[Federal Register: August 6, 2004 (Volume 69, Number 151)]
[Notices]
[Page 47970-47971]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr06au04-114]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-50129; File No. SR-Phlx-2004-39]
Self-Regulatory Organizations; Notice of Filing of Proposed Rule
Change, and Amendment No. 1 thereto, by the Philadelphia Stock
Exchange, Inc. Relating to Retroactive Application of Permit Holder
Fees
July 30, 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 June 30, 2004, the Philadelphia Stock Exchange, Inc. (``Phlx'' or
the ``Exchange'') filed with the Securities and Exchange Commission
(``SEC'' or ``Commission'') the proposed rule change as described in
Items I, II, and III below, which Items have been prepared by the Phlx.
On July 12, 2004, the Phlx filed Amendment No. 1 to the proposed rule
change.\3\ 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 Murray L. Ross, Phlx, to Nancy Sanow,
Assistant Director, Division of Market Regulation, SEC, dated July
9, 2004 (``Amendment No. 1''). In Amendment No. 1, the Exchange
removed references in two footnotes to the proposed date that the
retroactive fees would take effect.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Phlx proposes to retroactively apply its recent amendment to
its schedule of fees and Charges (``Fee Schedule Amendment'').\4\
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\4\ See Securities Exchange Act Release No. 49856 (June 15,
2004), 69 FR 3441 (June 21, 2004) (SR-Phlx-2004-32) (adopting a new
category of permit holders for billing purposes; establishing the
date of notification of terminating a permit as the date that permit
fee billing will cease; and establishing that only one monthly
permit fee would be assessed in certain limited situations where two
monthly permit fees would otherwise be imposed).
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In the Fee Schedule Amendment, the Exchange adopted an ``other''
permit fee category to address the limited situations where a permit
holder might not fit within any of the existing permit fee
categories.\5\ The Exchange had found that a few permit holders did not
fit in any existing permit fee categories, and, consequently, no permit
fee was applicable. For example, a member organization may be holding
its permit solely to be able to reflect its status as a Phlx member
organization on its letterhead, which is common in the securities
industry. That member organization would not have qualified for any of
the existing permit fee categories and, therefore, would not have been
subject to a permit fee at all. The Exchange is proposing to
retroactively apply the ``other'' permit fee category from February 2,
2004 through April 30, 2004, the period prior to the adoption of the
``other'' permit fee category, in order to collect permit fees from
member organizations that previously had not been subject to a permit
fee.
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\5\ The ``other'' permit fee category is intended to apply to
permit holders who solely qualify their respective member
organization.
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Additionally, the Exchange proposes to retroactively apply its
billing policy set forth in the Fee Schedule Amendment, which set the
date of notification for terminating a permit as the date that the
permit fee billing would cease. From February 2, 2004 through April 30,
2004, the period prior to the Fee Schedule Amendment, the effective
date of the posting period was used to determine the termination date
for a permit, resulting in some member organizations being billed for
an extra month.
Further, the Exchange is proposing to retroactively assess only one
monthly permit fee in certain limited situations where two monthly
permit fees otherwise would be imposed. Prior to the Fee Schedule
Amendment, if a permit was transferred, other than if the transfer
occurred within the permit holder's member organization,\6\ both member
organizations would have been assessed a billing fee. For example, if
the permit holder transferred from one member organization to another
unrelated member organization in the same month, both member
organizations were assessed a permit fee in the same billing period. In
addition, when a permit holder became associated with another member
organization as a result of a merger, partial sale of the current
member organization, or other business combination, a new permit was
issued but a monthly permit fee for the new permit would have also been
assessed in these limited situations. This policy of assessing only one
permit fee when a permit holder becomes associated with another member
organization is noted in the Fee Schedule Amendment and, pursuant to
the proposed rule change, would be retroactively applied from February
2, 2004 to April 30, 2004.
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\6\ If the permit holder transfers the permit to another
individual within the same member organization, only one monthly
permit fee is assessed for that permit.
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The text of the proposed rule change, as amended, is available at
the Exchange and at the Commission.
I. 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, as
amended. 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, as amended, is to
retroactively apply the ``other'' permit fee category and the other
recently adopted permit fee billing practices back to the initiation of
permit fee billing on February 2, 2004 to more fairly apply Exchange
permit fee policies to each permit holder and their respective member
organizations. Retroactively applying the recently effective ``other''
category of permit fees should ensure that each permit holder has been
billed an appropriate permit fee from February 2, 2004, the initial
date of permit fee billing. Additionally, allowing monthly billing of
permit fees to cease at the time a member notifies the Exchange, as
opposed to waiting for the effective date of the posting and notice
requirements, should avoid unnecessarily billing a member for permit
fees for a month during which their permit was terminated. Also,
charging only one permit fee for the month in which a merger or other
business combination occurs should avoid unfairly double billing for a
permit fee to a permit holder changing affiliation due to a merger or
other business organizational changes.
2. Statutory Basis
The Exchange believes that its proposal to retroactively apply its
[[Page 47971]]
amended schedule of dues, fees and charges is consistent with Section
6(b) of the Act \7\ in general, and furthers the objectives of Sections
6(b)(4) \8\ and 6(b)(5) \9\ of the Act in particular, in that it is an
equitable allocation of reasonable dues, fees, and other charges among
Exchange members and is designed to perfect the mechanism of a free and
open market and a national market system, and to protect investors and
the public interest.
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\7\ 15 U.S.C. 78f(b).
\8\ 15 U.S.C. 78f(b)(4).
\9\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition
The Phlx does not believe that the proposed rule change, as
amended, will result in 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 were neither solicited nor received.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Within 35 days of the date of publication of this notice in the
Federal Register or within such longer period (i) as the Commission may
designate up to 90 days of such date if it finds such longer period to
be appropriate and publishes its reasons for so finding or (ii) as to
which the Exchange consents, the Commission shall: (a) by order approve
such rule change, or (b) institute proceedings to determine whether the
proposed rule change should be disapproved.
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-2004-39 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-2004-39. 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, as amended, 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 also will be available for inspection and copying
at the principal office of the Phlx. 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-2004-39 and should be submitted on
or before August 27, 2004.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\10\
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\10\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 04-18002 Filed 8-5-04; 8:45 am]
BILLING CODE 8010-01-P