59244 Federal Register / Vol. 65, No. 193 / Wednesday, October 4, 2000 / Notices

3See Phlx Options Rule 1051.

4See Securities Exchange Act Release No. 42675

(April 13, 2000), 65 FR 21223 (April 20, 2000)

(eliminating all transaction, clearance and floor

brokerage fees for all customer equity option

orders).

5See Securities Exchange Act Release No. 42850

(May 30, 2000), 65 FR 36187 (June 7, 2000)

(rescinding transaction and trade match fees for

customer equity option orders routed through its

electronic order routing system).

6See Securities Exchange Act Release No. 43115

(August 3, 2000), 65 FR 49280 (August 11, 2000)

(eliminating both the fee for all manual executions

of customer option orders and the ticket data entry

fee applicable to all customer option orders). See

also Securities Exchange Act Release No. 43020

(July 10, 2000), 65 FR 44558 (July 18, 2000)

(eliminating of all transaction charges for all forms

of electronic executions of customer orders and all

on-line comparison charges for all customer

executions).

7 15 U.S.C. 78f(b).

8 15 U.S.C. 78f(b)(4).

9 15 U.S.C. 78s(b)(3)(A).

10 17 CFR 240.19b–4(f)(2).

11 17 CFR 240.30–2(a)(12).

1The 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.

II. Self-Regulatory Organization’s

Statements Regarding the Purpose of,

and the 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. 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 is to amend the Phlx fee

schedule to waive and eliminate all

comparison and transaction charges to

customers connected with the trading of

equity options. 3

Currently, the Phlx imposes both

comparison and transaction fees on all

equity option trades, which vary in

amount depending on whether a

transaction involves a Registered

Options Trader (‘‘ROT’’), a firm, a

specialist or a customer. Customer

orders electronically executed through

the Phlx’s Automated Options Market

(AUTOM) system are entirely exempt

from both comparison and transaction

fees. Customer block orders (in certain

size categories) are entitled to

transaction fee discounts up to 25% of

the normal charge. Under the proposed

rule change all charges to ROTs, firms

and specialists will remain unchanged.

The Phlx estimates that annual cost

savings for customers will approximate

$4.5 million based upon year-to-date

results through July, 2000. These

proposed fee adjustments are necessary

in order to make the Phlx’s fees more

competitive with equivalent fees

charged by other exchanges and to

either maintain or enhance the volume

of equity option orders placed with the

Phlx. These downward adjustments in

fee levels will also encourage the use of

options by the investing public and

promote competition and efficiencies

among exchanges.

Recently, the American Stock

Exchange,4 Chicago Board Options

Exchange 5 and the Pacific Exchange 6

have all changed their respective rules

to eliminate similar equity option fees.

2. Statutory Basis

The Exchange believes the proposed

rule change is consistent with Section

6(b) of the Act 7 in general and furthers

the objectives of Section 6(b)(4) of the

Act,8 in particular, because it provides

for the equitable allocation of reasonable

dues, fees and other charges among its

Members and others utilizing the Phlx.

B. Self-Regulatory Organization’s

Statement on Burden on Competition

The Phlx does not believe that the

proposed rule change will impose any

burden on competition.

C. Self-Regulatory Organization’s

Statement on Comments on the

Proposed Rule Change Received From

Members, Participants or Others

The Phlx has neither solicited nor

received written comments on the

proposed rule change.

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 charge imposed

by the Phlx and, therefore, has become

effective upon filing pursuant to Rule

19(b)(3)(A) of the Act 9 and Rule 19b–

4(f)(2) thereunder.10 At any time within

60 days of the filing of such 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 purpose of the Act.

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. 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 Phlx. All

submissions should refer to File No.

SR–Phlx–00–80 and should be

submitted by October 25, 2000.

For the Commission by the Division of

Market Regulation, pursuant to delegated

authority.11

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 00–25425 Filed 10–3–00; 8:45 am]

BILLING CODE 8010–10–M

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 ByVerDate 11<MAY>2000 20:35 Oct 03, 2000 Jkt 194001 PO 00000 Frm 00073 Fmt 4703 Sfmt 4703 E:\FR\FM\04OCN1.SGM pfrm08 PsN: 04OCN1
Federal Register / Vol. 65, No. 193 / Wednesday, October 4, 2000 / Notices 59245

4See 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.

5Securities Exchange Act Release No. 39740

(March 10, 1998), 63 FR 13083.

6See 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.

7The 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.

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).

11Telephone conversation between Murray L.

Ross, Vice President and Secretary, Phlx and David

Sieradzki, Special Counsel, Commission, on July

20, 2000.

12 15 U.S.C. 78f(b)(6).

13 15 U.S.C. 78s(b)(2).

14 15 U.S.C. 78s(b)(2).

15 17 CFR 200.30–3(a)(12).

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

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 ByLaws. 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.

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

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.

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.

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.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority. 15

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 00–25440 Filed 10–3–00; 8:45 am]

BILLING CODE 8010–01–M