Document ID: SEC-2007-0552-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: Philadelphia Stock Exchange, Inc.
Posted Date: 2007-04-13T04:00Z

[Federal Register: April 13, 2007 (Volume 72, Number 71)]
[Notices]               
[Page 18718-18719]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr13ap07-94]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-55599; File No. SR-Phlx-2007-32]

 
Self-Regulatory Organizations; Philadelphia Stock Exchange, Inc.; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change 
Relating to the Equity Option and Index Option Floor Brokerage 
Assessment

April 6, 2007.
    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 30, 2007, 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 substantially prepared by Phlx. 
Phlx filed the proposal pursuant to Section 19(b)(3)(A)(ii) of the Act 
\3\ and Rule 19b-4(f)(2) thereunder,\4\ which renders the proposal 
effective upon filing with the Commission. 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\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \4\ 17 CFR 240.19b-4(f)(2).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    Phlx proposes to amend the equity option and index option Floor 
Brokerage Assessment to change the levels of the monthly net floor 
brokerage income and corresponding assessment and to effectively reduce 
the fee cap from $100,000 per month to $10,000 per month. The proposed 
equity option and index option Floor Brokerage Assessment is set forth 
below:

------------------------------------------------------------------------
    Monthly net floor brokerage income               Assessment
------------------------------------------------------------------------
$0-$200,000...............................  5% for all amounts up to and
                                             including $200,000.
Any amount over $200,000..................  No additional charge.
------------------------------------------------------------------------
                          Monthly Cap: $10,000.
------------------------------------------------------------------------

The proposed amendments to the Floor Brokerage Assessment, as set forth 
above, are scheduled to become effective for trades settling on or 
after April 2, 2007.
    The Exchange also proposes to make a minor technical change to 
clarify that the title ``Summary of Equity Option and RUT and RMN 
Charges'' should appear on each page of that section of the fee 
schedule rather than merely on the first page. The text of the proposed 
rule change is available at Phlx, the Commission's Public Reference 
Room, and http://www.phlx.com.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, 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. 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 amending the Floor Brokerage Assessment, including 
effectively lowering the monthly fee cap to $10,000,\5\ is to create a 
financial incentive for floor brokers to send additional order flow to 
the Exchange, which should, in turn, allow the Exchange to remain 
competitive.
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    \5\ Although the fee schedule will reflect a cap of $10,000, in 
actuality listing the cap is just for clarity; mathematically, the 
cap would exist anyway because the 5% assessment would be applied to 
the monthly net floor brokerage income for all amounts up to and 
including $200,000. For example, if the net floor brokerage income 
is $300,000 for a particular month, then the first $200,000 would be 
assessed a rate of 5%, (which is $10,000) and the remainder 
($100,000) would not be charged any additional Floor Brokerage 
Assessment.
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    The purpose of setting forth the title ``Summary of Equity Option 
and RUT and RMN Charges'' on each applicable page of the fee schedule 
is to codify a change that was recently made to the Exchange's fee 
schedule. The Exchange recently filed a proposed rule change to assess 
equity option charges (including payment for order flow charges), as 
opposed to index option charges, on (1) options on the Russell 
2000[supreg] Index \6\ traded under the symbol RUT (the ``Full Value 
Russell Index''), and (2) options on the one-tenth value Russell 
2000[supreg] Index traded under the symbol RMN (the ``Reduced Value 
Russell Index'').\7\ The Exchange changed the title of the first page 
of the equity option fee schedule from ``Summary of Equity Option 
Charges'' to ``Summary of Equity Option and RUT and RMN Charges,'' but 
inadvertently did not make corresponding changes to the title on each 
subsequent page of the equity option fee schedule. Thus, placing the 
title ``Summary of Equity Option and RUT and RMN Charges'' on each page 
will more accurately reflect the changes that were recently made to the 
Exchange's fee schedule, as described above.
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    \6\ Russell 2000[supreg] is a trademark and service mark of the 
Frank Russell Company, used under license. Neither Frank Russell 
Company's publication of the Russell Indexes nor its licensing of 
its trademarks for use in connection with securities or other 
financial products derived from a Russell Index in any way suggests 
or implies a representation or opinion by Frank Russell Company as 
to the attractiveness of investment in any securities or other 
financial products based upon or derived from any Russell Index. 
Frank Russell Company is not the issuer of any such securities or 
other financial products and makes no express or implied warranties 
of merchantability or fitness for any particular purpose with 
respect to any Russell Index or any data included or reflected 
therein, nor as to results to be obtained by any person or any 
entity from the use of the Russell Index or any data included or 
reflected therein.
    \7\ See Securities Exchange Act Release No. 55473 (March 14, 
2007), 72 FR 13338 (March 21, 2007) (SR-Phlx-2007-12).
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2. Statutory Basis
    The Exchange believes that its proposal to amend its schedule of 
fees is consistent with Section 6(b) of the Act,\8\ in general, and 
furthers the objectives of Section 6(b)(4) of the Act,\9\ in 
particular, in that it is an equitable

[[Page 18719]]

allocation of reasonable fees and other charges among Exchange members.
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    \8\ 15 U.S.C. 78f(b).
    \9\ 15 U.S.C. 78f(b)(4).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition that is not necessary or appropriate 
in furtherance of the purposes of the Act.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    The Exchange 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 proposed rule change has been designated as a fee 
change pursuant to Section 19(b)(3)(A)(ii) of the Act \10\ and Rule 
19b-4(f)(2) \11\ thereunder. Accordingly, the proposed rule change is 
effective upon filing with the Commission. 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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    \10\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \11\ 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. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml.
); or     Send an e-mail to rule-comments@sec.gov. Please include 

File No. SR-Phlx-2007-32 on the subject line.

Paper Comments

     Send paper comments in triplicate to Nancy M. Morris, 
Secretary, Securities and Exchange Commission, Station Place, 100 F 
Street, NE., Washington, DC 20549-1090.

All submissions should refer to File No. SR-Phlx-2007-32. This file 
number should be included on the subject line if e-mail is used. To 
help the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml
). 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 Exchange. All comments received will be posted 
without change; the Commission does not edit personal identifying 
information from submissions. You should submit only information that 
you wish to make available publicly. All submissions should refer to 
File No. SR-Phlx-2007-32 and should be submitted on or before May 4, 
2007.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\12\
Florence E. Harmon,
Deputy Secretary.
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    \12\ 17 CFR 200.30-3(a)(12).
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 [FR Doc. E7-7007 Filed 4-12-07; 8:45 am]

BILLING CODE 8010-01-P