SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-43994; File No. SR-PHLX-01-13]
Self-Regulatory Organizations; Notice of Filing and Immediate
Effectiveness of Proposed Rule Change by the Philadelphia Stock
Exchange, Inc. Relating to Fees for Transactions Executed Through the
eVWAP Trading System
February 22, 2001.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on January 29, 2001, the Philadelphia Stock Exchange, Inc.
(``Exchange'' or ``Phlx'') filed with the Securities and Exchange
Commission (``SEC'' or ``Commission'') the proposed rule change as
described in Items I, II, and III below, which Items have been prepared
by Phlx. Phlx filed the proposed rule change pursuant to Section
19(b)(3)(A) of the Act,\3\ and Rule 19b-4(f)(2) thereunder.\4\ Pursuant
to Rule 19b-4(f)(2), Phlx has designated this proposal as one changing
a due, fee or charge imposed by the Exchange. As such, the proposed
rule change is immediately effective upon the Commission's receipt of
this filing. 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\ 15 U.S.C. 78s(b)(3)(A).
\4\ 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
Pursuant to Rule 19b-4 of the Act, Phlx is revising its fee
schedule governing transactions executed through the Volume Weighted
Average Price (``VWAP''),\5\ Trading System (``eVWAP'').\6---------------------------------------------------------------------------
\5\ VWAP is registered trademark of the Universal Trading
Technologies Corporation (``UTTC'').
\6\ eVWAP\TM\ was developed by UTTC, and was approved by the
Commission to operate as a facility of the Exchange. See Securities
Exchange Act Release No. 41210 (March 24, 1999), 64 FR 15857 (April
1, 1999) (SR-Phlx-96-14). The Commission approved the facility to
operate as a pilot program until November 30, 2001. See Securities
Exchange Act Release No. 43477 (October 23, 2000), 65 FR 64734
(October 30, 2000) SR-Phlx-00-84).
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[[Page 12824]]
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filling 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 proposed rule change. 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
The purpose of the proposed rule change is to amend the Exchange's
current fee schedule for eVWAP transactions. The eVWAP is a pre-opening
order matching session for the electronic execution of large-sized
stock orders at a standardized VWAP price (``eVWAP Price'').\7\ The
Exchange established the initial eVWAP fee schedule in July, 1999.\8\
The revised fee schedule, like the current schedule, will apply to Phlx
member firms who will be billed and held responsible for paying such
fees. The revised fee schedule was effective on February 1, 2001. The
Phlx endeavored to issue a notice to its members of the revised fee
schedule before its effectiveness on February 1, 2001.
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\7\ See Phlx Rule 237.
\8\ See Securities Exchange Act Release No. 41646 (July 23,
1999), 64 FR 41480 (July 30, 1999) (SR-Phlx-99-21).
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The Phlx has been advised by UTTC that the demand that exists for
eVWAP is price sensitive to transaction costs. Therefore, the Phlx
believes that the revised fee schedule should encourage greater use of
the eVWAP system.
Fees will continue to vary depending upon the ultimate user (e.g.,
institutional, broker-dealer, Committer), type of trade (e.g., cross
versus non-cross), and volume of user activity. The fee schedule
amendments are as follows:
1. Institutional user and retail customer (non-cross trades and
direct access):
0 to 10 million shares per year changed to 0 to 750,000
shares per month: $0.02 per share changed to $0.015 per share.
Greater than 10 million shares to 20 million shares per
year changed to greater than 750,000 shares to 1.5 million shares per
month: $0.015 per share changed to $0.01 per share.
Greater than 20 million shares per year changed to greater
than 1.5 million shares per month: $0.01 per share changed to $0.005
per share.\9---------------------------------------------------------------------------
\9\ The proposed monthly volume discounts are not graduated and
if a user reaches a discount threshold, the user's entire eVWAP
trades for the month in the category receive the benefit of the fee
discount.
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2. Institutional user and retail customer (cross trades):
Intra-firm: changed from $0.005 to $0.00125 per share.\10---------------------------------------------------------------------------
\10\ Intra-firm cross trades refer to cross trades where the
identified contra-sides are from the same firm. Because the same
firm is on both sides of an intra-firm cross trade, the proposed
$0.00125 per share fee applies to each side, thus totaling $0.0025
per share.
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Inter-firm: changed from $0.01 to $0.00125 per share.\11---------------------------------------------------------------------------
\11\ Intra-firm cross trades refer to cross trades where the
identified contra-sides are from different firms.
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3. Non-member/non-institutional user category, along with its
$0.015 per share fee, is eliminated.
4. Enrolled \12\ specialist or alternate specialist Committer: No
charge.
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\12\ Enrolled committers enter liquidity commitments on a good-
till cancelled basis.
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5. Enrolled member off-floor liquidity provider: changed from $0.01
per share to no charge.
6. Ad hoc \13\ Committer or liquidity provider: $0.005 per share.
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\13\ Ad hoc Committers or liquidity providers enter liquidity
commitments on a day-only basis.
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7. Member user category, along with its $0.01 per share fee, is
eliminated.
8. Broker-dealer user (not enrolled as Committer) category added:
Principal trades: $0.005 per share
Agency trades (entered by broker) 0 to 1.5 million shares
per month: $0.01 per share
Greater than 1.5 million shares per month: $0.005 per
share.\14---------------------------------------------------------------------------
\14\ The broker-dealer category applies to both member and non-
member broker-dealers. A broker-dealer's principal trade volume will
be included with its agency trade volume in calculating such broker-
dealer's monthly agency trade volume discount. These volume
discounts likewise are not graduated.
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The proposed rule change is consistent with Section 6(b)(4) of the
Act in that it provides for the equitable allocation of reasonable fees
and other charges among members using eVWAP. The Exchange further
believes that the proposed fee schedule amendments should help attract
increased participation and order flow to the system.
(B) Self-Regulatory Organization's Statement on Burden on Competition
Phlx does not believe that the proposed rule change will result in
any burden on completion 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
Written comments were neither solicited nor received.
III. Date of Effectiveness of the Proposed Rule Change and Timing
for Commission Action
Because the foregoing rule changes a due, fee or charge imposed
upon by the Exchange, it has become effective pursuant to Section
19(b)(3)(A) \15\ of the Act and Rule 19b-4(f)(2) \16\ thereunder. 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 or appropriate in the public
interest, for the protection of investors, or otherwise in furtherance
of the purposes of the Act.
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\15\ 15 U.S.C. 78s(b)(3)(A).
\16\ 17 CFR 240.19b-4(f)(2).
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IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
is consistent with the Act. Persons making written submissions should
file six copies thereof with the Secretary, Securities and Exchange
Commission, 450 Fifth Street, NW., Washington, DC 20549-0609. Copies of
the submission, all subsequent amendments, all written statements with
respect to the proposed rule change that are filed with the Commission,
and all written communications relating to the proposed rule change
between the Commission and any person, other than those that may be
withheld from the public in accordance with the provisions of 5 U.S.C.
552, will be available for inspection and copying in the Commission's
Public Reference Room. Copies of such filing will also be available for
inspection and copying at the principal office of Phlx. All submissions
should refer to SR-Phlx-01-13 and should be submitted by March 21,
2001.
[[Page 12825]]
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\17---------------------------------------------------------------------------
\17\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 01-4843 Filed 2-27-01; 8:45 am]
BILLING CODE 8010-01-M |
