[Federal Register Volume 69, Number 106 (Wednesday, June 2, 2004)]
[Notices]
[Pages 31150-31151]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-12368]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-49770; File No. SR-Phlx-2004-31]


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 a Temporary Waiver of 
Equity Option and Index Option Specialist Transaction Fees and ROT 
Comparison Fees for New and Recent Options Listings

May 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 April 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 Items have been prepared by the Exchange. On May 
21, 2004, the Exchange submitted Amendment No. 1 to the proposal.\3\ 
The proposed rule change, as amended, has been filed by the Exchange as 
establishing or changing a due, fee, or other charge pursuant to 
Section 19(b)(3)(A)(ii) of the Act \4\ and Rule 19b-4(f)(2) 
thereunder,\5\ which renders the proposal effective upon filing with 
the Commission. 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.
    \3\ See letter from Cynthia K. Hoekstra, Counsel, Phlx, to Nancy 
J. Sanow, Assistant Director, Division of Market Regulation, 
Commission, dated May 20, 2004 (``Amendment No. 1''). In Amendment 
No. 1, the Exchange revised the filing to add language regarding the 
temporary fee waiver to the Exchange's Specialist Unit Fixed Monthly 
Fee Schedule and to make other non-substantive changes to the 
filing.
    \4\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \5\ 17 CFR 240.19b-4(f)(2).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend its schedule of dues, fees and 
charges to waive, for options other than those with a license fee, (1) 
specialist equity option and index option transaction charges \6\ and 
Registered Options Trader (``ROT'') equity option and index option 
comparison charges \7\ and (2) the amount of the applicable increase in 
the specialist unit fixed monthly fee (``fixed monthly fee''),\8\ for 
all equity options and index options that begin trading on the Exchange 
between January 1, 2004 and June 30, 2004. The waiver of fees as 
described in this proposal is scheduled to become effective for 
transactions settling on or after May 1, 2004 through August 31, 
2004.\9\ The text of the proposed rule change is available at the 
Exchange and at the Commission.
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    \6\ Currently, specialist equity option transaction charges are 
$0.21 per contract and specialist index option transaction charges 
are $0.24 per contract.
    \7\ Currently, ROT equity option and index option comparison 
charges are $0.03 per contract.
    \8\ A specialist unit may elect to pay a fixed monthly fee in 
lieu of paying fees currently in effect for equity option and index 
option transaction charges and equity option specialist deficit 
(shortfall) fees. Currently, for specialist units who have elected 
to pay a fixed monthly fee and who obtain an equity option or index 
option book after a specified time period (either September 1, 2003 
or March 1, 2004) as a result of a new Exchange listing, the 
methodology used to calculate the fixed monthly fee for the newly 
listed Exchange equity option or index option is the average of the 
two previous months' national volume multiplied by 12% with that 
product multiplied by 21%, which is then multiplied by the 
specialist unit's current transaction charge of $0.21. If an equity 
option or index option does not have a complete two months' volume, 
the then-current transaction charge is used until that option trades 
for two full calendar months nationally, after which the above 
methodology is applied. The fixed monthly fee is in effect through 
August 31, 2004. See Securities Exchange Act Release No. 49467 
(March 24, 2004), 69 FR 17017 (March 31, 2004) (File No. SR-Phlx-
2004-17). Therefore, pursuant to this proposal, if a specialist unit 
is currently paying a fixed monthly fee of $100,000 and as a result 
of a new Exchange listing would pay an additional fixed monthly fee 
of $20,000 per month as a result of the above-referenced 
methodology, the fee of $20,000 would be waived from May 1, 2004 
through August 31, 2004 if the equity option or index option begins 
trading on the Exchange between January 1, 2004 and June 30, 2004.
    \9\ The fee schedule will note that the fees described in this 
proposal will be waived from May 1, 2004 through August 31, 2004. 
The Exchange will delete the reference to this limited waiver from 
its fee schedule after the specified time period has expired, 
pursuant to this proposed rule change.
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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, the Exchange 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. The Exchange has prepared summaries, set forth in 
Sections A, B, and C below, of the most significant aspects of such 
statements.

[[Page 31151]]

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 create a financial 
incentive for equity option and index option specialists and ROTs to 
request to list and/or trade equity options and index options currently 
not listed on the Exchange or recently listed on the Exchange. The 
Exchange believes that this financial incentive may provide Phlx with 
the opportunity to increase the number of equity options and index 
options listed on the Exchange and increase its market share, which 
should, in turn, generate additional revenue for the Exchange.
2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act \10\ in general, and furthers the objectives of Section 
6(b)(4) of the Act \11\ in particular, in that it is an equitable 
allocation of reasonable dues, fees, and other charges among Exchange 
members.
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    \10\ 15 U.S.C. 78f(b).
    \11\ 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 not necessary or appropriate in 
furtherance of the purposes of the Act.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    Written comments were neither solicited nor received with respect 
to the proposed rule change.

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

    The foregoing rule change has become effective upon filing pursuant 
to Section 19(b)(3)(A)(ii) of the Act,\12\ and Rule 19b-4(f)(2) 
thereunder,\13\ because it changes a fee imposed by the Exchange. 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.\14\
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    \12\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \13\ 17 CFR 240.19b-4(f)(2).
    \14\ For purposes of calculating the 60-day abrogation period, 
the Commission considers the period to have begun on May 21, 2004, 
the date on which the Exchange submitted Amendment No. 1. See 15 
U.S.C. 78s(b)(3)(C).
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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. Comments may be 
submitted by any of the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an e-mail to [email protected]. Please include 
File Number SR-Phlx-2004-31 on the subject line.

Paper Comments

     Send paper comments in triplicate to Jonathan G. Katz, 
Secretary, Securities and Exchange Commission, 450 Fifth Street, NW., 
Washington, DC 20549-0609.
    All submissions should refer to File Number SR-Phlx-2004-31. This 
file number should be included on the subject line if e-mail is used. 
To help the Commission process and review your comments more 
efficiently, please use only one method. The Commission will post all 
comments on the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). 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, 450 Fifth 
Street, NW., Washington, DC 20549. Copies of such filing also will be 
available for inspection and copying at the principal office of the 
Exchange. All comments received will be posted without change; the 
Commission does not edit personal identifying information from 
submissions. You should submit only information that you wish to make 
available publicly. All submissions should refer to File Number SR-
Phlx-2004-31 and should be submitted on or before June 23, 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. 04-12368 Filed 6-1-04; 8:45 am]
BILLING CODE 8010-01-P