[Federal Register Volume 65, Number 1 (Monday, January 3, 2000)]
[Notices]
[Pages 154-156]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-34017]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 42271; File No. SR-PHLX-99-45]
Self-Regulatory Organizations; Notice of Filing and Immediate
Effectiveness of a Proposed Rule Change by the Philadelphia Stock
Exchange, Inc. Relating to a Pilot Program to Impose Fees For Computer
Equipment Services, Repairs or Replacements and Relocation of Computer
Equipment
December 23, 1999.
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 October 29, 1999, 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 the
Exchange. On December 16, 1999, the Exchange
[[Page 155]]
submitted Amendment No. 1 \3\ to the proposed rule change.\4\
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\1\ 15 USC 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ In Amendment No. 1, the Exchange provided, among other
things, the dates during which the pilot program will be in effect,
clarified why the fees are being imposed, to whom they apply, and
represented that it will circulate a Notice to Members announcing
the pilot program. See Letter from Cynthia K. Hoeskstra, Counsel,
Phlx, to Jennifer Colihan, Attorney, Division of Market Regulation
(``Division''), SEC, dated December 16, 1999 (``Amendment No. 1'').
\4\ Because of the substantive nature of Amendment No. 1, the
Commission deems the proposal to be filed and effective as of
December 16, 1999, the date on which Amendment No. 1 was filed.
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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 schedule of dues, fees, and
charges to require all members on the options and equity floors to pay
a new fee for computer equipment services, repairs or replacements and
a fee for member-requested relocation of computer equipment.\5\ These
fees will be imposed on a three-month pilot basis beginning on January
1, 2000 and ending on March 31, 2000.
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\5\ A fee will not be charged for new installation of computer
equipment.
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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. 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
The proposed rule change amends the Phlx's fee schedule in two
ways. First, the Exchange would amend its schedule of dues, fees and
charges to impose a new fee on all members on the options and equity
floors for computer equipment services, repairs or replacements on the
trading floors. Specifically, the Exchange proposes to charge $100 for
every service call plus $75 an hour, with a minimum of two hours
charged.\6\ However, members will not be billed for computer equipment
services, repairs or replacements when new or refurbished equipment
fails in the normal and customary manner of usage within 30 days of
installation.
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\6\ Some component of this amount may reflect Pennsylvania sales
tax.
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The Exchange represents that these charges will cover the cost of
servicing, repairing or replacing computer equipment on the options and
equity floors.\7\ The Exchange receives 90 percent of calls on a
routine basis to repair, replace or otherwise service keyboards, track
balls, printers and other computer equipment from options or equity
floor members' work stations. The Exchange represents that this new fee
is intended to help cover the costs associated with the maintenance and
replacement of computer equipment, as well as to encourage care in
using the computer equipment.
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\7\ This proposed fee will apply to all such requests with no
distinction between intentional abuse or normal wear and tear due to
the difficulties associated with categorizing the types of repairs.
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Second, the Exchange would amend its schedule of dues, fees, and
charges to also impose another new fee for member-requested relocation
of a member's work station or any piece of their computer equipment on
the options or equity floor. In this case, the Exchange proposes to
charge a $100 service fee plus $75 per hour per person moving the
equipment, with a minimum of two hours charged for each relocation
request.\8\ The Exchange represents that the proposed fees are similar
to provisions adopted by the Pacific Exchange, Inc. (``PCX'') and the
Chicago Board Options Exchange (``CBOE'').\9\
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\8\ For example, if two individuals take two hours to relocate a
work station, the member will be charged $100 for the service call,
plus $300 for moving the equipment ($75 x four (two people x two
hours)). Again, some component of this amount may reflect
Pennsylvania sales tax.
\9\ See Securities and Exchange Act Release Nos. 41567 (June 28,
1999), 64 FR 36417 (July 6, 1999) (SR-PCX-99-19) and 29482 (July 24,
1999), 56 FR 36180 (July 31, 1999) (SR-CBOE-91-27).
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The Exchange represents that the post/equipment relocation fee will
assist in defraying the costs associated with the moving of computer
equipment. The Exchange states that on the options and equity floors,
the relocations can be very time-consuming and costly since nearly all
relocations take place after hours or on the weekends.
The Exchange intends to prepare pre-printed forms that floor
members can complete prior to requesting repair or relocation service.
A Notice to Members describing the equipment repair and relocation
request procedures will be sent to all floor members prior to
implementation.\10\
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\10\ This paragraph was clarified pursuant to a telephone
conversation between Cynthia Hoekstra, Counsel, Phlx, and Jennifer
Colihan, Attorney, SEC on December 21, 1999.
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The Exchange proposes to impose these new fees, to be billed
monthly, effective January 1, 2000 through March 31, 2000, to give the
Exchange the ability to monitor, and re-evaluate if necessary, the
procedures. These procedures include instructions to members as to
where the service request forms will be located, directions as to how
to complete the form and which department is required to forward the
forms to the accounting department. The procedures will also include a
provision that states that members will not be billed for computer
equipment services, repairs or replacements when new or refurbished
equipment fails in the normal and customary manner of usage within 30
days of installation. In addition, the three-month pilot program will
give the Exchange the opportunity to determine whether the fees for
computer equipment services, repairs or replacements and member-
requested relocation of computer equipment that are charged to member
are appropriate and reflect the costs for these services that are
incurred by the Exchange.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with Section 6(b) of the Act \11\ in general, and furthers the
objectives of Section 6(b)(4),\12\ in particular, in that it provides
for the equitable allocation of reasonable dues, fees and other charges
among its members and other persons using its facilities.
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\11\ 15 USC 78f(b).
\12\ 15 USC 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 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.
III. Date of Effectiveness of the Proposed Rule Change and Timing
for Commission Action
The foregoing rule change establishes or changes a due, fee or
charge imposed by the Exchange and, therefore, has become effective
upon filing pursuant to Rule 19(b)(3)(A) of the Act \13\ and Rule
[[Page 156]]
19b-4(f)(2) \14\ thereunder.\15\ 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 USC 78s(b)(3)(A).
\14\ 17 CFR 240.19b-4(f)(2).
\15\ In reviewing this proposal, the Commission has considered
its impact on efficiency, competition, and capital formation. 15 USC
78c(f).
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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. 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-99-45 and should
be submitted by January 24, 2000.
4For the Commission by the Division of Market Regulation,
pursuant to delegated authority.\16\
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\16\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 99-34017 Filed 12-30-99; 8:45 am]
BILLING CODE 8010-01-M
