[Federal Register Volume 70, Number 31 (Wednesday, February 16, 2005)]
[Notices]
[Pages 7995-7996]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E5-648]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-51186; File No. SR-SCCP-2004-05]


Self-Regulatory Organizations; Stock Clearing Corporation of 
Philadelphia; Notice of Filing and Immediate Effectiveness of a 
Proposed Rule Change Relating to Limitation of the Net Inbound ITS 
Credit to Certain SCCP and Phlx Fees and Transaction-Related Charges

February 10, 2005.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ notice is hereby given that on December 30, 2004, the 
Stock Clearing Corporation of Philadelphia (``SCCP'') 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 primarily by SCCP. The Commission is publishing this 
notice to solicit comments on the proposed rule change from interested 
persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    SCCP will amend SCCP's fee schedule to indicate that the Net 
Inbound ITS Credit (``ITS Credit'') \2\ established in the Philadelphia 
Stock Exchange's (``Phlx'') Summary of Equity Charges is limited to 
certain SCCP and Phlx transaction-related charges.
---------------------------------------------------------------------------

    \2\ The ITS Credit is a credit that is calculated on a monthly 
basis consisting of: $0.30 per 100 shares on the excess, if any, of 
the number of inbound ITS shares executed compared to the number of 
outbound ITS shares sent and executed. Securities Exchange Act 
Release No. 45388 (Feb. 2, 2002), 67 FR 6310 (Feb. 11, 2002) [SR-
Phlx-2001-121].
---------------------------------------------------------------------------

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, SCCP 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. SCCP has prepared summaries, set forth in sections A, B, 
and C below, of the most significant aspects of such statements.\3\
---------------------------------------------------------------------------

    \3\ The Commission has modified the text of the summaries 
prepared by SCCP.

---------------------------------------------------------------------------

[[Page 7996]]

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    Under the rule change, the ITS Credit will be limited to the amount 
of SCCP's Trade Recording Fees, Value Fees, ETF Fees, and Transaction 
Charges (Remote Specialist Only) plus Phlx Permit Fees and Phlx 
Outbound ITS Fees \4\ that are incurred in the same month that the 
credit is earned. On a monthly basis, ITS Credits in excess of the 
amount charged for all of these fees may not be used for any other 
purpose and may not be carried forward.\5\ The proposed amendment was 
effective for transactions settling on or after January 3, 2005.
---------------------------------------------------------------------------

    \4\ Phlx has submitted a companion proposed rule change to the 
Commission that adds reference to the ITS Credit in the Summary of 
Equity Charges in Phlx's schedule of fees. [SR-Phlx-2004-95.]
    \5\ For example, if an equity specialist had a monthly ITS 
Credit of $30,000 and monthly Phlx and SCCP charges that were 
eligible to be reduced by the ITS Credit of $5,000 and $20,000, 
respectively, the equity specialist would receive a credit of 
$25,000, and the unused credit amount of $5,000 would not be used 
for any other purpose.
---------------------------------------------------------------------------

    Also under the rule change, SCCP will rename the fees related to 
certain products \6\ as ``ETF Fees'' for ease of reference.
---------------------------------------------------------------------------

    \6\ I.e. Nasdaq 100 Trust, Series 1 (also known as QQQ), 
Standard & Poor's Depositary Receipts (also known as SPDRs), and 
Diamonds Exchange Traded Funds (also known as Diamonds).
---------------------------------------------------------------------------

    The purpose of the proposed rule change is to encourage ITS trades 
by allowing equity specialists to get an ITS Credit but to limit the 
credit in a reasonable fashion so as not to financially burden Phlx, 
particularly in light of the change in Phlx's equity business. While 
the ITS Fee and ITS Credit methodology was practical when instituted in 
2002,\7\ Phlx's equity business has changed so that the ITS Credit is 
now substantially greater than the ITS Fee. As a result, Phlx 
oftentimes has to credit substantial amounts to equity specialists. 
Phlx is therefore limiting the amount of the ITS Credit as described 
above. The fees to which the ITS Credit is now limited reflect the most 
fundamental fees applicable to equity specialists.
---------------------------------------------------------------------------

    \7\ Securities Exchange Act No. 45388 (Feb. 2, 2002), 67 FR 6310 
(Feb. 11, 2002) [SR-Phlx-2001-121].
---------------------------------------------------------------------------

    SCCP believes that the proposed rule change is consistent with 
Section 17A(b)(3)(D) of the Act \8\ which requires that the rules of a 
registered clearing agency provide for the equitable allocation of 
reasonable dues, fees, and other charges among its participants.
---------------------------------------------------------------------------

    \8\ 15 U.S.C. 78q-1(b)(3)(D).
---------------------------------------------------------------------------

B. Self-Regulatory Organization's Statement on Burden on Competition

    SCCP 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

    SCCP did not solicit or receive any comments regarding the proposed 
rule change.

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

    The foregoing rule change took effect upon filing with the 
Commission pursuant to Section 19(b)(3)(A)(ii) of the Act \9\ and Rule 
19b-4(f)(2) \10\ thereunder because the proposed rule change changes a 
due, fee, or other charge imposed by SCCP. At any time within sixty 
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.
---------------------------------------------------------------------------

    \9\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \10\ 17 CFR 240.19b-4(f)(2).
---------------------------------------------------------------------------

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-SCCP-2004-05 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-SCCP-2004-05. 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 SCCP's 
principal office and on SCCP's Web site at http://www.phlx.com/SCCP/memindex_sccpproposals.html. 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-SCCP-2004-05 and should be submitted on or before March 
9, 2005.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\11\
---------------------------------------------------------------------------

    \11\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Margaret H. McFarland,
Deputy Secretary.
 [FR Doc. E5-648 Filed 2-15-05; 8:45 am]
BILLING CODE 8010-01-P