[Federal Register: July 29, 2003 (Volume 68, Number 145)]
[Notices]
[Page 44556-44557]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr29jy03-97]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-48208; File No. SR-Phlx-2003-48]
Self-Regulatory Organizations; Notice of Filing and Immediate
Effectiveness of Proposed Rule Change by the Philadelphia Stock
Exchange, Inc. Relating to Specialist Deficit (Shortfall) Fee Credit
July 22, 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 July 1, 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 Items have been prepared by the Exchange. 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: (1) Eliminate the Exchange's Equity Option Specialist Deficit
(Shortfall) fee credit (``shortfall credit''); and (2) clarify the
application of the shortfall credit during the time period during which
it was in effect.
Pursuant to the shortfall credit, a credit of $.35 per contract
could be earned by options specialists for all contracts traded in
excess of 14 percent of the total national monthly contract volume.\3\
The credits could be applied against previously imposed Equity Option
Specialist Deficit (Shortfall) fees for the preceding six months for
issues that, in the month the deficit occurred, the equity option
traded in excess of 10 million contracts per month.\4\ The Exchange
proposes to clarify that a specialist may earn a shortfall credit of
$.35 per contract for all contracts traded in excess of 14 percent for
previously imposed shortfall fees for the preceding six months for
issues that, in the month the deficit occurred, the equity option
traded in excess of 10 million contract sides per month.\5\
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\3\ See Securities Exchange Act Release No. 45322 (January 22,
2002), 67 FR 3927 (January 28, 2002) (SR-Phlx-2001-115).
\4\ The contract volume reflects the total number of contracts
in an option that were traded nationally for a specified month,
based on volume reflected by The Options Clearing Corporation.
\5\ See Securities Exchange Act Release No. 44892 (October 1,
2001), 66 FR 51487 (October 9, 2001) (SR-Phlx-2001-83). In the
proposed rule change submitted in connection with the shortfall
credit, the word ``sides'' was inadvertently excluded from the
proposal. The shortfall credit is more easily attainable if the
threshold calculation is based on contract sides. For example, 10
million contracts equal 20 million contract sides.
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The Exchange intends to eliminate the shortfall credit for all
transactions settling on or after July 1, 2003.
The text of the proposed rule change is available at the Office of
the Secretary, the Phlx, and 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
[[Page 44557]]
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
Statutory Basis for, the Proposed Rule Change
1. Purpose
The purpose of the proposed rule change is to eliminate the
Exchange's shortfall credit due to recent revisions to the Exchange's
Specialist Deficit (Shortfall) fee program.\6\ The Exchange no longer
wishes to allow for a shortfall credit due to these recent changes.
However, the Exchange also seeks to clarify the application of the
shortfall credit during the time period during which it was in effect
in order to minimize member confusion.
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\6\ See SR-Phlx-2003-45, submitted on June 25, 2003 and SR-Phlx-
2003-47, submitted on June 27, 2003. These filings revised the
shortfall fee by decreasing the total national monthly contract
volume threshold from 14 percent to 12 percent for specialists
trading any Top 120 Option and imposed a limit of $10,000 to the
specialist on the monthly amount of the shortfall fee for any Top
120 Option, provided certain conditions are met.
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2. Statutory Basis
The Exchange believes that its proposal is consistent with section
6(b) of the Act,\7\ in general, and furthers the objectives of section
6(b)(4) of the Act,\8\ in particular, in that it is an equitable
allocation of reasonable dues, fees and other charges among Exchange
members.
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\7\ 15 U.S.C. 78f(b).
\8\ 15 U.S.C. 78f(b)(4).
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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
Because the foregoing rule change establishes or changes a due,
fee, or other charge imposed by the Exchange, it has become effective
pursuant to section 19(b)(3)(A)(ii) of the Act \9\ and subparagraph
(f)(2) of Rule 19b-4 \10\ thereunder. 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.
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\9\ 15 U.S.C. 78s(b)(3)(A)(ii).
\10\ 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 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-2003-48 and
should be submitted by August 19, 2003.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\11\
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\11\ 17 CFR 200.30-3(a)(12).
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Jill M. Peterson,
Assistant Secretary.
[FR Doc. 03-19182 Filed 7-28-03; 8:45 am]
BILLING CODE 8010-01-P