68 FR 107 pg. 33556 - Self-Regulatory Organizations; The Philadelphia Stock Exchange, Incorporated; Order Granting Approval to Proposed Rule Change and Amendment No. 1 Thereto to Adopt a Specialist Revenue Sharing Program for Trades in the Nasdaq-100 Index Tracking Stock
Type: NOTICEVolume: 68Number: 107Page: 33556
Docket number: [Release No. 34-47940; File No. SR-Phlx-2002-77]
FR document: [FR Doc. 03-13937 Filed 6-3-03; 8:45 am]
Agency: Securities and Exchange Commission
Official PDF Version: PDF Version
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-47940; File No. SR-Phlx-2002-77]
Self-Regulatory Organizations; The Philadelphia Stock Exchange, Incorporated; Order Granting Approval to Proposed Rule Change and Amendment No. 1 Thereto to Adopt a Specialist Revenue Sharing Program for Trades in the Nasdaq-100 Index Tracking Stock
May 29, 2003.
On December 16, 2002, The Philadelphia Stock Exchange, Inc. ("Phlx" or "Exchange") filed with the Securities and Exchange Commission ("Commission"), pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 ("Act"),1a proposed rule change to adopt a Specialist Revenue Sharing Program for trades in the Nasdaq-100 Index Tracking Stock SM ("QQQ"). The Phlx amended the proposed rule change on February 28, 2003.2The proposed rule change, as amended, was published for notice and comment in the Federal Register on March 13, 2003.3The Commission received one comment on the proposal.4On May 14, 2003, the Phlx responded to the NYSE Letter.5
Footnotes:
1 15 U.S.C. 78s(b)(1).
2 See letter from Cynthia K. Hoekstra, Counsel, Phlx, to Nancy J. Sanow, Assistant Director, Division of Market Regulation, Commission, dated February 27, 2003 ("Amendment No. 1"). In Amendment No. 1, the Exchange filed a Form 19b-4, which replaced the original filing in its entirety.
3 See Securities Exchange Act Release No. 47456 (March 6, 2003), 68 FR 12138.
4 See April 3, 2003 letter from Darla C. Stuckey, Corporate Secretary, New York Stock Exchange, Inc. ("NYSE"), to Jonathan G. Katz, Secretary, Commission ("NYSE Letter"). The NYSE Letter asked the Commission to institute disapproval proceedings and to also eliminate all market data rebate programs in both the equities and options markets. Because the NYSE Letter does not specifically address the Phlx proposed rule change, the Commission has not included a full summary of comments in this Order. The NYSE Letter is available for review in the Public Reference Room at the Commission.
5 See May 14, 2003, letter from Edith Hallahan, Deputy General Counsel, Phlx, to Jonathan G. Katz, Secretary, Commission ("Phlx Response Letter"). The Phlx Response Letter is available for review in the Public Reference Room at the Commission.
The Exchange proposes a Specialist Revenue Sharing Program in which it would share with the QQQ specialist unit a portion of the revenues that the Exchange receives under the Consolidated Tape Association ("CTA") Plan attributable to the QQQ (which is reported on Tape B).6The Exchange proposes to apply its program as of November 1, 2002.
Footnotes:
6 This proposal applies only to QQQ and to no other Tape B security, nor any Tape A security.
As set forth in its July 2, 2002 Order of Summary Abrogation ("Abrogation Order"),7the Commission will continue to examine the issues surrounding market data fees, the distribution of market data rebates, and the impact of market data revenue sharing programs on both the accuracy of market data and on the regulatory functions of self-regulatory organizations. The Phlx has proposed to operate market data revenue sharing program that is similar to existing programs at other self-regulatory organizations.8Thus, the Commission believes it is reasonable to allow the Phlx to operate a market data revenue sharing program as outlined in the proposal.
Footnotes:
7 Securities Exchange Act Release No. 46159 (July 2, 2002), 67 FR 45775 (July 10, 2002)(File Nos. SR-NASD-2002-61, SR-NASD-2002-68, SR-CSE-2002-06, and SR-PCX-2002-37)(Order of Summary Abrogation).
8 See e.g. , Securities Exchange Act Release Nos. 41238 (March 31, 1999), 64 FR 17204 (April 8, 1999)(SR-CSE-99-03), 46911 (November 26, 2002), 67 FR 72251 (December 4, 2002)(SR-BSE-2002-10), and 46938 (December 3, 2002), 67 FR 72993 (December 9, 2003)(SR-NASD-2002-149).
Thus, the Commission finds that the proposed rule change is consistent with the requirements of the Act and the rules and regulations thereunder applicable to a national securities exchange9and, in particular, the requirements of section 6 of the Act10and the rules and regulations thereunder. The Commission finds specifically that the proposed rule change is consistent with section 6(b)(5) of the Act,11in that it is designed to promote just and equitable principles of trade, to foster cooperation and coordination with persons engaged in regulating securities transactions, and to remove impediments to and perfect the mechanism of a free and open market and a national market system.
Footnotes:
9 In approving this proposed rule change, the Commission has considered the proposed rule's impact on efficiency, competition, and capital formation. 15 U.S.C. 78c(f).
10 15 U.S.C. 78f.
11 15 U.S.C. 78f(b)(5)
The decision to allow the Phlx to establish the market data revenue sharing program described in this proposed rule change, however, is narrowly drawn, and should not be construed as resolving the issues raised in the Abrogation Order, and does not suggest what, if any, future actions the Commission may take with regard to market data revenue sharing programs.
It is therefore ordered, pursuant to section 19(b)(2) of the Act,12that the proposed rule change (SR-Phlx-2002-77), as amended, be, and it hereby is, approved.
Footnotes:
12 15 U.S.C. 78s(b)(2).
For the Commission, by the Division of Market Regulation, pursuant to delegated authority.13
Footnotes:
13 17 CFR 200.30-3(a)(12).
J. Lynn Taylor,
Assistant Secretary.
[FR Doc. 03-13937 Filed 6-3-03; 8:45 am]
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