66 FR 164 pgs. 44393-44394 - Self-Regulatory Organizations; Notice of Filing and Immediate Effectiveness of Proposed Rule Change by the Philadelphia Stock Exchange, Inc., To Suspend Imposition of its Payment for Order Flow Fee
Type: NOTICEVolume: 66Number: 164Pages: 44393 - 44394
Docket number: [Release No. 34-44716; File No. SR-PHLX-2001-73]
FR document: [FR Doc. 01-21307 Filed 8-22-01; 8:45 am]
Agency: Securities and Exchange Commission
Official PDF Version: PDF Version
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-44716; File No. SR-PHLX-2001-73]
Self-Regulatory Organizations; Notice of Filing and Immediate Effectiveness of Proposed Rule Change by the Philadelphia Stock Exchange, Inc., To Suspend Imposition of its Payment for Order Flow Fee
August 16, 2001.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 ("Act"),1and Rule 19b-4 thereunder,2notice is hereby given that on August 2, 2001, the Philadelphia Stock Exchange, Inc. ("Phlx") filed with the Securities and Exchange Commission ("Commission") the proposed rule change as described in Items, I, II, and III, below, which Items the Phlx has prepared. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons.
Footnotes:
1 15 U.S.C. 78s(b)(1).
2 17 CFR 240.19b-4.
I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change
The Phlx proposes to suspend imposition of its $1.00 payment for order flow fee beginning with contracts settling on or after August 1, 2001.3The text of the proposed rule change is available at the principal offices of the Phlx and at the Commission.
Footnotes:
3 The Phlx would continue to provide Phlx specialists and order flow providers with reports regarding the quality of execution of options orders, and specialists or specialist units would continue to be governed by the books and records requirements of Phlx Rule 760. See Securities Exchange Act Release Nos. 43436 (October 11, 2000), 65 FR 63281 (October 23, 2000) (SR-Phlx-00-83) and 44405 (June 11, 2001), 66 FR 32859 (June 18, 2001) (SR-Phlx-2001-08).
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 had received. 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
The purpose of the proposed rule change is to suspend imposition of the Phlx's payment for order flow fee for contracts settling on or after August 1, 2001.
In August 2000, the Phlx imposed a $1.00 per contract fee on transactions by Phlx specialists and Registered Options Traders ("ROTs") in the top 120 options traded on the Phlx.4The payment for order flow fee did not apply to index or currency options. In addition, transactions between: (1) A specialist and an ROT; (2) an ROT and an ROT; (3) a specialist and a firm; (4) an ROT and a firm; (5) a specialist and a broker-dealer; and (6) an ROT and a broker-dealer were excepted from the $1.00 fee.5
Footnotes:
4 The Phlx defines a top 120 option as one of the 120 most actively traded equity options in terms of the total number of contracts that are traded nationally based on volume reflected by the Options Clearing Corporation. The Phlx recalculates the top 120 options every six months. For the period from April 2, 2001 through June 30, 2001, when options on the Nasdaq-100 Trust (trading under the symbol QQQ) were added to the program, there were 121 options on the Phlx's list. See Securities Exchange Act Release No. 44237 (April 30, 2001), 66 FR 23308 (May 8, 2001) (SR-Phlx-2001-43).
5 See Securities Exchange Act Release Nos. 43177 (August 18, 2000), 65 FR 51889 (August 25, 2000) (SR-Phlx-00-77); 43480 (October 25, 2000), 65 FR 66275 (Nov. 3, 2000) (SR-Phlx-00-86 and SR-Phlx-00-87); and 43481 (Oct. 25, 2000), 65 FR 66277 (November 3, 2000) (SR-Phlx-00-88 and SR-Phlx-00-89).
The Phlx believes that its proposal to suspend imposition of the fee is consistent with Section 6(b) of the Act6and furthers the objectives of Sections 6(b)(4) and (5) of the Act7in that it is an equitable allocation of reasonable fees among the Phlx's members. The Phlx notes that, although it is suspending the imposition of its payment for order flow fee, members may continue to negotiate their own private arrangements with order flow providers to attract options orders to the Phlx.
Footnotes:
6 15 U.S.C. 78f(b).
7 15 U.S.C. 78f(b)(4) and (5).
B. Self-Regulatory Organization's Statement on Burden on Competition
The Phlx does not believe that the proposed rule change 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
The Phlx neither solicited nor received any written comments with respect to the proposal.
III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action
The Phlx has designated the foregoing proposed rule change as a fee change pursuant to Section 19(b)(3)(A) of the Act8and Rule 19b-4(f)(2) thereunder,9and therefore the proposal has become effective upon filing with the Commission. At any time within 60 days after 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.
Footnotes:
8 15 U.S.C. 78s(b)(3)(A).
9 17 CFR 240.19b-4(f)(2).
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-2001-73 and should be submitted by September 13, 2001.
For the Commission, by the Division of Market Regulation, pursuant to delegated authority.10
Footnotes:
10 17 CFR 200.30-3(a)(12).
Jonathan G. Katz,
Secretary.
[FR Doc. 01-21307 Filed 8-22-01; 8:45 am]
BILLING CODE 8010-01-M