[Federal Register: February 11, 2004 (Volume 69, Number 28)]
[Notices]
[Page 6713-6714]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr11fe04-143]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-49189; File No. SR-SCCP-2004-01]
Self-Regulatory Organizations; Stock Clearing Corporation of
Philadelphia; Notice of Filing and Immediate Effectiveness of Proposed
Rule Change Relating to the Extension of Fee Waivers for Electronic
Communications Networks
February 4, 2004.
Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934
(``Act'') \1\ notice is hereby given that on January 20, 2004, 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.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1)
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
SCCP proposes to extend its one-year pilot program of waiving fees
for electronic communications networks (``ECNs'') for trades executed
on the Philadelphia Stock Exchange, Inc. (``Phlx'') for an additional
year (through January 23, 2005) \2\ and to change the definition of
ECN. The pilot program was scheduled to expire on January 23, 2004.\3\
---------------------------------------------------------------------------
\2\ A copy of SCCP's schedule of fees, which includes the fees
proposed to be waived for ECNs, is attached as Exhibit 2 to SCCP's
rule filing.
\3\ Securities Exchange Act Release No. 47924 (May 23, 2003), 68
FR 33558 (June 4, 2003) (SR-SCCP-2002-06).
---------------------------------------------------------------------------
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.\4\
---------------------------------------------------------------------------
\4\ The Commission has modified the text of the summaries
prepared by SCCP.
---------------------------------------------------------------------------
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
SCCP has waived fees (including trade recording fees, value fees,
treasury transaction charges, and Nasdaq 100 Trust, Series 1 (``QQQ'')
charges for ECN trades \5\ but not account fees, research fees,
computer transmission/tape charges, or other charges on its fee
schedule) since early 2001.\6\ SCCP proposes to continue this fee
waiver through January 23, 2005.
---------------------------------------------------------------------------
\5\ Certain provisions of the SCCP fee schedule do not apply to
ECNs because they apply to specialists and/or relate to margin
financing, such as specialist discount, margin account interest, P&L
statement charges, buy-ins, specialist QQQ charges, and SCCP
transaction charge (remote specialists only).
\6\ Securities Exchange Act Release No. 45145 (Dec. 10, 2001),
66 FR 65017 (Dec. 17, 2001) (SR-SCCP-2001-01).
---------------------------------------------------------------------------
This proposal affects ECN trades that are not related to ECNs
acting as Phlx specialists or floor brokers on Phlx. Currently, no ECN
operates from Phlx's equity trading floor as a floor broker or
specialist unit. If, however, an ECN
[[Page 6714]]
were to operate from the Phlx equity trading floor, it could be subject
to various SCCP fees with respect to its non-ECN floor operation. In
addition, an ECN's transactions as a floor broker would be subject to
the applicable SCCP fee, as would any ECN's specialist trades.\7\ Even
if the ECN acts as a floor broker or specialist with respect to some
trades, those trades for which it is not acting as a floor broker or
specialist, but rather an ECN, would be eligible for this fee waiver.
---------------------------------------------------------------------------
\7\ For example, an ECN acting as a specialist would be subject
to the trade recording fee for specialist trades matching with PACE
trades.
---------------------------------------------------------------------------
SCCP also proposes to make minor changes to its definition of ECNs
that appears on SCCP's fee schedule.\8\
---------------------------------------------------------------------------
\8\ SCCP's definition of ECN still generally conforms to the
definition in Rule 11Ac1-1(a) (8) of the Act, 17 CFR 240.11Ac-1-
(a)(8). As stated on SCCP's new proposed fee schedule, ECNs shall
mean any electronic system that widely disseminates to third parties
orders entered therein by a Phlx market maker or over-the-counter
(``OTC'') market maker, and permits such orders to be executed
against in whole or in part. The term ECN shall not include: any
system that crosses multiple orders at one or more specified times
at a single price set by the ECN (by algorithm or by any derivative
pricing mechanism) and does not allow orders to be crossed or
executed against directly by participants outside of such times or
any system operated by, or on behalf of, an OTC market maker or
exchange market maker that executes customer orders primarily
against the account of such market maker as principal, other than
riskless principal.
---------------------------------------------------------------------------
SCCP believes that this proposed rule change is consistent with
section 17A(b)(3)(D) of the Act \9\ because it provides for the
equitable allocation of dues, fees, and other charges.
---------------------------------------------------------------------------
\9\ 15 U.S.C. 78q-1(b)(3)(D).
---------------------------------------------------------------------------
B. Self-Regulatory Organization's Statement on Burden on Competition
SCCP 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
SCCP has not solicited or received written comments pertaining to
its proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The foregoing proposed rule change has become effective pursuant to
section 19(b)(3)(A)(ii) of the Act \10\ and Rule 19b-4(f)(2) \11\
thereunder because it establishes or changes a due, fee, or other
charge. 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.
---------------------------------------------------------------------------
\10\ 15 U.S.C. 78s(b)(3)(A)(ii).
\11\ 17 CFR 240.19b-4(f)(2).
---------------------------------------------------------------------------
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 5th Street NW., Washington, DC 20549-0069.
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-2004-01. 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, 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 rule filing that are filed with the Commission, and all
written communications relating to the rule filing between the
Commission and any person, other than those that may be withheld from
the public in accordance with provisions of 5 U.S.C. 552, will be
available for inspection and copying in the Commission's Public
Reference Room in Washington, DC. Copies of such filing will also be
available for inspection and copying at SCCP's principal office and on
SCCP's Web site at http://www.phlx.com/SCCP/memindex_sccpproposals.html.
All submissions should refer to File No. SR-SCCP-
2004-01 and should be submitted by March 3, 2004.
For the Commission by the Division of Market Regulation,
pursuant to delegated authority.\12\
---------------------------------------------------------------------------
\12\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 04-2909 Filed 2-10-04; 8:45 am]
BILLING CODE 8010-01-P