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Self-Regulatory Organizations; Notice of Filing and Immediate Effectiveness of Proposed Rule Change by the Philadelphia Stock Exchange, Inc. To Change the Exchange's Calculation of Transaction Charges From a Value-Based System to a Share-Based System

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Start Preamble November 21, 2002.

Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 Start Printed Page 71227(“Act”),[1] and rule 19b-4 thereunder,[2] notice is hereby given that on October 24, 2002, 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 Exchange has designated this proposal as one establishing or changing a due, fee, or other charge imposed by the Phlx under section 19(b)(3)(A)(ii) of the Act,[3] which renders the proposal effective upon filing with the Commission. 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 change its current equity value transaction charge from a transaction value-based method to a share-based method. Equity transaction charges will be assessed on a sliding scale in relation to how many shares are traded per transaction, as opposed to the total value of the transaction. The proposed equity per share transaction charge will continue to exclude specialist trades and PACE trades, and will continue to be subject to a $50 maximum fee per trade side.[4] The Exchange intends to implement the equity per share transaction charge for transactions settling on or after November 1, 2002.[5]

The text of the proposed rule change is below. Proposed new language is in italics; proposed deletions are in brackets.


[Based on total value of monthly transactions with the exception of specialist trades and PACE trades.]

[Monthly transaction valueRate per $1,000]
[500mm and over0.015]

Based on total shares per transaction with the exception of specialist trades and PACE trades.

Transaction feeRate per share
First 500 shares$0.00
Next 2,000 shares0.0075
Next 7,500 shares0.005
Remaining shares0.004
$50 maximum fee per trade side.
* * * * *

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 Exchange 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 change the Phlx's calculation of transaction charges from a value-based system to a share-based system in order to simplify the Phlx's transaction fee schedule. The Exchange believes a share-based system is easier for a member organization or a member to calculate current, and predict future, costs associated with these transactions. In addition, other exchanges use a share-based system.[6]

2. Statutory Basis

The Exchange believes that the proposed rule change is consistent with section 6(b) of the Act [7] in general, and furthers the objectives of section 6(b)(4) [8] in particular, in that it provides for the equitable allocation of reasonable dues, fees and other charges among Exchange members.

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 proposed rule change has become effective pursuant to section 19(b)(3)(A)(ii) of the Act [9] and subparagraph (f)(2) of Rule 19b-4 thereunder,[10] because it involves a due, fee, or other charge. At any time within 60 days of the filing of 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 proposal 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 at the principal office of the Exchange. All submissions should refer to file number SR-Phlx-2002-64, and should be submitted by December 20, 2002.

Start Printed Page 71228

For the Commission, by the Division of Market Regulation, pursuant to delegated authority.[11]

Start Signature

Margaret H. McFarland,

Deputy Secretary.

End Signature End Preamble


3.  15 U.S.C. 78s(b)(3)(A)(ii).

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4.  PACE is the acronym for the Phlx's Automated Communication and Execution System. It is the Phlx's order routing, delivery, execution and reporting system for its equity trading floor. See Phlx Rule 229.

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5.  This fee will continue to be eligible for the monthly credit of up to $1,000 to be applied against certain fees, dues and charges and other amounts owed to the Exchange by certain members. See Securities Exchange Act Release No. 44292 (May 11, 2001), 66 FR 27715 (May 18, 2001)(SR-Phlx-2002-32).

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6.  See Securities Exchange Act Release Nos. 36753 (January 22, 1996), 61 FR 2851 (January 29, 1996)(SR-CHX-95-30); and 43664 (December 4, 2000), 65 FR 77952 (December 13, 2000)(SR-NYSE-2000-50).

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9.  15 U.S.C. 78s(b)(3)(A)(ii).

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[FR Doc. 02-30196 Filed 11-27-02; 8:45 am]