[Federal Register Volume 68, Number 42 (Tuesday, March 4, 2003)]
[Notices]
[Pages 10295-10296]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-4954]


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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-47385; File No. SR-Phlx-2003-06]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by the Philadelphia Stock 
Exchange, Inc. Relating to Changes to Its Nasdaq-100 Index Tracking 
Stock \sm\ Fee Schedule

February 20, 2003.
    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 January 31, 2003, the Philadelphia Stock Exchange, Inc. (``Phlx'') 
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 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.
---------------------------------------------------------------------------

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

    The Phlx proposes to change its Nasdaq-100 Index Tracking Stock 
(``QQQ'') \sm\ Fee Schedule \3\ in two ways: (1) amending the Customer, 
Non-PACE \4\ per-trade fee and (2) eliminating the Specialist $0.002 
per-share fee.
---------------------------------------------------------------------------

    \3\ The Nasdaq-100 [reg], Nasdaq-100 Index [reg], Nasdaq [reg] 
The Nasdaq Stock Market [reg], Nasdaq 100 Shares sm, 
Nasdaq-100 Trust sm, Nasdaq-100 Index Tracking Stock 
sm and QQQ sm are trademarks or service marks 
of The Nasdaq Stock Market, Inc. (Nasdaq) and have been licensed for 
use for certain purposes by the Philadelphia Stock Exchange pursuant 
to a License Agreement with Nasdaq. The Nasdaq-200 Index [reg] (the 
Index) is determined, composed, and calculated by Nasdaq without 
regard to the Licensee, the Nasdaq-100 Trust sm, or the 
beneficial owners of Nasdaq-100 Shares sm. Nasdaq has 
complete control and sole discretion in determining, composing or 
calculating the Index or in modifying in any way its method for 
determining, composing or calculating the Index in the future.
    \4\ ``PACE'' is the acronym for the Phlx's Automated 
Communication and Execution System. It is the Phlx's order routing, 
delivery, execution and reporting system for its equity trading 
floor. See Phlx Rules 229 and 229A.
---------------------------------------------------------------------------

    First, in connection with the Phlx's QQQ Fee Schedule, the Phlx 
proposes to replace the current Customer, Non-PACE per-trade fee of 
$1.00 per-trade with the equity transaction charge currently in effect 
on the Phlx's Summary of Equity Charges. Therefore, the Customer, Non-
PACE per-trade fee of $1.00 per-trade will be replaced with the 
following:

------------------------------------------------------------------------
                   Transaction charge                     Rate per-share
------------------------------------------------------------------------
First 500 shares........................................         $0.00
Next 2,000 shares.......................................          0.0075
Remaining shares........................................          0.005
------------------------------------------------------------------------

    $50 maximum fee per-trade side.\5\
---------------------------------------------------------------------------

    \5\ This fee will be eligible for the monthly credit of up to 
$1,000 to be applied against certain fees, dues and charges and 
other amounts owed to the Phlx by certain members. See Securities 
Exchange Act Release No. 44292 (May 11, 2001), 66 FR 27715 (May 18, 
2001) (SR-Phlx-2001-49).
---------------------------------------------------------------------------

    Second, the Phlx proposes to eliminate the specialist $0.002 per-
share ($50.00 cap per-trade) fee.
    The Phlx intends to implement the changes beginning with 
transactions settling on or after February 3, 2003.
    The text of the proposed rule change is available at the Phlx, and 
at the Commission.

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

[[Page 10296]]

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 simplify the Phlx's 
fee schedule by applying the same equity transaction charge for 
customer non-PACE transaction charges for the QQQs that is currently in 
effect for equity transactions. In addition, the Phlx proposes to 
delete the specialist fee of $0.002 per-share to provide the specialist 
unit with incentives to grow its specialist activity in the QQQs by 
reducing its costs of doing business and providing it with additional 
funds to commit to trading, which should, in turn, promote liquidity.
2. Statutory Basis
    The Phlx believes that its proposal to amend its schedule of dues, 
fees and charges is consistent with section 6(b) of the Act \6\ in 
general, and furthers the objectives of section 6(b)(4) of the Act \7\ 
in particular, in that it is an equitable allocation of reasonable 
dues, fees, and other charges among Phlx members.
---------------------------------------------------------------------------

    \6\ 15 U.S.C. 78f(b).
    \7\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------

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

    The Phlx neither solicited nor received written comments concerning 
the proposal.

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

    Because the foregoing rule change establishes or changes a due, 
fee, or other charge imposed by the Phlx, it has become effective 
pursuant to section 19(b)(3)(A) of the Act \8\ and subparagraph (f)(2) 
of Rule 19b-4\9\ thereunder. At any time within 60 days after 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.
---------------------------------------------------------------------------

    \8\ 15 U.S.C. 78s(b)(3)(A).
    \9\ 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 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 also will be 
available for inspection and copying at the principal office of the 
Phlx.
    All submissions should refer to File No. SR-Phlx-2003-06 and should 
be submitted by March 25, 2003.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\10\
---------------------------------------------------------------------------

    \10\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 03-4954 Filed 3-3-03; 8:45 am]
BILLING CODE 8010-01-P