[Federal Register Volume 65, Number 225 (Tuesday, November 21, 2000)]
[Notices]
[Pages 69983-69984]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-29713]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-43546; File No. SR-Phlx-00-47]
Self-Regulatory Organizations; Notice of Filing and Immediate
Effectiveness of Proposed Rule Change by the Philadelphia Stock
Exchange, Inc. (``Phlx'') Relating to Requirement That Certain Members
and Member Organizations for Whom the Phlx is the Designated Examining
Authority Give Prior Written Notice to the Phlx's Examinations
Department of Any Changes in Business Operation
November 9, 2000.
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 3, 2000, the Philadelphia Stock Exchange, Inc. (``Phlx'' or
``Exchange'') filed with the Securities and Exchange Commission
(``Commission'') the proposed rule change as described in Items I, II
and III below, which Items have been prepared by the Exchange. The
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 Phlx proposes to adopt Rule 610 to require that members and
member organizations for which the Exchange is the Designated Examining
Authority (``DEA''), that operate as a specialist, floor broker and/or
Registered Options Trade (``ROT'') and that have changed their business
operations, or engaged in new business (for example, an ROT engages in
off-floor proprietary trading), which materially affects the net
capital, examinations and registration requirements to which the member
or member organization is subject, to provide prior written notice to
the Exchange's Examinations Department of any such changes in business
operations. Below is the complete text of the proposed rule change.
Proposed new text is in italics.
* * * * *
Philadelphia Stock Exchange, Inc.
* * * * *
Regulation of Members and Member Organizations
* * * * *
Rule 610. Notification of Changes in Business Operations
Any member or member organization for which the Exchange is the
Designated Examining Authority (``DEA''), that operates as a
specialist, floor broker and/or Registered Options Trader (``ROT''),
shall provide prior written notification to the Examinations Department
of any change in the business operations of such member or member
organization which would cause the member or member organization to be
subject to additional or modified net capital requirements, examination
schedules or other registration, examination or regulatory
requirements.
* * * * *
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 IV 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 Orgnaization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The purpose of the proposed rule is to provide notification to the
Exchange's Examinations Department of changes in the business
operations of member and
[[Page 69984]]
member organizations to bolster the examinations function.
Specifically, pursuant to Section 19(g)(1) of the Act,\3\ self-
regulatory organizations (``SROs'') are required to enforce member
compliance with the provisions of the Act and the SRO's own rules.
Conducting cycle examinations of member firms for whom they are DEA is
one method used by SROs to assess such compliance. Currently, the Phlx
conducts examinations of its member firms on a periodic basis. The type
of business a firm conducts is determinate of the interval between
examinations as to any one particular firm. For example, the Phlx may
examine specialist firms and proprietary trading firms annually, floor
brokerage firms once every other year and ROTs once every three years.
If a Phlx member would change its business operations, the change may
affect the examination cycle for that particular firm. Further, new
business operations often trigger both subtle changes in various
regulatory requirements as well as larger issues of applicability of
new provisions and obligations of which a firm may not be aware.
---------------------------------------------------------------------------
\3\ See 15 U.S.C. 78s(g)(1).
---------------------------------------------------------------------------
As stated above, the proposed rule change would require any member
or member organization operating as a specialist, floor broker, and/or
ROT and whose DEA is the Phlx, to notify, in writing, the Phlx
Examinations Department of any change in its business operations which
would cause it to be subject to additional or modified net capital
requirements. The Examinations Department could then adjust the
examination cycle as to the particular firm, as well as to advise such
firm of new reporting and net capital requirements, if applicable. This
information will also assist the Examinations Department in better
focusing its examinations.
The Exchange believes that the proposed rule change should
facilitate more efficient and effective periodic and systematic
assessment of its member firms' compliance with the Act, consistent
with its mandate under Section 19(g) of the Act.
2. Statutory Basis
The Phlx believes that the proposal is consistent with Section 6 of
the Act,\4\ in general, and furthers the objectives of Section 6(b)(1)
of the Act \5\ in particular, in that it is designed to ensure that
Phlx is so organized and has the capacity to be able to carry out the
purposes of the Act and to comply, and to enforce compliance by its
members and persons associated with its members, with the provisions of
the Act, the rules and regulations thereunder, and the rules of the
Phlx. The proposed rule change is also consistent with Section 6(b)(5)
of the Act,\6\ in that it is designed to ensure member firm compliance
with federal securities laws and the rules of the Phlx, which should
protect investors and the public interest.
---------------------------------------------------------------------------
\4\ 15 U.S.C. 78f.
\5\ 15 U.S.C. 78f(b)(1).
\6\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
B. Self-Regulatory Organization's Statement on Burden on Competition
The Phlx does not believe that the proposed rule change will impose
any inappropriate burden on competition.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants or Others
No written comments were either solicited or received.
III. Date of Effectiveness of the Proposed Rule Change and Timing
for Commission Action
The foregoing rule change has become effective pursuant to Section
19(b)(3)(A) of the Act \7\ and Rule 19b-4(f)(6) thereunder \8\ because
the rule change will become operative 30 days after the date of filing
with the Commission, and because this proposal: (i) Does not
significantly affect the protection of investors or the public
interest; (ii) does not impose any significant burden on competition;
and (iii) the Exchange provided written notice to the Commission with a
brief description and the text of the proposed rule change on July 12,
2000. At any time within 60 days of this filing, the Commission may
summarily abrogate this proposal 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.
---------------------------------------------------------------------------
\7\ 15 U.S.C. 78s(b)(3)(A).
\8\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------
IV. Solicitation of Comments
Interested persons are invited to submit written data, view 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, 450 Fifth Street, NW., Washington,
DC. Copies of such filing will also be available for inspection and
copying at the principal office of the Phlx. All submissions should
refer to File No. SR-Phlx-00-47 and should be submitted by December 12,
2000.
For the Commission, by the Division of Market Regulation, pursuant
to delegated authority.\9\
---------------------------------------------------------------------------
\9\ 17 CFR 200.03-3(a)(12).
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 00-29713 Filed 11-20-00; 8:45 am]
BILLING CODE 8010-01-M