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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 Amend Its Schedule of Dues, Fees and Charges To Increase the Equity Floor Brokerage Assessment

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Start Preamble January 3, 2002.

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 December 20, 2001, 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. 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 increase the equity floor brokerage assessment from 1.25% of net floor brokerage income to 5%. The increased equity floor brokerage assessment fee will be implemented on transactions settling on or after January 2, 2002. Previously, the Exchange charged a 5% equity floor brokerage assessment fee but offered equity specialist units that also conducted floor brokerage business on the Exchange a discounted rate on the assessment at 1.25%. That discounted rate was subsequently extended to all equity floor brokerage.[3]

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 Exchange 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 the Statutory Basis for, the Proposed Rule Change

(1) Purpose

Currently, the Exchange assesses a monthly fee on the amount of money a floor broker bills to its customers each month for floor brokerage services with respect to equity securities. The current rate is 1.25% of net floor brokerage income and has been in effect for over four years. Given the costs of operating the Exchange's equities trading floor, the Exchange believes that it is now necessary to increase the equity floor brokerage assessment fee to 5%. The Exchange notes that prior to reducing the equity floor brokerage assessment fee to 1.25% in November 1997,[4] the rate was 5% for floor brokerage units only and specialist units that conducted a floor brokerage business were charged a discounted rate of 1.25%. Furthermore, the Exchange notes that the increased rate of 5% is the same rate that is currently charged on equity and index options floor brokerage.

(2) Statutory Basis

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

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

The Phlx 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 rule change, which establishes or changes a due, fee or other charge imposed by the Exchange, has become effective pursuant to section 19(b)(3)(A) [7] of the Act and subparagraph (f)(2) of Rule 19b-4 thereunder.[8] 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 appropriate in the public interest, for the protection of investors, or otherwise in the 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 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 Start Printed Page 1389those 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 at the principal office of the Phlx. All submissions should refer to File No. SR-Phlx-2001-116 and should be submitted by January 31, 2002.

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.  See Securities Exchange Act Release No. 39325 (November 13, 1997), 62 FR 62395 (November 21, 1997).

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[FR Doc. 02-598 Filed 1-9-02; 8:45 am]

BILLING CODE 8010-01-M