01-3682. Self-Regulatory Organizations; Notice of Filing and Immediate Effectiveness of Proposed Rule Change by the Philadelphia Stock Exchange, Inc. Amending Eligibility to Impose Fees for Computer Equipment Services, Repairs or Replacements and ...

February 6, 2001.

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 January 2, 2001, 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 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

Phlx pursuant to Rule 19b-4 of the Act, proposes to adopt fees ^[3] for (1) computer equipment services, repairs or replacements on the Foreign Currency Options (“FCO”) trading floor and (2) FCO participant-requested relocation of computer equipment.^[4] Additionally, the Exchange proposes to exempt track ball repairs and replacements from the computer equipment services, repairs or replacements fees for both members and FCO participants.

The text of the proposed rule change is available at the Office of the Secretary, the PCX, and the Commission.

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 amend the Phlx's fee schedule for (1) FCO computer equipment services, repairs, or replacements and (2) FCO participant-requested relocation of computer equipment, while exempting track ball repairs or replacements from the computer equipment services, repairs and replacement fees.

First, the Exchange proposes to impose a fee on participants on the FCO trading floor for computer equipment services, repairs or replacements on the trading floors. Specifically, the Phlx will extend, to the foreign currency options trading floor, charges currently imposed on members such that $100 will be charged for every service call plus $75 an hour, with a minimum of two hours charged per service call.^[5] The Exchange staff anticipates that the majority of computer services, repairs or replacements will be completed within two hours. Participants 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, participants will not be charged for repairing system-wide problems, rebooting central processing units and adjusting cables or replacing certain extension cables.

These charges are intended to defray the cost of servicing, repairing or replacing computer equipment on the FCO trading floor, as well as to encourage care in using the computer equipment.^[6] The Exchange receives a small percentage of calls for computer equipment services, repairs or replacements from participants on the FCO trading floor.^[7]

Second, the Exchange proposes to adopt a fee substantially similar to that currently imposed on members for an FCO participant-requested relocation of a FCO participant's workstation or any other piece of their computer equipment on the FCO trading floor. The charges will consist of 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 post/equipment relocation fee should assist in defraying the costs associated with the moving of computer equipment. FCO participant-requested relocations on the trading floor are very time-consuming and costly because nearly all relocations take place after business hours or on the weekends.

At this time, Exchange staff and members trading floor personnel should complete a pre-printed form prior to requesting repair or relocation service. A notice describing the equipment repair procedures was sent to all floor members prior to the implementation of the fee on equity and options floor members, and notice will be given to FCO participants as well.

Under the current fee that is applied to members on equity and options trading floor, the Exchange staff had the opportunity to review the procedures relating to computer equipment services, repairs, replacements and relocations, which include instructions to members and Exchange staff 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 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 usage within 30 days of installation. These same procedures will now be followed for computer-related requests received from FCO participants. The procedures described above have proven to be an effective way to administer these requests, including the billing of fees, and should continue to allow for the efficient handling of computer equipment services, repairs or replacement and member/participant requested relocation of computer equipment while exempting repairs and replacements of track ball equipment. The Exchange has determined to exempt repairs and/or replacements for track ball devices from the computer equipment service fees as regular and recurring maintenance of these essential peripheral devices is necessary in the ordinary course of business operations.

The Exchange has determined that the fees for computer equipment services, repairs or replacements (exempting track ball equipment) and relocation of computer equipment that are charged are appropriate and reflect the costs for these services that are incurred by the Exchange. The minimum charge of $250 per service call for computer equipment services, repairs, replacements or relocations reasonably approximates the average costs for these services. However, the minimum charge may not cover all the costs involved in repairing, servicing and relocating computer equipment. Members and FCO participants will continue to be billed on a monthly basis for these charges.

2. Statutory Basis

The Exchange believes that its proposal to amend its schedule of dues, fees and charges to impose a fee for computer equipment services, repairs or replacements (while exempting track ball equipment repairs or replacements) and a fee for member/participant-requested relocation of computer equipment is consistent with Section 6(b) ^[9] of the Act, in general, and Section 6(b)(4) of the Act,^[10] in particular, because it provides for the equitable allocation of reasonable dues, fees and other charges among its members and other persons using its facilities.

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

Written comments were neither solicited nor received.

III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action

Because the foregoing rule change establishes or changes a due, fee, or other charge imposed by the Exchange, it has become effective pursuant to Section 19(b)(3)(A) ^[11] of the Act and subparagraph (f)(2) of Rule 19b-4 ^[12] thereunder. 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-00-109 and should be submitted by March 7, 2001.

For the Commission, by the Division of Market Regulation, pursuant to delegated authority.^[13]

Margaret H. McFarland,

Deputy Secretary.

Footnotes

1.  15 U.S.C. 78s(b)(1).

2.  17 CFR 240.19b-4.

3.  Currently, all members on the Exchange's options and equity members on the options and equity trading floors pay a fee for (1) computer equipment services, repairs, or replacements and (2) member-requested relocation of computer equipment. See Securities Exchange Act Release No. 43081 (SR-Phlx-00-53) (July 27, 2000).

4.  A fee will not be charged for new installation of computer equipment.

5.  Some component of this amount may reflect Pennsylvania sales tax.

6.  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.

7.  The majority of calls are from members on equity trading floors. The lower percentage, of FCO repair requests is due to the relatively small number of computers and computer related equipment in use on the FCO trading floor as compared to the options and equity trading floors.

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 × four (two people × two hours)). Again, some component of this amount may reflect Pennsylvania sales tax.

9.  15 U.S.C. 78f(b).

10.  15 U.S.C. 78f(b)(4).

11.  15 U.S.C. 78s(b)(3)(A).

12.  17 CFR 240.19b-4(f)(2).

13.  17 CFR 200.30-3(a)(12).