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Self-Regulatory Organizations; Notice of Filing and Immediate Effectiveness of Proposed Rule Change by the Philadelphia Stock Exchange, Inc. Relating to Changes to Its Nasdaq-100 Index Tracking Stock sm

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Start Preamble February 20, 2003.

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 January 31, 2003, the Philadelphia Stock Exchange, Inc. (“Phlx”) 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. 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 change its Nasdaq-100 Index Tracking Stock (“QQQ”)[sm] Fee Schedule [3] in two ways: (1) amending the Customer, Non-PACE [4] per-trade fee and (2) eliminating the Specialist $0.002 per-share fee.

First, in connection with the Phlx's QQQ Fee Schedule, the Phlx proposes to replace the current Customer, Non-PACE per-trade fee of $1.00 per-trade with the equity transaction charge currently in effect on the Phlx's Summary of Equity Charges. Therefore, the Customer, Non-PACE per-trade fee of $1.00 per-trade will be replaced with the following:

Transaction chargeRate per-share
First 500 shares$0.00
Next 2,000 shares0.0075
Remaining shares0.005

$50 maximum fee per-trade side.[5]

Second, the Phlx proposes to eliminate the specialist $0.002 per-share ($50.00 cap per-trade) fee.

The Phlx intends to implement the changes beginning with transactions settling on or after February 3, 2003.

The text of the proposed rule change is available at the Phlx, and at 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 Start Printed Page 10296comments 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 simplify the Phlx's fee schedule by applying the same equity transaction charge for customer non-PACE transaction charges for the QQQs that is currently in effect for equity transactions. In addition, the Phlx proposes to delete the specialist fee of $0.002 per-share to provide the specialist unit with incentives to grow its specialist activity in the QQQs by reducing its costs of doing business and providing it with additional funds to commit to trading, which should, in turn, promote liquidity.

2. Statutory Basis

The Phlx believes that its proposal to amend its schedule of dues, fees and charges is consistent with section 6(b) of the Act [6] in general, and furthers the objectives of section 6(b)(4) of the Act [7] in particular, in that it is an equitable allocation of reasonable dues, fees, and other charges among Phlx members.

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

The Phlx neither solicited nor received written comments concerning the proposal.

III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action

Because the foregoing rule change establishes or changes a due, fee, or other charge imposed by the Phlx, it has become effective pursuant to section 19(b)(3)(A) of the Act [8] and subparagraph (f)(2) of Rule 19b-4[9] thereunder. At any time within 60 days after 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 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 also will be available for inspection and copying at the principal office of the Phlx.

All submissions should refer to File No. SR-Phlx-2003-06 and should be submitted by March 25, 2003.

Start Signature

For the Commission, by the Division of Market Regulation, pursuant to delegated authority.[10]

Margaret H. McFarland,

Deputy Secretary.

End Signature End Preamble


3.  The Nasdaq-100 ®, Nasdaq-100 Index ®, Nasdaq ® The Nasdaq Stock Market ®, Nasdaq 100 Shares sm, Nasdaq-100 Trust sm, Nasdaq-100 Index Tracking Stock sm and QQQ sm are trademarks or service marks of The Nasdaq Stock Market, Inc. (Nasdaq) and have been licensed for use for certain purposes by the Philadelphia Stock Exchange pursuant to a License Agreement with Nasdaq. The Nasdaq-200 Index ® (the Index) is determined, composed, and calculated by Nasdaq without regard to the Licensee, the Nasdaq-100 Trust sm, or the beneficial owners of Nasdaq-100 Shares sm. Nasdaq has complete control and sole discretion in determining, composing or calculating the Index or in modifying in any way its method for determining, composing or calculating the Index in the future.

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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 Rules 229 and 229A.

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5.  This fee will 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 Phlx 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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[FR Doc. 03-4954 Filed 3-3-03; 8:45 am]