[Federal Register: December 4, 2002 (Volume 67, Number 233)]
[Notices]
[Page 72263-72264]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr04de02-109]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-46912; File No. SR-Phlx-2002-72]
Self-Regulatory Organizations; Notice of Filing and Immediate
Effectiveness of Proposed Rule Change and Amendment No. 1 by the
Philadelphia Stock Exchange, Inc. To Set Time Limits Within Which Phlx
Members Must Request Credits Under the Phlx Monthly Credit Program
November 26, 2002.
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 31, 2002, 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. On
November 26, 2002, the Phlx amended the proposed rule change.\3\ The
Exchange has designated this proposal as one establishing or changing a
due, fee, or other charge imposed by the Phlx under section
19(b)(3)(A)(ii) of the Act,\4\ which renders the proposal effective
upon filing with the Commission. 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 November 25, 2002, letter from Cynthia K. Hoekstra,
Phlx, to Nancy J. Sanow, Assistant Director, Division of Market
Regulation, Commission (``Amendment No. 1''). In Amendment No. 1,
the Phlx replaces the text in footnote 3 on page 2 (and also
footnote 4 on page 9) of the original filing with new text. For
purposes of calculating the 60-day abrogation period, the Commission
considers the period to have commenced on November 26, 2002, the
date the Phlx filed Amendment No. 1.
\4\ 15 U.S.C. 78s(b)(3)(A)(ii).
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Phlx proposes to adopt certain provisions in connection with
its Monthly Credit Program (``Program'').
Background
In May 2000, the Exchange adopted, for an aggregate period of 36
months,\5\ the Program, which allows a monthly credit of up to $1,000
to be applied against fees, dues, charges and other amounts as may from
time to time be owed to the Exchange that month (collectively referred
to as ``credit-eligible fees''), except fines, late fees, out-of-pocket
expenses, pass-through costs, capital funding fees, payment for order
flow fees, any fees paid by equity trading permit (``ETP'') holders
respecting any trading permits the Exchange may issue,\6\ the fee for
electronic communications networks, and the fee for the print
subscription of the Phlx Guide by members who own the membership by
which they are a member and certain other categories of members. The
Program is in effect until May 16, 2003.
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\5\ This aggregate period of 36 months includes the time period
that previous pilot programs were in effect. The first monthly
credit pilot program became effective upon filing on May 16, 2000,
and lasted six months, expiring on November 16, 2000. See Securities
Exchange Act Release No. 42791 (May 16, 2000), 65 FR 33606 (May 24,
2000)(SR-Phlx-00-44). The pilot program was then extended for six
months through May 16, 2001. See Securities Exchange Act Release No.
43567 (November 15, 2000), 65 FR 71187 (November 29, 2000)(SR-Phlx-
00-100). Therefore, the Program will be in effect from May 16, 2000
until May 16, 2003. See Securities Exchange Act Release No. 44292
(May 11, 2001), 66 FR 27715 (May 18, 2001)(SR-Phlx-2001-49).
\6\ In March 2002, this provision was amended to provide that
ETP monthly fees are credit-eligible. See Securities Exchange Act
Release No. 45480 (February 26, 2002), 67 FR 10029 (March 5,
2002)(SR-Phlx-2002-10).
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Pursuant to the Program, the amount of credit-eligible fees owed to
the Exchange is reduced on a monthly basis by an amount equal to: (1)
$1,000 per month if such fees, dues, charges and other amounts are
equal to or greater than $1,000, or (2) the amount of such fees, dues,
charges and other amounts if such fees, dues, charges and other amounts
are less than $1,000. Credits may not be carried over from one month to
the next and only one credit of up to $1,000 is available per
membership per month.
Credits cannot be shared among members, except qualified member(s)
in the same member organization may aggregate their credit(s). The
monthly credit of up to $1,000 will be applied against the invoice of
the member or member organization with which the member is associated.
Currently, any request to receive the credit is application driven with
each applicant submitting an Exchange form delineating the credit-
eligible fees for that calendar month. A member's eligibility for the
monthly credit is determined by the opening of trading on the first
business day of each month.
Proposal
In connection with the Program, the Exchange has accrued on its
books credit-eligible funds to be reimbursed to members who are
eligible for the monthly credit of up to $1,000, but who have not
submitted a request to receive
[[Page 72264]]
the credit.\7\ Therefore, the Exchange proposes to set a time limit
within which Exchange members must request the credit.
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\7\ In addition, there are members who originally stated they
were not eligible for the credit and therefore did not submit a
request to claim the credit. These members, however, subsequently
discovered they were eligible for the credit and provided supporting
information to the Exchange. These members will also be allowed to
claim past credits, although these amounts may not have been
accrued.
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In connection with unclaimed past credits, any member eligible for
the monthly credit must submit his/her credit request form within three
months after the date of the release issued pursuant to the Act whereby
the proposal has been filed and has become effective. For example, if
the Commission issues a Notice of Filing and Immediate Effectiveness
respecting this change to the Program on, hypothetically, November 15,
2002, members will have until February 15, 2003 to claim any past
credits. After that time period, any request for unclaimed past credits
will be denied, except as described in the following paragraph.
Going forward, members must request their monthly credit within
three months from the first day of the month in which the credits were
earned. For example, if a member is eligible to receive a credit of
$600 for the month of September, the member must request that credit by
December 1 (three months from September 1). Any requests for credits
not made within this three month time period will be denied, and
credits will not be pro-rated over any month.
The Phlx proposes no other changes to the Program at this time.
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 Exchange 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.
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 set time limits
within which Phlx Members must request credits under the Program. Due
to the bookkeeping and associated costs with monitoring the Program,
the Exchange proposes to set a date certain by which the members must
request a claim for past-due credits. If the credit is not claimed by
that date, the members will not be able to claim the credit in the
future.
In addition, the time limit within which Exchange members must
request the monthly credit should promote compliance with the
Exchange's intent for members to timely claim the credit and to remove
from the Exchange's books reserves for unclaimed credits that may never
be requested.
The Phlx intends to send a memorandum to members, member
organizations and clearing firms to clarify the proposed credit
procedures, and will include a copy of the memorandum with the
Exchange's monthly invoice.\8\
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\8\ The Phlx notifies members of various Exchange proposals by
way of memoranda generally sent to the members, member organizations
and their respective clearing firms. The Exchange intends to send
the memorandum with the October invoice, which is sent in the
beginning of November.
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2. Statutory Basis.
The Exchange believes that the proposed rule change is consistent
with section 6(b) of the Act \9\ in general, and furthers the
objectives of section 6(b)(4)\10\ in particular, in that it provides
for the equitable allocation of reasonable dues, fees and other charges
among Exchange members.
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\9\ 15 U.S.C. 78f(b).
\10\ 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 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
The proposed rule change has become effective pursuant to section
19(b)(3)(A)(ii) of the Act \11\ and subparagraph (f)(2) of rule 19b-4
thereunder,\12\ because it involves a due, fee, or other charge. 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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\11\ 15 U.S.C. 78s(b)(3)(a)(ii).
\12\ 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 proposal 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 Exchange. All
submissions should refer to file number SR-Phlx-2002-72, and should be
submitted by December 26, 2002.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\13\
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\13\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 02-30672 Filed 12-3-02; 8:45 am]
BILLING CODE 8010-01-P