[Federal Register Volume 69, Number 158 (Tuesday, August 17, 2004)]
[Notices]
[Pages 51137-51138]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-18756]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-50174; File No. SR-PHLX-2004-52]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by the Philadelphia Stock 
Exchange, Inc. To Amend Its NASDAQ-100 Index Tracking Stock\SM\ Equity 
Transaction Charge To Replace the Total Shares Per Transaction Charge 
With a Single Per Share Charge

August 10, 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 July 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. 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 \3\ and Rule 19b-4(f)(2) 
thereunder,\4\ 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\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \4\ 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 NASDAQ-100 Index Tracking Stock\SM\ 
\5\ (known as QQQ\SM\) equity transaction charge \6\ to replace the 
total shares per transaction charge with a single per share charge, as 
described further below, for trades on or after August 2, 2004. Below 
is the text of the proposed rule change. Proposed new language is in 
italics; deletions are in brackets.
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    \5\ Nasdaq-100[supreg], Nasdaq-100 Index[supreg], 
Nasdaq[supreg], The Nasdaq Stock Market[supreg], Nasdaq-100 
Shares\SM\, Nasdaq-100 Trust\SM\, Nasdaq-100 Index Tracking 
Stock\SM\ and QQQ\SM\ are trademarks or service marks of The Nasdaq 
Stock Market, Inc. (Nasdaq) and have been licensed for use for 
certain purposes by the Philadelphia Stock Exchange pursuant to a 
License Agreement with Nasdaq. The Nasdaq-100 Index[supreg] (the 
Index) is determined, composed and calculated by Nasdaq without 
regard to the Licensee, the Nasdaq-100 Trust\SM\, or the beneficial 
owners of Nasdaq-100 Shares\SM\. Nasdaq has complete control and 
sole discretion in determining, comprising or calculating the Index 
or in modifying in any way its method for determining, comprising or 
calculating the Index in the future.
    \6\ The Exchange filed a proposed rule change, SR-Phlx-2004-40, 
which amends the Summary of Equity Charges portion of the fee 
schedule by replacing the total shares per transaction charge with a 
single per share charge. See Exchange Act Release No. 34-50106 (July 
28, 2004), 69 FR 47197 (August 4, 2004). The NASDAQ-100 Index 
Tracking Stock\SM\ fee schedule, which contains a duplicate tiered 
fee schedule as contained in the Summary of Equity Charges, was 
inadvertently omitted from that filing. This filing seeks to amend 
the replicated tiered fee schedule, which is displayed in the 
NASDAQ-100 Index Tracking Stock\SM\, in the same fashion as it was 
amended in the Summary of Equity Charges portion of the fee 
schedule.
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* * * * *

            NASDAQ-100 Index Tracking Stock\SM\ Fee Schedule
------------------------------------------------------------------------
 
------------------------------------------------------------------------
    Phlx Fee Schedule
 
Customer
    PACE                  ......................  none\5\
    Non-PACE
        Transaction       $.0035 per share        [Rate per Share]
         [Charge] Fee
        [First 500        ......................  $0.00
         shares
        Next 2,000        ......................  $0.0075
         shares
        Remaining shares  ......................  $0.005]
        $50 maximum fee
         per trade side.
 
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\5\ 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.

* * * * *

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,

[[Page 51138]]

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 non-PACE NASDAQ-100 Index Tracking 
Stock\SM\ equity transaction charges with a single per share charge of 
$.0035, subject to a cap of $50 per trade side.\7\ Presently, such 
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. This proposal would increase the fee for the 
first 500 shares transacted and decrease the fee for subsequent share 
volume.\8\
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    \7\ However, this fee 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. See footnote 5 of the Exchange's NASDAQ-100 Index 
Tracking Stock\SM\ Fee Schedule. PACE is the Exchange's automated 
order entry, routing and execution system. See Phlx Rules 229 and 
229A. Telephone conversation between Angela Saccomandi Dunn, 
Counsel, Phlx, and David Liu, Attorney, Division of Market 
Regulation, Commission, on August 5, 2004.
    \8\ 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 
August 5, 2004.
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    In addition, the term ``charge'' is being replaced with the term 
``fee'' for the purpose of clarity.
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-2004-52 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-2004-52. 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-2004-52 and should be submitted on or before 
September 7, 2004.

    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).

Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 04-18756 Filed 8-16-04; 8:45 am]
BILLING CODE 8010-01-P