[Federal Register Volume 68, Number 107 (Wednesday, June 4, 2003)]
[Notices]
[Pages 33560-33561]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-13941]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-47922; File No. SR-SCCP-2002-08]


Self-Regulatory Organizations; Stock Clearing Corporation of 
Philadelphia; Notice of Filing and Immediate Effectiveness of Proposed 
Rule Change Relating to Trade Recording Fees and Value Fees for Pace 
Trades

May 23, 2003.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ notice is hereby given that on December 31, 2002, the 
Stock Clearing Corporation of Philadelphia (``SCCP'') 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 primarily by SCCP. 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).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The proposed rule change would amend SCCP's schedule of dues, fees, 
and charges to clarify the definition of a PACE trade as it relates to 
the imposition of SCCP's trade recording

[[Page 33561]]

fees and value fees.\2\ Currently, SCCP does not charge trade recording 
fees or value fees for PACE trades. SCCP proposes to define a PACE 
trade with greater specificity in order to clarify the imposition of 
trade recording fees and value fees as they relate to PACE trades only.
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    \2\ PACE is the acronym for the Philadelphia Stock Exchange 
Inc.'s (``Phlx'') automated communication and execution system. It 
is Phlx's order routing, delivery, execution, and reporting system 
for its equity trading floor. See Phlx Rules 229 and 229A.
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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, SCCP 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. SCCP has prepared summaries, set forth in sections A, B, 
and C below, of the most significant aspects of such statements.\3\
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    \3\ The Commission has modified parts of these statements.
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A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    First, the proposed rule change clarifies that the trade recording 
fees and value fees apply in situations where an order, after being 
delivered to Phlx by the PACE system, is executed by way of an outbound 
Intermarket Trading System (``ITS'') commitment \4\ when such outbound 
ITS commitment reflects the PACE order's clearing information. In this 
situation, the trade is not considered to be a PACE trade for purposes 
of the imposition of trade recording fees and value fees and thus 
becomes subject to both charges.
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    \4\ ITS means the application of the system that permits 
intraday trading in eligible listed securities between participant 
markets as set forth in the ITS Plan. See Phlx Rule 2001.
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    Secondly, the proposed rule change clarifies that the trade 
recording fees and value fees do not apply where a PACE trade was 
executed against an inbound ITS commitment. The execution on the Phlx 
against an inbound ITS commitment is considered a PACE trade and 
therefore, SCCP trade recording fees and value fees do not apply to 
these transactions.
    Lastly, the proposed rule change rebates to any participants that 
were charged trade recording fees or value fees for PACE trades that 
were executed against an inbound ITS commitment for the months of 
September, October, November, and December 2002.
    SCCP believes that not charging SCCP participants these fees for 
PACE trades that are executed against an inbound ITS commitment should 
encourage greater use of the PACE system which in turn should promote a 
more active and liquid equities market. Also, SCCP believes that this 
clarification should help to avoid any participant confusion.
    Previously, SCCP's billing system charged trade recording fees and 
value fees for PACE trades executed against an inbound ITS commitment 
due to the difficulties in identifying executions of orders in this 
manner. Due to advances in billing, SCCP can now more readily identify 
PACE trades that are executed against inbound ITS commitments. SCCP 
believes that by not charging trade recording fees and value fees and 
by providing a rebate, as described above for the months of September 
through December 2002, it will encourage future use of the PACE system 
and will reimburse participants who were charged the trade recording 
fees and value fees when the application of these charges may not have 
been clear. Also, SCCP believes that going forward for trades settling 
on or after January 2, 2003, there should be no charge for these PACE 
trades due to the fact that the method of execution of these trades is 
outside of the customer's control.
    SCCP believes that its proposal is consistent with Section 
17A(b)(3)(D) of the Act \5\ because it provides for the equitable 
allocation of reasonable dues, fees, and other charges among its 
participants.
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    \5\ 15 U.S.C. 78q-1(b)(3)(D).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    SCCP does not believe that the proposed rule 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

    Because the foregoing rule change establishes or changes a due, 
fee, or other charge, it has become effective pursuant to Section 
19(b)(3)(A)(ii) of the Act \6\ and Rule 19b-4(f)(2) thereunder.\7\ At 
any time within sixty 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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    \6\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \7\ 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. 
Comments may also be submitted electronically at the following e-mail 
address: [email protected]. All comment letters should refer to 
File No. SR-SCCP-2002-08. This file number should be included on the 
subject line if e-mail is used. To help us process and review comments 
more efficiently, comments should be sent in hardcopy or by e-mail but 
not by both methods. 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 Section, 450 Fifth Street, NW., Washington, DC 20549. Copies 
of such filing also will be available for inspection and copying at the 
principal office of SCCP. 

    For the Commission by the Division of Market Regulation, 
pursuant to delegated authority.\8\
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    \8\ 17 CFR 200.30-3(a)(12).
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Jill M. Peterson,
Assistant Secretary.
[FR Doc. 03-13941 Filed 6-3-03; 8:45 am]
BILLING CODE 8010-01-P