[Federal Register Volume 69, Number 149 (Wednesday, August 4, 2004)]
[Notices]
[Pages 47197-47199]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-17775]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-50106; File No. SR-PHLX-2004-40]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change and Amendment No. 1 Thereto by 
the Philadelphia Stock Exchange, Inc. To Replace the Total Shares per 
Transaction Charge With a Single Per Share Charge

July 28, 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 June 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 July 
19, 2004, the Phlx submitted Amendment No. 1 to the proposal.\3\ The 
Phlx has designated this proposal as one changing a fee imposed by the 
Phlx under 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, as amended, 
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.
    \3\ See letter from Angela Saccomandi Dunn, Counsel, Phlx, to 
Nancy J. Sanow, Assistant Director, Division of Market Regulation, 
Commission, dated July 16, 2004 and accompanying Form 19b-4 
(``Amendment No. 1''). Amendment No. 1 replaces and supercedes the 
originally filed proposed rule change.
    \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 Phlx proposes to amend its equity transaction charge to replace 
the total shares per transaction charge with a single per share charge, 
as described further below. Below is the text of the proposed rule 
change. Proposed new language is in italics; deletions are in brackets.
* * * * *
Philadelphia Stock Exchange Fee Schedule Summary of Equity Charges
SUMMARY OF EQUITY CHARGES (p 1/3)*
EQUITY TRANSACTION CHARGE


[[Page 47198]]


    Based on total shares per transaction with the exception of 
specialist trades and PACE trades.\1\
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    \1\ However, this charge applies where an order, after being 
delivered to the Exchange by the PACE system is executed by the 
specialist by way of an outbound ITS commitment, when such outbound 
ITS commitment reflects the PACE order's clearing information, but 
does not apply where a PACE trade was executed against an inbound 
ITS commitment.

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                                                            $.0035 per
                     Transaction fee                       share  [Rate
                                                            per share]
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[First 500 shares.......................................          $ 0.00
Next 2,000 shares.......................................          0.0075
Remaining shares........................................          0.005]
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    $50 maximum fee per trade side.
* * * * *

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 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 Phlx states that the purpose of the proposed rule change is to 
remain competitive and foster growth of the equity floor brokerage 
business by seeking to increase volume. The proposal seeks to replace 
the current tiered fee schedule for equity transaction charges with a 
single per share charge of $.0035, subject to a cap of $50 per trade 
side. Presently, equity transaction charges are based on total shares 
per transaction. For example, for the first 500 shares the transaction 
fee is $0, for the next 2,000 shares the transaction fee is $.0075 on a 
per share basis, and thereafter, for any remaining shares the 
transaction fee is $.005 on a per share basis. The proposal would 
increase the fee for the first 500 shares transacted and decrease the 
fee for subsequent share volume.\6\
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    \6\ The fee is charged only to members of the Phlx. Telephone 
conversation between Angela Saccomandi Dunn, Counsel, Phlx, and 
David Liu, Attorney, Division of Market Regulation, Commission, on 
July 28, 2004.
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    In addition, the current fee schedule excludes specialist trades 
and Phlx Automated Communication and Execution System (``PACE'') \7\ 
trades from the equity transaction charge.\8\ Under the proposal, these 
aforementioned exceptions would remain.
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    \7\ PACE is the Exchange's automated order entry, routing and 
execution system. See Phlx Rules 229 and 229A.
    \8\ Although it does not apply to PACE trades, the equity 
transaction charge applies where an order, after being delivered to 
the Exchange by the PACE system, is executed by the specialist by 
way of an outbound ITS commitment, when such outbound ITS commitment 
reflects the PACE order's clearing information. However, the equity 
transaction charge does not apply where a PACE trade was executed 
against an inbound ITS commitment.
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2. 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 \9\ 
in general, and furthers the objectives of Section 6(b)(4) of the Act 
\10\ in particular, in that it is an equitable allocation of reasonable 
dues, fees, and other charges among Exchange members and will allow the 
equity floor to remain competitive and encourage growth.
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    \9\ 15 U.S.C. 78f(b).
    \10\ 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 rule change has become effective pursuant to Section 
19(b)(3)(A)(ii) of the Act \11\ and Rule 19b-4(f)(2) \12\ 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 such 
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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    \11\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \12\ 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. 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-2004-40 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-2004-40. 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 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 the 
Phlx. 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-2004-40 and should be submitted on or before August 25, 2004.


[[Page 47199]]


    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\13\
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    \13\ 17 CFR 200.30-3(a)(12).

J. Lynn Taylor,
Assistant Secretary.
[FR Doc. 04-17775 Filed 8-3-04; 8:45 am]
BILLING CODE 8010-01-P