[Federal Register Volume 66, Number 242 (Monday, December 17, 2001)]
[Notices]
[Pages 65017-65018]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-30956]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-45145; File No. SR-SCCP-2001-01]


Self-Regulatory Organizations; Stock Clearing Corporation of 
Philadelphia; Notice of Filing and Immediate Effectiveness of a 
Proposed Rule Change Relating To Adopting a Fee Schedule for Electronic 
Communications Networks

December 10, 2001.
    Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ notice is hereby given that on January 23, 2001, the 
Stock Clearing Corporation of Philadelphia (``SCCP'') filed with the 
Securities and Exchange Commission (``Commission'') and on June 25, 
2001, and November 27, 2001, amended the proposed rule change as 
described in Items I, II, and III, below, which Items have been 
prepared by SCCP. 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).
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I. Self-Regulatory Organization's Statement of the Terms of 
Substance of the Proposed Rule Change

    SCCP has adopted a new fee schedule for SCCP participants for 
trades executed on the Philadelphia Stock Exchange, Inc. (``Phlx'') for 
Electronic Communications Networks (``ECNs'').\2\ The new fee schedule 
will operate as a pilot program for one year, wherein SCCP proposes to 
waive certain dues, fees and charges, including trade recording fees, 
value fees, treasury transactions charges but not account fees, 
research fees, computer transmission/tapes charges, or miscellaneous 
charges on SCCP's fee schedule.\3\
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    \2\ ECNs shall mean any electronic system that widely 
disseminates to third parties orders entered therein by an Exchange 
market maker or over-the-counter (``OTC'') market maker, and permits 
such orders to be executed against in whole or in part; except that 
the term ECN shall not include: any system that crosses multiple 
orders at one or more specified times at a specified price set by 
the ECN, algorithm, or by any derivative pricing mechanism and does 
not allow orders to be crossed or executed against directly by 
participants outside of such times; or, any system operated by or on 
behalf of an OTC market maker or exchange market maker that executes 
customer orders primarily against the account of such market maker 
as principal, other than riskless principal.
    \3\ Certain provisions of the SCCP Fee Schedule will not apply 
to ECNs because they apply to specialists and/or relate to margin 
financing, such as specialist discount, margin account interest, P&L 
statements charges, and buy-ins.
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    After the initial pilot period, an ECN will be eligible for the new 
fee schedule only if it has achieved average daily equity volume on the 
Phlx of at least 5,000 trades and 5,000,000 shares in the twelfth month 
after the ECN first became subject to the ECN fee schedule.\4\ If the 
targeted amount is not met, the ECN will be subject to the SCCP fee 
schedule in effect at that time. After this pilot program ends in 2002, 
SCCP will make another rule filing with the Commission to establish new 
fees based on volume thresholds for ECNs.
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    \4\ Because this volume requirement only applies to volume in 
the twelfth month (meaning to the thirteenth month's fee), actually 
waiving SCCP fees that month would necessarily require an extension 
of the pilot program beyond the initial 12 months. In the extension, 
SCCP would address whether the targets would continue to be monthly.
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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, SCCP 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. SCCP has prepared summaries, set forth in sections A, B, 
and C below, of the most significant aspects of such statements.\5\
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    \5\ The Commission has modified the text of the summaries 
prepared by SCCP.
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A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    The proposed changes to SCCP's fee schedule are intended to attract 
equity order flow from ECNs to Phlx by substituting a more competitive 
fee schedule tied to high volume targets. The high volume targets would 
be triggered in the twelfth month of the fee. Should an ECN not meet 
the targeted volume numbers described above, it

[[Page 65018]]

may become subject to the then current SCCP fee schedule in the 
thirteenth month.
    SCCP believes that the ECN fee schedule provides competitive fees 
with appropriate incentives, thus providing a reasonable method to 
attract large order flow providers such as ECNs to the Exchange. 
Additional order flow should enhance liquidity and improve Phlx's and 
SCCP's competitive position in equity trading and clearance.
    SCCP believes that the proposed changes to its fee schedule are 
consistent with section 17A of the Act because that they provide for 
the equitable allocation of reasonable dues, fees, and other charges in 
order to attract a new form of order flow to Phlx.

B. Self-Regulatory Organization's Statement on Burden on Competition

    SCCP 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 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 \6\ and Rule 19b-4(f)(2) \7\ thereunder 
because the proposed rule change establishes a fee. At any time within 
sixty 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 
purposes of the Act.
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    \6\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \7\ 17 CFR 240.19b-(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. 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 Phlx's principal office. All 
submissions should refer to File No. SR-SCCP-2001-01 and should be 
submitted by January 7, 2002.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\8\
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    \8\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 01-30956 Filed 12-14-01; 8:45 am]
BILLING CODE 8010-01-M