Document ID: SEC-2008-0046-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Philadelphia Stock Exchange, Inc.
Posted Date: 2008-01-09T05:00Z

[Federal Register: January 9, 2008 (Volume 73, Number 6)]
[Notices]               
[Page 1659-1660]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr09ja08-82]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-57090; File No. SR-Phlx-2007-94]

 
Self-Regulatory Organizations; Philadelphia Stock Exchange, Inc.; 
Notice of Filing and Immediate Effectiveness of a Proposed Rule Change 
Amending the Examinations Fee

January 3, 2008.
    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 28, 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 the 
Exchange. 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

    Phlx proposes to expand its current Examinations Fee in order to 
assess this fee on: (1) Member organizations and participant 
organizations,\5\ for whom the Exchange is the Designated Examining 
Authority (``DEA''), that do not employ any off-floor traders; and (2) 
``inactive organizations.'' While changes to the Exchange's fee 
schedule pursuant to this proposal are effective upon filing, the 
Exchange has designated that the proposed changes become operative 
beginning January 1, 2008. The text of the proposed rule change is 
available at the Exchange, on its Web site at http:// phlx.com/

exchange/phlx--rule--fil.html, and at Commission's Public Reference 
Room.
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    \5\ For purposes of this proposed rule change, the term 
``participant organization'' means Foreign Currency Options 
Participant Organization, as that term is defined in Section 1-1(l) 
of Phlx's By-Laws. See telephone conversation between Cynthia 
Hoekstra, Vice President, Phlx, and Christopher Chow, Special 
Counsel, Division of Trading and Markets, Commission, on December 
31, 2007.
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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 Exchange 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 Exchange 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
    Currently, the Exchange implements a tiered Examinations Fee based 
on the number of off-floor traders in the same member/participant 
organization for whom the Exchange is the DEA.\6\ Specifically, a 
member/participant organization is assessed $2,100 per month for one to 
ten off-floor traders; $2,600 per month for 11 to 50 off-floor traders; 
$5,000 per month for 51 to 200 off-floor traders; and $12,500 per month 
for over 200 off-floor traders. However, the following member 
organizations are currently exempt from the assessment of the 
Examinations Fee: (1) Inactive organizations; \7\ and (2) organizations 
operating through one or more Phlx markets that demonstrated that 25% 
or more of its revenue as reflected on the most recently submitted 
FOCUS report or transactions as reflected on its purchase and sales 
blotter are derived from securities transactions on the Phlx.
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    \6\ In connection with charges assessed in connection with the 
trading of equity securities on XLE (the Exchange's equity trading 
system), Sponsored Participants are not included in the calculation 
of the number of off-floor traders in a Sponsoring Member 
Organization. See Securities Exchange Act Release No. 54941 
(December 14, 2006), 71 FR 77079 (December 22, 2006) (SR-Phlx-2006-
70).
    \7\ An inactive organization is defined as one that has no 
securities transaction revenue, as determined by Financial and 
Operational Combined Uniform Single Report (``FOCUS reports'') or 
other financial filings, as long as the member/participant 
organization continues to have no such revenue each month.
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    The Exchange proposes to assess the Examinations Fee on those 
member/participant organizations who do not have any off-floor traders 
because the Exchange must examine those member/participant 
organizations for whom the Exchange is the DEA.\8\ Member/

[[Page 1660]]

participant organizations with no off-floor traders in the same member/
participant organization would be assessed a monthly fee of $2,100, 
which is the same fee that is currently assessed on member/participant 
organizations with one to ten off-floor traders.
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    \8\ Member/participant organizations that have operated without 
an off-floor trader generally rely on persons registered with 
affiliated broker-dealers or operate utilizing a ``black box'' 
trading technology.
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    Additionally, the Exchange proposes to assess the Examinations Fee 
on inactive organizations, thereby eliminating the current inactive 
member/participant organization exemption.\9\ As a result, inactive 
member/participant organizations for whom the Exchange is the DEA will 
be assessed the Examinations Fee based on the number of off-floor 
traders in that inactive member/participant organization.\10\
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    \9\ The Exchange represents that it will continue to conduct 
examinations of member/participant organizations that have chosen to 
elect an ``inactive status.'' See telephone conversation between 
Cynthia Hoekstra, Vice President, Phlx, and Christopher Chow, 
Special Counsel, Division of Trading and Markets, Commission, on 
January 2, 2008.
    \10\ Member organizations operating through one or more Phlx 
markets that demonstrated that 25% or more of its revenue as 
reflected on the most recently submitted FOCUS report or 
transactions as reflected on its purchase and sales blotter are 
derived from securities transactions on Phlx will continue to be 
exempt from the assessment of the Examinations Fee.
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    The Exchange intends to implement the Examinations Fee as set forth 
in this proposal beginning January 1, 2008.
    The Exchange states that the purpose of revising the Examinations 
Fee is to more efficiently and effectively assess member/participant 
organizations for costs in connection with conducting examinations of 
member/participant organizations that do not have any off-floor traders 
for whom the Exchange is the DEA and for those that choose to elect an 
``inactive status.''
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the objectives of section 6 of the Act \11\ in general, and 
furthers the objectives of section 6(b)(4) of the Act \12\ in 
particular, in that it is designed to provide for the equitable 
allocation of reasonable dues, fees, and other charges among its 
members and other persons using its facilities. According to the 
Exchange, assessing member/participant organizations an Examinations 
Fee as set forth in this proposal should more efficiently and 
effectively charge those member/participant organizations for costs 
associated with conducting examinations of these organizations.
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    \11\ 15 U.S.C. 78f(b).
    \12\ 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 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 \13\ and Rule 
19b-4(f)(2) \14\ thereunder, because it establishes or changes a due, 
fee, or other charge imposed by the Exchange. Accordingly, the proposal 
took effect upon filing with the Commission. At any time within 60 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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    \13\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \14\ 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-Phlx-2007-94 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 20549-1090.

All submissions should refer to File Number SR-Phlx-2007-94. 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. Copies of such filing also will 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 Number SR-Phlx-2007-94 and should be 
submitted on or before January 30, 2008.
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    \15\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\15\
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E8-150 Filed 1-8-08; 8:45 am]

BILLING CODE 8011-01-P