Philadelphia Stock Exchange Responds To SEC Chairman Donaldson's Request For Information On Exchange Corporate Governance

The Philadelphia Stock Exchange today responded to the March 26, 2003 request by the Securities and Exchange Commission, which asked all exchanges to detail their internal corporate governance practices and oversight of management. Following a thorough review by the Exchange of its governance structure and procedures, the Exchange determined that its corporate governance serves the public well and is consistent with the specific requirements of the Securities Act of 1934 and certain core principles embodied in the Act, including: (1) the promotion of the public interest; (2) the commitment to strong regulatory oversight of the markets; and (3) the appropriate representation of a broad cross-section of on-floor and off-floor members in the oversight and management of the Exchange.

"Fundamental to our assertion that the PHLX meets and surpasses the 'best practices' for companies of its type is the fact that the PHLX has had a Board of Governors comprised of a majority of public and non-industry Governors since 1997," said Meyer "Sandy" Frucher, chairman and CEO of the PHLX. "Our experience with a majority non-industry and public Board has proven very successful as our public Governors have infused the deliberations of the Board with an independent viewpoint and a commitment to serving the public interest."

Critical to the "best practices" of corporate governance, as well, the PHLX asserted in its response to the SEC, is the composition and role of the standing committees at the Exchange. Particularly with respect to key committees, such as the Audit and Finance Committees, but common to all committees, is the active involvement of public Governors and the various committees' charters at the Exchange.

Even though as a non-stock, not for profit corporation, the PHLX is not specifically governed by the Sarbanes-Oxley Act of 2002, shortly after the passage of that law, the Exchange conducted a voluntary review of its governance in light of the law and determined to adopt a number of changes in order to be in step with current principles for good governance. The thorough review of the PHLX's internal governance structure and procedures subsequent to the passage of Sarbanes-Oxley and the review initiated at the request of Chairman Donaldson has confirmed that since 1997 and up through today, the Exchange truly reflects the "best practices" of corporate governance today. "We applaud the SEC's continuing vigilance on enforcing corporate governance standards in the US markets," Frucher said, "and the PHLX stands firm in our regulatory commitment to the investing public and our membership."

The Philadelphia Stock Exchange (PHLX) was founded in 1790. The PHLX trades more than 2,200 stocks, 1,016 listed equity options, 12 sectors index options and currency pairs. For more information about the PHLX and its products, visit www.phlx.com.