[Federal Register: October 28, 2003 (Volume 68, Number 208)]
[Notices]
[Page 61545-61546]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr28oc03-111]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-48673; File No. SR-Phlx-2003-69]
Self-Regulatory Organizations; Notice of Filing and Immediate
Effectiveness of Proposed Rule Change by the Philadelphia Stock
Exchange, Inc. To Temporarily Waive Membership Transfer Fees
October 21, 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 October 2, 2003, 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 the Exchange has prepared. The Commission is
publishing this notice to solicit comments on the proposed rule change
from interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
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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 the following temporary actions respecting fees that would
ordinarily be imposed on transfers of memberships: \3\ (1) Waive the
transfer fee of $500 \4\ in connection with memberships that are
transferred from a member who holds legal title to more than one
regular membership \5\ to an existing member or new member; (2) waive
the application fee of $350 \6\ in connection with the transfer of a
membership from a member who holds legal title to more than one regular
membership to a new member; \7\ (3) refund the initiation fee of $1,500
\8\ incurred in connection with the transfer of a membership from a
member who holds legal title to more than one regular membership to a
new member, when such transfer occurred during the time period from
October 1, 2003 until the record date for the Special Member
Meeting;\9\ and (4) waive the transfer fee of $500 in connection with
transfers of memberships back to the prior legal title holder (who held
legal title to more than one regular membership and transferred it to
an existing member or new member from October 1, 2003 to the record
date for the Special Member Meeting) within 60 days after the record
date. The text of the proposed rule change is available at the Phlx and
at the Commission.
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\3\ This proposal does not apply to memberships in non-
participating status (``NPS''). Any transfer of memberships in NPS
must abide by the requirements set forth in Phlx Article XII,
Section 12-1. The Phlx notes, however, that members who change the
status of their membership from NPS to participating status before
the record date for the special meeting concerning demutualization
(``Special Member Meeting'') can take full advantage of the waivers
described herein. Telephone conversation between Cynthia Hoekstra,
Counsel, Phlx, and Ian K. Patel, Attorney, Division of Market
Regulation, Commission on October 20, 2003.
\4\ The transfer fee is imposed on the transferee at the time of
the transfer of legal or equitable title to any Phlx regular
membership. See Securities Exchange Act Release No. 38394 (March 12,
1997), 62 FR 13204 (March 19, 1997) (SR-Phlx-97-09).
\5\ See Phlx Certificate of Incorporation, Article Fifth.
\6\ In general, the application fee is charged in connection
with applications handled by the Exchange's Membership Services
Department, including applications for Exchange membership. See
Securities Exchange Act Release No. 47383 (February 20, 2003), 68 FR
8956 (February 26, 2003) (SR-Phlx-2002-79).
\7\ The waivers for the application fee and transfer fee as
described in items one and two would be in effect from October 1,
2003 until the record date for the Special Member Meeting. The
record date has currently been set for October 21, 2003.
\8\ The initiation fee is imposed upon members upon election.
See Securities Exchange Act Release No. 26468 (January 18, 1989), 54
FR 3713 (January 23, 1989) (SR-Phlx-88-45). See also Phlx Article
XII, Section 12-8.
\9\ The Exchange intends to refund these initiation fees in the
billing cycle following the date of the transfer of the membership.
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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 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 Exchange has prepared summaries, set forth in
Sections A, B, and C below, of the most significant aspects of such
statements.
[[Page 61546]]
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
In connection with an upcoming Special Member Meeting concerning
demutualization,\10\ members holding legal title to a regular
membership will be allowed to vote respecting a proposed
demutualization plan. Currently, in accordance with the Exchange's by-
laws and Delaware General Corporation Law, a member holding a regular
Phlx membership is permitted to cast only one vote, regardless of the
number of memberships to which he or she holds legal title.\11\ For
instance, a member organization may hold title to multiple memberships
in the name of a single employee of that member organization, thereby
only allowing one vote for the memberships held in the name of that
single employee; simply transferring those memberships to different
employees would permit those memberships to be voted. However, there
are fees--specifically the application, initiation and transfer fees--
that may be associated with the transfer of memberships.
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\10\ In the proposed Demutualization, the Phlx is seeking
approval to convert from a non-stock mutual corporation that is
precluded from paying dividends, into a for-profit stock corporation
that may pay dividends. The transaction, if approved, would take
place in two stages: (1) an amendment to the Phlx's Certificate of
Incorporation; and (2) a merger by the Phlx with and into a
subsidiary created for this purpose.
\11\ See Phlx By-Law Article XII, Section 12-1(b), except as
provided by Article Thirteenth of the Phlx's Certificate of
Incorporation.
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The purpose of the proposed rule change is to allow members who own
multiple memberships to transfer some of their memberships to others
during the time periods specified above, in order to maximize voting
rights, without imposing a significant cost to those members. As a
result, members who hold legal title to more than one regular
membership during the applicable period will be able to transfer
memberships without incurring significant costs. The Exchange believes
that this will enable more memberships to be voted with respect to the
demutualization if the legal titleholders of the memberships choose to
do so.
2. Statutory Basis
The Exchange believes that the proposal to amend its schedule of
dues, fees and charges is consistent with Section 6(b) of the Act \12\
in general, and furthers the objectives of Section 6(b)(4) of the Act
\13\ in particular, in that it is an equitable allocation of reasonable
dues, fees, and other charges among Exchange members. This proposal
applies to all members who hold legal title to more than one regular
membership. The Exchange believes that this temporary fee waiver and
refund should maximize member voting rights in connection with the
Exchange's proposed plan to demutualize.
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\12\ 15 U.S.C. 78f(b).
\13\ 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 that is 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 on the proposed rule change were neither solicited
nor 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 \14\ and subparagraph (f)(2) of Rule 19b-4
thereunder,\15\ because it establishes or changes a due, fee, or other
charge imposed by the Exchange. 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.
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\14\ 15 U.S.C. 78s(b)(3)(A)(ii).
\15\ 17 CFR 240.19b-4(f)(2).
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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 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
Phlx. All submissions should refer to file number SR-Phlx-2003-69 and
should be submitted by November 18, 2003.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\16\
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\16\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 03-27090 Filed 10-27-03; 8:45 am]
BILLING CODE 8010-01-P