Self-Regulatory Organizations; Philadelphia Stock Exchange, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change and Amendments No. 1 and No. 2 Relating to a Dividend Spread Transaction Fee Cap, 24851-24852 [E5-2306]

Download as PDF Federal Register / Vol. 70, No. 90 / Wednesday, May 11, 2005 / Notices SECURITIES AND EXCHANGE COMMISSION [Release No. 34–51657; File No. SR–Phlx– 2005–22] Self-Regulatory Organizations; Philadelphia Stock Exchange, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change and Amendments No. 1 and No. 2 Relating to a Dividend Spread Transaction Fee Cap May 5, 2005. 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 March 31, 2005, 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 Phlx submitted Amendments No. 1 and No. 2 to the proposal on April 27, 2005,3 and May 4, 2005, respectively.4 The proposed rule change has been filed by the Phlx as establishing or changing a due, fee, or other charge, pursuant to Section 19(b)(3)(A)(ii) of the Act 5 and Rule 19b–4(f)(2) 6 thereunder, which renders the proposal effective upon filing with the Commission. 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 amend its schedule of fees to amend its fee cap on equity option transaction and comparison charges on dividend spread transactions 7 for a security with a declared dividend or distribution of less than $0.25. For these transactions, the Registered Options Trader (‘‘ROT’’) and specialist equity option transaction and comparison fees will be capped at $1,000 per dividend spread transaction 1 15 U.S.C. 78s(b)(1). CFR 240.19b–4. 3 Amendment No. 1 made clarifying and minor technical changes to the text of the proposal. 4 Amendment No. 2 included the expiration date of the pilot program regarding the Exchange’s fee caps for dividend and merger spread transactions as part of the text of its fee schedule. See also Securities Exchange Act Release No. 51596 (April 21, 2005), 70 FR 22381 (April 29, 2005) (SR–Phlx– 2005–19). 5 15 U.S.C. 78s(b)(3)(A)(ii). 6 17 CFR 240.19b–4(f)(2). 7 For purposes of this proposal, a ‘‘dividend spread’’ transaction is any trade done within a defined time frame pursuant to a strategy in which a dividend arbitrage can be achieved between any two deep-in-the-money options. 2 17 VerDate jul<14>2003 16:48 May 10, 2005 Jkt 205001 effected pursuant to a dividend spread strategy executed on the same trading day in the same options class. The fee cap will be implemented after any applicable rebates are applied to ROT and specialist equity option transaction and comparison charges.8 The proposed fee cap would be effective for trades settling on or after April 1, 2005. The proposed fee cap will be in effect as a pilot program that will expire on September 1, 2005. The text of the proposed rule change is available on the Phlx’s Web site (https://www.phlx.com), at the Phlx’s Office of the Secretary, and at 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 Exchange imposes a fee cap of $1,750 on ROT and specialist equity option transaction and comparison charges on dividend spread transactions and merger spread transactions.9 The purpose of capping at $1,000 the ROT and specialist transaction and 8 The Exchange provides a rebate for certain contracts executed in connection with transactions occurring as part of a dividend spread strategy. Specifically, for those options contracts executed pursuant to a dividend spread strategy, the Exchange rebates $0.08 per contract side for ROT executions and $0.07 per side for specialist executions on the business day before the underlying stock’s ex-date. The ex-date is the date on or after which a security is traded without a previously declared dividend or distribution. After the ex-date, a stock is said to trade ex-dividend. See Securities Exchange Act Release No. 48983 (December 23, 2003), 68 FR 75703 (December 31, 2003) (SR–Phlx–2003–80). 9 For purposes of this proposal, the Exchange defines a ‘‘merger spread’’ transaction as a transaction executed pursuant to a merger spread strategy involving the simultaneous purchase and sale of options of the same class and expiration date, but different strike prices, followed by the exercise of the resulting long options position, each executed prior to the date on which shareholders of record are required to elect their respective form of consideration, i.e., cash or stock. See Securities Exchange Act Release No. 51596 (April 21, 2005) (SR–Phlx–2005–19). PO 00000 Frm 00087 Fmt 4703 Sfmt 4703 24851 comparison charges for dividend spread transactions for a security with a declared dividend or distribution of less than $0.25 is to attract additional liquidity to the Exchange.10 In addition, the fee cap should provide an opportunity for specialists and ROTs to engage in additional dividend opportunities in lower dividend distributions at a reduced rate, whereas the $1,750 current fee cap may not be economically beneficial because as the dividend distribution amount declines, the opportunity for a profitable strategy also declines. Thus, a lower cap should provide additional dividend strategy opportunities and additional business to the Exchange. 2. Statutory Basis The Exchange believes that its proposal to amend its schedule of fees is consistent with Section 6(b) of the Act,11 in general, and furthers the objectives of Section 6(b)(4) of the Act,12 in particular, in that it is an equitable allocation of reasonable fees among Exchange members. B. Self-Regulatory Organization’s Statement on Burden on Competition The Exchange 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 No written comments were either solicited or received. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action The foregoing proposed rule change has become effective pursuant to Section 19(b)(3)(A)(ii) of the Act 13 and Rule 19b–4(f)(2) 14 thereunder, because it changes a fee imposed by the Exchange. 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, 10 Similar to the Exchange’s current rebate process, members who wish to benefit from the proposed fee cap will be required to submit to the Exchange a written rebate request with supporting documentation. 11 15 U.S.C. 78f(b). 12 15 U.S.C. 78f(b)(4). 13 15 U.S.C. 78(s)(b)(3)(A)(ii). 14 17 CFR 240.19b–4(f)(2). E:\FR\FM\11MYN1.SGM 11MYN1 24852 Federal Register / Vol. 70, No. 90 / Wednesday, May 11, 2005 / Notices or otherwise in furtherance of the purposes of the Act.15 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. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission’s Internet comment form (https://www.sec.gov/ rules/sro.shtml); or • Send an e-mail to rulecomments@sec.gov. Please include File Number SR–Phlx–2005–22 on the subject line. Paper Comments • Send paper comments in triplicate to Jonathan G. Katz, Secretary, Securities and Exchange Commission, 450 Fifth Street, NW., Washington, DC 20549–0609. All submissions should refer to File Number SR–Phlx–2005–22. This file number should be included on the subject line if e-mail is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission’s Internet Web site (https://www.sec.gov/ rules/sro.shtml). 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 the filing also will be available for inspection and copying at the principal office of the Phlx. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR–Phlx–2005–22 and should be submitted on or before June 1, 2005. 15 See 15 U.S.C. 78s(b)(3)(C). For purposes of calculation the 60-day abrogation period, the Commission considers the period to commence on May 4, 2005, the date the Phlx filed Amendment No. 2. VerDate jul<14>2003 16:48 May 10, 2005 Jkt 205001 For the Commission, by the Division of Market Regulation, pursuant to delegated authority.16 Margaret H. McFarland, Deputy Secretary. [FR Doc. E5–2306 Filed 5–10–05; 8:45 am] the proposed amendments in Washington, DC, on April 12, 2005. On April 29, 2005, the Commission submitted these amendments to Congress and specified an effective date of November 1, 2005. BILLING CODE 8010–01–P Authority: 28 U.S.C. 994(a), (o), and (p); USSC Rule of Practice and Procedure 4.1. UNITED STATES SENTENCING COMMISSION Sentencing Guidelines for United States Courts United States Sentencing Commission. ACTION: Notice of submission to Congress of amendments to the sentencing guidelines effective November 1, 2005. AGENCY: SUMMARY: Pursuant to its authority under 28 U.S.C. 994(p), the Commission has promulgated amendments to the sentencing guidelines, policy statements, commentary, and statutory index. This notice sets forth the amendments and the reason for each amendment. DATES: The Commission has specified an effective date of November 1, 2005, for the amendments set forth in this notice. FOR FURTHER INFORMATION CONTACT: Michael Courlander, Public Affairs Officer, 202–502–4590. The amendments set forth in this notice also may be accessed through the Commission’s Web site at https:// www.ussc.gov. SUPPLEMENTARY INFORMATION: The United States Sentencing Commission is an independent agency in the judicial branch of the United States Government. The Commission promulgates sentencing guidelines and policy statements for Federal sentencing courts pursuant to 28 U.S.C. 994(a). The Commission also periodically reviews and revises previously promulgated guidelines pursuant to 28 U.S.C. 994(o) and generally submits guideline amendments to Congress pursuant to 28 U.S.C. 994(p) not later than the first day of May each year. Absent action of Congress to the contrary, submitted amendments become effective by operation of law on the date specified by the Commission (generally November 1 of the year in which the amendments are submitted to Congress). Notice of proposed amendments was published in the Federal Register on February 23, 2005 (see 70 FR 8868). The Commission held a public hearing on PO 00000 16 17 CFR 200.30–3(a)(12). Frm 00088 Fmt 4703 Sfmt 4703 Ricardo H. Hinojosa, Chair. 1. Amendment: Chapter Two, Part B, Subpart 1 is amended by adding at the end the following new guideline and accompanying commentary: ‘‘§ 2B1.6. Aggravated Identity Theft (a) If the defendant was convicted of violating 18 U.S.C. 1028A, the guideline sentence is the term of imprisonment required by statute. Chapters Three (Adjustments) and Four (Criminal History and Criminal Livelihood) shall not apply to that count of conviction. Commentary Statutory Provision: 18 U.S.C. 1028A. For additional statutory provision(s), see Appendix A (Statutory Index). Application Notes 1. Imposition of Sentence.— (A) In General.—Section 1028A of title 18, United States Code, provides a mandatory term of imprisonment. Accordingly, the guideline sentence for a defendant convicted under 18 U.S.C. 1028A is the term required by that statute. Except as provided in subdivision (B), 18 U.S.C. 1028A also requires a term of imprisonment imposed under this section to run consecutively to any other term of imprisonment. (B) Multiple Convictions Under Section 1028A.—Section 1028A(b)(4) of title 18, United States Code, provides that in the case of multiple convictions under 18 U.S.C. 1028A, the terms of imprisonment imposed on such counts may, in the discretion of the court, run concurrently, in whole or in part, with each other. See the Commentary to § 5G1.2 (Sentencing on Multiple Counts of Conviction) for guidance regarding imposition of sentence on multiple counts of 18 U.S.C. 1028A. 2. Inapplicability of Chapter Two Enhancement.—If a sentence under this guideline is imposed in conjunction with a sentence for an underlying offense, do not apply any specific offense characteristic for the transfer, possession, or use of a means of identification when determining the sentence for the underlying offense. A sentence under this guideline accounts for this factor for the underlying offense of conviction, including any such E:\FR\FM\11MYN1.SGM 11MYN1

Agencies

SECURITIES AND EXCHANGE COMMISSION

[Federal Register Volume 70, Number 90 (Wednesday, May 11, 2005)]
[Notices]
[Pages 24851-24852]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E5-2306]



[[Page 24851]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-51657; File No. SR-Phlx-2005-22]


Self-Regulatory Organizations; Philadelphia Stock Exchange, Inc.; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change 
and Amendments No. 1 and No. 2 Relating to a Dividend Spread 
Transaction Fee Cap

May 5, 2005.
    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 March 31, 2005, 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 Phlx 
submitted Amendments No. 1 and No. 2 to the proposal on April 27, 
2005,\3\ and May 4, 2005, respectively.\4\ The proposed rule change has 
been filed by the Phlx as establishing or changing a due, fee, or other 
charge, pursuant to Section 19(b)(3)(A)(ii) of the Act \5\ and Rule 
19b-4(f)(2) \6\ thereunder, which renders the proposal effective upon 
filing with the Commission. The Commission is publishing this notice to 
solicit comments on the proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ Amendment No. 1 made clarifying and minor technical changes 
to the text of the proposal.
    \4\ Amendment No. 2 included the expiration date of the pilot 
program regarding the Exchange's fee caps for dividend and merger 
spread transactions as part of the text of its fee schedule. See 
also Securities Exchange Act Release No. 51596 (April 21, 2005), 70 
FR 22381 (April 29, 2005) (SR-Phlx-2005-19).
    \5\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \6\ 17 CFR 240.19b-4(f)(2).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Phlx proposes to amend its schedule of fees to amend its fee 
cap on equity option transaction and comparison charges on dividend 
spread transactions \7\ for a security with a declared dividend or 
distribution of less than $0.25. For these transactions, the Registered 
Options Trader (``ROT'') and specialist equity option transaction and 
comparison fees will be capped at $1,000 per dividend spread 
transaction effected pursuant to a dividend spread strategy executed on 
the same trading day in the same options class. The fee cap will be 
implemented after any applicable rebates are applied to ROT and 
specialist equity option transaction and comparison charges.\8\ The 
proposed fee cap would be effective for trades settling on or after 
April 1, 2005. The proposed fee cap will be in effect as a pilot 
program that will expire on September 1, 2005.
---------------------------------------------------------------------------

    \7\ For purposes of this proposal, a ``dividend spread'' 
transaction is any trade done within a defined time frame pursuant 
to a strategy in which a dividend arbitrage can be achieved between 
any two deep-in-the-money options.
    \8\ The Exchange provides a rebate for certain contracts 
executed in connection with transactions occurring as part of a 
dividend spread strategy. Specifically, for those options contracts 
executed pursuant to a dividend spread strategy, the Exchange 
rebates $0.08 per contract side for ROT executions and $0.07 per 
side for specialist executions on the business day before the 
underlying stock's ex-date. The ex-date is the date on or after 
which a security is traded without a previously declared dividend or 
distribution. After the ex-date, a stock is said to trade ex-
dividend. See Securities Exchange Act Release No. 48983 (December 
23, 2003), 68 FR 75703 (December 31, 2003) (SR-Phlx-2003-80).
---------------------------------------------------------------------------

    The text of the proposed rule change is available on the Phlx's Web 
site (https://www.phlx.com), at the Phlx's Office of the Secretary, and 
at 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 Exchange imposes a fee cap of $1,750 on ROT and specialist 
equity option transaction and comparison charges on dividend spread 
transactions and merger spread transactions.\9\ The purpose of capping 
at $1,000 the ROT and specialist transaction and comparison charges for 
dividend spread transactions for a security with a declared dividend or 
distribution of less than $0.25 is to attract additional liquidity to 
the Exchange.\10\ In addition, the fee cap should provide an 
opportunity for specialists and ROTs to engage in additional dividend 
opportunities in lower dividend distributions at a reduced rate, 
whereas the $1,750 current fee cap may not be economically beneficial 
because as the dividend distribution amount declines, the opportunity 
for a profitable strategy also declines. Thus, a lower cap should 
provide additional dividend strategy opportunities and additional 
business to the Exchange.
---------------------------------------------------------------------------

    \9\ For purposes of this proposal, the Exchange defines a 
``merger spread'' transaction as a transaction executed pursuant to 
a merger spread strategy involving the simultaneous purchase and 
sale of options of the same class and expiration date, but different 
strike prices, followed by the exercise of the resulting long 
options position, each executed prior to the date on which 
shareholders of record are required to elect their respective form 
of consideration, i.e., cash or stock. See Securities Exchange Act 
Release No. 51596 (April 21, 2005) (SR-Phlx-2005-19).
    \10\ Similar to the Exchange's current rebate process, members 
who wish to benefit from the proposed fee cap will be required to 
submit to the Exchange a written rebate request with supporting 
documentation.
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2. Statutory Basis
    The Exchange believes that its proposal to amend its schedule of 
fees is consistent with Section 6(b) of the Act,\11\ in general, and 
furthers the objectives of Section 6(b)(4) of the Act,\12\ in 
particular, in that it is an equitable allocation of reasonable fees 
among Exchange members.
---------------------------------------------------------------------------

    \11\ 15 U.S.C. 78f(b).
    \12\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange 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

    No written comments were either solicited or received.

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

    The foregoing proposed rule change has become effective pursuant to 
Section 19(b)(3)(A)(ii) of the Act \13\ and Rule 19b-4(f)(2) \14\ 
thereunder, because it changes a fee imposed by the Exchange. 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,

[[Page 24852]]

or otherwise in furtherance of the purposes of the Act.\15\
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    \13\ 15 U.S.C. 78(s)(b)(3)(A)(ii).
    \14\ 17 CFR 240.19b-4(f)(2).
    \15\ See 15 U.S.C. 78s(b)(3)(C). For purposes of calculation the 
60-day abrogation period, the Commission considers the period to 
commence on May 4, 2005, the date the Phlx filed Amendment No. 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. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's Internet comment form (https://
www.sec.gov/rules/sro.shtml); or
     Send an e-mail to rule-comments@sec.gov. Please include 
File Number SR-Phlx-2005-22 on the subject line.

Paper Comments

     Send paper comments in triplicate to Jonathan G. Katz, 
Secretary, Securities and Exchange Commission, 450 Fifth Street, NW., 
Washington, DC 20549-0609.
    All submissions should refer to File Number SR-Phlx-2005-22. This 
file number should be included on the subject line if e-mail is used. 
To help the Commission process and review your comments more 
efficiently, please use only one method. The Commission will post all 
comments on the Commission's Internet Web site (https://www.sec.gov/
rules/sro.shtml). 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 the 
filing also will be available for inspection and copying at the 
principal office of the Phlx. All comments received will be posted 
without change; the Commission does not edit personal identifying 
information from submissions. You should submit only information that 
you wish to make available publicly. All submissions should refer to 
File Number SR-Phlx-2005-22 and should be submitted on or before June 
1, 2005.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\16\
Margaret H. McFarland,
Deputy Secretary.
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    \16\ 17 CFR 200.30-3(a)(12).
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[FR Doc. E5-2306 Filed 5-10-05; 8:45 am]
BILLING CODE 8010-01-P

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