Self-Regulatory Organizations; Philadelphia Stock Exchange, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change and Amendment No. 1 Thereto To Adopt Fees for the Trading of Equity Securities on XLE, 77079-77083 [E6-21906]
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Federal Register / Vol. 71, No. 246 / Friday, December 22, 2006 / Notices
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–54941; File No. SR–Phlx–
2006–70)
Self-Regulatory Organizations;
Philadelphia Stock Exchange, Inc.;
Notice of Filing and Immediate
Effectiveness of Proposed Rule
Change and Amendment No. 1 Thereto
To Adopt Fees for the Trading of
Equity Securities on XLE
December 14, 2006.
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
2, 2006, 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 Phlx. On
December 12, 2006, the Exchange filed
Amendment No. 1 to the proposed rule
change.3 The Exchange has designated
this amended proposal as one
establishing or changing a due, fee, or
other charge imposed by the Exchange
under Section 19(b)(3)(A),4 and Rule
19b–4(f)(2) thereunder,5 which renders
the proposal effective upon filing with
the Commission. The Commission is
publishing this notice to solicit
comments on the proposed rule change,
as amended, from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Phlx proposes to adopt the
proposed fees described below for the
trading of equity securities on the
Exchange in connection with its new
equity system (‘‘XLE’’).6 With XLE, the
Exchange no longer operates a physical
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1 15
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 In Partial Amendment No. 1, which
supplemented the proposal as originally filed, the
Exchange made several clarifying changes to further
explain the assessment of the proposed fees in
connection with its new equity trading system and
made other technical changes to the original filing.
In addition, the Exchange included a revised
Exhibit 5A in Partial Amendment No. 1 to reflect
technical and clarifying changes made therein,
which, for clarity and ease of reference, replaces the
Exhibit 5A contained in the original filing. The
Exchange did not propose any new fees in Partial
Amendment No. 1.
4 15 U.S.C. 78s(b)(3)(A).
5 17 CFR 240.19b–4(f)(2).
6 XLE is designed to provide the opportunity for
entirely automated executions to occur within a
central matching system accessible by Exchange
members and member organizations and their
Sponsored Participants. See Securities Exchange
Act Release No. 54538 (September 28, 2006), 71 FR
59184 (October 6, 2006) (SR–Phlx–2006–43).
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trading floor for equity securities or the
Philadelphia Stock Exchange
Automated Communication and
Execution (‘‘PACE’’) system.7 Therefore,
the Exchange proposes to adopt a new
fee schedule to accommodate the
trading of equity securities on XLE and
to amend Appendix A of the Exchange’s
fee schedule to adopt XLE-related fees,
delete obsolete fees, and modify other
fees that will no longer apply to equity
trading.8 The text of the proposed rule
change is available on the Phlx’s Web
site at https://www.phlx.com, at the
Phlx’s Office of the Secretary, and at the
Commission’s Public Reference Room.9
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission,
Phlx included statements concerning
the purpose of, and basis for, the
proposed rule change and discussed any
comments it received on the proposal.
The text of these statements may be
examined at the places specified in Item
IV below. 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 adopt a fee schedule for the
trading of equity securities on the
Exchange in connection with XLE. The
XLE fee schedule includes transaction
fees (execution and routing fees),
covered sale fees, and system fees, as
well as a market data revenue sharing
proposal. Changes to Appendix A of the
Exchange’s fee schedule include permit
fees, application fees, and a modified
examination fee, as well as the deletion
7 PACE was the Exchange’s order routing,
delivery, execution and reporting system for its
equity trading floor. The Commission notes that
XLE commenced limited operations on November
10, 2006.
8 Although the fees proposed herein have been
filed to become immediately effective, the fees will
not become operative until the Exchange
discontinues its physical equities trading floor and
commences operation of XLE. See Securities
Exchange Act Release No. 54538 (September 28,
2006), 71 FR 59184 (October 6, 2006) (SR–Phlx–
2006–43) (order approving XLE rules). The
Commission notes that XLE commenced limited
operations on November 10, 2006.
9 The Stock Clearing Corporation of Philadelphia
(‘‘SCCP’’) filed a separate proposed rule change
with the Commission to amend its fee schedule to
reflect fees associated with the trade processing of
equity securities through SCCP in connection with
XLE. See SR–SCCP–2006–04.
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of certain floor-based fees. All the
proposed fees will be assessed on
Exchange members or member
organizations, which may include
Sponsoring Member Organizations,10
(collectively referred to herein as
‘‘member organizations’’). Sponsoring
Member Organizations are responsible
for the fees generated by their
Sponsored Participant’s activities.
Transaction Fees. With respect to
securities trading at or above $1.00, the
Exchange intends to charge member
organizations an execution fee, ranging
from $0.0026 to $0.003 per share,
depending on the number of total shares
executed monthly,11 for orders that
remove liquidity from XLE.
Additionally, the Exchange intends to
offer an execution credit to member
organizations, ranging from $0.002 to
$0.0026 per share, for orders that
provide liquidity to XLE. Any available
credits would be applied to the member
organization’s monthly invoice. Excess
credits would be carried over into
subsequent months or rebated to the
applicable member organization, as
requested by the member organization.
The purpose of adopting the volume
tiers in connection with the assessment
of transaction fees is to encourage XLE
Participant Organizations to send and
execute orders on XLE. The volume tiers
are based on the monthly shares
executed per XLE Participant
Organization; for Tier 1 (less than or
equal to 10 million shares executed), the
Exchange proposes to assess a fee of
$0.003 per share executed to remove
liquidity and give a credit of $0.002 per
share executed for providing liquidity;
for Tier 2 (greater than 10 million and
less than or equal to 50 million shares
executed), the Exchange proposes to
assess a fee of $0.0028 per share
executed to remove liquidity and give a
10 A Sponsoring Member Organization is a
member organization that has authorized access to
XLE for a Sponsored Participant (a person who has
access to XLE which is authorized by a Sponsoring
Member Organization). See Phlx Rules 1(jj) and
1(kk).
11 The ‘‘total monthly shares’’ executed includes
executions resulting from removing and providing
liquidity on XLE and crosses executed on XLE, as
well as shares executed when routed via XLE to an
away trading center and executed on that away
trading center, except for liquidity provided by
incoming NMS Linkage Orders or ITS
Commitments. The total monthly shares will be
calculated separately per XLE Participant
Organization, which, for purposes of this proposal,
refers to Sponsored Participants, Sponsoring
Member Organizations, and member organizations
without Sponsored Participants. Thus, Sponsored
Participant activity will accrete towards that
Sponsored Participant’s volume tier and not
towards the Sponsoring Member Organization’s
volume tier. Once a specific tier has been reached
in a month, all transactions for that month will be
subject to the fee that corresponds with that volume
tier. See also infra notes 15 and 16.
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credit of $0.0025 per share executed for
providing liquidity; for Tier 3 (greater
than 50 million and less than or equal
to 200 million shares executed), the
Exchange proposes to assess a fee of
$0.0027 per share executed to remove
liquidity and give a credit of $0.0026
per share executed for providing
liquidity; and for Tier 4 (greater than
200 million shares executed), the
Exchange proposes to assess a fee of
$0.0026 per share executed to remove
liquidity and give a credit of $0.0026
per share executed for providing
liquidity. For each of the four volume
tiers described above, the Exchange
proposes to charge a flat routing fee of
$0.0036 per share executed when an
order is routed via XLE to an away
trading center and executed on that
away trading center.
In addition, in lieu of the abovereferenced execution fees, the Exchange
proposes to adopt a separate execution
fee for securities executed on XLE at a
per share price below $1.00 that remove
liquidity. For these securities, the
Exchange would charge 0.1% (i.e., 10
basis points) of the total dollar value of
the transaction. The Exchange is not
proposing an execution fee credit for
providing liquidity for shares with a per
share price below $1.00. Such executed
volume for securities trading below
$1.00 will accrete towards the volume
tier breakpoint per XLE Participant
Organization.
Additional transaction fees are set
forth on the proposed fee schedule
under the heading ‘‘Miscellaneous
Transaction Fees.’’ Miscellaneous
Transaction Fees would be assessed in
lieu of the general transaction fees
described above. The Exchange
proposes to adopt an execution fee of
$0.0023 per share per side for
Immediate or Cancel (‘‘IOC’’) Cross
Orders and Mid-Point Cross Orders
entered over technology provided by
Phlx.12 The Exchange is not proposing
to adopt any transaction fees (i.e.,
execution fee for removing liquidity or
execution credit for providing liquidity)
for executions of IOC Cross Orders 13
and Mid-Point Cross Orders 14 with
12 Phlx intends to provide optional technology to
XLE Participants for the entry of two-sided orders
into XLE.
13 IOC Cross Orders are two-sided orders that
match immediately and automatically on XLE the
identified buy-side with the identified sell-side.
Specifically, an IOC Cross Order is a two-sided
order that executes, in its entirety, at the specified
price, provided that XLE will cancel an IOC Cross
Order at the time of order entry under certain
conditions. See Phlx Rules 185(c) and 185(c)(2).
14 A Mid-Point Cross Order is a two-sided order
that executes, in its entirety, at the midpoint of the
best Protected Bid and the best Protected Offer in
a security. These orders will match immediately
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respect to orders entered over
technology that is not provided by the
Exchange. There also would be no
execution credit for any IOC Cross or
Mid-Point Cross transactions, whether
entered over technology provided by
Phlx or not.15 In addition, in connection
with IOC Cross Orders and Mid-Point
Cross Orders entered over technology
provided by Phlx, there would be a $50
maximum fee per trade side.
The execution fee for Odd Lot
Orders 16 would be $0.003 per share
executed, which applies to orders
initially entered as Odd Lot Orders and
executed in XLE. There would be no
execution credit for orders initially
entered as Odd Lot Orders and executed
on XLE. Also, for incoming NMS
Linkage Orders or ITS Commitments
routed to Phlx and executed on XLE, the
Exchange proposes to charge $0.003 per
share for removing liquidity.17 The
Exchange is proposing to delete from its
Summary of Equity Charges the
Outbound ITS fee and Net Inbound ITS
Credit, since the Exchange will no
longer assess an Outbound ITS fee or
give a Net Inbound ITS Credit.
Covered Sale Fee. The Exchange will
continue to charge a Covered Sale Fee.
Each member and member organization
engaged in executing sale transactions
on the Exchange or executing
transactions, which were routed over
the Intermarket Trading System or
pursuant to the NMS Linkage Plan, on
another exchange or on a Participant in
NASD’s Alternative Display Facility
during any computational period shall
pay a Covered Sale Fee equal to (i) the
Section 31 fee rate multiplied by (ii) the
and automatically on XLE the identified buy-side
with the identified sell-side. See Phlx Rules 185(c)
and 185(c)(1).
15 Executed volume for IOC Cross and Mid-Point
Cross Orders, whether entered over technology
provided by the Exchange or not, will accrete
towards the volume tier breakpoint per XLE
Participant Organization that is a party to the
execution.
16 An Odd Lot Order means an order for less than
a round lot, which is defined for purposes of XLE
as a unit of trading that is 100 shares. See Phlx
Rules 1(w) and 1(gg). Executed volume for orders
initially entered as Odd Lot Orders and executed on
XLE will accrete towards the volume tier breakpoint
per XLE Participant Organization.
17 This fee will be assessed on the member
organization sponsoring the NMS Linkage Order or
ITS Commitment or, if there is no member
organization sponsoring the NMS Linkage Order or
ITS Commitment, on the exchange or the
Participant in the National Association of Securities
Dealers, Inc. Alternative Display Facility (‘‘ADF
Participant’’) sending the ITS Commitment or NMS
Linkage Order. The arrangement to charge other
exchanges or ADF Participants was part of separate
proposed rule changes that were approved by the
Commission. See Securities Exchange Act Release
Nos. 54548 (September 29, 2006), 71 FR 59159
(October 6, 2006) (SR–Phlx–2006–58) and 54555
(October 2, 2006), 71 FR 59577 (October 10, 2006)
(SR–Phlx–2006–60).
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member’s aggregate dollar amount of
covered sales.18
System Fees. The Exchange proposes
to charge a monthly FIX 19 Computer-toComputer Interface (CTCI) Port Fee 20 of
$100.00 per port. At this time, however,
the Exchange does not intend to charge
for monthly Drop Copy Feeds,21
Monthly Phlx Systems,22 or Depth of
Book Data Feeds.23
Marketing Data Revenue Sharing. In
addition, the Exchange is proposing to
adopt a quarterly market data revenue
sharing program that would provide for
50% of gross market data revenue to be
shared with the member organization
responsible for providing the liquidity
portion of the trade. Sponsored
Participant trades will be credited to the
applicable Sponsoring Member
Organization. Any market data revenue
would be paid to the applicable member
organization on a quarterly basis.
The market data revenue sharing will
apply to all securities: Tape A, Tape B,
and Tape C. Although there is a
difference in the manner in which the
underlying Tape A and Tape B, revenue
versus Tape C revenue is distributed to
Phlx and the other national securities
exchanges 24 there is no difference in the
manner in which member organizations
will share in Tape A and B revenue
versus Tape C revenue because the
proposed rule language bases the credits
on revenue attributable to the
executions of a member organization.
Thus, a member organization
responsible for providing the liquidity
18 See Phlx Rule 607 and Securities Exchange Act
Release No. 54555 (October 2, 2006), 71 FR 59577
(October 10, 2006) (SR–Phlx–2006–60) (amending
Phlx Rule 607). See also Partial Amendment No. 1,
supra note 3 (making conforming edits to the
Covered Sale Fee rule text to reflect the amended
version of Phlx Rule 607). A Sponsoring Member
Organization is responsible for the Covered Sale
Fees generated in connection with its Sponsored
Participant’s sale transactions.
19 The Financial Information eXchange (‘‘FIX’’)
Protocol is a messaging standard developed
specifically for the real-time electronic exchange of
securities transactions.
20 A port is defined as an Internet Protocol (‘‘IP’’)
address assigned by the Exchange for connectivity
to XLE.
21 The Drop Copy Feed provides real-time
information concerning trades executed by an XLE
Participant Organization and will be provided on a
subscription basis.
22 The Monthly Phlx Systems Fee refers to the use
of optional Phlx technology to enter in two-sided
orders and related clearing information.
23 The Depth of Book feed displays every order,
except the undisplayed portion of a Reserve Order,
within XLE at each price level and will be
provided, on a subscription basis, at no charge to
anyone who subscribes to receive this information.
24 Tape A and Tape B revenue is currently
distributed to Phlx and national securities
exchanges based on the number of trades reported,
while Tape C revenue is distributed based on an
average of number of trades and number of shares
reported.
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portion of the trade will receive 50% of
the revenue attributable to its
executions reported to each of the three
tapes.25
Deleting Obsolete Fees. In connection
with adopting the XLE fee schedule for
the trading of equity securities on the
Exchange, the Exchange proposes to
delete the obsolete fees currently listed
on the Summary of Equity Charges,26
which includes deleting references to
license fees assessed in connection with
the trading of certain products.
Although the Exchange may currently,
or in the future, be a party to a license
fee agreement with a licensor in
connection with the trading of certain
products, the Exchange does not
propose to assess license fees in
connection with XLE at this time. The
Exchange would submit a separate
proposed rule change if it decides to
assess license fees in the future.
The Exchange also proposes to delete
references to SCCP customer and
specialist fees on the Exchange’s
Nasdaq-100 Index Tracking StockSM Fee
Schedule 27 to reflect changes that were
proposed in a separate SCCP fee filing.28
Appendix A. Appendix A of the
Exchange’s fee schedule contains
general fees that are currently assessed
on members, foreign currency options
(‘‘FCO’’) participants, member
organizations, or FCO participant
organizations that are not transactionbased, such that many of the fees relate
to gaining access to trading on the
Exchange or being physically present on
the trading floor. As set forth below, the
Exchange intends to adopt, modify, or
delete, as appropriate, several fees to
accommodate the trading of equity
securities on XLE.
The Exchange proposes to adopt
permit fees related to the trading of
25 The Exchange states that the proposed market
data revenue sharing program is similar to programs
implemented by other self-regulatory organizations.
See, e.g., Securities Exchange Act Release No.
53860 (May 24, 2006), 71 FR 31250 (June 1, 2006)
(SR–NSX–2006–07).
26 The Covered Sale Fee, however, will continue
to be assessed in connection with XLE.
27 The Nasdaq-100, Nasdaq-100 Index,
Nasdaq, The Nasdaq Stock Market, Nasdaq-100
Shares,SM Nasdaq-100 Trust,SM Nasdaq-100 Index
Tracking Stock,SM and QQQSM are trademarks or
service marks of The Nasdaq Stock Market, Inc.
(‘‘Nasdaq’’) and have been licensed for use for
certain purposes by the Philadelphia Stock
Exchange pursuant to a License Agreement with
Nasdaq. The Nasdaq-100 Index (the ‘‘Index’’) is
determined, composed and calculated by Nasdaq
without regard to the Licensee, the Nasdaq-100
Trust,SM or the beneficial owners of Nasdaq-100
Shares.SM Nasdaq has complete control and sole
discretion in determining, comprising or calculating
the Index or in modifying in any way its method
for determining, comprising or calculating the
Index in the future.
28 See SR–SCCP–2006–04.
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equity securities on XLE. Currently, the
Exchange assesses a permit fee to access
trading on the Exchange. Permit fees are
assessed based on how each permit is
used. Specifically, the Exchange will
charge an Order Flow Provider a permit
fee of $200 per month to submit orders
to XLE only and $300 per month to
submit orders to more than one trading
venue (i.e., XLE, foreign currency
options trading floor, or options trading
floor). Members who are registered as
Market Maker Authorized Traders 29
will be charged $1,200 per month for
the first permit and $1,000 per month
for each additional permit for members
in the same member organization. If a
member organization only sponsors a
Sponsored Participant and does not
have any other trading functions, the
permit holder associated with that
member organization will be charged a
permit fee of $1,200 per month and
$1,000 per month for additional permits
for members in the same member
organization.
The permit fees will be assessed
consistent with current practices. For
example, any member who is associated
with one or more member organizations
and uses a permit in more than one
category will pay the higher of the
applicable fees each month for such
permit.30 In addition, permits may not
be transferred from one permit holder
associated with one member
organization to a permit holder
associated with a different member
organization, thus a Transfer Fee is
inapplicable for permits relating to XLE
trading.31
Excess permit fees 32 will continue to
apply, but will be expanded to include
XLE users. Therefore, permit holders
may be designated as ‘‘excess’’ permit
holders in cases where permit holders
in the same organization, other than the
permit holder who qualifies the member
organization, are either: (1) not floor
brokers, specialists, ROTs (including
29 The term ‘‘Market Maker Authorized Trader’’
means a Participant Authorized User who is a
member and who performs market making activities
pursuant to Phlx Rules 170 et. seq. A Participant
Authorized User means an individual authorized by
a member organization or a Sponsored Participant
to enter orders, on its behalf, on XLE. See Phlx
Rules 1(m) and 1(x).
30 See Securities Exchange Act Release No. 49157
(January 30, 2004), 69 FR 5883 (February 6, 2004)
(SR–Phlx–2004–02).
31 Permits, however, may be transferred within a
member organization without incurring a Transfer
Fee. See Securities Exchange Act Release No. 49157
(January 30, 2004), 69 FR 5883 (February 6, 2004)
(SR–Phlx–2004–02).
32 See Securities Exchange Act Release Nos.
49856 (June 15, 2004), 69 FR 34411 (June 21, 2004)
(SR–Phlx–2004–32) and 53043 (December 29,
2005), 71 FR 959 (January 6, 2006) (SR–Phlx–2005–
72).
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77081
RSQTs and SQTs), Off-Floor Traders,
Market Maker Authorized Traders, or an
XLE Sponsoring Member Organization
whose only function is to sponsor a
Sponsored Participant; or (2) not
associated with a member organization
that meets the definition of an Order
Flow Provider, which now includes
submitting orders to XLE. The rate
remains unchanged. Thus, member
organizations that have excess permit
holders will continue to be assessed
$200 for each ‘‘excess’’ permit.
The Exchange also proposes to charge
Sponsoring Member Organizations an
application fee of $1,850.00 for each
Sponsored Participant that it proposes
to sponsor to help offset the costs
associated with the processing of the
application, including administrative
costs associated with reviewing the
application and creating the appropriate
accounts.33
The Account Fee also will continue to
apply to member organizations that
trade on XLE. Currently, the Exchange
charges member organizations a
monthly fee of $50.00 for each account
beyond the number of permits billed to
that member organization.34 Therefore,
if a member organization sponsors a
Sponsored Participant and establishes a
new account, each account beyond the
number of permits billed to that member
organization would be subject to the
$50.00 fee.
In addition, any equity floor-based
fees, such as post and booth space fees,
would no longer apply to members or
member organizations due to the fact
that there will no longer be a physical
equity trading floor.35 The Exchange
will not assess these equity floor-based
fees for any part of the month in which
XLE is launched.36 These fees will
33 This fee is the same amount as the Exchange’s
current application ($350.00) and initiation fees
($1,500) combined for members and member
organizations.
34 Each account may have 22 suffixes or subaccounts. For example, account number 202 can
actually be used as accounts 202–A, 202–B, etc.
There is no additional charge for suffixes assigned
within the same account. See Securities Exchange
Act Release No. 53046 (January 3, 2006), 71 FR
1459 (January 9, 2006) (SR–Phlx–2005–89).
35 Examples of these floor-based fees include
trading post/booth space, controller space, floor
facility, direct wire to the floor, telephone system
line extension, trading floor personnel registration,
computer equipment services, repairs or
replacements, and computer relocation requests.
These fees will remain on Appendix A to reflect
that they will still be assessed on members,
participants, and member or participant
organizations on the options and/or foreign
currency options trading floors.
36 For example, if XLE is launched in midNovember, no equity floor-based fees from
Appendix A will be assessed for the month of
November.
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remain on the fee schedule as applicable
to the Exchange’s other trading floors.
The Exchange proposes to delete from
the fee schedule any fees applicable
only to the equity trading floor, such as
the stock execution machine registration
fee, due to the fact that there will no
longer be a physical equity trading floor.
Additionally, the Exchange proposes to
delete all Remote Specialist fees,37 since
Remote Specialists will not exist in
XLE.
Apart from the launch of XLE and
merely to update the fee schedule, the
Exchange also proposes to delete the
‘‘Equity, Option or FCO Transmission
Charge’’ and the ‘‘FCO Pricing Tape’’
fees because the Exchange will no
longer be providing these services.
Thus, a charge for these services will
not be assessed.
The Exchange also proposes to delete
its Off-Floor Examinations Fee of $30.00
per month per off-floor trader and, in
turn, amend its Examinations Fee. The
implementation of a tiered monthly
Examinations Fee will replace the OffFloor Examinations Fee. Currently, the
Exchange assesses a monthly fee of
$30.00 per off-floor trader for off-floor
traders associated with member
organizations for whom the Exchange is
the Designated Examining Authority
(‘‘DEA’’).38 With the closing of the
Exchange’s equity trading floor, traders
that previously physically traded on the
floor of the Exchange (and for whom the
Exchange was the DEA for their member
organization) will no longer be
considered ‘‘on-floor traders,’’ but will
now be designated as ‘‘off-floor traders’’
and therefore would now fall under and
be assessed the Off-Floor Examinations
Fee.39
To address the unintended
consequences that XLE would now
cover additional traders that previously
were not covered under the Off-Floor
Examinations Fee, the Exchange is
proposing to delete the Off-Floor
Examinations Fee and adopt a tiered
Examinations Fee based on the number
of off-floor traders in a member
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37 Specifically,
these fees include the Remote
Specialist System Fee, Remote Specialist Security
Routing Fee, Remote Specialist
Telecommunications Installation Fee, Remote
Specialist Telecommunications Fee, Remote
Specialist Equipment Installation Fee, and Remote
Specialist Equipment Rental Fee.
38 See Securities Exchange Act Release No. 53643
(April 13, 2006), 71 FR 20151 (April 19, 2006) (SR–
Phlx–2006–23).
39 The Examinations Fee is applicable to member/
participant organizations for whom the Exchange is
the DEA, unless an exemption to the assessment of
the Examinations Fee applies. See, e.g., Securities
Exchange Act Release Nos. 46392 (August 21,
2002), 67 FR 55294 (August 28, 2002) (SR–Phlx–
2002–45) and 42562 (March 22, 2000), 65 FR 16445
(March 28, 2000) (SR–Phlx–00–18).
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17:45 Dec 21, 2006
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organization.40 Specifically, a member
organization will be assessed a monthly
fee of $2,100 for one to ten off-floor
traders; $2,600 for eleven to fifty offfloor traders; $5,000 for fifty-one to two
hundred off-floor traders; and $12,500
for over two hundred off-floor traders in
the same member organization. The
following member organizations will
continue to be exempt from the
Examinations Fee, consistent with
current practice: (1) inactive
organizations; 41 and (2) organizations
operating through one or more Phlx
trading venues that demonstrated that
25% or more of its revenue as reflected
on the most recently submitted FOCUS
Report or transactions as reflected on its
purchase and sales blotter are derived
from securities transactions on the Phlx.
The Exchange proposes to eliminate the
following exemptions to clarify and
simplify the application of the
Examinations Fee: (1) the exemption
category for member organizations for
any month where they incur transaction
or clearing fees charged directly by the
Exchange or by its registered clearing
subsidiary, provided that the fees
exceed the examination fee for that
month and (2) the exemption for
member organizations affiliated with a
member organization exempt from the
Examination Fee due to the exemption
listed immediately above or the
exemption if that member organization
is affiliated with a member organization
operating from the Phlx trading floor or
as a Remote Specialist which have
demonstrated that at least 25% or more
of their income as reflected on the most
recently submitted FOCUS Report was
derived from floor activities or remote
specialist activities.
The proposed revised Examinations
Fee, which would apply to many of the
members currently covered by the OffFloor Examinations Fee, should more
efficiently and effectively assess
member organizations for recovery of
regulatory-related costs related to
conducting examinations and should
clarify how the Examinations Fee will
be assessed in connection with the
member organizations that trade equity
securities on XLE.42
40 For purposes of assessing the proposed tiered
Examinations Fee, Sponsored Participants are not
included in the calculation of the number of offfloor traders in a Sponsoring Member Organization.
41 In connection with amending the Examinations
Fee as described above, the definition of an inactive
organization is being modified slightly so that it
will be defined as an organization that had no
securities transaction revenue, as determined by
FOCUS reports or other financial filings, as long as
the organization continues to have no such revenue
each month.
42 The proposed Examinations Fee would be
implemented the first full month after XLE is
PO 00000
Frm 00123
Fmt 4703
Sfmt 4703
Finally, the Exchange proposes to
renumber the footnotes on the
Exchange’s fee schedule to reflect the
changes described above.
2. Statutory Basis
The Phlx believes that the proposed
rule change to amend its schedule of
fees is consistent with Section 6(b) of
the Act,43 in general, and furthers the
objectives of Section 6(b)(4) of the Act,44
in particular, in that it is designed to
assure the equitable allocation of
reasonable fees and other charges among
its members and other persons using its
facilities.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Phlx does not believe that the
proposed rule change will impose any
burden on competition that is not
necessary or appropriate in furtherance
of the purposes of the Act.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants or Others
No written comments were solicited
or received with respect to the proposed
rule change.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
The foregoing rule change has become
effective pursuant to Section 19(b)(3)(A)
of the Act 45 and subparagraph (f)(2) of
Rule 19b–4 thereunder,46 since it
establishes or changes a due, fee or
other charge imposed by the Exchange.
At any time within 60 days of the
filing of such proposed rule change, the
Commission may summarily abrogate
such rule change if it appears to the
Commission that such action is
necessary of appropriate in the public
interest, for the protection of investors,
or otherwise in the furtherance of the
purposes of the Act.47
launched. For example, if XLE is launched in midNovember, the current off-floor Examinations Fee
will apply for the month of November and the
Examinations Fee set forth in this proposal would
be assessed beginning with the month of December.
43 15 U.S.C. 78f(b).
44 15 U.S.C. 78f(b)(4).
45 15 U.S.C. 78s(b)(3)(A).
46 17 CFR 240.19b–4(f)(2).
47 The effective date of the original proposed rule
change is November 2, 2006 and the effective date
of Amendment No. 1 is December 12, 2006. For
purposes of calculating the 60-day period within
which the Commission may summarily abrogate the
proposed rule change under Section 19(b)(3)(C) of
the Act, the Commission considers the period to
commence on December 12, 2006 the date on which
Phlx filed Amendment No. 1. See 15 U.S.C.
78s(b)(3)(C).
E:\FR\FM\22DEN1.SGM
22DEN1
Federal Register / Vol. 71, No. 246 / Friday, December 22, 2006 / Notices
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:
SMALL BUSINESS ADMINISTRATION
Notice Seeking Exemption Under
Section 312 of the Small Business
Investment Act, Conflicts of Interest;
Alliance Enterprise Corporation
License No. 03/03–5066
Notice is hereby given that Alliance
Enterprise Corporation, 2435 North
Central Expressway, Suite 200,
Richardson, TX 75080, a Federal
Licensee under the Small Business
Investment Act of 1958, as amended
(‘‘the Act’’), in connection with the
financing of a small concern, has sought
an after-the-fact exemption under
Section 312 of the Act and Section
Paper Comments
107.730, Financings which Constitute
Conflicts of Interest of the Small
• Send paper comments in triplicate
Business Administration (‘‘SBA’’) Rules
to Nancy M. Morris, Secretary,
and Regulations (13 CFR 107.730).
Securities and Exchange Commission,
Alliance Enterprise Corporation
100 F Street, NE., Washington DC
provided a $500,000 loan to M68
20549–1090.
Technologies, Inc. (M68) on May 20,
All submissions should refer to File
2005.
Number SR–Phlx–2006–70. This file
The financing is brought within the
number should be included on the
purview of § 107.730(a)(1) of the
subject line if e-mail is used. To help the
Regulations because M68 is an
Commission process and review your
Associate of Alliance Enterprise
comments more efficiently, please use
Corporation, inasmuch as sister SBIC
only one method. The Commission will
post all comments on the Commission’s MESBIC Ventures, Inc. had previously
invested in M68 and owned 51.5
Internet Web site (https://www.sec.gov/
percent of the common stock. MESVIC
rules/sro.shtml). Copies of the
Ventures, Inc. and Alliance Enterprise
submission, all subsequent
Corporation are associates of each other
amendments, all written statements
since they are under common control in
with respect to the proposed rule
accordance with the definition
change that are filed with the
contained in Section 107.50(4) of the
Commission, and all written
Regulations. Both SBICs are whollycommunications relating to the
owned by Pacesetter/MVHC, Inc.
proposed rule change between the
Notice is hereby given that any
Commission and any person, other than
interested person may submit written
those that may be withheld from the
comments on the transaction to the
public in accordance with the
Associate Administrator for Investment,
provisions of 5 U.S.C. 552, will be
U.S. Small Business Administration,
available for inspection and copying in
409 Third Street, SW., Washington, DC
the Commission’s Public Reference
Room. Copies of such filing also will be 20416.
Dated: October 31, 2006.
available for inspection and copying at
the principal office of the Phlx. All
Jaime Guzman-Fournier,
comments received will be posted
Acting Associate Administrator for
without change; the Commission does
Investment.
not edit personal identifying
[FR Doc. E6–21983 Filed 12–21–06; 8:45 am]
information from submissions. You
BILLING CODE 8025–01–P
should submit only information that
you wish to make available publicly. All
submissions should refer to File No.
DEPARTMENT OF STATE
SR–Phlx–2006–70 and should be
submitted on or before January 12, 2007. [PUBLIC NOTICE 5652]
jlentini on PROD1PC65 with NOTICES
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–2006–70 on the
subject line.
For the Commission, by the Division of
Market Regulation, pursuant to delegated
authority.48
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E6–21906 Filed 12–21–06; 8:45 am]
BILLING CODE 8011–01–P
48 17
CFR 200.30–3(a)(12).
VerDate Aug<31>2005
17:45 Dec 21, 2006
Jkt 211001
Culturally Significant Object Imported
for Exhibition Determinations: ‘‘Hans
Holbein The Younger’s Robert
Cheseman’’
SUMMARY: Notice is hereby given of the
following determinations: Pursuant to
the authority vested in me by the Act of
October 19, 1965 (79 Stat. 985; 22 U.S.C.
PO 00000
Frm 00124
Fmt 4703
Sfmt 4703
77083
2459), Executive Order 12047 of March
27, 1978, the Foreign Affairs Reform and
Restructuring Act of 1998 (112 Stat.
2681, et seq.; 22 U.S.C. 6501 note, et
seq.), Delegation of Authority No. 234 of
October 1, 1999, Delegation of Authority
No. 236 of October 19, 1999, as
amended, and Delegation of Authority
No. 257 of April 15, 2003 [68 FR 19875],
I hereby determine that the object ‘‘Hans
Holbein The Younger’s Robert
Cheseman,’’ imported from abroad for
temporary exhibition within the United
States, is of cultural significance. The
object is imported pursuant to a loan
agreement with the foreign owners or
custodians. I also determine that the
exhibition or display of the exhibit
object at The J. Paul Getty Museum, Los
Angeles, California, from on or about
January 16, 2007, until on or about April
22, 2007, and at possible additional
venues yet to be determined, is in the
national interest. Public Notice of these
Determinations is ordered to be
published in the Federal Register.
FOR FURTHER INFORMATION CONTACT: For
further information, including a list of
the exhibit object, contact Wolodymyr
Sulzynsky, Attorney-Adviser, Office of
the Legal Adviser, U.S. Department of
State (telephone: (202) 453–8050). The
address is U.S. Department of State, SA–
44, 301 4th Street, SW., Room 700,
Washington, DC 20547–0001.
Dated: December 15, 2006.
C. Miller Crouch,
Principal Deputy Assistant Secretary for
Educational and Cultural Affairs, Department
of State.
[FR Doc. E6–21963 Filed 12–21–06; 8:45 am]
BILLING CODE 4710–05–P
DEPARTMENT OF STATE
[Public Notice 5651]
Culturally Significant Objects Imported
for Exhibition; Determinations:
‘‘Venice and the Islamic World, 828–
1797’’
SUMMARY: Notice is hereby given of the
following determinations: Pursuant to
the authority vested in me by the Act of
October 19, 1965 (79 Stat. 985; 22 U.S.C.
2459), Executive Order 12047 of March
27, 1978, the Foreign Affairs Reform and
Restructuring Act of 1998 (112 Stat.
2681, et seq.; 22 U.S.C. 6501 note, et
seq.), Delegation of Authority No. 234 of
October 1, 1999, Delegation of Authority
No. 236 of October 19, 1999, as
amended, and Delegation of Authority
No. 257 of April 15, 2003 [68 FR 19875],
I hereby determine that the objects to be
included in the exhibition ‘‘Venice and
the Islamic World, 828–1797’’, imported
E:\FR\FM\22DEN1.SGM
22DEN1
]]>Agencies
[Federal Register Volume 71, Number 246 (Friday, December 22, 2006)]
[Notices]
[Pages 77079-77083]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E6-21906]
[[Page 77079]]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-54941; File No. SR-Phlx-2006-70)
Self-Regulatory Organizations; Philadelphia Stock Exchange, Inc.;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change
and Amendment No. 1 Thereto To Adopt Fees for the Trading of Equity
Securities on XLE
December 14, 2006.
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 2, 2006, 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 Phlx. On December
12, 2006, the Exchange filed Amendment No. 1 to the proposed rule
change.\3\ The Exchange has designated this amended proposal as one
establishing or changing a due, fee, or other charge imposed by the
Exchange under Section 19(b)(3)(A),\4\ and Rule 19b-4(f)(2)
thereunder,\5\ which renders the proposal effective upon filing with
the Commission. The Commission is publishing this notice to solicit
comments on the proposed rule change, as amended, from interested
persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ In Partial Amendment No. 1, which supplemented the proposal
as originally filed, the Exchange made several clarifying changes to
further explain the assessment of the proposed fees in connection
with its new equity trading system and made other technical changes
to the original filing. In addition, the Exchange included a revised
Exhibit 5A in Partial Amendment No. 1 to reflect technical and
clarifying changes made therein, which, for clarity and ease of
reference, replaces the Exhibit 5A contained in the original filing.
The Exchange did not propose any new fees in Partial Amendment No.
1.
\4\ 15 U.S.C. 78s(b)(3)(A).
\5\ 17 CFR 240.19b-4(f)(2).
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Phlx proposes to adopt the proposed fees described below for
the trading of equity securities on the Exchange in connection with its
new equity system (``XLE'').\6\ With XLE, the Exchange no longer
operates a physical trading floor for equity securities or the
Philadelphia Stock Exchange Automated Communication and Execution
(``PACE'') system.\7\ Therefore, the Exchange proposes to adopt a new
fee schedule to accommodate the trading of equity securities on XLE and
to amend Appendix A of the Exchange's fee schedule to adopt XLE-related
fees, delete obsolete fees, and modify other fees that will no longer
apply to equity trading.\8\ The text of the proposed rule change is
available on the Phlx's Web site at https://www.phlx.com, at the Phlx's
Office of the Secretary, and at the Commission's Public Reference
Room.\9\
---------------------------------------------------------------------------
\6\ XLE is designed to provide the opportunity for entirely
automated executions to occur within a central matching system
accessible by Exchange members and member organizations and their
Sponsored Participants. See Securities Exchange Act Release No.
54538 (September 28, 2006), 71 FR 59184 (October 6, 2006) (SR-Phlx-
2006-43).
\7\ PACE was the Exchange's order routing, delivery, execution
and reporting system for its equity trading floor. The Commission
notes that XLE commenced limited operations on November 10, 2006.
\8\ Although the fees proposed herein have been filed to become
immediately effective, the fees will not become operative until the
Exchange discontinues its physical equities trading floor and
commences operation of XLE. See Securities Exchange Act Release No.
54538 (September 28, 2006), 71 FR 59184 (October 6, 2006) (SR-Phlx-
2006-43) (order approving XLE rules). The Commission notes that XLE
commenced limited operations on November 10, 2006.
\9\ The Stock Clearing Corporation of Philadelphia (``SCCP'')
filed a separate proposed rule change with the Commission to amend
its fee schedule to reflect fees associated with the trade
processing of equity securities through SCCP in connection with XLE.
See SR-SCCP-2006-04.
---------------------------------------------------------------------------
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, Phlx included statements
concerning the purpose of, and basis for, the proposed rule change and
discussed any comments it received on the proposal. The text of these
statements may be examined at the places specified in Item IV below.
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 adopt a fee schedule
for the trading of equity securities on the Exchange in connection with
XLE. The XLE fee schedule includes transaction fees (execution and
routing fees), covered sale fees, and system fees, as well as a market
data revenue sharing proposal. Changes to Appendix A of the Exchange's
fee schedule include permit fees, application fees, and a modified
examination fee, as well as the deletion of certain floor-based fees.
All the proposed fees will be assessed on Exchange members or member
organizations, which may include Sponsoring Member Organizations,\10\
(collectively referred to herein as ``member organizations'').
Sponsoring Member Organizations are responsible for the fees generated
by their Sponsored Participant's activities.
---------------------------------------------------------------------------
\10\ A Sponsoring Member Organization is a member organization
that has authorized access to XLE for a Sponsored Participant (a
person who has access to XLE which is authorized by a Sponsoring
Member Organization). See Phlx Rules 1(jj) and 1(kk).
---------------------------------------------------------------------------
Transaction Fees. With respect to securities trading at or above
$1.00, the Exchange intends to charge member organizations an execution
fee, ranging from $0.0026 to $0.003 per share, depending on the number
of total shares executed monthly,\11\ for orders that remove liquidity
from XLE. Additionally, the Exchange intends to offer an execution
credit to member organizations, ranging from $0.002 to $0.0026 per
share, for orders that provide liquidity to XLE. Any available credits
would be applied to the member organization's monthly invoice. Excess
credits would be carried over into subsequent months or rebated to the
applicable member organization, as requested by the member
organization.
---------------------------------------------------------------------------
\11\ The ``total monthly shares'' executed includes executions
resulting from removing and providing liquidity on XLE and crosses
executed on XLE, as well as shares executed when routed via XLE to
an away trading center and executed on that away trading center,
except for liquidity provided by incoming NMS Linkage Orders or ITS
Commitments. The total monthly shares will be calculated separately
per XLE Participant Organization, which, for purposes of this
proposal, refers to Sponsored Participants, Sponsoring Member
Organizations, and member organizations without Sponsored
Participants. Thus, Sponsored Participant activity will accrete
towards that Sponsored Participant's volume tier and not towards the
Sponsoring Member Organization's volume tier. Once a specific tier
has been reached in a month, all transactions for that month will be
subject to the fee that corresponds with that volume tier. See also
infra notes 15 and 16.
---------------------------------------------------------------------------
The purpose of adopting the volume tiers in connection with the
assessment of transaction fees is to encourage XLE Participant
Organizations to send and execute orders on XLE. The volume tiers are
based on the monthly shares executed per XLE Participant Organization;
for Tier 1 (less than or equal to 10 million shares executed), the
Exchange proposes to assess a fee of $0.003 per share executed to
remove liquidity and give a credit of $0.002 per share executed for
providing liquidity; for Tier 2 (greater than 10 million and less than
or equal to 50 million shares executed), the Exchange proposes to
assess a fee of $0.0028 per share executed to remove liquidity and give
a
[[Page 77080]]
credit of $0.0025 per share executed for providing liquidity; for Tier
3 (greater than 50 million and less than or equal to 200 million shares
executed), the Exchange proposes to assess a fee of $0.0027 per share
executed to remove liquidity and give a credit of $0.0026 per share
executed for providing liquidity; and for Tier 4 (greater than 200
million shares executed), the Exchange proposes to assess a fee of
$0.0026 per share executed to remove liquidity and give a credit of
$0.0026 per share executed for providing liquidity. For each of the
four volume tiers described above, the Exchange proposes to charge a
flat routing fee of $0.0036 per share executed when an order is routed
via XLE to an away trading center and executed on that away trading
center.
In addition, in lieu of the above-referenced execution fees, the
Exchange proposes to adopt a separate execution fee for securities
executed on XLE at a per share price below $1.00 that remove liquidity.
For these securities, the Exchange would charge 0.1% (i.e., 10 basis
points) of the total dollar value of the transaction. The Exchange is
not proposing an execution fee credit for providing liquidity for
shares with a per share price below $1.00. Such executed volume for
securities trading below $1.00 will accrete towards the volume tier
breakpoint per XLE Participant Organization.
Additional transaction fees are set forth on the proposed fee
schedule under the heading ``Miscellaneous Transaction Fees.''
Miscellaneous Transaction Fees would be assessed in lieu of the general
transaction fees described above. The Exchange proposes to adopt an
execution fee of $0.0023 per share per side for Immediate or Cancel
(``IOC'') Cross Orders and Mid-Point Cross Orders entered over
technology provided by Phlx.\12\ The Exchange is not proposing to adopt
any transaction fees (i.e., execution fee for removing liquidity or
execution credit for providing liquidity) for executions of IOC Cross
Orders \13\ and Mid-Point Cross Orders \14\ with respect to orders
entered over technology that is not provided by the Exchange. There
also would be no execution credit for any IOC Cross or Mid-Point Cross
transactions, whether entered over technology provided by Phlx or
not.\15\ In addition, in connection with IOC Cross Orders and Mid-Point
Cross Orders entered over technology provided by Phlx, there would be a
$50 maximum fee per trade side.
---------------------------------------------------------------------------
\12\ Phlx intends to provide optional technology to XLE
Participants for the entry of two-sided orders into XLE.
\13\ IOC Cross Orders are two-sided orders that match
immediately and automatically on XLE the identified buy-side with
the identified sell-side. Specifically, an IOC Cross Order is a two-
sided order that executes, in its entirety, at the specified price,
provided that XLE will cancel an IOC Cross Order at the time of
order entry under certain conditions. See Phlx Rules 185(c) and
185(c)(2).
\14\ A Mid-Point Cross Order is a two-sided order that executes,
in its entirety, at the midpoint of the best Protected Bid and the
best Protected Offer in a security. These orders will match
immediately and automatically on XLE the identified buy-side with
the identified sell-side. See Phlx Rules 185(c) and 185(c)(1).
\15\ Executed volume for IOC Cross and Mid-Point Cross Orders,
whether entered over technology provided by the Exchange or not,
will accrete towards the volume tier breakpoint per XLE Participant
Organization that is a party to the execution.
---------------------------------------------------------------------------
The execution fee for Odd Lot Orders \16\ would be $0.003 per share
executed, which applies to orders initially entered as Odd Lot Orders
and executed in XLE. There would be no execution credit for orders
initially entered as Odd Lot Orders and executed on XLE. Also, for
incoming NMS Linkage Orders or ITS Commitments routed to Phlx and
executed on XLE, the Exchange proposes to charge $0.003 per share for
removing liquidity.\17\ The Exchange is proposing to delete from its
Summary of Equity Charges the Outbound ITS fee and Net Inbound ITS
Credit, since the Exchange will no longer assess an Outbound ITS fee or
give a Net Inbound ITS Credit.
---------------------------------------------------------------------------
\16\ An Odd Lot Order means an order for less than a round lot,
which is defined for purposes of XLE as a unit of trading that is
100 shares. See Phlx Rules 1(w) and 1(gg). Executed volume for
orders initially entered as Odd Lot Orders and executed on XLE will
accrete towards the volume tier breakpoint per XLE Participant
Organization.
\17\ This fee will be assessed on the member organization
sponsoring the NMS Linkage Order or ITS Commitment or, if there is
no member organization sponsoring the NMS Linkage Order or ITS
Commitment, on the exchange or the Participant in the National
Association of Securities Dealers, Inc. Alternative Display Facility
(``ADF Participant'') sending the ITS Commitment or NMS Linkage
Order. The arrangement to charge other exchanges or ADF Participants
was part of separate proposed rule changes that were approved by the
Commission. See Securities Exchange Act Release Nos. 54548
(September 29, 2006), 71 FR 59159 (October 6, 2006) (SR-Phlx-2006-
58) and 54555 (October 2, 2006), 71 FR 59577 (October 10, 2006) (SR-
Phlx-2006-60).
---------------------------------------------------------------------------
Covered Sale Fee. The Exchange will continue to charge a Covered
Sale Fee. Each member and member organization engaged in executing sale
transactions on the Exchange or executing transactions, which were
routed over the Intermarket Trading System or pursuant to the NMS
Linkage Plan, on another exchange or on a Participant in NASD's
Alternative Display Facility during any computational period shall pay
a Covered Sale Fee equal to (i) the Section 31 fee rate multiplied by
(ii) the member's aggregate dollar amount of covered sales.\18\
---------------------------------------------------------------------------
\18\ See Phlx Rule 607 and Securities Exchange Act Release No.
54555 (October 2, 2006), 71 FR 59577 (October 10, 2006) (SR-Phlx-
2006-60) (amending Phlx Rule 607). See also Partial Amendment No. 1,
supra note 3 (making conforming edits to the Covered Sale Fee rule
text to reflect the amended version of Phlx Rule 607). A Sponsoring
Member Organization is responsible for the Covered Sale Fees
generated in connection with its Sponsored Participant's sale
transactions.
---------------------------------------------------------------------------
System Fees. The Exchange proposes to charge a monthly FIX \19\
Computer-to-Computer Interface (CTCI) Port Fee \20\ of $100.00 per
port. At this time, however, the Exchange does not intend to charge for
monthly Drop Copy Feeds,\21\ Monthly Phlx Systems,\22\ or Depth of Book
Data Feeds.\23\
---------------------------------------------------------------------------
\19\ The Financial Information eXchange (``FIX'') Protocol is a
messaging standard developed specifically for the real-time
electronic exchange of securities transactions.
\20\ A port is defined as an Internet Protocol (``IP'') address
assigned by the Exchange for connectivity to XLE.
\21\ The Drop Copy Feed provides real-time information
concerning trades executed by an XLE Participant Organization and
will be provided on a subscription basis.
\22\ The Monthly Phlx Systems Fee refers to the use of optional
Phlx technology to enter in two-sided orders and related clearing
information.
\23\ The Depth of Book feed displays every order, except the
undisplayed portion of a Reserve Order, within XLE at each price
level and will be provided, on a subscription basis, at no charge to
anyone who subscribes to receive this information.
---------------------------------------------------------------------------
Marketing Data Revenue Sharing. In addition, the Exchange is
proposing to adopt a quarterly market data revenue sharing program that
would provide for 50% of gross market data revenue to be shared with
the member organization responsible for providing the liquidity portion
of the trade. Sponsored Participant trades will be credited to the
applicable Sponsoring Member Organization. Any market data revenue
would be paid to the applicable member organization on a quarterly
basis.
The market data revenue sharing will apply to all securities: Tape
A, Tape B, and Tape C. Although there is a difference in the manner in
which the underlying Tape A and Tape B, revenue versus Tape C revenue
is distributed to Phlx and the other national securities exchanges \24\
there is no difference in the manner in which member organizations will
share in Tape A and B revenue versus Tape C revenue because the
proposed rule language bases the credits on revenue attributable to the
executions of a member organization. Thus, a member organization
responsible for providing the liquidity
[[Page 77081]]
portion of the trade will receive 50% of the revenue attributable to
its executions reported to each of the three tapes.\25\
---------------------------------------------------------------------------
\24\ Tape A and Tape B revenue is currently distributed to Phlx
and national securities exchanges based on the number of trades
reported, while Tape C revenue is distributed based on an average of
number of trades and number of shares reported.
\25\ The Exchange states that the proposed market data revenue
sharing program is similar to programs implemented by other self-
regulatory organizations. See, e.g., Securities Exchange Act Release
No. 53860 (May 24, 2006), 71 FR 31250 (June 1, 2006) (SR-NSX-2006-
07).
---------------------------------------------------------------------------
Deleting Obsolete Fees. In connection with adopting the XLE fee
schedule for the trading of equity securities on the Exchange, the
Exchange proposes to delete the obsolete fees currently listed on the
Summary of Equity Charges,\26\ which includes deleting references to
license fees assessed in connection with the trading of certain
products. Although the Exchange may currently, or in the future, be a
party to a license fee agreement with a licensor in connection with the
trading of certain products, the Exchange does not propose to assess
license fees in connection with XLE at this time. The Exchange would
submit a separate proposed rule change if it decides to assess license
fees in the future.
---------------------------------------------------------------------------
\26\ The Covered Sale Fee, however, will continue to be assessed
in connection with XLE.
---------------------------------------------------------------------------
The Exchange also proposes to delete references to SCCP customer
and specialist fees on the Exchange's Nasdaq-100 Index Tracking
StockSM Fee Schedule \27\ to reflect changes that were
proposed in a separate SCCP fee filing.\28\
---------------------------------------------------------------------------
\27\ The Nasdaq-100[supreg], Nasdaq-100 Index[supreg],
Nasdaq[supreg], The Nasdaq Stock Market[supreg], Nasdaq-100
Shares,SM Nasdaq-100 Trust,SM Nasdaq-100 Index
Tracking Stock,SM and QQQSM are trademarks or
service marks of The Nasdaq Stock Market, Inc. (``Nasdaq'') and have
been licensed for use for certain purposes by the Philadelphia Stock
Exchange pursuant to a License Agreement with Nasdaq. The Nasdaq-100
Index[supreg] (the ``Index'') is determined, composed and calculated
by Nasdaq without regard to the Licensee, the Nasdaq-100
Trust,SM or the beneficial owners of Nasdaq-100
Shares.SM Nasdaq has complete control and sole discretion
in determining, comprising or calculating the Index or in modifying
in any way its method for determining, comprising or calculating the
Index in the future.
\28\ See SR-SCCP-2006-04.
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Appendix A. Appendix A of the Exchange's fee schedule contains
general fees that are currently assessed on members, foreign currency
options (``FCO'') participants, member organizations, or FCO
participant organizations that are not transaction-based, such that
many of the fees relate to gaining access to trading on the Exchange or
being physically present on the trading floor. As set forth below, the
Exchange intends to adopt, modify, or delete, as appropriate, several
fees to accommodate the trading of equity securities on XLE.
The Exchange proposes to adopt permit fees related to the trading
of equity securities on XLE. Currently, the Exchange assesses a permit
fee to access trading on the Exchange. Permit fees are assessed based
on how each permit is used. Specifically, the Exchange will charge an
Order Flow Provider a permit fee of $200 per month to submit orders to
XLE only and $300 per month to submit orders to more than one trading
venue (i.e., XLE, foreign currency options trading floor, or options
trading floor). Members who are registered as Market Maker Authorized
Traders \29\ will be charged $1,200 per month for the first permit and
$1,000 per month for each additional permit for members in the same
member organization. If a member organization only sponsors a Sponsored
Participant and does not have any other trading functions, the permit
holder associated with that member organization will be charged a
permit fee of $1,200 per month and $1,000 per month for additional
permits for members in the same member organization.
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\29\ The term ``Market Maker Authorized Trader'' means a
Participant Authorized User who is a member and who performs market
making activities pursuant to Phlx Rules 170 et. seq. A Participant
Authorized User means an individual authorized by a member
organization or a Sponsored Participant to enter orders, on its
behalf, on XLE. See Phlx Rules 1(m) and 1(x).
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The permit fees will be assessed consistent with current practices.
For example, any member who is associated with one or more member
organizations and uses a permit in more than one category will pay the
higher of the applicable fees each month for such permit.\30\ In
addition, permits may not be transferred from one permit holder
associated with one member organization to a permit holder associated
with a different member organization, thus a Transfer Fee is
inapplicable for permits relating to XLE trading.\31\
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\30\ See Securities Exchange Act Release No. 49157 (January 30,
2004), 69 FR 5883 (February 6, 2004) (SR-Phlx-2004-02).
\31\ Permits, however, may be transferred within a member
organization without incurring a Transfer Fee. See Securities
Exchange Act Release No. 49157 (January 30, 2004), 69 FR 5883
(February 6, 2004) (SR-Phlx-2004-02).
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Excess permit fees \32\ will continue to apply, but will be
expanded to include XLE users. Therefore, permit holders may be
designated as ``excess'' permit holders in cases where permit holders
in the same organization, other than the permit holder who qualifies
the member organization, are either: (1) not floor brokers,
specialists, ROTs (including RSQTs and SQTs), Off-Floor Traders, Market
Maker Authorized Traders, or an XLE Sponsoring Member Organization
whose only function is to sponsor a Sponsored Participant; or (2) not
associated with a member organization that meets the definition of an
Order Flow Provider, which now includes submitting orders to XLE. The
rate remains unchanged. Thus, member organizations that have excess
permit holders will continue to be assessed $200 for each ``excess''
permit.
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\32\ See Securities Exchange Act Release Nos. 49856 (June 15,
2004), 69 FR 34411 (June 21, 2004) (SR-Phlx-2004-32) and 53043
(December 29, 2005), 71 FR 959 (January 6, 2006) (SR-Phlx-2005-72).
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The Exchange also proposes to charge Sponsoring Member
Organizations an application fee of $1,850.00 for each Sponsored
Participant that it proposes to sponsor to help offset the costs
associated with the processing of the application, including
administrative costs associated with reviewing the application and
creating the appropriate accounts.\33\
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\33\ This fee is the same amount as the Exchange's current
application ($350.00) and initiation fees ($1,500) combined for
members and member organizations.
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The Account Fee also will continue to apply to member organizations
that trade on XLE. Currently, the Exchange charges member organizations
a monthly fee of $50.00 for each account beyond the number of permits
billed to that member organization.\34\ Therefore, if a member
organization sponsors a Sponsored Participant and establishes a new
account, each account beyond the number of permits billed to that
member organization would be subject to the $50.00 fee.
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\34\ Each account may have 22 suffixes or sub-accounts. For
example, account number 202 can actually be used as accounts 202-A,
202-B, etc. There is no additional charge for suffixes assigned
within the same account. See Securities Exchange Act Release No.
53046 (January 3, 2006), 71 FR 1459 (January 9, 2006) (SR-Phlx-2005-
89).
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In addition, any equity floor-based fees, such as post and booth
space fees, would no longer apply to members or member organizations
due to the fact that there will no longer be a physical equity trading
floor.\35\ The Exchange will not assess these equity floor-based fees
for any part of the month in which XLE is launched.\36\ These fees will
[[Page 77082]]
remain on the fee schedule as applicable to the Exchange's other
trading floors.
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\35\ Examples of these floor-based fees include trading post/
booth space, controller space, floor facility, direct wire to the
floor, telephone system line extension, trading floor personnel
registration, computer equipment services, repairs or replacements,
and computer relocation requests. These fees will remain on Appendix
A to reflect that they will still be assessed on members,
participants, and member or participant organizations on the options
and/or foreign currency options trading floors.
\36\ For example, if XLE is launched in mid-November, no equity
floor-based fees from Appendix A will be assessed for the month of
November.
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The Exchange proposes to delete from the fee schedule any fees
applicable only to the equity trading floor, such as the stock
execution machine registration fee, due to the fact that there will no
longer be a physical equity trading floor. Additionally, the Exchange
proposes to delete all Remote Specialist fees,\37\ since Remote
Specialists will not exist in XLE.
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\37\ Specifically, these fees include the Remote Specialist
System Fee, Remote Specialist Security Routing Fee, Remote
Specialist Telecommunications Installation Fee, Remote Specialist
Telecommunications Fee, Remote Specialist Equipment Installation
Fee, and Remote Specialist Equipment Rental Fee.
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Apart from the launch of XLE and merely to update the fee schedule,
the Exchange also proposes to delete the ``Equity, Option or FCO
Transmission Charge'' and the ``FCO Pricing Tape'' fees because the
Exchange will no longer be providing these services. Thus, a charge for
these services will not be assessed.
The Exchange also proposes to delete its Off-Floor Examinations Fee
of $30.00 per month per off-floor trader and, in turn, amend its
Examinations Fee. The implementation of a tiered monthly Examinations
Fee will replace the Off-Floor Examinations Fee. Currently, the
Exchange assesses a monthly fee of $30.00 per off-floor trader for off-
floor traders associated with member organizations for whom the
Exchange is the Designated Examining Authority (``DEA'').\38\ With the
closing of the Exchange's equity trading floor, traders that previously
physically traded on the floor of the Exchange (and for whom the
Exchange was the DEA for their member organization) will no longer be
considered ``on-floor traders,'' but will now be designated as ``off-
floor traders'' and therefore would now fall under and be assessed the
Off-Floor Examinations Fee.\39\
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\38\ See Securities Exchange Act Release No. 53643 (April 13,
2006), 71 FR 20151 (April 19, 2006) (SR-Phlx-2006-23).
\39\ The Examinations Fee is applicable to member/participant
organizations for whom the Exchange is the DEA, unless an exemption
to the assessment of the Examinations Fee applies. See, e.g.,
Securities Exchange Act Release Nos. 46392 (August 21, 2002), 67 FR
55294 (August 28, 2002) (SR-Phlx-2002-45) and 42562 (March 22,
2000), 65 FR 16445 (March 28, 2000) (SR-Phlx-00-18).
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To address the unintended consequences that XLE would now cover
additional traders that previously were not covered under the Off-Floor
Examinations Fee, the Exchange is proposing to delete the Off-Floor
Examinations Fee and adopt a tiered Examinations Fee based on the
number of off-floor traders in a member organization.\40\ Specifically,
a member organization will be assessed a monthly fee of $2,100 for one
to ten off-floor traders; $2,600 for eleven to fifty off-floor traders;
$5,000 for fifty-one to two hundred off-floor traders; and $12,500 for
over two hundred off-floor traders in the same member organization. The
following member organizations will continue to be exempt from the
Examinations Fee, consistent with current practice: (1) inactive
organizations; \41\ and (2) organizations operating through one or more
Phlx trading venues that demonstrated that 25% or more of its revenue
as reflected on the most recently submitted FOCUS Report or
transactions as reflected on its purchase and sales blotter are derived
from securities transactions on the Phlx. The Exchange proposes to
eliminate the following exemptions to clarify and simplify the
application of the Examinations Fee: (1) the exemption category for
member organizations for any month where they incur transaction or
clearing fees charged directly by the Exchange or by its registered
clearing subsidiary, provided that the fees exceed the examination fee
for that month and (2) the exemption for member organizations
affiliated with a member organization exempt from the Examination Fee
due to the exemption listed immediately above or the exemption if that
member organization is affiliated with a member organization operating
from the Phlx trading floor or as a Remote Specialist which have
demonstrated that at least 25% or more of their income as reflected on
the most recently submitted FOCUS Report was derived from floor
activities or remote specialist activities.
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\40\ For purposes of assessing the proposed tiered Examinations
Fee, Sponsored Participants are not included in the calculation of
the number of off-floor traders in a Sponsoring Member Organization.
\41\ In connection with amending the Examinations Fee as
described above, the definition of an inactive organization is being
modified slightly so that it will be defined as an organization that
had no securities transaction revenue, as determined by FOCUS
reports or other financial filings, as long as the organization
continues to have no such revenue each month.
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The proposed revised Examinations Fee, which would apply to many of
the members currently covered by the Off-Floor Examinations Fee, should
more efficiently and effectively assess member organizations for
recovery of regulatory-related costs related to conducting examinations
and should clarify how the Examinations Fee will be assessed in
connection with the member organizations that trade equity securities
on XLE.\42\
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\42\ The proposed Examinations Fee would be implemented the
first full month after XLE is launched. For example, if XLE is
launched in mid-November, the current off-floor Examinations Fee
will apply for the month of November and the Examinations Fee set
forth in this proposal would be assessed beginning with the month of
December.
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Finally, the Exchange proposes to renumber the footnotes on the
Exchange's fee schedule to reflect the changes described above.
2. Statutory Basis
The Phlx believes that the proposed rule change to amend its
schedule of fees is consistent with Section 6(b) of the Act,\43\ in
general, and furthers the objectives of Section 6(b)(4) of the Act,\44\
in particular, in that it is designed to assure the equitable
allocation of reasonable fees and other charges among its members and
other persons using its facilities.
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\43\ 15 U.S.C. 78f(b).
\44\ 15 U.S.C. 78f(b)(4).
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B. Self-Regulatory Organization's Statement on Burden on Competition
The Phlx does not believe that the proposed rule change will impose
any burden on competition that is not necessary or appropriate in
furtherance of the purposes of the Act.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants or Others
No written comments were solicited or received with respect to the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The foregoing rule change has become effective pursuant to Section
19(b)(3)(A) of the Act \45\ and subparagraph (f)(2) of Rule 19b-4
thereunder,\46\ since it establishes or changes a due, fee or other
charge imposed by the Exchange.
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\45\ 15 U.S.C. 78s(b)(3)(A).
\46\ 17 CFR 240.19b-4(f)(2).
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At any time within 60 days of the filing of such proposed rule
change, the Commission may summarily abrogate such rule change if it
appears to the Commission that such action is necessary of appropriate
in the public interest, for the protection of investors, or otherwise
in the furtherance of the purposes of the Act.\47\
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\47\ The effective date of the original proposed rule change is
November 2, 2006 and the effective date of Amendment No. 1 is
December 12, 2006. For purposes of calculating the 60-day period
within which the Commission may summarily abrogate the proposed rule
change under Section 19(b)(3)(C) of the Act, the Commission
considers the period to commence on December 12, 2006 the date on
which Phlx filed Amendment No. 1. See 15 U.S.C. 78s(b)(3)(C).
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[[Page 77083]]
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-2006-70 on the subject line.
Paper Comments
Send paper comments in triplicate to Nancy M. Morris,
Secretary, Securities and Exchange Commission, 100 F Street, NE.,
Washington DC 20549-1090.
All submissions should refer to File Number SR-Phlx-2006-70. 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 such
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 No. SR-Phlx-2006-70 and should be submitted on or before January
12, 2007.
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\48\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\48\
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E6-21906 Filed 12-21-06; 8:45 am]
BILLING CODE 8011-01-P
