Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”) , and Rule 19b-4 thereunder, notice is hereby given that on December 29, 2003, 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 Phlx. On January 9, 2004, the Phlx submitted an amendment to the proposed rule change. The Commission is publishing this notice to solicit comments on the proposed rule change, as amended, from interested persons.
I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change
The Phlx proposes to amend its schedule of dues, fees, and charges by: (1) Permanently adopting a monthly fee of $250 for each member who derives his/her primary income from floor brokerage business conducted on the equity floor of the Exchange; (2) eliminating the equity floor brokerage assessment fee of 5 percent of net floor brokerage income, which had been waived through December 31, 2003; and (3) clarifying that the $250 monthly charge is assessed on members who derive their primary income from brokerage business conducted on the equity floor of the Exchange, as opposed to the options or foreign currency floors of the Exchange.
For purposes of this proposed rule change, floor brokerage business conducted on the Exchange includes orders that are received on the equity floor of the Phlx, even if those orders are executed on an exchange other than the Phlx. For purposes of the $250 monthly fee, “primary income” means that the member derives at least 80 percent of gross income generated from Phlx floor-based activities from his/her brokerage business conducted on the equity floor of the Exchange.
The Exchange previously suspended its equity floor brokerage assessment fee of 5 percent of net floor brokerage income through December 31, 2003 and adopted a monthly fee of $250 for each member who derives his/her primary income from equity floor brokerage business. The Exchange intends to adopt permanently the $250 monthly fee beginning on January 2004 and to eliminate the equity floor brokerage fee of 5 percent beginning on January 1, 2004.
See Securities Exchange Act Release No. 46875 (November 21, 2002), 67 FR 72014 (December 3, 2002) (SR-Phlx-2002-70). While the reference to the floor brokerage was updated on the Exchange's summary of equity charges, the additional reference on the QQQ schedule was not similarly updated. Therefore, the QQQ equity fee schedule will also be updated with the proposed changes described herein.
The text of the proposed rule change is available at the Office of the Secretary, the Phlx, and 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, 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 purpose of the proposed rule change is to attract business to the Exchange. Specifically, the Exchange believes that permanently waiving the equity floor brokerage fee of 5 percent of net floor brokerage income and implementing a modest monthly fee of $250 should encourage floor brokers to send additional order flow to the Exchange and enhance the competitiveness of the Exchange. Charging a flat $250 monthly charge would also simplify Phlx accounting procedures and billing. In addition, specifying that the $250 monthly charge would be assessed on members who derive their primary income from brokerage business conducted on the equity floor of the Exchange should help to avoid any member confusion with respect to the billing of the floor brokerage assessment.
2. Statutory 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 in general, and furthers the objectives of Section 6(b)(4) of the Act in particular, in that it is an equitable allocation of reasonable dues, fees, and other charges among Exchange members.
15 U.S.C. 78f(b)(4).
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, as amended, has become effective immediately pursuant to Section 19(b)(3)(A)(ii) of the Act and Rule 19b-4(f)(2) 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 the proposed rule change, as amended, 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.
17 CFR 240.19b-4(f)(2).
For purposes of calculating the 60-day abrogation period, the Commission considers the period to commence on January 9, 2004, the date on which the Exchange filed Amendment No. 1.
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. Persons making written submissions should file six copies thereof with the Secretary, Securities and Exchange Commission, 450 Fifth Street, NW., Washington, DC 20549-0609. Comments may also be submitted electronically at the following e-mail address: rule-comments@sec.gov. All comment letters should refer to File No. SR-Phlx-2003-83. This file number should be included on the subject line if e-mail is used. To help the Commission process and review comments more efficiently, your comments should be sent in hardcopy or by e-mail but not by both methods. 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 will also be available for inspection and copying at the principal office of the Phlx. All submissions should refer to File No. SR-Phlx-2003-83 and should be submitted by February 10, 2004.
For the Commission, by the Division of Market Regulation, pursuant to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 04-1081 Filed 1-16-04; 8:45 am]
BILLING CODE 8010-01-P