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Notice

Self-Regulatory Organizations; Notice of Filing and Immediate Effectiveness of Proposed Rule Change by the Philadelphia Stock Exchange, Inc. To Adopt a New Transaction Fee of $0.20 Per Trade for Specialists Trading on the Philadelphia Stock Exchange Automated Communication System

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Start Preamble May 19, 2000.

Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”)[1] and Rule 19b 4 thereunder,[2] notice hereby is given that on May 8, 2000, 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.[3] The Commission is publishing this notice to solicit comments on the proposed rule change 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 to initiate a transaction fee of $0.20 per trade for equity specialists using the PACE System. The proposed fee would be effective on June 1, 2000. The following is the text of the proposed addition to the Phlx fee schedule:

“EQUITY FLOOR SPECIALIST TRANSACTION FEE $.20 per trade for each trade conducted on PACE”

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 regarding 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 proposed rule change would amend the Exchange's fee schedule to include a transaction fee of $0.20 per trade for those specialists trading through the PACE system on the equity floor of the Exchange. PACE is the Exchange's automated order entry, routing, and execution system. The purpose of the fee is to generate revenues for the Exchange that would strengthen its overall financial and competitive posture. For example, the Exchange may continue to incur costs respecting PACE system development, such as decimalization efforts and other planned improvements. Of course, the Phlx is seeking to raise revenues for overall Exchange use. The Exchange believes that the fee is both reasonable and equitable because Phlx specialists are not currently charged any Phlx fee respecting PACE trades.

2. Basis

The Exchange believes that the proposed rule change is consistent with Section 6(b) of the Act [4] in general and Section 6(b)(4) of the Act [5] in particular in that it is intended to provide for the equitable allocation of reasonable dues, fees, and other charges among its members and other persons using its facilities.[6]

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

The Phlx does not believe that the proposed rule change would 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 establishes or changes a due, fee, or other charge imposed by the Exchange and, therefore, has become effective pursuant to Section 19(B)(3)(A)(ii) of the Act [7] and Rule 19b-4(f)(2) [8] thereunder. The Exchange intends to implement the fee effective June 1, 2000. 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 Start Printed Page 34245appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purpose of the Act.

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. Persons making written submissions should file six copies thereof with the Secretary, Securities and Exchange Commission, 450 Fifth Street, NW., Washington, DC 20549-0609. 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 at the Commission's Public Reference Room. Copies of such filing will also be available for inspection and copying at the principal office of the Exchange. All submissions should refer to File No. SR-Phlx-00-42 and should be submitted by June 16, 2000.

Start Signature

For the Commission, by the Division of Market Regulation, pursuant to delegated authority.[9]

Margaret H. McFarland,

Deputy Secretary.

End Signature End Preamble

Footnotes

3. The current proposal replaces File No. SR-Phlx-00-36, which the Phlx has withdrawn. See Letter from John Kenney, Jr., Counsel, Phlx, to Nancy Sanow, Assistant Director, Division of Market Regulation, Commission, dated May 5, 2000. In file No. SR-Phlx-00-36, the Phlx proposed to establish a monthly transaction fee of $0.20 per $1000 of value traded for equity specialists' trades transacted through the Philadelphia Stock Exchange Automated Communication and Execution (“PACE”) System. According to the Phlx, the Exchange inadvertently filed File No. SR-Phlx-00-36 with the Commission. Telephone conversation between John Kenney, Jr., Counsel, Phlx, and Michael Gaw, Attorney, Division of Market Regulation, Commission, on May 16, 2000 (“May 16 Conversation”)

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6.  The Phlx represents that the proposed fees would be charged exclusively to members and not to public customers. See May 16 Conversion, supra note 3. The Commission notes that this proposed rule change is, therefore, properly filed under Section 19(b)(3)(A)(ii) of the Act. 15 U.S.C. 78s(b)(3)(A)(ii).

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7.  15 U.S.C. 78s(b)(3)(A)(ii).

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[FR Doc. 00-13258 Filed 5-25-00; 8:45 am]

BILLING CODE 8010-01-M