[Federal Register Volume 69, Number 12 (Tuesday, January 20, 2004)]
[Notices]
[Pages 2808-2809]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-1081]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-49057; File No. SR-Phlx-2003-83]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change and Amendment No. 1 Thereto by 
the Philadelphia Stock Exchange, Inc. Relating to Equity Floor 
Brokerage Assessment Fees

January 12, 2004.
    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 December 29, 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 
Phlx. On January 9, 2004, the Phlx submitted an amendment to the 
proposed rule change. 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.
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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 
by: (1) Permanently adopting a monthly fee of $250 for each member who 
derives his/her primary income from floor brokerage business conducted 
on the equity floor of the Exchange; (2) eliminating the equity floor 
brokerage assessment fee of 5 percent of net floor brokerage income, 
which had been waived through December 31, 2003; and (3) clarifying 
that the $250 monthly charge is assessed on members who derive their 
primary income from brokerage business conducted on the equity floor of 
the Exchange, as opposed to the options or foreign currency floors of 
the Exchange.\3\
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    \3\ For purposes of this proposed rule change, floor brokerage 
business conducted on the Exchange includes orders that are received 
on the equity floor of the Phlx, even if those orders are executed 
on an exchange other than the Phlx. For purposes of the $250 monthly 
fee, ``primary income'' means that the member derives at least 80 
percent of gross income generated from Phlx floor-based activities 
from his/her brokerage business conducted on the equity floor of the 
Exchange.
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    The Exchange previously suspended its equity floor brokerage 
assessment fee of 5 percent of net floor brokerage income through 
December 31, 2003 and adopted a monthly fee of $250 for each member who 
derives his/her primary income from equity floor brokerage business.\4\ 
The Exchange intends to adopt permanently the $250 monthly fee 
beginning on January 2004 and to eliminate the equity floor brokerage 
fee of 5 percent beginning on January 1, 2004.
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    \4\ See Securities Exchange Act Release No. 46875 (November 21, 
2002), 67 FR 72014 (December 3, 2002) (SR-Phlx-2002-70). While the 
reference to the floor brokerage was updated on the Exchange's 
summary of equity charges, the additional reference on the QQQ 
schedule was not similarly updated. Therefore, the QQQ equity fee 
schedule will also be updated with the proposed changes described 
herein.
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    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 proposed rule change and 
discussed any

[[Page 2809]]

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 attract business to 
the Exchange. Specifically, the Exchange believes that permanently 
waiving the equity floor brokerage fee of 5 percent of net floor 
brokerage income and implementing a modest monthly fee of $250 should 
encourage floor brokers to send additional order flow to the Exchange 
and enhance the competitiveness of the Exchange. Charging a flat $250 
monthly charge would also simplify Phlx accounting procedures and 
billing. In addition, specifying that the $250 monthly charge would be 
assessed on members who derive their primary income from brokerage 
business conducted on the equity floor of the Exchange should help to 
avoid any member confusion with respect to the billing of the floor 
brokerage assessment.
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.
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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 Exchange 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, as amended, has become 
effective immediately pursuant to Section 19(b)(3)(A)(ii) of the Act 
\7\ and Rule 19b-4(f)(2) \8\ thereunder because it establishes or 
changes a due, fee, or other charge imposed by the Exchange. At any 
time within 60 days of the filing of the proposed rule change, as 
amended, 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.\9\
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    \7\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \8\ 17 CFR 240.19b-4(f)(2).
    \9\ For purposes of calculating the 60-day abrogation period, 
the Commission considers the period to commence on January 9, 2004, 
the date on which the Exchange filed Amendment No. 1.
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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. Comments may also be submitted electronically at the 
following e-mail address: [email protected]. All comment letters 
should refer to File No. SR-Phlx-2003-83. This file number should be 
included on the subject line if e-mail is used. To help the Commission 
process and review comments more efficiently, your 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 will also be available for inspection and copying 
at the principal office of the Phlx. All submissions should refer to 
File No. SR-Phlx-2003-83 and should be submitted by February 10, 2004.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\10\
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    \10\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 04-1081 Filed 1-16-04; 8:45 am]
BILLING CODE 8010-01-P