[Federal Register Volume 65, Number 217 (Wednesday, November 8, 2000)]
[Notices]
[Pages 67031-67032]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-28593]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-43489; File No. SR-Phlx-00-64]


Self-Regulatory Organizations; Notice of Filing of Proposed Rule 
Change by the Philadelphia Stock Exchange, Inc. Relating to Late 
Charges and Penalties for Non-Payment

October 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 September 18, 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 and II below, which Items have been prepared by the Exchange. 
The Commission is publishing this notice to solicit comments on the 
proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of 
Substance of the Proposed Rule Change

    The Exchange proposes to amend its By-Law Article XIV, Section 14-
5, ``Penalty for Non-Payment,'' and Phlx Rule 50, ``Late Charge,'' to 
clarify and provide consistent time periods for reporting delinquent 
accounts to the Phlx's Finance Committee and the Phlx's Board of 
Governors (``Board''). Specifically, the Phlx proposes to amend Phlx 
Rule 50 to (1) Impose a late charge on accounts unpaid 30 days after 
the date of the original invoice, rather than accounts unpaid 40 days 
after the date of the original invoice; (2) reduce the amount of the 
late charge from 2% simple interest to 1% simple interest for each 30-
day period or fraction thereof, calculated on a daily basis, during 
which the accounts payable to the Phlx remain outstanding; and (3) 
provide that the Phlx's Finance Committee may waive the amount of the 
late charge, or a portion thereof, if the amount falls within 
guidelines established by the Board. The Phlx also proposes to 
eliminate from Phlx Rule 50 the requirements that the Phlx's Controller 
notify the Board when an amount due to the Exchange remains outstanding 
for 90 days. Instead, Phlx Rule 50, as amended, requires the Phlx's 
controller to notify the Finance Committee when an amount due to the 
Phlx remains unpaid 50 days after the date of the original invoice. The 
Finance Committee will refer the matter to the Board if the amount due 
exceeds $10,000.
    For amounts in excess of $10,000, Phlx By-Law Article XIV, Section 
14-5, as amended, requires the Phlx's Controller, rather than the 
Secretary, to report to the Board: (1) a fine and/or other monetary 
sanction unpaid 20 days after the amount becomes payable; and (2) a 
due, FCO user's fee, fee, other charge or other amount due to the Phlx 
that is unpaid 50 days from the date of the original invoice. The 
proposed amendments to Phlx By-Law Section 14-5 replace current 
provisions requiring the Secretary of the Phlx to report to the Board a 
due or fee not paid within three months and a fine not paid within 20 
days.

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.

[[Page 67032]]

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

1. Purpose
    The proposed amendments provide consistent time periods for 
reporting delinquent accounts to the Finance Committee and the Board. 
The proposed amendments specify that the Controller, rather than the 
Secretary, will report delinquent unpaid accounts in excess of $10,000 
to the Board and establish a $10,000 threshold for reporting delinquent 
accounts to the Board. The Controller will report delinquent accounts 
under $10,000 to the Finance Committee for appropriate action.
    No new remedies to achieve payment more rapidly are proposed; only 
the administrative business process has been amended. The proposed 
amendments to Phlx Rule 50 provide that late charges will be imposed on 
unpaid accounts outstanding after 30 days, rather than 40 days, and 
that the Controller will report all outstanding accounts unpaid after 
50 days, rather than 90 days, to the Finance Committee for outstanding 
accounts with outstanding balances of less than $10,000. The proposed 
amendments also allow the Finance Committee or its designee to waive 
the imposition of late fees or a portion thereof if the amount falls 
within guidelines to be established by the Board.
    The purpose of the proposed amendment to By-Law XIV, Section 14-5 
is to change the reporting of unpaid outstanding delinquent accounts 
less than $10,000 to the Finance Committee 50 days after original 
invoice to relieve the Board from having to deal with such matters. The 
Finance Committee may take appropriate action under amended Phlx Rule 
50, such as contacting the member organization to pursue payment or 
referring the matter to the Business Conduct Committee pursuant to Phlx 
Rule 708 Commentary .01(c), which prohibits members, member 
organizations, and associated persons from engaging in acts detrimental 
to the interest or welfare of the Phlx, including the failure to make a 
good faith effort to pay fees, dues and fines or other monies due and 
owing the Exchange. The Phlx believes that the proposed accelerated 
imposition of the late charge for accounts unpaid after 30 days and the 
reporting provisions to the Finance Committee and the Board provide an 
appropriate business process for collection of unpaid charges and fees 
and are administrative in nature. The specification of the late charge 
rate and its calculations are delineated in the amended Phlx Rule 50 
and the current supplementary material to Phlx 50 is being deleted.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6 of the Act, \3\ in general, and with Section 6(b)(5) \4\ 
in particular, in that the proposed rule change is designed to promote 
just and equitable principles of trade and to protect investors and the 
public interest by providing the Exchange with the ability to provide a 
more responsive administrative process to pursue collection of monies 
due and owing the Exchange.
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    \3\ 15 U.S.C. 78f.
    \4\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
impose any inappropriate burden on competition.

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

    Written comments were neither solicited nor received.

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

    Within 35 days of the date of publication of this notice in the 
Federal Register or within such longer period (i) as the Commission may 
designate up to 90 days of such date if it finds such longer period to 
be appropriate and publishes its reasons for so finding or (ii) as to 
which the self-regulatory organization consents, the Commission will:
    A. by order approve the proposed rule change, or
    B. institute proceedings to determine whether the proposed rule 
change should be disapproved.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change 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 at the 
Commission's Public Reference Room. Copies of such filing will also be 
available for inspection and copying at the principal office of the 
Exchange. All submissions should refer to file No. SR-Phlx-00-64 and 
should be submitted by November 29, 2000.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\5\
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    \5\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 00-28593 Filed 11-7-00; 8:45 am]
BILLING CODE 8010-01-M