[Federal Register Volume 66, Number 4 (Friday, January 5, 2001)]
[Notices]
[Pages 1166-1167]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-312]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-43776; File No. SR-PHLX-00-103]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change and Amendment No. 1 Thereto by 
the Philadelphia Stock Exchange, Inc. Relating to Proposed Fees for 
Processing of Units of Beneficial Interest in the Nasdaq-100 Trust, 
Series 1

December 28, 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 8, 2000, the Philadelphia Stock Exchange, Inc. (``Phlx'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission'') the proposed rule change as described in Items I, II, 
and III below, which Items have been prepared by the Exchange. On 
December 14, 2000, the Exchange submitted Amendment No. 1 to the 
proposed rule change.\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\ In Amendment No. 1, the Exchange: replaced the term 
``Nasdaq-100 Shares'' with ``Nasdaq-100 Index Tracking Stock'' noted 
that ``Nasdaq-100 Index Tracking Stock'' and ``QQQ'' are service 
marks of the Nasdaq Stock Market, Inc. (``Nasdaq'') and that the 
Phlx has entered into a licensing agreement with Nasdaq to use those 
marks for certain purposes; observed that the Commission has 
approved a related rule filing, File No. SR-Phlx-00-54, relating to 
the listing and trading of Trust Shares; clarified that a fee for 
trades not processed through the Phlx Automated Communication and 
Execution System (``PACE'') will be paid by members of the Exchange; 
and clarified that the Phlx will charge specialists a per-share fee 
whether or not an order is executed via PACE. See letter from Carla 
Behnfeldt, Counsel, Phlx, to Nancy Sanow, Assistant Director, 
Division of Market Regulation, Commission, dated December 14, 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 Exchange proposes to amend its fee schedule to accommodate the 
trading of Units of Beneficial Interest in the Nasdaq 100 Trust, Series 
1 (``Nasdaq-100 Index Tracking Stock''), traded under the symbol and 
widely known as QQQ. On June 14, 2000, the Phlx filed a proposed rule 
change with the Commission to permit, among other things, the trading 
pursuant to unlisted trading privileges (``UTP''), of Nasdaq-100 Index 
Tracking Stock.\4\ The proposal has been approved.\5\ In addition, the 
Exchange has obtained a license to use the Nasdaq-100 Index in 
connection with the trading of the Nasdaq-100 Index Tracking Stock.\6\
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    \4\ File No. SR-Phlx-00-54.
    \5\ Securities Exchange Act Release No. 43717 (December 13, 
2000). The proposal is pending publication in the Federal Register.
    \6\ The Nasdaq-100<Register>, Nasdaq-100 Index<Register>, 
Nasdaq<Register>, The Nasdaq Stock Market<Register>, Nasdaq-100 
Shares\SM\, Nasdaq-100 Trust \SM\, Nasdaq-100 Index Tracking Stock 
\SM\, and QQQ \SM\, are trademarks or service marks of The Nasdaq 
Stock Market, Inc. (``Nasdaq'') and have been licensed for use for 
certain purposes by the Phlx pursuant to a License Agreement with 
Nasdaq. The Nasdaq-100 Index<Register> (``Index'') is determined, 
composed, and calculated by Nasdaq without regard to the Licensee, 
the Nasdaq-100 Trust<SUP>TM</SUP>, or the beneficial owners of 
Nasdaq-100 Shares\SM\. Nasdaq has complete control and sole 
discretion in determining, comprising or calculating the Index or in 
modifying in any way its method for determining, comprising or 
calculating the Index in the future.
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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 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 provide for fees that 
will apply to trading on the Exchange of Units of Beneficial Interest 
in the Nasdaq 100 Trust, Series 1, referred to as ``Nasdaq 100 
Shares.'' Specifically, under the Exchange's proposal the Exchange will 
assess no charge to members for trades entered through the Phlx 
Automated Communication and Execution System (``PACE''), but will 
impose a $1.00 fee for non-PACE trades.\7\ Specialists will be charged 
a fee of $0.002 per share, with a maximum charge of $50.00 per trade, 
whether or not a trade takes place on PACE.\8\ No other Phlx 
transaction fees will apply to trades in Nasdaq-100 Index Tracking 
Stock. The Exchange represents that, upon initiation of trading, 
members will be notified, by means of a circular, of the new fees 
applicable to trading in Nasdaq-100 Index Tracking Stock.
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    \7\ The $1.00 fee for non-PACE trades will be paid by a member 
who is trading with a specialist, either for the member's own 
account or for the account of the member's customer. See Amendment 
No. 1, supra note 3.
    \8\ Id.
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    The Exchange represents that the fees proposed above for 
transactions in Nasdaq-100 Index Tracking Stock are lower than the fees 
charged for other equities already traded on the Exchange. The Phlx 
believes that the proposed lower fees should encourage trading of 
Nasdaq-100 Index Tracking Stock, while ensuring that the amounts 
collected will still cover the Exchange's costs of administering the 
trading of this new product. The Exchange further states that lower 
fees should also provide market participants with a more affordable 
market for the trading of this product. The Phlx states that a more 
affordable, competitive market for trading should attract more order 
flow in Nasdaq-100 Index Tracking Stock to the Exchange, which in turn 
should further increase liquidity of Nasdaq-100 Index Tracking Stock, 
and create a tighter, more liquid market. The Phlx represents that 
increased market competition should both benefit investors and protect 
the public interest in general.
2. Statutory Basis
    The Exchange believes that the proposal is consistent with Section 
6(b) of the Act,\9\ in general, and furthers the objectives of Section 
(6)(b)(4) \10\ in particular because it applies equally to all members 
that would be trading the Nasdaq-100 Index Tracking Stock and, 
therefore, is an equitable allocation of reasonable fees among Exchange 
members.
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    \9\ 15 U.S.C. 78f(b).
    \10\ 15 U.S.C. 78s(b)(4).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Phlx represents that it does not believe 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 either solicited or received.

[[Page 1167]]

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 \11\ and Rule 19b-4(f)(2) thereunder 
\12\ because it establishes or changes a due, fee, or other charge 
imposed by the self-regulatory organization. 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.\13\
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    \11\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \12\ 17 CFR 240.19b-4(f)(2).
    \13\ 15 U.S.C. 78s(b)(3)(C).
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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, as amended, 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-00-103 and should be submitted by January 26, 2001.

    For the Commission by the Division of Market Regulation, 
pursuant to delegated authority.\14\
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    \14\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 01-312 Filed 1-4-01; 8:45 am]
BILLING CODE 8010-01-M