00-31995. Self-Regulatory Organizations; Notice of Filing and Immediate Effectiveness of Proposed Rule Change by the Philadelphia Stock Exchange, Inc. Establishing Two Systems Changes and Corresponding Fees to Members and Member Organizations for ...

December 8, 2000.

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 November 30, 2000, the Philadelphia Stock Exchange, Inc (“Phlx” or “Exchange”) filed with the Securities and Exchange Commission (“Commission” or “SEC”) the proposed rule change as described in Items I, II, and III below, which Items have been prepared by the Exchange. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons.

I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change

The Phlx proposes to effect a systems change and amend its schedule of dues, fees and charges to impose a $.10 per trade off-Exchange information fee for Phlx equity specialist units utilizing an enhancement to the Phlx electronic equity system, the Phlx Automated Communication and Execution (“PACE”) System,^[3] that provides equity specialists on the floor with real-time trade information respecting Super Designated Order Turnaround (“Super Dot”) transactions in New York Stock Exchange, Inc. (“NYSE”) securities.^[4]

In addition, Phlx proposes to effect a systems change and amend its schedule of dues, fees and charges to impose a $300 per month remote information access fee on members and member organizations utilizing another enhancement to the PACE System that provides real-time trade information respecting trading positions to a remote access terminal.

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 purpose of the proposed rule change is to effect a systems change and amend the Phlx's fee schedule to impose a $.10 per trade off-Exchange trade information fee and a $300 per month remote information access fee for Phlx specialist units, who choose to utilize respective enhancements to the PACE System. These fees address the cost of, and demand for, these new interfaces, which offer important new risk management tools to Phlx specialists.

$.10 Per Trade Off-Exchange Trade Information Fee. The first of the new enhancements provides certain real-time positions to Phlox specialist units. Specifically, it enhances the Exchange's proprietary risk management systems by allowing Phlx specialist units to obtain more complete data reflecting real-time positions for their respective trading accounts for DOT transactions by means of a real-time interface with the PACE System. The enhancement incorporates DOT trades on a real-time basis into the Phlx specialist unit's position reports, which are displayed electronically via the PACE System. This feature, including the interface, is voluntary.

The proposed fee is being instituted to defray costs of establishing real-time DOT interfaces with various member organizations, providing trade information to Phlx specialist units as well as to cover costs of maintenance and operation.^[5] The real-time interface should contribute to enhancing the Phlx specialist unit's ability to track trading account positions by allowing more complete, time-sensitive position reports to be developed reflecting DOT transactions.

$300 Per Month Remote Information Access Fee. The second of the new enhancements allows specialist units to view trading positions from a remote access terminal off the trading floor. The new feature provides real-time positions to the off-floor (or “upstairs” offices of Phlx specialist units via a PACE System dial-up connection. This enhancement will enable the upstairs office of the Phlx specialist units access to data reflecting real-time positions for their respective trading accounts with specific detail, including the security, the last sale of that security, the profit or loss of the position, and a total long and/or short dollar value. This enhancement incorporates trades on a real-time basis into the specialist unit's position reports, which are displayed electronically at a remote access terminal via a dial-up connection. This feature, which is voluntary,^[6] is a means for off-floor principals of Phlx specialist units to gauge their unit's risk exposure.

The proposed fee is being instituted to defray the costs of and demand for this risk management report as well as maintenance and operation of the dial-up connection service. The Exchange is choosing to charge a flat monthly fee for this service. The Exchange believes that a flat monthly fee is appropriate as the fee for the remote access feature reflects the cost of creating and maintaining a dial-up connection with the off-floor offices of the specialist. Information transmitted through this dial-up connection is substantially similar to the information currently received by the specialist unit on the floor of the Exchange. The remote access feature should contribute to enhancing the upstairs office's ability to track trading account positions by allowing more complete, time-sensitive position reports to be viewed by a principals of specialist units from off the floor.

2. Statutory Basis

The Exchange believes the proposed rule change is consistent with Section 6(b)(4) and (6)(5) of the Act ^[7] in that it provides for the equitable allocation of reasonable dues, fees and other charges among its members and other persons using its facilities and promotes just and equitable principles of trade.

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.

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 Action

The foregoing rule change, which (1) establishes or changes a due, fee, or other charge imposed by the Exchange and (2) effects a change in an existing order-entry or trading system of the Exchange that (i) does not significantly affect the protection of investors of the public interest; (ii) does not impose any significant burden on competition; and (iii) does not have the effect of limiting the access to or availability of the system, has become effective pursuant to Section 19(b)(3)(A) of the Act ^[8] and subparagraph (f)(2) and (f)(5) of Rule 19b-4 thereunder.^[9] 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.

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, N.W., Washington, D.C. 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 at the Commission's Public Reference Room. Copies of such filing also will be available for inspection and copying at the principal office of the Phlx. All submissions should refer to File No. SR-PHLX-00-99 and should be submitted by January 5, 2001.

For the Commission, by the Division of Market Regulation, pursuant to delegated authority.^[10]

Margaret H. McFarland,

Deputy Secretary.

Footnotes

1.  15 U.S.C. 78s(b)(1).

2.  17 CFR 240.19b-4.

3.  See Phlx Rule 229.

4.  SuperDot is an order routing system of the NYSE.

5.  As originally filed, the purpose section stated that the enhancement provided execution services to Phlx specialist units. The Exchange has clarified that the enhancement does not provide execution services to Phlx specialist units. Instead, the enhancement only provides trade information to Phlx specialist units, which the specialist units may then use as they see fit. As per telephone conversation between John Dayton, Assistant Secretary and Counsel, Phlx, and Heather Traeger, Attorney, SEC, Division of Marker Regulation, on December 7, 2000.

6.  The Phlx confirmed that this feature is voluntary. Id.

7.  15 U.S.C. 78f(b)(4) and (b)(5).

8.  15 U.S.C. 78s(b)(3)(A).

9.  17 CFR 240.19b-4(f)(2) and (f)(5).

10.  17 CFR 240.30-2(a)(12).