[Federal Register Volume 68, Number 145 (Tuesday, July 29, 2003)]
[Notices]
[Pages 44556-44557]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-19182]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-48208; File No. SR-Phlx-2003-48]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by the Philadelphia Stock 
Exchange, Inc. Relating to Specialist Deficit (Shortfall) Fee Credit

July 22, 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 July 1, 2003, the Philadelphia Stock Exchange, Inc. (``Phlx'' or 
``Exchange'') 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 Exchange. 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: (1) Eliminate the Exchange's Equity Option Specialist Deficit 
(Shortfall) fee credit (``shortfall credit''); and (2) clarify the 
application of the shortfall credit during the time period during which 
it was in effect.
    Pursuant to the shortfall credit, a credit of $.35 per contract 
could be earned by options specialists for all contracts traded in 
excess of 14 percent of the total national monthly contract volume.\3\ 
The credits could be applied against previously imposed Equity Option 
Specialist Deficit (Shortfall) fees for the preceding six months for 
issues that, in the month the deficit occurred, the equity option 
traded in excess of 10 million contracts per month.\4\ The Exchange 
proposes to clarify that a specialist may earn a shortfall credit of 
$.35 per contract for all contracts traded in excess of 14 percent for 
previously imposed shortfall fees for the preceding six months for 
issues that, in the month the deficit occurred, the equity option 
traded in excess of 10 million contract sides per month.\5\
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    \3\ See Securities Exchange Act Release No. 45322 (January 22, 
2002), 67 FR 3927 (January 28, 2002) (SR-Phlx-2001-115).
    \4\ The contract volume reflects the total number of contracts 
in an option that were traded nationally for a specified month, 
based on volume reflected by The Options Clearing Corporation.
    \5\ See Securities Exchange Act Release No. 44892 (October 1, 
2001), 66 FR 51487 (October 9, 2001) (SR-Phlx-2001-83). In the 
proposed rule change submitted in connection with the shortfall 
credit, the word ``sides'' was inadvertently excluded from the 
proposal. The shortfall credit is more easily attainable if the 
threshold calculation is based on contract sides. For example, 10 
million contracts equal 20 million contract sides.
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    The Exchange intends to eliminate the shortfall credit for all 
transactions settling on or after July 1, 2003.
    The text of the proposed rule change is available at the Office of 
the Secretary, the Phlx, and 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

[[Page 44557]]

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 eliminate the 
Exchange's shortfall credit due to recent revisions to the Exchange's 
Specialist Deficit (Shortfall) fee program.\6\ The Exchange no longer 
wishes to allow for a shortfall credit due to these recent changes. 
However, the Exchange also seeks to clarify the application of the 
shortfall credit during the time period during which it was in effect 
in order to minimize member confusion.
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    \6\ See SR-Phlx-2003-45, submitted on June 25, 2003 and SR-Phlx-
2003-47, submitted on June 27, 2003. These filings revised the 
shortfall fee by decreasing the total national monthly contract 
volume threshold from 14 percent to 12 percent for specialists 
trading any Top 120 Option and imposed a limit of $10,000 to the 
specialist on the monthly amount of the shortfall fee for any Top 
120 Option, provided certain conditions are met.
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2. Statutory Basis
    The Exchange believes that its proposal is consistent with section 
6(b) of the Act,\7\ in general, and furthers the objectives of section 
6(b)(4) of the Act,\8\ in particular, in that it is an equitable 
allocation of reasonable dues, fees and other charges among Exchange 
members.
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    \7\ 15 U.S.C. 78f(b).
    \8\ 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

    Because the foregoing rule change establishes or changes a due, 
fee, or other charge imposed by the Exchange, it has become effective 
pursuant to section 19(b)(3)(A)(ii) of the Act \9\ and subparagraph 
(f)(2) of Rule 19b-4 \10\ thereunder. 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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    \9\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \10\ 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 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-2003-48 and 
should be submitted by August 19, 2003.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\11\
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    \11\ 17 CFR 200.30-3(a)(12).
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Jill M. Peterson,
Assistant Secretary.
[FR Doc. 03-19182 Filed 7-28-03; 8:45 am]
BILLING CODE 8010-01-P