[Federal Register Volume 65, Number 14 (Friday, January 21, 2000)]
[Notices]
[Pages 3517-3518]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-1476]



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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-42332; File No. SR-Phlx-99-59]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by the Philadelphia Stock 
Exchange, Inc. Relating to Exemptions for Certain Customer Executions 
Via AUTOM and Increases to Options Transaction Charges for Firms, ROTs 
and Specialists

January 12, 2000.
    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 December 27, 1999, the Philadelphia Stock Exchange, Inc. (``Phlx'' 
or ``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 
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 exempt from customer per contract transaction and comparison fees, 
customer executions on orders of 250 contracts or less delivered 
through the Exchange's Automated Options Market (``AUTOM'') electronic 
delivery and execution system. The Exchange also proposes to increase 
transaction charges by $.02 per contract for firm and registered 
options trade transactions and $.04 per contract for specialist 
transactions. The proposed effective date of these amended charges is 
at the opening of business, January 3, 2000. The text of the proposed 
rule change follows. New text is italicized and deleted text is 
bracketed.
SUMMARY OF EQUITY OPTION CHARGES   

Option Comparison Charge (applicable to all trades--except
 specialist trades):
                                                                     Per
                                                                contract
    Registered Option Trader...............................         $.03
    Firm ([Property] Proprietary [and Customer Execution]).         $.04
    x Customer Executions..................................         $.04
Option Transaction Charge:
13 xCustomer Executions:
      Market value less than $1.00 *.......................         $.10
      Market value $1.00 or over *.........................         $.10
    Firm **................................................      $.0[6]8
    Registered Option Trader [and Specialist]..............      $.1[4]6
    Specialist.............................................         $.18
Option Floor Brokerage Assessment
    5% of net floor brokerage income.
Floor Brokerage Transaction Fee
    $.05 per contract, for floor brokers executing
     transactions for their own member firms
See Appendix A for additional fees.
 
* Block transaction for customer executions of 500 to 999 contracts and
  1000 contracts and more are eligible for a discount to such charges of
  15% and 25% repsectively from the stated rates upon submission to the
  PHLX of a customer option block discount request form with supportive
  documentation within thirty (30) days of monthly billing date.
** Non-clearing firm members' proprietary transactions are eligible for
  the ``firm'' rate based upon submission of a PHLX rebate request form
  with supportive documentation within thirty (30) days of invoice date.
 
x Customer executions on orders delivered through the Exchange's
  Automated Options Market (``AUTOM'') electronic delivery and execution
  system of 250 contracts or less are exempt from these charges.

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 self-regulatory organization 
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 self-regulatory 
organizations 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 this proposed rule change is to amend the Phlx's fee 
schedule to exempt all customer executions on orders delivered through 
AUTOM electronic delivery and execution system of 250 contracts or less 
from equity option transaction and comparison charges and to offset the 
fee exemption by imposing increased per contract option transaction 
charges on firm, registered options traders and specialist executions 
to achieve a revenue neutral effect. The proposed amended schedule of 
equity option charges is designed to promote the Exchange's reputation 
as a cost effective environment for both customers and traders to 
transact their options business.\3\
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    \1\ Only Exchange member organizations are permitted to enter 
orders on AUTOM and are charged the relevant fees by the Exchange. 
Therefore, only members of the Exchange will be directly affected by 
this proposed rule change. Telephone conversation between Murray 
Ross, Secretary, and Madge M. Hamilton on January 4, 2000.
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    The Phlx believes that the amended equity option charges are 
reasonable and equitable and will encourage customer order flow to be 
executed over the Exchange's AUTOM electronic delivery and execution 
system by exempting customer transactions from per contract transaction 
and comparison charges. The amended schedule of equity options charges 
affords retail broker/dealers cost savings respecting electronic 
delivery and executions of customer orders.
    The Exchange believes that these changes will help it to meet the 
changing needs of customers in the marketplace and give the Exchange 
better means of competing with other options exchanges for order flow, 
particularly in multiply traded issues. The Exchange also believes the 
changes will allow the Exchange to enhance its operational efficiency.
2. Statutory Basis
    The Exchange represents that the proposed rule change is consistent 
with Section 6(b) of the Act \4\ in general and furthers the objectives 
of Section 6(b)(4) \5\ in particular because it provides for the 
equitable allocation of reasonable dues, fees and other charges among 
its members.\6\
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    \4\ 15 U.S.C. 78f(b).
    \5\ 15 U.S.C. 78f(b)(4).
    \6\ In reviewing this proposal, the Commission has considered 
its impact on efficiency, competition, and capital formation. 15 
U.S.C. 78c(f).
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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

    The Exchange neither solicited nor received written comments.

III. Date of Effectiveness of the Proposed Rule Change and Timing 
for Commission Action

    The foregoing rule change establishes or changes a due, fee, or 
other charge and, therefore, has become effective pursuant to Section 
19(b)(3)(A) of the

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Act \7\ of Rule 19b-4 thereunder.\8\ays 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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    \7\ 15 U.S.C. 78s(b)(3)(A).
    \8\ 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. Sec. 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 
Exchange. All submissions should refer to File No. SR-Phlx-99-59 and 
should be submitted by February 11, 2000.
    For the Commission, by the Division of Market Regulation, pursuant 
to delegated authority.\9\
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    \9\ 17 CFR 200.30-3(a)(12).

Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 00-1476 Filed 1-20-00; 8:45am]
BILLING CODE 8010-01-M