[Federal Register Volume 65, Number 151 (Friday, August 4, 2000)]
[Notices]
[Pages 48039-48040]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-19733]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-43081; File No. SR-Phlx-00-53]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by the Philadelphia Stock 
Exchange, Inc. Relating to Permanent Approval of a Pilot Program 
Regarding Fees for Computer Equipment Services, Repairs or 
Replacements, and Relocation of Computer Equipment

July 27, 2000.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on June 22, 2000, the Philadelphia Stock Exchange, Inc. (``Phlx'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``SEC'' or ``Commission'') the proposed rule change as described in 
Items I, II, and III below, which Items have been prepared by the 
Exchange.\3\ The Commission is publishing this notice to solicit 
comments on the proposed rule change from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ The Phlx originally submitted the proposal on June 22, 2000. 
On July 19, 2000 the Phlx submitted a letter from Cynthia Hoekstra, 
Attorney, Phlx, to Jack Drogin, Assistant Director, Division of 
Market Regulation (``Division''), Commission, amending the filing 
(``Amendment No. 1''). In Amendment No. 1, the Phlx withdrew the 
portion of the filing extending the fees for computer equipment 
services, repairs or replacements, and member-requested relocation 
to the Exchange's Foreign Currency Option trading floor. Amendment 
No. 1 also requests that the permanent approval of the pilot program 
be retroactive to the date of the original filing on June 22, 2000. 
Because of the substantive nature of Amendment No. 1, the Commission 
deems the filing date to be July 19, 2000, the date Amendment No. 1 
was filed.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of 
Substance of the Proposed Rule Change

    The Phlx request permanent approval of its pilot program which, 
requires all members on the options and equity trading floors to pay a 
fee for (1) computer equipment services, repairs, or replacements and 
(2) member-requested relocation of computer equipment.\4\ The current 
pilot program is in effect from April 1, 2000 through June 30, 2000.\5\
---------------------------------------------------------------------------

    \4\ A fee will not be charged for new installation of computer 
equipment.
    \5\ See Securities Exchange Act Release No. 42654 (April 10, 
2000), 65 FR 20500 (April 17, 2000).
---------------------------------------------------------------------------

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the Exchange included statements 
concerning the purpose of and basis for the proposed rule change and 
discussed any comments it received on the proposed rule change. The 
text of these statements may be examined at the places specified in 
Item IV below. The Exchange has prepared summaries, set forth in 
sections A, B, and C below, of the most significant aspects of such 
statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The purpose of the proposed rule change is to request permanent 
approval of Phlx's current three-month pilot program that amends Phlx's 
fee schedule for (1) computer equipment services, repairs, or 
replacements and (2) member-requested relocation of computer equipment.
    First, pursuant to the current pilot program, the Phlx's schedule 
of dues, fees, and charges was amended to impose a fee on all members 
on the options and equity floors for computer equipment services, 
repairs, or replacements on the trading floors. Specifically, the Phlx 
charges $100 for every service call plus $75 an hour,\6\ with a minimum 
of two hours charged per service call.\7\ The Exchange staff 
anticipates that the majority of computer services, repairs, or 
replacements will continue to be completed within two hours. Currently, 
notwithstanding the pilot program, members are not bill for computer 
services, repairs, or replacements when new or refurbished equipment 
fails in the normal and customary manner of usage within 30 days of 
installation. In addition, members are not charged for repairing 
system-wide problems, rebooting central processing units, and adjusting 
cables or replacing certain extension cables.
---------------------------------------------------------------------------

    \6\ The computer equipment services, repairs, or replacements 
fee is charged per service call and per hour but not per person, 
unlike the computer relocation request fee. Telephone conversation 
between Cynthia Hoekstra, Attorney, Phlx, and Marla Chidsey, 
Attorney Division, Commission on July 6, 2000.
    \7\ Some component of this amount may reflect Pennsylvania sales 
tax.
---------------------------------------------------------------------------

    These changes are intended to defray the cost of servicing, 
repairing, or replacing computer equipment on the options and equity 
trading floors, as well as to encourage care in using computer 
equipment.\8\ The Exchange receives approximately 90 percent of calls 
on a routine basis to repair, replace, or otherwise service keyboards, 
track balls, printers, and other computer equipment from options or 
equity floor members' work stations.
---------------------------------------------------------------------------

    \8\ This proposed fee will apply to all such requests with no 
distinction between intentional abuse or normal wear and tear due to 
the difficulties associated with categorizing the types or repairs.
---------------------------------------------------------------------------

    Second, the Exchange has amended its schedule of dues, fees, and 
charges to impose a fee for member-requested relocation of a member's 
work station or any piece of their computer equipment on the options or 
equity trading floors. Under the current pilot program, the Exchange 
imposes a $100 service fee plus $75 per hour per person moving the 
equipment, with a minimum of two hours charged for each relocation 
request.\9\
---------------------------------------------------------------------------

    \9\ For example, if two individuals take two hours to relocate a 
work station, the member will be charged $100 for the service call, 
plus $300 for moving the equipment ($75 four (two people x two 
hours)). Again, some component of this amount may reflect 
Pennsylvania sales tax.
---------------------------------------------------------------------------

    The post/equipment relocation fee should assist in defraying the 
costs associated with the moving of computer equipment. Member/
participant-requested relocations on the trading floors can be very 
time-consuming and costly because nearly all relocations take place 
after hours or on the weekends.
    Exchange staff and trading floor members are required to complete a 
pre-printed form prior to requesting repair or relocation service. A 
notice describing the equipment repair procedures was sent to all floor 
members prior to the implementation of the original three-month pilot 
program that was in effect from January 1, 2000 through March 31, 2000. 
Another notice will be sent to members and participants to inform them 
that these fees will be implemented on a permanent basis to members on 
the equity and options trading floors.
    The Exchange staff has had the opportunity to review the procedures 
relating to computer equipment services, repairs, replacements, and 
relocations, which include instructions to members and Exchange staff 
as to where the service request forms will be located, directions as to 
how to

[[Page 48040]]

complete the form, and which department is required to forward the 
forms to the accounting department. The procedures also include a 
provision that states that members will not be billed for computer 
equipment services, repairs, or replacements when new or refurbished 
equipment fails in the normal and customary usage within 30 days of 
installation. The procedures described above have proven to be an 
effective way to administer these requests, including the billing of 
fees and should continue to allow for the efficient handling of 
computer equipment services, repairs, or replacements, and member/
participant-requested relocation of computer equipment.
    The Exchange has determined that the fees for computer equipment 
services, repairs or replacements and relocation of computer equipment 
that are charged are appropriate and reflect the costs for these 
services that are incurred by the Exchange. After reviewing the matter, 
it was decided that the Exchange should continue to charge a fixed 
rate, as opposed to different rates for different computer repairs. The 
minimum charge of $250 per service call for computer equipment 
services, repairs, replacements, or relocations reasonably approximates 
the average costs for these services. However, the minimum charge may 
not cover all the costs involved in repairing, servicing, and 
relocating computer equipment. Members and participants will continue 
to be billed on a monthly basis for these charges.
2. Statutory Basis
    For these reasons, the Exchange believes that its proposal to amend 
its schedule of dues, fees, and charges to include a fee for computer 
equipment services, repairs or replacements, and a fee for member/
participant-requested relocation of computer equipment is consistent 
with Section 6(b) of the Act \10\ in general, and furthers the 
objectives of Section 6(b)(4),\11\ in particular, in that it provides 
for the equitable allocation of reasonable dues, fees, and other 
charges among its members and other persons using its facilities.
---------------------------------------------------------------------------

    \10\ 15 U.S.C. 78f(b).
    \11\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Phlx represents that it does not believe that the proposed rule 
change will impose any burden on competition that is not necessary or 
appropriate in furtherance of the Acts.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants or Others

    The Exchange has neither solicited nor received written comments on 
the proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing 
for Commission Action

    The proposed rule change has become effective pursuant to Section 
19(b)(3)(A) of the Act \12\ and Rule 19b-4(f)(2) \13\ thereunder 
because it establishes a due, fee, or other charge. Accordingly, the 
proposal will take effect upon filing with the Commission. At any time 
within 60 days of the filing of the proposed rule change, the 
Commission may summarily abrogate such rule change if it appears to the 
Commission that such action is necessary or appropriate in the public 
interest, for the protection of investors, or otherwise in furtherance 
of the purposes of the Act.
---------------------------------------------------------------------------

    \12\ 15 U.S.C. 78s(b)(3)(A).
    \13\ 17 CFR 240.19b-4(f)(2).
---------------------------------------------------------------------------

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing including whether the proposed rule 
change, as amended, is consistent with the Act. Persons making written 
submissions should file six copies thereof with the Secretary, 
Securities and Exchange Commission, 450 Fifth Street, NW, Washington, 
DC 20549-0609. Copies of the submission, all subsequent amendments, all 
written statements with respect to the proposed rule change that are 
filed with the Commission, and all written communications relating to 
the proposed rule change between the Commission and any person, other 
than those that may be withheld from the public in accordance with the 
provisions of 5 U.S.C. 552, will be available for inspection and 
copying in the Commission's Public Reference Room. Copies of such 
filing will also be available for inspection and copying at the 
principal office of the Phlx. All submissions should refer to File No. 
SR-Phlx-00-53 and should be submitted by August 25, 2000.
    For the Commission, by the Division of Market Regulation, pursuant 
to delegated authority.\14\
---------------------------------------------------------------------------

    \14\ 17 CFR 200.30-3(a)(12).

Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 00-19733 Filed 8-3-00; 8:45 am]
BILLING CODE 8010-01-M