[Federal Register Volume 65, Number 251 (Friday, December 29, 2000)]
[Notices]
[Pages 83122-83123]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-33263]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-43762; File No. SR-Phlx-00-64]


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

December 21, 2000.

I. Introduction

    On September 18, 2000, the Philadelphia Stock Exchange, Inc. 
(``Phlx'' or ``Exchange'') submitted to the Securities and Exchange 
Commission (``SEC'' or ``Commission''), pursuant to Section 19(b)(1) of 
the Securities Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 
thereunder,\2\ a proposed rule change 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'').
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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    The proposed rule change was published for comment in the Federal 
Register on November 8, 2000.\3\ No comments were received on the 
proposal. This order approves the proposal.
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    \3\ Securities Exchange Act Release No. 43489 (October 27, 
2000), 65 FR 67031.
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II. Description of the Proposal

    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 
requirement 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

[[Page 83123]]

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 find and/or other monetary 
sanction unpaid 20 days after the amount becomes payable; and (2) a 
due, foreign currency option (``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. In addition, the Phlx proposes to amend Phlx By-
Law 14-5 to provide that the Phlx's Committee on Admissions may dispose 
of a membership or FCO participation when an amount over $10,000 has 
not been paid within one year after payment was due.

III. Discussion

    The Commission finds that the proposed rule change is consistent 
with the requirements of the Act and the rules and regulations 
thereunder applicable to a national securities exchange, and in 
particular, with the requirements of Section 6 of the Act.\4\ 
Specifically, the Commission finds that the proposal is consistent with 
Section 6(b)(5) \5\ of the Act in that it is designed to modify the 
Exchange's fee collection process in a manner that promotes just and 
equitable principles of trade, prevents fraudulent and manipulative 
acts and practices, maintains fair and orderly markets, and protests 
investors and the public interest.\6\ In addition, the Commission finds 
that the proposal is consistent with Section 6(b)(4) of the Act,\7\ 
which provides that a registered national securities exchange must 
promulgate rules that provide for the equitable allocation of 
reasonable dues, fees, and other charges among its members and other 
persons using its facilities.
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    \4\ 15 U.S.C. 78f.
    \5\ 15 U.S.C. 78f(b)(5).
    \6\ In approving this rule, the Commission has considered the 
proposed rule's impact on efficiency, competition and capital 
formation. 15 U.S.C. 78c(f).
    \7\ 15 U.S.C. 78f(b)(4).
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    The Commission believes that the proposal to revise PHLX Rule 50 to 
impose a late charge 30 days after the date of the original invoice, 
rather than 40 days after the date of the original invoice, will help 
to encourage the prompt payment of amounts due to the Exchange. The 
Commission believes that the reduction of the late charge in PHLX Rule 
50 from 2% simple interest to 1% simple interest is reasonable. In 
addition, the Commission believes that the proposal to allow the 
Finance Committee or its designee to waive a late charge or a portion 
of a late charge if the amount falls within guidelines established by 
the Board will provide the Finance Committee with flexibility in the 
administration of late charges.
    PHLX Rule 50 currently requires the Controller to notify the Board 
if a member fails to pay dues, fees, fines, or other charges within 90 
days. The Commission believes that the proposal to revise PHLX Rule 50 
to require the Controller to notify the Finance Committee of the 
failure to pay a fine and/or other monetary sanction within 20 days, 
and of the failure to pay dues, fees, and other charges within 50 days, 
will facilitate the collection of amounts owed to the PHLX. The 
Commission believes that amending PHLX Rule 50 to require the Finance 
Committee to report to the matter to the Board when an amount due 
exceed $10,000 establishes a reasonable threshold for Board involvement 
in the collection process.
    PHLX By-Law 14-5 currently states that the membership or 
participation of a member or FCO participant may be disposed of by the 
PHLX's Committee on Admissions when a due, fee, or fine has not been 
paid within one year. The Commission believes that amending PHLX By-Law 
14-5 to specify that the Committee on Admissions may dispose of the 
participation or membership when an amount in excess of $10,000 has not 
been paid within a year will establish a threshold for action by the 
Committee on Admissions and notify members and participants of a 
circumstance under which the Committee on Admissions may dispose of a 
membership or FCO participation. With regard to unpaid amounts 
exceeding $10,000, the Commission finds that the PHLX's proposal to 
amend PHLX By-Law 14-5 to require 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 is 
designed to increase the efficiency of the collection process.

IV. Conclusion

    It Is Therefore Ordered, pursuant to Section 19(b)(2) of the 
Act,\8\ that the proposed rule change (SR-PHLX-00-64) be and hereby is 
approved.
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    \8\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\9\
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    \9\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 00-33263 Filed 12-28-00; 8:45 am]
BILLING CODE 8010-01-M