[Federal Register: June 4, 2003 (Volume 68, Number 107)]
[Notices]
[Page 33560-33561]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr04jn03-141]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-47922; File No. SR-SCCP-2002-08]
Self-Regulatory Organizations; Stock Clearing Corporation of
Philadelphia; Notice of Filing and Immediate Effectiveness of Proposed
Rule Change Relating to Trade Recording Fees and Value Fees for Pace
Trades
May 23, 2003.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ notice is hereby given that on December 31, 2002, the
Stock Clearing Corporation of Philadelphia (``SCCP'') 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 primarily by SCCP. 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).
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The proposed rule change would amend SCCP's schedule of dues, fees,
and charges to clarify the definition of a PACE trade as it relates to
the imposition of SCCP's trade recording
[[Page 33561]]
fees and value fees.\2\ Currently, SCCP does not charge trade recording
fees or value fees for PACE trades. SCCP proposes to define a PACE
trade with greater specificity in order to clarify the imposition of
trade recording fees and value fees as they relate to PACE trades only.
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\2\ PACE is the acronym for the Philadelphia Stock Exchange
Inc.'s (``Phlx'') automated communication and execution system. It
is Phlx's order routing, delivery, execution, and reporting system
for its equity trading floor. See Phlx Rules 229 and 229A.
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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, SCCP 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. SCCP has prepared summaries, set forth in sections A, B,
and C below, of the most significant aspects of such statements.\3\
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\3\ The Commission has modified parts of these statements.
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A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
First, the proposed rule change clarifies that the trade recording
fees and value fees apply in situations where an order, after being
delivered to Phlx by the PACE system, is executed by way of an outbound
Intermarket Trading System (``ITS'') commitment \4\ when such outbound
ITS commitment reflects the PACE order's clearing information. In this
situation, the trade is not considered to be a PACE trade for purposes
of the imposition of trade recording fees and value fees and thus
becomes subject to both charges.
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\4\ ITS means the application of the system that permits
intraday trading in eligible listed securities between participant
markets as set forth in the ITS Plan. See Phlx Rule 2001.
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Secondly, the proposed rule change clarifies that the trade
recording fees and value fees do not apply where a PACE trade was
executed against an inbound ITS commitment. The execution on the Phlx
against an inbound ITS commitment is considered a PACE trade and
therefore, SCCP trade recording fees and value fees do not apply to
these transactions.
Lastly, the proposed rule change rebates to any participants that
were charged trade recording fees or value fees for PACE trades that
were executed against an inbound ITS commitment for the months of
September, October, November, and December 2002.
SCCP believes that not charging SCCP participants these fees for
PACE trades that are executed against an inbound ITS commitment should
encourage greater use of the PACE system which in turn should promote a
more active and liquid equities market. Also, SCCP believes that this
clarification should help to avoid any participant confusion.
Previously, SCCP's billing system charged trade recording fees and
value fees for PACE trades executed against an inbound ITS commitment
due to the difficulties in identifying executions of orders in this
manner. Due to advances in billing, SCCP can now more readily identify
PACE trades that are executed against inbound ITS commitments. SCCP
believes that by not charging trade recording fees and value fees and
by providing a rebate, as described above for the months of September
through December 2002, it will encourage future use of the PACE system
and will reimburse participants who were charged the trade recording
fees and value fees when the application of these charges may not have
been clear. Also, SCCP believes that going forward for trades settling
on or after January 2, 2003, there should be no charge for these PACE
trades due to the fact that the method of execution of these trades is
outside of the customer's control.
SCCP believes that its proposal is consistent with Section
17A(b)(3)(D) of the Act \5\ because it provides for the equitable
allocation of reasonable dues, fees, and other charges among its
participants.
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\5\ 15 U.S.C. 78q-1(b)(3)(D).
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B. Self-Regulatory Organization's Statement on Burden on Competition
SCCP does not believe that the proposed rule 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, it has become effective pursuant to Section
19(b)(3)(A)(ii) of the Act \6\ and Rule 19b-4(f)(2) thereunder.\7\ At
any time within sixty 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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\6\ 15 U.S.C. 78s(b)(3)(A)(ii).
\7\ 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.
Comments may also be submitted electronically at the following e-mail
address: rule-comments@sec.gov. All comment letters should refer to
File No. SR-SCCP-2002-08. This file number should be included on the
subject line if e-mail is used. To help us process and review comments
more efficiently, comments should be sent in hardcopy or by e-mail but
not by both methods. 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 Section, 450 Fifth Street, NW., Washington, DC 20549. Copies
of such filing also will be available for inspection and copying at the
principal office of SCCP.
For the Commission by the Division of Market Regulation,
pursuant to delegated authority.\8\
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\8\ 17 CFR 200.30-3(a)(12).
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Jill M. Peterson,
Assistant Secretary.
[FR Doc. 03-13941 Filed 6-3-03; 8:45 am]
BILLING CODE 8010-01-P