[Federal Register Volume 69, Number 42 (Wednesday, March 3, 2004)]
[Notices]
[Pages 10091-10094]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-4718]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-49320; File No. SR-Phlx-2004-09]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by the Philadelphia Stock 
Exchange, Inc. Relating to Permit Fees

February 25, 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 January 30, 2004, 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 the Exchange has prepared. 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 adopt a new category of permit holders for billing purposes to 
address possible situations where permit holders would not fall under 
one of the two existing permit fee categories.
    The Exchange recently adopted the following permit fees, which are 
assessed based on how each permit is used: \3\
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    \3\ See Securities Exchange Act Release No. 49157 (January 30, 
2004), 69 FR 5883 (February 6, 2004) (SR-Phlx-2004-02).

[[Page 10092]]



Order Flow Provider Permit Fee: \4\
    a. Permits used only to submit    $200 per month
     orders to the equity, foreign
     currency options or options
     trading floor (one floor only).
    b. Permits used only to submit    $300 per month
     orders to more than one trading
     floor.
Floor Broker, Specialist or ROT (on
 any trading floor) or Off-Floor
 Trader Permit Fee
    a. First permit.................  $1,200 per month
    b. Additional permits for         $1,000 per month
     members in the same
     organization.
 
\4\ This fee applies to a permit held by a permit holder who does not
  have physical access to the Exchange's trading floor, is not
  registered as a Floor Broker, Specialist or Registered Options Trader
  (``ROT'') (on any trading floor) or Off-Floor Trader, and whose member
  organization submits orders to the Exchange. See Phlx Rule 620(a).

    Any member who qualifies a member organization in more than one 
category pays the higher of the applicable fees for such permit.\5\
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    \5\ For example, if a member organization with only one permit 
was an order flow provider and the permit holder associated with the 
member organization then registered as a floor broker on the 
Exchange for that or another member organization, that permit would 
be subject to a permit fee of $1,200 (the higher of $200 and $1,200, 
but not both fees).
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    In some instances, there may be permit holders in the same 
organization, other than the permit holder who qualifies the member 
organization, who either: (1) are not Floor Brokers, Specialists or 
ROTs (on any trading floor) or who are not Off-Floor Traders; or (2) 
are not associated with a member organization that meets the definition 
of an order flow provider. In those cases, the permit holders may be 
designated as ``excess'' permit holders. This designation would 
therefore create a third category of permit holders who would be 
assessed $200 for each ``excess permit'' that is not specifically 
designated for use in any of the two previously established categories.
    The highest applicable permit fee will be assessed each month. 
Therefore, in the same month, if one was a floor broker and then became 
a clerk (and therefore, an ``excess'' permit holder, if one kept his or 
her permit) for the same member organization, such person would be 
charged the higher of the possible applicable fees.
    The Exchange intends to implement the proposal as described herein 
effective February 2, 2004.
    The text of the proposed rule change is below. Proposed new 
language is italicized.
* * * * *

Appendix A

Order Flow Provider Permit Fee
    a. Permits used only to submit       $200.00 per month
     orders to the equity, foreign
     currency options, or options
     trading floor (one floor only).
    b. Permits used only to submit       $300.00 per month
     orders to more than one trading
     floor.
Floor Broker, Specialist, or ROT (on
 any trading floor) or Off-Floor Trader
 Permit Fee
    a. First Permit....................  $1,200.00 per month
    b. Additional permits for members    $1,000.00 per month
     in the same organization.
Excess Permit Holders..................  $200.00 per month
Foreign Currency User Fee..............  $1,200.00 monthly
Application Fee........................  $350.00
Initiation Fee \6\.....................  $1,500.00
Transfer Fee for FCO Participant.......  $500.00
Trading Post/Booth.....................  $250.00 monthly
Trading Post with Kiosk................  $375.00 monthly
Kiosk Construction Fee (when requested   Pass-through cost
 by specialist).
Controller Space.......................  $250.00 monthly
Floor Facility Fees....................  $125.00 monthly
Shelf Space on Equity Option Trading     $125.00 monthly
 Floor.
Direct Wire to the Floor...............  $20.00 monthly
Telephone System Line Extensions.......  $22.50 monthly/per extension
Wireless Telephone System..............  $100.00 monthly
Tether Initial Connectivity Fee........  $1,100.00 per initial
                                          connection
Tether Monthly Service Fee.............  $150.00 monthly
Execution Services/Communication Charge  $200.00 monthly
Stock Execution Machine Registration     $300.00
 Fee (Equity Floor).
Equity, Option, or FCO Transmission      $750.00 monthly
 Charge.
FCO Pricing Tape.......................  $600.00 monthly
PHLX CCH Guide.........................  $200.00 annually \7\
Option Report Service
    (New York).........................  $600.00 monthly
    (Chicago)..........................  $800.00 monthly
Quotron Equipment......................  $225.00 monthly
Instinet, Reuters Equipment............  cost passed through
Examination Fee........................  $2,000.00 monthly \8\ or pass-
                                          through of another SRO's fees

[[Page 10093]]

 
Review/Process Subordinated Loans......  $25.00
Registered Representative Registration:
 \9\
    Initial............................  $55.00
    Renewal............................  $55.00 annually
    Transfer...........................  $55.00
    Termination........................  $30.00
Trading Floor Personnel Registration     $25.00 monthly
 Fee \10\.
Option Mailgram Service................  $117.00 monthly
Off-Floor Trader Initial Registration    $100.00
 Fee.
Off-Floor Trader Annual Fee............  $350.00
Computer Equipment Services,
    Repairs or Replacements............  $100.00 per service call and
                                          $75.00 per hour (Two hour
                                          minimum)
    Computer Relocation Requests.......  $100.00 per service call and
                                          $75.00 per person, per hour
                                          (Two hour minimum)
Remote Specialist System Fee*..........  $250.00 per month per
                                          workstation
Remote Specialist Security Routing Fee.  $250.00 per month per
                                          specialist
Remote Specialist Telecommunications
Installation Fee.......................  Pass-through cost
Remote Specialist Telecommunications
 Fee
          No. of Workstations*                    Monthly Charge
    2..................................  $2,800.00
    3..................................  $3,600.00
    4..................................  $4,000.00
    5..................................  $4,700.00
    6..................................  $5,100.00
    7..................................  $5,875.00
    8..................................  $6,275.00
    9..................................  $7,535.00
    10.................................  $7,935.00
    11.................................  $8,335.00
    12.................................  $8,735.00
Remote Specialist Equipment              $500.00 per remote facility
 Installation Fee.
Remote Specialist Equipment Rental Fee*  $355.00 per month for the first
                                          two workstations at a single
                                          site; $144.00 per month for
                                          each workstation in excess of
                                          two at such site
 
* Payment for a minimum of two remote workstations will be required for
  each remote location.
\6\ This fee is imposed on a member upon election, on a non-member FCO
  participant upon the purchase of an FCO participation, and on persons
  or entities registering as approved lessors.
\7\ PHLX Guides will be provided to new members/member organizations
  without charge but there will be a $200/year charge for renewals.
  Alternatively, members/member organizations can get access to the PHLX
  Guide at no cost through the internet.
\8\ This fee is applicable to member/participant organizations for which
  the PHLX is the DEA. The following organizations are exempt: (1)
  inactive organizations; (2) organizations operating from the PHLX
  trading floor or as remote specialists which have demonstrated that at
  least 25% of their income as reflected on the most recently submitted
  FOCUS Report was derived from floor activities or remote specialist
  activities; (3) organizations for any month where they incur
  transaction or clearing fees charged directly by the Exchange or by
  its registered clearing subsidiary, provided that the fees exceed the
  examinations fee for that month; and (4) organizations affiliated with
  an organization exempt from this fee due to the second or third
  category. Affiliation includes an organization that is a wholly owned
  subsidiary of or controlled by or under the common control with an
  exempt member or participant organization. An inactive organization is
  one which had no securities transaction revenue, as determined by semi-
  annual FOCUS reports, as long as the organization continues to have no
  such revenue each month.
\9\ For the purposes of these fees, the registered representative
  categories include registered options principals, general securities
  representatives, general securities sales supervisors and United
  Kingdom limited general securities registered representatives and
  shall not apply to ``off-floor'' traders, as defined in Phlx Rule
  604(e).
\10\ This fee is imposed on member/participant organizations for
  individuals who are employed by such member/participant organizations
  and who work on the Exchange's trading floor, such as clerks, interns,
  stock execution clerks and other associated persons, but who are not
  registered as members or participants.

* * * * *

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 Exchange included statements 
concerning the purpose of and basis for the proposed rule change and 
discussed any comments it had 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 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 clarify the 
application of the permit fee schedule currently in effect to address, 
in advance, instances when a person who is neither a Floor Broker, 
Specialist, ROT (on any trading

[[Page 10094]]

floor) nor Off-Floor Trader is the permit holder for a member 
organization who is also not an order flow provider. Creating a 
category to cover these permit holders who do not currently fall within 
an existing category should help to minimize member confusion in 
connection with the billing of these permit holders and to ensure that 
each permit is subject to a permit fee.
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 \11\ 
in general, and furthers the objectives of section 6(b)(4) of the Act 
\12\ in particular, in that it is an equitable allocation of reasonable 
dues, fees, and other charges among Exchange members.
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    \11\ 15 U.S.C. 78f(b).
    \12\ 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 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 with 
respect to the proposed rule change.

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 \13\ and Rule 
19b-4(f)(2)\14\ 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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    \13\ 15 U.S.C. 78(s)(b)(3)(A)(ii).
    \14\ 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-Phlx-2004-09. 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, 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 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 number SR-Phlx-2004-09 and should be 
submitted by March 24, 2004.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\15\
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    \15\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 04-4718 Filed 3-2-04; 8:45 am]
BILLING CODE 8010-01-P