[Federal Register Volume 69, Number 225 (Tuesday, November 23, 2004)]
[Notices]
[Pages 68208-68209]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E4-3299]



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SECURITIES AND EXCHANGE COMMISSION

[Release No. 50679; File No. SR-Phlx-2004-69]


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 Amendments to the 
Summary of Index Option and FXI Options Charges Fee Schedule

November 16, 2004.
    Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ and Rule 19b-4 \2\ thereunder, notice is hereby given 
that on October 29, 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 and II below, which Items have been prepared by Phlx. On 
November 16, 2004, Phlx filed Amendment No. 1 to the proposed rule 
change.\3\ 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.
    \3\ Amendment No. 1 made clarifying and technical corrections to 
the proposed changes to the Summary of Index Option and FXI Options 
Charges fee schedule. See infra, note 4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    Phlx proposes to amend its Summary of Index Option and FXI Options 
Charges fee schedule to: (1) Increase the firm option transaction 
charge from $.15 per contract to $.20 per contract and more clearly 
identify the types of firm option transaction charges; (2) assess a 
$.40 per contract option transaction charge for customer executions 
(regardless of the premium); (3) eliminate the block transaction 
discount for customer executions; and (4) make minor amendments to the 
Exchange's Summary of Index Option and FXI Options Charges fee schedule 
to more accurately reflect current Exchange charges.
    Specifically, the Exchange will increase the current firm option 
transaction charge from $.15 per contract to $.20 per contract. The 
Exchange also proposes to separate the reference to the firm option 
transaction charge into ``firm/proprietary'' and ``firm/proprietary 
facilitation'' charges (collectively ``firm-related transaction 
charges'') in order to more clearly delineate the specific types of 
firm-related transaction charges.\4\
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    \4\ No new types of transactions are being added to the firm-
related transaction charges. In Amendment No. 1, Phlx corrected the 
proposed rule text to include a ``+'' symbol after the Firm/
Proprietary Facilitation option transaction charge to indicate that 
the associated footnote regarding a maximum fee of $50,000 relates 
to both firm/proprietary and firm/proprietary facilitation option 
transaction charges. Amendment No. 1 also made technical corrections 
to the footnote.
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    The Exchange also proposes to amend the index option transaction 
charges for customer executions. Currently, the Exchange charges an 
index option transaction charge for customer executions at two rates: 
$.20 per contract when the premium \5\ is less than $1.00, and $.40 per 
contract when the premium is $1.00 or over. The Exchange proposes to 
charge an index option transaction charge of $.40 per contract for all 
customer executions, regardless of the premium. In addition, the 
Exchange proposes to eliminate the related block transaction discounts 
of 15 percent and 25 percent for customer executions of 500 to 999 
contracts and 1000 contracts, respectively.\6\
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    \5\ The premium appears on the Exchange's Summary of Index 
Option and FXI Options Charges fee schedule as ``market value.''
    \6\ The block transaction discounts are available to Phlx 
members upon submission to the Exchange of a customer option block 
discount request form with supporting documentation within thirty 
days of the monthly billing date.
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    In addition, the Exchange proposes to make minor, technical 
amendments to its Summary of Index Option and FXI Options Charges fee 
schedule.
    The proposal would become effective for transactions settling on or 
after November 1, 2004. The text of the proposed rule change is 
available at Phlx and at 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, 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. 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 increase the index 
option transaction charges as outlined in this proposal, which should, 
in turn, generate additional revenue for the Exchange. Also, increasing 
the firm-related transaction charges as described above will make Phlx 
charges more in line with similar charges imposed by other 
exchanges.\7\ The Exchange proposes to eliminate the block transaction 
discount as this discount is seldom used by members and has not had the 
desired effect of promoting and encouraging additional customer market 
participation. In addition, the purpose of making minor, technical 
amendments to the Summary of Index Option and FXI Options Charges fee 
schedule is to more accurately describe the fees that are charged by 
the Exchange.\8\
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    \7\ See Securities Exchange Act Release No. 42675 (April 13, 
2000), 65 FR 21223 (April 20, 2000) (File No. SR-Amex-00-15), and 
Chicago Board Options Exchange, Inc. Index Options fee schedule 
dated October 1, 2004, located at www.cboe.com.
    \8\ In addition, separating the current firm option transaction 
charges into two categories of ``firm/proprietary'' and ``firm/
proprietary facilitation transaction'' fee will correspond to the 
firm-related transaction charges that appear on the Exchange's 
Summary of Equity Option Charges.
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2. Basis
    The Exchange believes the proposed rule change is consistent with 
Section 6 of the Act,\9\ in general, and with 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.
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    \9\ 15 U.S.C. 78f.
    \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 proposed rule change has become effective pursuant to 
section 19(b)(3)(A)(ii) of the Act \11\ and subparagraph (f)(2) of Rule 
19b-4 \12\ thereunder, because it establishes or changes a due, fee, or 
other charge.
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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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    At any time within 60 days of the filing of the proposed rule 
change, the Commission may summarily abrogate

[[Page 68209]]

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.\13\
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    \13\ 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 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-2004-69 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-2004-69. 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. Copies of the 
filing also will be available for inspection and copying at the 
principal office of 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-2004-69 
and should be submitted on or before December 14, 2004.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\14\
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    \14\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. E4-3299 Filed 11-22-04; 8:45 am]
BILLING CODE 8010-01-P