[Federal Register Volume 66, Number 208 (Friday, October 26, 2001)]
[Notices]
[Pages 54317-54319]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-26959]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-44963; File No. SR-PHLX-2001-84]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by the Philadelphia Stock 
Exchange, Inc. Adopting a Fee for Installing and Maintaining Tethers on 
the Options Trading Floor

October 19, 2001.
    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 August 31, 2001, the Philadelphia Stock Exchange, Inc. 
(``Phlx'' or ``Exchange'')

[[Page 54318]]

filed with the Securities and Exchange Commission (``Commission'') the 
proposed rule change as described in Items I, II, and III, below, which 
Items have been prepared by the Phlx. The Phlx amended the proposed 
rule change on October 15, 2001.\3\ The Commission is publishing this 
notice to solicit comments on the proposed rule change, as amended, 
from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ The Phlx submitted a new Form 19b-4, which replaces and 
supersedes the original filing in its entirety (``Amendment No. 
1'').
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I. Self-Regulatory Organization's Statement of the Terms of 
Substance of the Proposed Rule Change

    The Phlx proposes to amend its schedule of dues, fees and charges 
to adopt a Tether \4\ Initial Connectivity Fee of $1,100 and a Tether 
Monthly Service Fee of $150 for installing and thereafter maintaining 
tethers that allow a hardwire connection to an existing communication 
network (local area network) on the Exchange's options trading floor.
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    \4\ A tether is a hardwire connection to an existing Exchange 
communication network. It would augment the current wireless network 
on the options floor and allow users to connect their handheld 
devices to the existing Exchange communication network and thereby 
interface with member firm communication networks.
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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 Phlx 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 Phlx 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 amend the Exchange's 
schedule of dues, fees and charges to adopt a Tether Initial 
Connectivity Fee of $1,100 and a Tether Monthly Service Fee of $150 for 
installing and thereafter maintaining tethers that allow a hardwire 
connection to an existing communication network (local area network) on 
the Exchange's options trading floor. Each tethering device will incur 
one initial connectivity fee, and thereafter may be transferred to 
another user as well as to another location on the floor without 
incurring any additional connectivity fee. The connectivity and monthly 
fees will be imposed on the users of such tethers and communication 
network, namely registered options traders and floor brokers (but not 
specialists) on the options trading floor.
    The Exchange has had a wireless communication network on its 
options and other trading floors. Due to increases in bandwidth demands 
and the use of applications by traders, namely on the options floor, 
that are not designated to effectively operate on a shared wireless 
network, the Exchange has determined to augment its wireless network 
with hardwire access to an existing local area network that would allow 
users on the options trading floor to connect with communications 
networks of Exchange member firms. The Exchange is installing hardwire 
tethers at trading posts across the options trading floor and will 
maintain an existing communication network at considerable cost to the 
Exchange.\5\ The Exchange believes that the proposed fees are equitable 
and reasonable in that they are based on actual and estimated expenses 
incurred in installing and maintaining the tethered connections.\6\
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    \5\ The decision to install tethers and augment a network on a 
trading floor is solely within the Exchange's discretion.
    \6\ The restrictions of Exchange Rule 606 and any other rules 
applicable to communications would apply to all communications via 
the tethers. The Exchange intends in the near future to propose 
amendments to Rule 606 and any other relevant rules to clarify their 
applicability to tethers.
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    In the case of a newly installed tether, the initial connectivity 
fee commences upon installation and the monthly fee commences in the 
first full calendar month after installation is completed.\7\ For 
instance, installation on September 1 would trigger a connectivity fee 
on September 1 and a monthly fee beginning October 1 (but not September 
1).
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    \7\ This fee is eligible for the monthly credit of up to $1,000 
to be applied against certain fees, dues and charges and other 
amounts owned to the Exchange by certain members. See Securities 
Exchange Act Release No. 44292 (May 11, 2001), 66 FR 27715 (May 18, 
2001) (SR-Phlx-2001-49).
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2. Statutory Basis
    The Exchange believes that is proposal to amend its schedule of 
dues, fees and charges is consistent with section 6(b) of the Act,\8\ 
in general, and furthers the objectives of section 6(b)(4),\9\ in 
particular, in that it is an equitable allocation of reasonable fees 
among the Exchange's members because the members who pay the additional 
amount for the tethers incur the benefit of their use and access to a 
communication network.
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    \8\ 15 U.S.C. 78f(b).
    \9\ 15 U.S.C. 78f(b)(4).
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B. Self-Regulatory Organization's Statement on Burden on Competition

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

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

    No written comments were either solicited or received.

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

    The Exchange has designated the proposed rule change as a fee 
change pursuant to section 19(b)(3)(A)(ii) of the Act \10\ and Rule 
19b-4(f)(2) thereunder.\11\ Accordingly, the proposal will take effect 
upon filing with the Commission. At any time within 60 days of the 
filing of Amendment No. 1 to 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.
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    \10\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \11\ 17 CFR 240.19b-4(f)(2).
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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 it the 
principal office of the Phlx. All submissions should refer to the File 
No.

[[Page 54319]]

SR-Phlx-2001-84 and should be submitted by November 16, 2001.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\12\
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    \12\ 17 CFR 200.30-3(a)(12).

Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 01-26959 Filed 10-25-01; 8:45 am]
BILLING CODE 8010-01-M