[Federal Register Volume 65, Number 74 (Monday, April 17, 2000)]
[Notices]
[Pages 20500-20501]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-9487]



[[Page 20500]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-42654; File No. SR-Phlx-00-24]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by the Philadelphia Stock 
Exchange, Inc. Extending the Pilot Program To Impose Fees for Computer 
Equipment Services, Repairs or Replacements and Relocation of Computer 
Equipment

April 10, 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 March 14, 2000, 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. On March 29, 2000, the Exchange filed Amendment No. 1 to the 
proposed rule change with the Commission.\3\ 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.
    \3\ Amendment No. 1 to the proposed rule change made technical 
corrections to the Phlx's fee schedule. See letter from John Dayton, 
Assistant Secretary and Counsel, Phlx, to Nancy Sanow, Assistant 
Director, Division of Market Regulation (``Division''), Commission, 
dated March 29, 2000 (``Amendment No. 1'').
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I. Self-Regulatory Organization's Statement of the Terms of 
Substance of the Proposed Rule Change

    The Phlx, pursuant to Rule 19b-4 of the Act, proposes to extend for 
a further three months its pilot program that requires all members on 
the options and equity trading floors to pay a fee for computer 
equipment services, repairs or replacements and a fee for member-
requested relocation of computer equipment.\4\ The Exchange proposes to 
extend the current pilot program, which expired on March 31, 2000, 
through June 30, 2000.\5\
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    \4\ A fee is not charged for new installation of computer 
equipment. Fees also are not charged to participants on the foreign 
currency options trading floor.
    \5\ The Commission first approved the pilot program on December 
23, 1999. See Securities Exchange Act Release No. 42271 (December 
23, 1999), 65 FR 154 (January 3, 2000) (File No. SR-Phlx-99-45).
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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 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 Phlx has requested an extension through June 30, 2000 of a 
pilot program that amends the Exchange's fee schedule in two ways. 
First, pursuant to the current pilot program, the Phlx's schedule of 
dues, fees and charges was amended to impose a fee on all members on 
the options and equity floors for computer equipment services, repairs 
or replacements on the trading floors. Specifically, Phlx charges $100 
for every service calls plus $75 an hour, with a minimum of two hours 
charged per service calls.\6\ The Exchange anticipates that the 
majority of computer services, repairs or replacements will continue to 
be completed within two hours. Members are not billed for computer 
equipment services, repairs or replacements when new or refurbished, 
equipment fails in the normal and customary manner of usage within 30 
days of installation.
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    \6\ Some component of this amount may reflect Pennsylvania sales 
taxx.
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    The Exchange represents that these charges are intended to defray 
the cost of servicing, repairing or replacing computer equipment on the 
options and equity floors, as well as to encourage care in using the 
computer equipment.\7\ The Exchange represents that the bulk of calls 
that are routinely received by its Financial Automation Department are 
requests to repair, replace or otherwise service computer equipment at 
options or equity floor members' work stations.\8\
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    \7\ This proposed fee will apply to all such requests with no 
distinction between intentional abuse and normal wear and tear due 
to the difficulties associated with categorizing the types of 
repairs.
    \8\ Telephone conversation between John Dayton, Assistant 
Secretary and Counsel, Phlx, and Susie Cho, Attorney, Division, 
Commission, March 30, 2000.
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    Second, the Exchange has amended its schedule of dues, fees, and 
charges to also impose a fee for member-requested relocation of a 
member's work station or any piece of their computer equipment on the 
options or equity trading floor. Under the current pilot program, the 
Exchange imposes a $100 service fee plus $75 per hour per person moving 
the equipment, with a minimum of two hours charged for each relocation 
request.\9\ Members will continue to be billed on a monthly basis for 
computer equipment services, repairs or replacements and for member-
requested relocations of computer equipment.
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    \9\ For example, if two individuals take two hours to relocate a 
work station, the member will be charged $100 for the service call, 
plus $300 for moving the equipment (i.e., $75  x  4 (2 people  x  2 
hours)). Again, some component of this amount may reflect 
Pennsylvania sales tax.
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    The Exchange represents that the post/equipment relocation fee will 
assist Phlx in defraying the costs associated with the moving of 
computer equipment. The relocations on the options and equity floors 
can be very time-consuming and costly since nearly all relocations take 
place after hours or on the weekends.
    Under the current pilot program, Exchange staff and trading floor 
members complete a preprinted form prior to requesting repair or 
relocation service. A Notice to Members describing the equipment repair 
and relocation request procedures was sent to all floor members prior 
to the implementation of the current three-month pilot program that was 
in effect from January 1, 2000 through March 31, 2000. The procedures 
include instructions to members and Exchange staff as to where the 
service request forms are located, directions as to how to complete the 
form, and which department is required to forward the forms to the 
accounting department.
    The Exchange proposes to extend the pilot program for an additional 
three months, through June 30, 2000. The Exchange asserts that an 
extension would allow it to fully review the fees and procedures that 
were implemented on January 1, 2000. The Exchange would have an 
opportunity to determine whether the fees for computer equipment 
services, repairs or replacements and member-requested relocation of 
computer equipment that are charged to members are appropriate and 
reflect the costs for these services that are incurred by the Exchange. 
An extension of the pilot program would further enable the Exchange to 
determine whether the fees relating to computer equipment services, 
repairs or replacements and member-requested relocation of computer 
equipment should be applied to similar situations to foreign currency 
options participants

[[Page 20501]]

on the foreign currency options trading floor. I would also give the 
Board of Governors the opportunity to decide whether this pilot program 
should be implemented on a permanent basis.
2. Statutory Basis
    The Exchange believes that the proposed rule is consistent with 
Section 6(b) of the Act \10\ in general, and furthers the objectives of 
Section 6(b)(4) \11\ in particular, in that it provides for the 
equitable allocation of reasonable dues, fees and other charges among 
its members and other persons using its facilities.
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    \10\ 15 U.S.C. 78f(b).
    \11\ 15 U.S.C. 78f(b)(4).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange represents that the proposed rule change will impose 
no 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 solicited or received with respect to the 
proposed rule change.

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

    The foregoing proposed rule change has become effective pursuant to 
Section 19(b)(3)(A(ii) of the Act \12\ and Rule 19b-4(f)(2) thereunder 
\13\ 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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    \12\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \13\ 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.\14\ Persons making written 
submissions should file six copies thereof with the Secretary, 
Securities and Exchange Commission, 450 Fifth Street, N.W., Washington, 
D.C. 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 at 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.
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    \14\ In reviewing 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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    All submissions should refer to File No. SR-Phlx-00-24 and should 
be submitted by May 8, 2000.

    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. 00-9487 Filed 4-14-00; 8:45 am]
BILLING CODE 8010-01-M