[Federal Register: June 2, 2004 (Volume 69, Number 106)]
[Notices]
[Page 31150-31151]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr02jn04-96]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-49770; File No. SR-Phlx-2004-31]
Self-Regulatory Organizations; Notice of Filing and Immediate
Effectiveness of Proposed Rule Change and Amendment No. 1 Thereto by
the Philadelphia Stock Exchange, Inc. Relating to a Temporary Waiver of
Equity Option and Index Option Specialist Transaction Fees and ROT
Comparison Fees for New and Recent Options Listings
May 25, 2004.
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 April 30, 2004, 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. On May
21, 2004, the Exchange submitted Amendment No. 1 to the proposal.\3\
The proposed rule change, as amended, has been filed by the Exchange as
establishing or changing a due, fee, or other charge pursuant to
Section 19(b)(3)(A)(ii) of the Act \4\ and Rule 19b-4(f)(2)
thereunder,\5\ which renders the proposal effective upon filing with
the Commission. The Commission is publishing this notice to solicit
comments on the proposed rule change, as amended, from interested
persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ See letter from Cynthia K. Hoekstra, Counsel, Phlx, to Nancy
J. Sanow, Assistant Director, Division of Market Regulation,
Commission, dated May 20, 2004 (``Amendment No. 1''). In Amendment
No. 1, the Exchange revised the filing to add language regarding the
temporary fee waiver to the Exchange's Specialist Unit Fixed Monthly
Fee Schedule and to make other non-substantive changes to the
filing.
\4\ 15 U.S.C. 78s(b)(3)(A)(ii).
\5\ 17 CFR 240.19b-4(f)(2).
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to amend its schedule of dues, fees and
charges to waive, for options other than those with a license fee, (1)
specialist equity option and index option transaction charges \6\ and
Registered Options Trader (``ROT'') equity option and index option
comparison charges \7\ and (2) the amount of the applicable increase in
the specialist unit fixed monthly fee (``fixed monthly fee''),\8\ for
all equity options and index options that begin trading on the Exchange
between January 1, 2004 and June 30, 2004. The waiver of fees as
described in this proposal is scheduled to become effective for
transactions settling on or after May 1, 2004 through August 31,
2004.\9\ The text of the proposed rule change is available at the
Exchange and at the Commission.
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\6\ Currently, specialist equity option transaction charges are
$0.21 per contract and specialist index option transaction charges
are $0.24 per contract.
\7\ Currently, ROT equity option and index option comparison
charges are $0.03 per contract.
\8\ A specialist unit may elect to pay a fixed monthly fee in
lieu of paying fees currently in effect for equity option and index
option transaction charges and equity option specialist deficit
(shortfall) fees. Currently, for specialist units who have elected
to pay a fixed monthly fee and who obtain an equity option or index
option book after a specified time period (either September 1, 2003
or March 1, 2004) as a result of a new Exchange listing, the
methodology used to calculate the fixed monthly fee for the newly
listed Exchange equity option or index option is the average of the
two previous months' national volume multiplied by 12% with that
product multiplied by 21%, which is then multiplied by the
specialist unit's current transaction charge of $0.21. If an equity
option or index option does not have a complete two months' volume,
the then-current transaction charge is used until that option trades
for two full calendar months nationally, after which the above
methodology is applied. The fixed monthly fee is in effect through
August 31, 2004. See Securities Exchange Act Release No. 49467
(March 24, 2004), 69 FR 17017 (March 31, 2004) (File No. SR-Phlx-
2004-17). Therefore, pursuant to this proposal, if a specialist unit
is currently paying a fixed monthly fee of $100,000 and as a result
of a new Exchange listing would pay an additional fixed monthly fee
of $20,000 per month as a result of the above-referenced
methodology, the fee of $20,000 would be waived from May 1, 2004
through August 31, 2004 if the equity option or index option begins
trading on the Exchange between January 1, 2004 and June 30, 2004.
\9\ The fee schedule will note that the fees described in this
proposal will be waived from May 1, 2004 through August 31, 2004.
The Exchange will delete the reference to this limited waiver from
its fee schedule after the specified time period has expired,
pursuant to this proposed rule change.
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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.
[[Page 31151]]
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 create a financial
incentive for equity option and index option specialists and ROTs to
request to list and/or trade equity options and index options currently
not listed on the Exchange or recently listed on the Exchange. The
Exchange believes that this financial incentive may provide Phlx with
the opportunity to increase the number of equity options and index
options listed on the Exchange and increase its market share, which
should, in turn, generate additional revenue for the Exchange.
2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act \10\ in general, and furthers the objectives of Section
6(b)(4) of the Act \11\ in particular, in that it is an equitable
allocation of reasonable dues, fees, and other charges among Exchange
members.
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\10\ 15 U.S.C. 78f(b).
\11\ 15 U.S.C. 78f(b)(4).
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B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition not necessary or appropriate in
furtherance of the purposes of the Act.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
Written comments were neither solicited nor received with respect
to the proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The foregoing rule change has become effective upon filing pursuant
to Section 19(b)(3)(A)(ii) of the Act,\12\ and Rule 19b-4(f)(2)
thereunder,\13\ because it changes a fee imposed by the Exchange. 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.\14\
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\12\ 15 U.S.C. 78s(b)(3)(A)(ii).
\13\ 17 CFR 240.19b-4(f)(2).
\14\ For purposes of calculating the 60-day abrogation period,
the Commission considers the period to have begun on May 21, 2004,
the date on which the Exchange submitted Amendment No. 1. See 15
U.S.C. 78s(b)(3)(C).
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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. Comments may be
submitted by any of the following methods:
Electronic Comments
Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml.
); or Send an e-mail to rule-comments@sec.gov. Please include
File Number SR-Phlx-2004-31 on the subject line.
Paper Comments
Send paper comments in triplicate to Jonathan G. Katz,
Secretary, Securities and Exchange Commission, 450 Fifth Street, NW.,
Washington, DC 20549-0609.
All submissions should refer to File Number SR-Phlx-2004-31. This
file number should be included on the subject line if e-mail is used.
To help the Commission process and review your comments more
efficiently, please use only one method. The Commission will post all
comments on the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml
). 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, 450 Fifth
Street, NW., Washington, DC 20549. Copies of such filing also will be
available for inspection and copying at the principal office of the
Exchange. All comments received will be posted without change; the
Commission does not edit personal identifying information from
submissions. You should submit only information that you wish to make
available publicly. All submissions should refer to File Number SR-
Phlx-2004-31 and should be submitted on or before June 23, 2004.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\15\
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\15\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 04-12368 Filed 6-1-04; 8:45 am]
BILLING CODE 8010-01-P