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Notice

Self-Regulatory Organizations; Notice of Filing and Immediate Effectiveness of Proposed Rule Change by the Philadelphia Stock Exchange, Inc. Adopting a Fee for Installing and Maintaining Tethers on the Options Trading Floor

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Start Preamble October 19, 2001.

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 August 31, 2001, the Philadelphia Stock Exchange, Inc. (“Phlx” or “Exchange”) Start Printed Page 54318filed 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. The Phlx amended the proposed rule change on October 15, 2001.[3] 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 to adopt a Tether [4] Initial Connectivity Fee of $1,100 and a Tether Monthly Service Fee of $150 for installing and thereafter maintaining tethers that allow a hardwire connection to an existing communication network (local area network) on the Exchange's options trading floor.

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 amend the Exchange's schedule of dues, fees and charges to adopt a Tether Initial Connectivity Fee of $1,100 and a Tether Monthly Service Fee of $150 for installing and thereafter maintaining tethers that allow a hardwire connection to an existing communication network (local area network) on the Exchange's options trading floor. Each tethering device will incur one initial connectivity fee, and thereafter may be transferred to another user as well as to another location on the floor without incurring any additional connectivity fee. The connectivity and monthly fees will be imposed on the users of such tethers and communication network, namely registered options traders and floor brokers (but not specialists) on the options trading floor.

The Exchange has had a wireless communication network on its options and other trading floors. Due to increases in bandwidth demands and the use of applications by traders, namely on the options floor, that are not designated to effectively operate on a shared wireless network, the Exchange has determined to augment its wireless network with hardwire access to an existing local area network that would allow users on the options trading floor to connect with communications networks of Exchange member firms. The Exchange is installing hardwire tethers at trading posts across the options trading floor and will maintain an existing communication network at considerable cost to the Exchange.[5] The Exchange believes that the proposed fees are equitable and reasonable in that they are based on actual and estimated expenses incurred in installing and maintaining the tethered connections.[6]

In the case of a newly installed tether, the initial connectivity fee commences upon installation and the monthly fee commences in the first full calendar month after installation is completed.[7] For instance, installation on September 1 would trigger a connectivity fee on September 1 and a monthly fee beginning October 1 (but not September 1).

2. Statutory Basis

The Exchange believes that is proposal to amend its schedule of dues, fees and charges is consistent with section 6(b) of the Act,\8\ in general, and furthers the objectives of section 6(b)(4),[9] in particular, in that it is an equitable allocation of reasonable fees among the Exchange's members because the members who pay the additional amount for the tethers incur the benefit of their use and access to a communication network.

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

The Exchange does not believe that the proposed rule change, as amended, 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 Exchange has designated the proposed rule change as a fee change pursuant to section 19(b)(3)(A)(ii) of the Act [10] and Rule 19b-4(f)(2) thereunder.[11] Accordingly, the proposal will take effect upon filing with the Commission. At any time within 60 days of the filing of Amendment No. 1 to the 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.

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. 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 such filing will also be available for inspection and copying it the principal office of the Phlx. All submissions should refer to the File No. Start Printed Page 54319SR-Phlx-2001-84 and should be submitted by November 16, 2001.

Start Signature

For the Commission, by the Division of Market Regulation, pursuant to delegated authority.[12]

Margaret H. McFarland,

Deputy Secretary.

End Signature End Preamble

Footnotes

3.  The Phlx submitted a new Form 19b-4, which replaces and supersedes the original filing in its entirety (“Amendment No. 1”).

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4.  A tether is a hardwire connection to an existing Exchange communication network. It would augment the current wireless network on the options floor and allow users to connect their handheld devices to the existing Exchange communication network and thereby interface with member firm communication networks.

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5.  The decision to install tethers and augment a network on a trading floor is solely within the Exchange's discretion.

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6.  The restrictions of Exchange Rule 606 and any other rules applicable to communications would apply to all communications via the tethers. The Exchange intends in the near future to propose amendments to Rule 606 and any other relevant rules to clarify their applicability to tethers.

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7.  This fee is eligible for the monthly credit of up to $1,000 to be applied against certain fees, dues and charges and other amounts owned to the Exchange by certain members. See Securities Exchange Act Release No. 44292 (May 11, 2001), 66 FR 27715 (May 18, 2001) (SR-Phlx-2001-49).

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10.  15 U.S.C. 78s(b)(3)(A)(ii).

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[FR Doc. 01-26959 Filed 10-25-01; 8:45 am]

BILLING CODE 8010-01-M