Document ID: SEC-2006-0129-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: Philadelphia Stock Exchange, Inc.
Posted Date: 2006-02-01T05:00Z

[Federal Register: February 1, 2006 (Volume 71, Number 21)]
[Notices]               
[Page 5394-5396]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr01fe06-164]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-53180; File No. SR-Phlx-2005-90]

 
Self-Regulatory Organizations; Philadelphia Stock Exchange, 
Incorporated; Notice of Filing and Immediate Effectiveness of a 
Proposed Rule Change Relating to a Session Fee Increase for the 
Regulatory Element of the Continuing Education Program

January 26, 2006.
    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 23, 2005, 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 Phlx. The 
Exchange has designated this proposal as one establishing or changing a 
due, fee, or other charge imposed by Phlx under 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

    The Phlx proposes to amend its schedule of fees to increase the 
Regulatory Element Session fee from $60 to $75 effective January 1, 
2006. The text of this proposed rule change is

[[Page 5395]]

available on the Exchange's Web site (http://www.phlx.com), at the 

Phlx, and at the Commission's Public Reference Room.

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 proposed rule change provides notice to the Exchange's 
membership of the recent increase to the Regulatory Element Session fee 
from $60 to $75 effective January 1, 2006. The Regulatory Element, a 
computer-based education program administered by the National 
Association of Securities Dealers, Inc. (``NASD'') to help ensure that 
registered persons are kept up-to-date on regulatory, compliance, and 
sales practice matters in the industry, is a component of the 
Securities Industry Continuing Education Program (``Program''). The 
Securities Industry/Regulatory Council on Continuing Education 
(``Council'')\5\ was organized in 1995 to facilitate cooperative 
industry/regulatory coordination of the administration and future 
development of the Program in keeping with applicable industry 
regulations and changing industry needs. Its roles include recommending 
and helping develop specific content and questions for the Regulatory 
Element, defining minimum core curricula for the Firm Element component 
of the Program, and developing and updating information about the 
Program for industry-wide dissemination.
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    \5\ The Council currently consists of 20 individuals, 14 of whom 
are securities industry professionals associated with NASD member 
firms, and six of whom represent self-regulatory organizations (the 
American Stock Exchange LLC, the Chicago Board Options Exchange, 
Inc., the Municipal Securities Rulemaking Board, NASD, the New York 
Stock Exchange, Inc., and the Phlx).
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    It is the Council's responsibility to maintain the Program on a 
revenue neutral basis while maintaining adequate reserves for 
unanticipated future expenditures.\6\ In December 2003, the Council 
voted to reduce the Regulatory Element session fee from $65 to $60 
effective January 1, 2004, in order to reduce the reserves to a level 
necessary to support current and expected programs and expenses. The 
Council decided to review the reserve level and evaluate the Regulatory 
Element session fee on an annual basis. The 2004 financial review and 
evaluation produced no change in the Regulatory Element session fee. In 
September 2005, the Council's annual financial review and evaluation 
revealed that unless the Regulatory Element session fee were adjusted, 
the Council's reserves were likely to be insufficient in 2006. The 
reasons for the declining surplus are: (1) Lower than projected session 
volume resulting in a significant decrease in actual revenue over 
projected revenue; (2) higher delivery-related expenses beginning in 
2006; and (3) costs associated with the rebuilding of 
PROCTOR[supreg].\7\ At its September 2005 meeting, the Council voted 
unanimously to increase the Regulatory Element session fee from $60 to 
$75, effective January 1, 2006, in order to meet costs and maintain an 
adequate reserve in 2006.
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    \6\ The Regulatory Element session fee was initially set at $75 
when NASD established the continuing education requirements in 1995. 
The fee was reduced in 1999 to $65 and again in 2004 to $60. The 
proposed fee increase returns the Regulatory Element session fee to 
its original level.
    \7\ PROCTOR[supreg] is a technology system that supports 
computer-based testing and training. The Regulatory Element program 
uses PROCTOR[supreg] to package content, deliver, score and report 
results, and maintain and generate statistical data related to the 
Program.
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    Pursuant to Exchange Rule 640, each registered person is required 
to complete the Regulatory Element of the continuing education 
program.\8\ The Regulatory Element Session fee continues to be payable 
directly to the NASD. A notice will be provided to the Exchange's 
membership of the increase in the fee and the effective date of the 
increase.
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    \8\ See Exchange Rule 640(a)(1) which states, ``Each registered 
person shall complete the Regulatory Element of the continuing 
education program on the occurrence of their second registration 
anniversary date(s), and every three years thereafter or as 
otherwise prescribed by the Exchange. On each occasion, the 
Regulatory Element must be completed within 120 days after the 
person's registration anniversary date. A person's initial 
registration date, also known as the ``base date,'' shall establish 
the cycle of anniversary dates for purposes of this Rule. The 
content of the Regulatory Element of the program shall be determined 
by the Exchange for each registration category of persons subject to 
the rule.''
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2. Statutory Basis
    The Exchange believes this is consistent with Section 6(b) of the 
Act,\9\ in general, and furthers the objectives of Section 6(b)(4)\10\ 
and 6(b)(5)\11\ of the Act, in particular, in that it is an equitable 
allocation of reasonable dues, fees, and other charges among Phlx 
members and other persons using its facilities, and that Phlx rules 
must be designed to prevent fraudulent and manipulative acts and 
practices, to promote just and equitable principles of trade, and, in 
general, to protect investors and the public interest. Phlx believes 
that the proposed rule change is designed to accomplish these ends by 
enabling the Program to be maintained on a revenue neutral basis while 
maintaining adequate reserves for unanticipated future expenditures.
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    \9\ 15 U.S.C. 78f(b).
    \10\ 15 U.S.C. 78f(b)(4).
    \11\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Phlx 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

    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 \12\ and Rule 
19b-4(f)(2) thereunder,\13\ because it establishes or changes a due, 
fee or other charge imposed by the Exchange. 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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    \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,

[[Page 5396]]

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-Phlx-2005-90 on the subject line.

Paper Comments

     Send paper comments in triplicate to Nancy M. Morris, 
Secretary, Securities and Exchange Commission, 100 F Street, NE., 
Washington, DC 20549-9303.

All submissions should refer to File Number SR-Phlx-2005-90. 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 the filing 
also will be available for inspection and copying at the principal 
offices of the Phlx. 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-Phlx-2005-90 and should be submitted on or before February 22, 2006.

    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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Nancy M. Morris,
Secretary.
[FR Doc. E6-1305 Filed 1-31-06; 8:45 am]

BILLING CODE 8010-01-P