[Federal Register Volume 68, Number 4 (Tuesday, January 7, 2003)]
[Notices]
[Pages 841-842]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-270]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-47109; File No. SR-Phlx-2002-78]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by the Philadelphia Stock 
Exchange, Inc. To Increase the Transaction Charge for Off-Floor Broker-
Dealer Orders Delivered via AUTOM and Executed via AUTO-X

    December 30, 2002.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ and Rule 19b-4\2\ thereunder, notice is hereby given that 
on December 16, 2002, the Philadelphia Stock Exchange, Inc. 
(``Exchange'' or ``Phlx'') submitted to 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 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 Phlx proposes to amend its schedule of dues, fees and charges 
to increase the off-floor broker-dealer equity option transaction 
charge from $.35 per contract to $.45 per contract for orders delivered 
through the Phlx Automated Options Market (``AUTOM'') System, and 
automatically executed by the Exchange's Automatic Execution System 
(``AUTO-X'').\3\ The $.45 per contract transaction charge applicable to 
off-floor broker-dealer orders entered via AUTOM and executed via AUTO-
X will apply to transactions in equity options only.\4\ The option 
transaction charge applicable to off-floor broker-dealer orders not 
executed by AUTO-X remains at $.35 per contract. The Exchange intends 
to implement this fee on transactions settling on or after January 2, 
2003.
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    \3\ AUTOM is the Exchange's electronic order delivery, routing, 
execution and reporting system, which provides for the automatic 
entry and routing of equity option and index option orders to the 
Exchange trading floor. Orders delivered through AUTOM may be 
executed manually, or certain orders are eligible for AUTOM's 
automatic execution feature, AUTO-X. Equity option and index option 
specialists are required by the Exchange to participate in AUTOM and 
its features and enhancements. Option orders entered by Exchange 
members into AUTOM are routed to the appropriate specialist unit on 
the Exchange trading floor. See Exchange Rule 1080.
    \4\ This fee will be eligible for the monthly credit of up to 
$1,000 to be applied against certain fees, dues, charges and other 
amounts owed 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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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 Exchange has

[[Page 842]]

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 raise revenue for the 
Exchange by charging a $.45 transaction charge for off-floor broker-
dealer orders that are delivered via AUTOM and executed automatically 
via AUTO-X.
    Currently, the Exchange charges a fee of $.35 per contract for all 
off-floor broker-dealer transactions, regardless of how such an order 
is executed. The $.35 charge will continue to apply to off-floor 
broker-dealer orders not executed by AUTO-X.
    The $.35 charge for non-AUTO-X transactions and the $.45 charge for 
AUTO-X transactions apply to members for orders, received from other 
than the floor of the Exchange, for any account (i) in which the holder 
of beneficial interest is a member or non-member broker-dealer or (ii) 
in which the holder of beneficial interest is a person associated with 
or employed by a member or non-member broker-dealer. Accordingly, an 
order for the account of an ROT entered from off-floor would be subject 
to one of the two charges.
2. Statutory Basis
    The Exchange believes that its proposal to amend its schedule of 
dues, fees and charges is consistent with Section 6(b) of the Act \5\ 
in general, and furthers the objectives of Section 6(b)(4) of the Act 
\6\ in particular, in that it is an equitable allocation of reasonable 
dues, fees, and other charges among Exchange members relating to the 
automatic execution of off-floor broker-dealer orders.
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    \5\ 15 U.S.C. 78f(b).
    \6\ 15 U.S.C. 78f(b)(4).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Phlx 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 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 foregoing proposed rule change has been designated as a fee 
change pursuant to Section 19(b)(3)(A)(ii) of the Act \7\ and Rule 19b-
4(f)(2) \8\ thereunder. 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.
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    \7\ 15 U.S.C. 78(s)(b)(3)(A)(ii).
    \8\ 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 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-2002-78 and should 
be submitted by January 28, 2003. 
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    \9\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Market Regulation, 
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pursuant to delegated authority.\9\

Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 03-270 Filed 1-6-03; 8:45 am]
BILLING CODE 8010-01-P