Document ID: SEC-2008-1642-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Stock Clearing Corporation of Philadelphia
Posted Date: 2008-12-08T05:00Z

[Federal Register: December 8, 2008 (Volume 73, Number 236)]
[Notices]               
[Page 74556-74557]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr08de08-102]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-59031; File No. SR-SCCP-2008-02]

 
Self-Regulatory Organizations; Stock Clearing Corporation of 
Philadelphia; Notice of Filing and Immediate Effectiveness of Proposed 
Rule Change Relating to the Collection of Financial Industry Regulatory 
Authority Section 3 Regulatory Fees

December 1, 2008.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ notice is hereby given that on October 3, 2008, Stock 
Clearing Corporation of Philadelphia (``SCCP'') 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 primarily by SCCP. SCCP filed the proposed rule change 
pursuant to Section 19(b)(3)(A)(ii) of the Act \2\ and Rule 19b-4(f)(2) 
thereunder \3\ so that the proposal was effective upon filing with the 
Commission. The Commission is publishing this notice to solicit 
comments on the proposed rule change from interested parties.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 15 U.S.C. 78s(b)(3)(A)(i).
    \3\ 17 CFR 240.19b-4(f)(1).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    SCCP proposes to amend the SCCP fee schedule to accommodate the 
collection of fees by the Financial Industry Regulatory Authority 
(``FINRA'') \4\ pursuant to Section 3 of Schedule A to the FINRA By-
Laws (``Section 3 Fees'') from certain SCCP Margin Members that are 
also FINRA members (``Joint Members'') through an agreement 
(``Agreement'') that will be entered into among SCCP, FINRA and The 
NASDAQ OMX Group, Inc. (``NASDAQ'').
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    \4\ FINRA is a national securities association pursuant to 15 
U.S.C. 78o-3.
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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

1. Purpose
    The purpose of the proposed rule change is to amend the SCCP fee 
schedule to allow SCCP to collect Section 3 Fees from the Joint 
Members. Rule 31 \6\ under Section 31 of the Act \7\ requires national 
securities associations and national securities exchanges to pay 
transaction fees (``Section 31 Fees'') to the Commission that are 
designed to recover the costs related to the government's supervision 
and regulation of the securities markets and security professionals. 
Currently SCCP members submit transactions to SCCP for clearance of 
equity trades executed through XLE, which is the equity trading system 
of NASDAQ OMX PHLX, Inc., (``PHLX''). Because all SCCP members' 
transactions executed on XLE must be submitted to SCCP for trade 
recording and confirmation,\8\ SCCP creates and transmits to PHLX a 
monthly billing file of the Section 31 Fees for the SCCP members based 
on the ``covered sales'' executed through PHLX XLE.\9\ As a result of 
the acquisition of PHLX by NASDAQ,\10\ XLE will cease operations as of 
October 24, 2008.\11\ Because certain SCCP Members who clear through 
SCCP will no longer be able to use XLE, they have decided to become 
members of FINRA. FINRA obtains the funds used to pay Section 31 Fees 
from its membership in accordance with Section 3 of Schedule A to the 
FINRA By-Laws. FINRA's Section 3 Fees apply to ``covered sales'' 
transactions effected otherwise than on a national securities exchange. 
FINRA members are required to report transactions subject to Section 3 
Fees to FINRA in an automated manner using FINRA facilities, including 
among others, the FINRA/NASDAQ Trade Reporting Facility (``FINRA/NASDAQ 
TRF'').\12\ FINRA uses the transaction data reported to its automated 
facilities to bill member firms at the self-clearing and clearing firm 
level. However, SCCP is not a member firm of FINRA. Therefore, SCCP, 
FINRA and NASDAQ will enter into the Agreement allowing FINRA to obtain 
Section 3 fees from certain Joint Members by debiting SCCP's omnibus 
account at the National Securities Clearing Corporation (``NSCC'') on a 
monthly basis for the aggregate amount of covered sales reported to the 
FINRA/NASDAQ TRF by such Joint Members. Because the Section 3 Fees are 
ultimately obligations of the Joint Member and not SCCP, the proposed 
rule filing will allow SCCP to recover the Section 3 Fees obtained by 
FINRA from SCCP's NSCC omnibus account directly from the Joint Member 
based on the transaction data reported to the FINRA/NASDAQ TRF.
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    \6\ 17 CFR 240.31.
    \7\ 15 U.S.C. 7ee.
    \8\ See SCCP Rule 6, Trade Recording and Confirmation of 
Transactions.
    \9\ ``Covered sales'' means a sale of a security, other than an 
exempt sale or a sale of a security future, occurring on a national 
securities exchange or by or through any member of a national 
securities association otherwise than on a national securities 
exchange. 17 CFR 31(6).
    \10\ See Securities Exchange Act Release Nos. 58179 (July 17, 
2008), 73 FR 42874 (July 23, 2008) [SR-Phlx-2008-31]; 58180 (July 
17, 2008), 73 FR 42890 (July 23, 2008) [SR-SCCP-2008-01]; and 58183 
(July 17, 2008), 73 FR 42850 (July 23, 2008) [SR-NASDAQ-2008-035].
    \11\ See Securities Exchange Act Release No. 58613 (September 
22, 2008), 73 FR 57181 (October 1, 2008) [SR-Phlx-2008-65].
    \12\ See generally Securities Exchange Act Release No. 53977 
(June 12, 2006), 71 FR 34976 (June 16, 2006) [SR-NASD-2006-055]. 
Also, in limited instances FINRA members may report trades to FINRA 
using Form T.
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2. Statutory Basis
    SCCP believes that its proposal is consistent with Section 17A of 
the Act \13\ in general, and with Section 17A(b)(3)(D) of the Act,\14\ 
which requires that the rules of a registered clearing agency provide 
for the equitable allocation of reasonable fees and other charges among 
its participants. The filing will allow SCCP to provide a mechanism for 
collecting and remitting to FINRA the Section 3 Fees that FINRA charges 
to Joint Members.
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    \13\ 15 U.S.C. 78q-1.
    \14\ 15 U.S.C. 78q-1(b)(3)(D).
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(B) Self-Regulatory Organization's Statement on Burden on Competition

    SCCP does not believe that the proposed rule change will impose any 
burden on competition not necessary or

[[Page 74557]]

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

    No written comments were either solicited or received.

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 \15\ and Rule 
19b-4(f)(2) \16\ thereunder. Accordingly, the proposal will take effect 
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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    \15\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \16\ 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 Number SR-SCCP-2008-02 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-SCCP-2008-02. 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, 100 F Street, NE., Washington, DC 
20549, on official business days between the hours of 10 a.m. and 3 
p.m. The text of the proposed rule change is available at SCCP, the 
Commission's Public Reference Room, and http://www.phlx.com/about/
sccprulechanges.aspx. 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 Number 
SR-SCCP-2008-02 and should be submitted on or before December 29, 2008.

    For the Commission by the Division of Trading and Markets, 
pursuant to delegated authority.\17\
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    \17\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Acting Secretary.
 [FR Doc. E8-28961 Filed 12-5-08; 8:45 am]

BILLING CODE 8011-01-P