# Self-Regulatory Organizations; Notice of Filing and Immediate Effectiveness of Proposed Rule Change by the Philadelphia Stock Exchange, Inc. Relating to Index Option Charges
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 February 19, 2003, 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 and II below, which items have been prepared by the Exchange. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons.
[^1] 15 U.S.C. 78s(b)(1).
[^2] 17 CFR 240.19b-4.
**I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change**
The Exchange proposes to amend its schedule of dues, fees and charges by terminating the Index Option Book Charge of $1000 per month on Phlx specialists in the Exchange's Sector Index Options (“Index Options”), and the $2000 per month charge on Phlx specialists in the KBW Bank Sector <sub>SM</sub> (“BKX <sub>SM</sub> ”), the Oil Service Sector <sub>SM</sub> (“OSX <sub>SM</sub> ”), the Semiconductor Sector <sub>SM</sub> (“SOX <sub>SM</sub> ”) and the Gold and Silver Sector <sub>SM</sub> (“XAU <sub>SM</sub> ”). The Index Option Book Charge became effective on January 2, 2003. [^3] The text of the proposed rule change is set forth below. Deleted text is in brackets.
[^3]*See* Securities Exchange Act Release No. 47087 (December 23, 2002), 68 FR 146 (January 2, 2003).
**Summary of Index Option Charges**
**Option Comparison Charge I (applicable to all trades—except specialist trades)**
Registered Option Trader—$.03 per contract
Firm (Proprietary and Customer Executions)—$.04 per contract
**Option Transaction Charge I**
Customer Executions
Market value less than $1.00*—$.20 per contract
Market value $1.00 or over*—$.40 per contract
Firm **—$.10 per contract
Registered Option Trade—$.19 per contract
Specialist—$.14 per contract
**[Option Book Charge I**
KBW Bank Sector <sup>SM</sup> —$2,000 per month
Oil Service Sector <sup>SM</sup>
Semiconductor Sector <sup>SM</sup>
Gold and Silver Sector <sup>SM</sup>
All other Index Options—$1,000 per month]
**Option Floor Brokerage Assessment I**
5% of net floor brokerage income.
**Floor Brokerage Transaction Fee I**
$.05 per contract, for floor brokers executing transactions for their own member firms.
**Real-Time Risk Management Fee I**
$.0025 per contract for firms/members receiving information on a real-time basis *See* Appendix A for additional fees.
I denotes fee eligible for monthly credit of up to $1,000.
* Block transaction for customer executions of 500 to 999 contracts and 1000 contracts and more are eligible for a discount to such charges of 15% and 25% respectively from the stated rates upon submission to the PHLX of a customer option block discount request form with supportive documentation within thirty (30) days of monthly billing date.
** Non-clearing firm members' proprietary transactions are eligible for the “firm” rate based upon submission of a PHLX rebate request form with supportive documentation within thirty (30) days of invoice date.
**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 Exchange 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 III below. The Exchange 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 terminate the Index Option Book Charge of $1000 per month on Phlx specialists in the Exchange's Index Options, and the $2000 per month charge on Phlx specialists in the KBW Bank Sector <sup>SM</sup> (“BKX <sup>SM</sup> ”), the Oil Service Sector <sup>SM</sup> (“OSX <sup>SM</sup> ”), the Semiconductor Sector <sup>SM</sup> (“SOX <sup>SM</sup> ”) and the Gold and Silver Sector <sup>SM</sup> (“XAU <sup>SM</sup> ”) Index Options. The Index Option Book Charge became effective on January 2, 2003.
2. Statutory Basis
The Exchange believes that its proposal to terminate the Index Option Book Charge consistent with section 6(b) of the Act, [^4] in general, and furthers the objectives of section 6(b)(4) of the Act, [^5] in particular, in that it provides for the equitable allocation of reasonable dues, fees, and other charges among Exchange members.
[^4] 15 U.S.C. 78f(b).
[^5] 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. [^6]
[^6] One comment letter regarding SR-Phlx-2002-80 was received after the proposed rule change was effective. No comments were solicited or received regarding the present proposed rule change.
**III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action**
The foregoing rule change establishes or changes a due, fee, or charge imposed by the Exchange and, therefore, has become effective upon filing pursuant to section 19(b)(3)(A)(ii) of the Act [^7] and rule 19b-4(f)(2) thereunder. [^8] 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, or otherwise in furtherance of the purpose of the Act.
[^7] 15 U.S.C. 78(s)(b)(3)(A)(ii).
[^8] 17 CFR 240.19b-4(f)(2).
**IV. Solicitation of Comments**
Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Persons making written submissions should file six copies thereof with the Secretary, Securities and Exchange Commission, 450 Fifth Street, NW., Washington, DC 20549-0609. Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for inspection and copying at the Commission's Public Reference Room. Copies of such filing will also be available for inspection and copying at the principal office of the Exchange. All submissions should refer to File No. SR-Phlx-2003-09 and should be submitted by March 26, 2003.
For the Commission, by the Division of Market Regulation, pursuant to delegated authority. [^9]
[^9] 17 CFR 200.30-3(a)(12).
Margaret H. McFarland,
Deputy Secretary.