[Federal Register Volume 65, Number 193 (Wednesday, October 4, 2000)]
[Notices]
[Pages 59244-59245]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-25440]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-43339; File No. SR-PHLX-97-46]


Self-Regulatory Organizations; Philadelphia Stock Exchange, Inc.; 
Order Approving Proposed Rule Change and Notice of Filing and Order 
Granting Accelerated Approval to Amendment No. 2 to the Proposed Rule 
Change Amending Article V, Section 5-5 and Article XXII, Section 22-1 
of the Exchange's By-Laws

September 25, 2000.

I. Introduction

    On February 11, 1998,\1\ the Philadelphia Stock Exchange, Inc. 
(``Phlx'' or ``Exchange'') submitted to the Securities and Exchange 
Commission (``SEC'' or ``Commission''), pursuant to Section 19(b)(1) of 
the Securities Exchange Act of 1934 (``Act'') \2\ and Rule 19b-4 
thereunder,\3\ a proposed rule change to amend the Exchange's By-

[[Page 59245]]

Laws. On February 17, 1998, the Exchange filed Amendment No. 1 to the 
proposal with the Commission.\4\ The proposed rule change, including 
Amendment No. 1, was published for comment in the Federal Register on 
March 17, 1998.\5\ No comments were received on the proposal. On 
September 7, 1999, the Exchange filed Amendment No. 2 to the proposal 
with the Commission.\6\
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    \1\ The Phlx had originally submitted the filing on December 10, 
1997; however, at that time, the filing was incomplete. At the 
Commission's request the Phlx made a complete filing on February 11, 
1998.
    \2\ 15 U.S.C. 78s(b)(1).
    \3\ 17 CFR 240.19b-4.
    \4\ See Letter from Murray L. Ross, Vice President and 
Secretary, Phlx, to Marie Ito, Special Counsel, Commission, dated 
February 13, 1998 (``Amendment No. 1''). In amendment No. 1, the 
Exchange made technical corrections to the language contained in 
Exhibit A to the proposal and provided support for the proposed 
changes to the By-Laws.
    \5\ Securities Exchange Act Release No. 39740 (March 10, 1998), 
63 FR 13083.
    \6\ See Letter from Edith Hallahan, Deputy General Counsel, 
Phlx, to Michael Walinskas, Deputy Associate Director, SEC, dated 
September 3, 1999 (``Amendment No. 2''). In Amendment No. 2, the 
Exchange eliminated references in the proposal to By-Law Article IV, 
Section 4-8. The Exchange has filed the proposed changes to Section 
4-8 in a separate proposal. See SR-PHLX-00-39.
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    This order approves the proposal, as amended, and requests comment 
from interested persons regarding Amendment No. 2 to the proposal.

II. Description of the Proposal

    The Exchange proposes to amend Article V, Section 5-5, of its By-
Laws to provide a mechanism to designate the Chief Operating Officer or 
another senior officer to assume the duties of Chairman on an interim 
basis in circumstances of an extended absence or inability of the 
Chairman to serve.\7\ The Exchange also proposes to amend Article XXII, 
Section 22-1 to clarify the procedures with respect to the submission 
of amendments to the By-Laws. This proposed amendment to Section 22-1 
would raise from fifty to seventy-five the number of Phlx members 
required to offer an amendment to the By-Laws; would lengthen from two 
weeks to four weeks the time period in which a vote on a proposed 
amendment must be held; and would establish the date of the submission 
of the proposed amendment as the record date for determining the 
eligibility of members to vote on the proposed amendment. The proposal 
also changes the requirement that the proposed amendment be submitted 
to the Board. Under the proposal, the proposed amendment will be 
submitted to the Secretary.
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    \7\ The Exchange has defined ``extended absence or inability to 
act'' as an inability of the Chairman to fulfill his or her duties 
for a period longer than four weeks.
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III. Discussion

    After careful consideration, the Commission finds that the proposed 
rule change is consistent with the requirements of the Act and the 
rules and regulations thereunder applicable to a national securities 
exchange, and, in particular, with the requirements of Section 6(b).\8\ 
In particular, the Commission believes that the proposal is consistent 
with the Section 6(b)(3) \9\ requirements that the rules of an Exchange 
be designed to assure a fair representation of its members in the 
selection of its directors and administration of its affairs.\10\
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    \8\ 15 U.S.C. 78f(b).
    \9\ 15 U.S.C. 78f(b)(3).
    \10\ In approving this proposal, the Commission has considered 
the proposed rule's impact on efficiency, competition, and capital 
formation. 15 U.S.C. 78c(f).
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    Under the proposed amendment to Article V, Section 5-5 of the 
Exchange's By-Laws, the Phlx board will be required to designate an 
acting Chairman if the Chairman of the Board is unable to fulfill his 
or her duties for more than four weeks. The Commission finds that the 
proposal may enable the Exchange to function more efficiently in the 
face of the extended absence or inability of the Chairman of the Board 
to act. By clarifying the circumstances under which the Chairman of the 
Phlx's board will be replaced on a temporary basis, the proposal 
strengthens existing provisions of the By-Laws, enabling the Exchange 
to better fulfill its responsibilities as a self-regulatory 
organization.
    The Commission finds that the proposed amendments to Article XXII, 
Section 22-1 of the Phlx's By-Laws are designed to promote a fair and 
reasonable process for amending the Phlx's By-Laws that is consistent 
with the requirements of the Act. The Exchange represents that 
extending the period of time from two weeks to four weeks to conduct a 
vote on an amendment to the By-Laws will allow the Exchange sufficient 
time to send ballots to its membership while allowing the membership 
sufficient time to cast a reasoned and informed vote.\11\ In addition, 
the Commission believes that the proposal, by establishing the record 
date for determining which members will be entitled to vote on a 
particular amendment to the Exchange's By-Laws, should improve and 
clarify the process by which By-Laws are amended.
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    \11\ Telephone conversation between Murray L. Ross, Vice 
President and Secretary, Phlx and David Sieradzki, Special Counsel, 
Commission, on July 20, 2000.
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    The Commission finds good cause for approving Amendment No. 2 prior 
to the thirtieth day after the date of publication of notice in the 
Federal Register. Amendment No. 2 removes the section of the proposal 
amending Article IV, Section 4-8 of the Exchange's By-Laws. As a 
result, the Amendment raises no new significant regulatory issues. 
Accordingly, the Commission finds good cause, consistent with Sections 
6(b)(6) \12\ and 19(b)(2) \13\ of the Act, to approve Amendment No. 2 
to the proposed rule change on an accelerated basis.
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    \12\ 15 U.S.C. 78f(b)(6).
    \13\ 15 U.S.C. 78s(b)(2).
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IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning Amendment No. 2, including whether Amendment No. 2 
is consistent with the Act. Persons making written submissions should 
file six copies thereof with the Secretary, Securities and Exchange 
Commission, 450 Fifth Street, N.W., 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 
NASD. All submissions should refer to File No. SR-PHLX-97-46 and should 
be submitted by October 25, 2000.

V. Conclusion

    It Is Therefore Ordered, pursuant to Section 19(b)(2) of the Act, 
\14\ that the proposed rule change (SR-PHLX-97-46) is approved, as 
amended, and Amendment No. 2 is approved on an accelerated basis.
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    \14\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority. \15\
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    \15\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 00-25440 Filed 10-3-00; 8:45 am]
BILLING CODE 8010-01-M