Federal Register / Vol. 75, No. 37 / Thursday, February 25, 2010 / Notices 8765 

17 17 CFR 200.30–3(a)(12). 

1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

3PHLX Semiconductor SectorSM may also be 

known as PHLX Semiconductor Index or PHLX 

Semiconductor SectorSM Index. 

4The contract specifications for SOX options are 

available at http://www.nasdaqtrader.com/ 

micro.aspx?id=phlxsectorscontractspecs#SOX. 

5A narrow-based index or industry index is 

defined as: An index designed to be representative 

of a particular industry or a group of related 

industries. The term ‘‘narrow-based index’’ includes 

indices the constituents of which are all 

headquartered within a single country. See Rule 

1000A(b)(12). 

6A broad-based index or market index is defined 

as: An index designed to be representative of a 

stock market as a whole or of a range of companies 

in unrelated industries. See Rule 1000A(b)(11). 

7Rule 1009A establishes generic listing standards 

for options on narrow-based and broad-based 

indexes pursuant to Rule 19b–4(e) of the Act. See 

Securities Exchange Act Release No. 40761 

(December 8, 1998), 63 FR 70952 (December 22, 

1998). The listing standards in Rule 1009A are 

similar to those of other options exchanges such as, 

for example, Chicago Board Options Exchange, 

Incorporated; International Stock Exchange LLC; 

and The NASDAQ Stock Market LLC. 

8See Securities Exchange Act Release No. 34546 

(August 18, 1994), 59 FR 43881 (August 25, 1994) 

(SR–Phlx–94–02) (order approving proposal to list 

and trade the SOX index). 

9Other sector indexes on which options are listed 

and traded on the Exchange include: KBW Bank 

IndexSM (BKXSM); PHLX Gold/Silver SectorSM

(XAUSM); PHLX Housing SectorSM (HGXSM); PHLX 

Oil Service SectorSM (OSXSM); PHLX Utility 

SectorSM (UTYSM); NASDAQ OMX China IndexSM

(CNZSM); SIG Energy MLP IndexSM (SVOTM); and 

SIG Oil Exploration & Production IndexTM (EPXSM). 

10Other currently available investment products 

that evaluate the semiconductor market, albeit 

differently from SOX, include Semiconductor 

HOLDRs (SMH) and iShares S&P North American 

Technology-Semiconductors Index Fund (IGW). 

11 During 2009, SOX has traded an average of 

29,127 contracts per month and has traded as much 

as 23,339 contracts in a day (June 16, 2009). As of 

December 31, 2009, there were 11,976 contracts of 

open interest in SOX. 

Internet Web site (http://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 Web site viewing and 

printing in the Commission’s Public 

Reference Room on official business 

days between the hours of 10 a.m. and 

3 p.m. Copies of such filing also will be 

available for inspection and copying at 

the principal office of the Exchange. 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 

Number SR–BX–2010–014 and should 

be submitted on or before March 18, 

2010. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.17

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. 2010–3774 Filed 2–24–10; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–61539; File No. SR–Phlx– 

2010–20] 

Self-Regulatory Organizations; 

NASDAQ OMX PHLX, Inc.; Notice of 

Filing of Proposed Rule Change To 

Expand the Number of Components in 

the PHLX Semiconductor SectorSM

Known as SOXSM, on Which Options 

Are Listed and Traded 

February 18, 2010. 

Pursuant to Section 19(b)(1) of the 

Securities Exchange Act of 1934 

(‘‘Act’’) 1 and Rule 19b–4 2 thereunder, 

notice is hereby given that on February 

2, 2010, NASDAQ OMX PHLX, Inc. 

(‘‘Phlx’’ or ‘‘Exchange’’) filed with the 

Securities and Exchange Commission 

(the ‘‘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. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange is filing with the 

Commission a proposal to expand the 

number of components in the PHLX 

Semiconductor SectorSM known as 

SOXSM, on which options are listed and 

traded.3 No other changes are made to 

the index or options on the index. 

A copy of the filing is available on the 

Exchange’s Web site at http:// 

nasdaqomxphlx.cchwallstreet.com/ 

NASDAQOMXPHLX/Filings/, at the 

principal office of the Exchange, and at 

the Commission’s Public Reference 

Room. 

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 Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The purpose of the proposal is to 

expand the number of components in 

the PHLX Semiconductor SectorSM

known as SOXSM (‘‘SOX’’ or the 

‘‘Index’’), on which options are listed 

and traded. 

SOX options subsequent to this 

proposal will be identical to SOX 

options that are currently listed and 

trading except for the number of 

components in the underlying Index, 

and will trade pursuant to the same 

(unchanged) contract specifications.4

The singular post-proposal difference in 

SOX options is that they will overlie an 

Index with thirty components where the 

current Index has twenty-one 

components. 

Background 

The Exchange currently has initial 

listing and maintenance listing 

standards for options on indexes in Rule 

1009A that are designed to allow the 

Exchange to list options on narrowbased indexes 5 and broad-based 

indexes 6 pursuant to generic listing 

standards (the ‘‘Index Listing 

Standards’’).7 SOX is a narrow-based 

index and SOX options overlying the 

Index are listed and traded pursuant to 

Rule 1009A(b). SOX options were 

originally listed and began trading in 

1994 pursuant to Exchange approval.8

SOX is a modified market 

capitalization-weighted index composed 

of twenty-one companies primarily 

involved in the design, distribution, 

manufacture, and sale of 

semiconductors, and is one of several 

narrow-based sector indexes on which 

options are listed and traded on the 

Exchange.9 SOX provides exposure to 

the fast-growing (yet extremely volatile) 

semiconductor industry. When 

investors want information and 

investment opportunities specific to 

semiconductors, they look most often to 

the SOX index.10 Indeed, the popularity 

of SOX is reflected in the trading 

volumes of options on the Index.11 It 


jlentini on DSKJ8SOYB1PROD with NOTICES
8766 Federal Register / Vol. 75, No. 37 / Thursday, February 25, 2010 / Notices 

12A listing of the component securities in SOX 

is available at https://indexes.nasdaqomx.com/ 

weighting.aspx?IndexSymbol=SOX&menuIndex=0. 

13The maintenance provisions in subsection (c) 

of Rule 1009A state, in part, as applicable to SOX: 

(1) The conditions stated in subparagraphs (b)(1), 

(3), (6), (7), (8), (9), (10), (11) and (12) [regarding 

A.M. settlement; market capitalization; component 

weighting; components being NMS stock; non-U.S. 

components, reporting at least every fifteen 

seconds; and rebalancing], must continue to be 

satisfied, provided that the conditions stated in 

subparagraph (b)(6) [regarding component 

weighting] must be satisfied only as to the first day 

of January and July in each year; (2) The total 

number of component securities in the index may 

not increase or decrease by more than 331⁄3% from 

the number of component securities in the index at 

the time of its initial listing, and in no event may 

be less than nine component securities; (3) Trading 

volume of each component security in the index 

must be at least 500,000 shares for each of the last 

six months, except that for each of the lowest 

weighted component securities in the index that in 

the aggregate account for no more than 10% of the 

weight of the index, trading volume must be at least 

400,000 shares for each of the last six months; (4) 

In a capitalization-weighted index, the lesser of the 

five highest weighted component securities in the 

index or the highest weighted component securities 

in the index that in the aggregate represent at least 

30% of the total number of stocks in the index each 

have had an average monthly trading volume of at 

least 1,000,000 shares over the past six months. 

Moreover, the Index in its current and proposed 

expanded form would substantially meet the initial 

option listing provisions in subsection (b) of Rule 

1009A. 

14For purposes of the Index, Last Sale Price refers 

to the following: For a security listed on NASDAQ, 

it is the last sale price on NASDAQ which normally 

would be the official closing, known as the Nasdaq 

Official Closing Price (NOCP), when NASDAQ is 

closed. For any NYSE-listed or NYSE AMEX-listed 

security, it is the last regular way trade reported on 

such security’s primary U.S. listing market. If a 

security does not trade on its primary listing market 

on a given day, the most recent last sale price from 

the primary listing market (adjusted for corporate 

actions, if any) is used. 

has been observed that a rise or decline 

in the SOX usually precedes a similar 

move in the broader technology market. 

As such, SOX has served as a leading 

indicator for technology stocks. 

Recognizing the market-leading aspects 

of the Index, the Exchange is proposing 

a rule change to increase to thirty the 

number of components in SOX so that 

this narrow-based index may even more 

effectively represent the dynamic 

semiconductor market.12

The Exchange submits that in the 

proposed expanded form SOX would 

continue to meet the generic Index 

Listing Standards of Rule 1009A. 

Specifically, all the index maintenance 

requirements in subsection (c) of Rule 

1009A applicable to options on narrowbased indexes would be met with one 

exception.13 The singular exception is 

the number of components. In 

particular, subsection (c)(2) of Rule 1009 

indicates that the total number of 

component securities in the index may 

not increase or decrease by more than 

331⁄3% from the total number of 

securities in the index at the time of its 

initial listing; adding components to 

equal thirty is outside the (c)(2) 

parameter, and is the reason why the 

Exchange is making the current filing. 

Index Design and Index Composition 

The Index is calculated using a 

modified market capitalizationweighted methodology. The value of the 

Index equals the total capitalization of 

modified shares, divided by the divisor. 

The divisor serves the purpose of 

scaling aggregate value to a lower order 

of magnitude which is more desirable 

for Index reporting and trading 

purposes. To maintain continuity for the 

Index’s value, the divisor is adjusted 

periodically to reflect events such as 

changes in the number of shares 

outstanding for component stocks, 

company additions or deletions, 

corporate restructurings, or other 

capitalization changes. 

If trading in an Index security is 

halted while the market is open, the 

most recent last sale price for that 

security (‘‘Last Sale Price’’) 14 is used for 

all index computations until trading 

resumes. If trading is halted before the 

market is open, the most recent Last 

Sale Price is used. Additionally, the 

Index ordinarily is calculated without 

regard to dividends on component 

securities. The modified capitalizationweighted methodology is expected to 

retain, in general, the economic 

attributes of capitalization weighting, 

while providing enhanced 

diversification. To accomplish this, 

NASDAQ OMX, which maintains the 

Index, rebalances the Index at least 

twice annually and adjusts the 

weighting of Index components. 

Index eligibility is limited to specific 

security types only. The security types 

eligible for the Index include foreign or 

domestic common stocks, ordinary 

shares, American Depository Receipts 

(‘‘ADRs’’), shares of beneficial interest or 

limited partnership interests, and 

tracking stocks. Security types not 

included in the Index are closed-end 

funds, convertible debentures, exchange 

traded funds, preferred stocks, rights, 

warrants, units and other derivative 

securities. 

As of December 31, 2009, the 

following were characteristics of the 

Index: 

—The total weighted capitalization of 

all components of the Index was 

$276.43 billion; 

—Regarding component capitalization, 

(a) the highest weighted capitalization 

of a component was $112.65 billion 

(Intel Corp.), (b) the lowest weighted 

capitalization of a component was 

$0.79 billion (STMicroelectronics 

N.V.), (c) the mean capitalization of 

the components was $13.16 billion, 

and (d) the median capitalization of 

the components was $6.62 billion; 

—Regarding component price per share, 

(a) the highest price per share of a 

component was $56.37 (Cree, Inc.), (b) 

the lowest price per share of a 

component was $9.27 

(STMicroelectronics N.V.), (c) the 

mean price per share of the 

components was $23.32, and (d) the 

median price per share of the 

components was $22.63; 

—Regarding component weightings, (a) 

the highest weighting of a component 

was 7.83% (Applied Materials, Inc.), 

(b) the lowest weighting of a 

component was 1.36% 

(STMicroelectronics N.V.), (c) the 

mean weighting of the components 

was 4.76%, (d) the median weighting 

of the components was 4.00%, and (e) 

the total weighting of the top five 

highest weighted components was 

37.37% (Applied Materials, Inc., 

Taiwan Semiconductor 

Manufacturing Co., Broadcom 

Corporation, Intel Corp., and Texas 

Instruments, Inc.); 

—Regarding component shares, (a) the 

most available shares of a component 

was 5.52 billion shares (Intel Corp.), 

(b) the least available shares of a 

component was 0.06 billion shares 

(Atheros Communications, Inc.), (c) 

the mean available shares of the 

components was 0.67 billion shares, 

and (d) the median available shares of 

the components was 0.24 billion 

shares; 

—Regarding the six-month average daily 

volumes (‘‘ADVs’’) of the components, 

(a) the highest six-month ADV of a 

component was 61.35 million shares 

(Intel Corp.), (b) the lowest six-month 

ADV of a component was 1.71 million 

shares (STMicroelectronics N.V.), (c) 

the mean six-month ADV of the 

components was 11.77 million shares, 

(d) the median six-month ADVs of the 

components was 7.07 million shares, 

(e) the average of six-month ADVs of 

the five most heavily traded 

components was 30.21 million shares 

(Intel Corp., Advanced Micro Devices, 

Inc., Micron Technology, Applied 

Materials, Inc., and Taiwan 

Semiconductor Manufacturing Co.), 

and (f) 100% of the components had 

a six-month ADV of at least 200,000; 

and 

—Regarding option eligibility, (a) 

100.00% of the components were 

options eligible, as measured by 

weighting, and (b) 100.00% of the 

components were options eligible, as 

measured by number. 


jlentini on DSKJ8SOYB1PROD with NOTICES
Federal Register / Vol. 75, No. 37 / Thursday, February 25, 2010 / Notices 8767 

15Rule 1009A(b)(12) states that should an 

underlying index be maintained by a broker-dealer, 

however, the index must be calculated by a third 

party who is not a broker-dealer, and the brokerdealer will have to erect a ‘‘Chinese Wall’’ around 

its personnel who have access to information 

concerning changes in and adjustments to the 

index. 

16See Rule 1009A(b). 

17Moreover, changes in the price of an Index 

component security driven by corporate events 

such as stock dividends, stock splits, certain spinoffs, and rights issuances will be adjusted on the exdate. In the case of a special cash dividend, a 

determination will be made on an individual basis 

whether to make a change to the price of an Index 

security in accordance with its Index dividend 

policy. If it is determined that a change will be 

made, it will become effective on the ex-date and 

advance notification will be made. Ordinarily, 

whenever there is a change in the price of an Index 

security due to stock dividends, stock splits, spinoff, rights issuances, or special cash dividends, the 

divisor is adjusted to ensure that there is no 

discontinuity in the value of the Index, which 

might otherwise be caused by any such change. 

18 15 U.S.C. 78s(b)(2). 

19See supra note 5. 

20See Rule 101. 

21For trading rules applicable to trading index 

options, see Rules 1000A et seq. For trading rules 

applicable to trading options generally, see Rules 

1000 et seq. 

22See Phlx Rule 1101A(a). 

23See Phlx Rule 1034(a). 

24See Phlx Rule 721 et seq. 

25See Phlx Rule 1101A(b). 

26A list of the current members and affiliate 

members of ISG can be found at http:// 

www.isgportal.com. 

27 15 U.S.C. 78f(b). 

28 15 U.S.C. 78f(b)(5). 

Index Calculation and Index 

Maintenance 

The Index is maintained by NASDAQ 

OMX and index levels are calculated 

continuously, using the last sale price 

for each component stock in the Index. 

Index values are publicly disseminated 

at least every fifteen seconds throughout 

the trading day through a major market 

data vendor, namely NASDAQ OMX’s 

index dissemination service. The 

Exchange expects that such 

dissemination will continue through 

one or more (NASDAQ OMX-owned or 

unrelated) major market data vendors.15

Appurtenant to review of the Index 

for purposes of rebalancing, component 

securities are evaluated by NASDAQ 

OMX. In the event that an Index 

component security no longer meets the 

requirements for continued security 

eligibility, it will be replaced with a 

security that meets all of the initial 

security eligibility criteria and 

additional criteria which follows. 

Securities eligible for inclusion will be 

ranked descending by market value, 

current price and greatest percentage 

price change over the previous six 

months. The security with the highest 

overall ranking will be added to the 

Index provided that the Index then 

meets the following criteria: No single 

Index security is greater than 30% of the 

weight of the Index and the top five 

Index securities are not greater than 

50% of the weight of the Index; and 

non-U.S. component securities that are 

not subject to comprehensive 

surveillance agreements do not in the 

aggregate represent more than 20% of 

the weight of the Index.16 In the event 

that the highest-ranking security does 

not permit the Index to meet the above 

criteria, the next highest-ranking 

security will be selected and the Index 

criteria will again be applied to 

determine eligibility. The process will 

continue until a qualifying replacement 

security is selected. 

The list of annual additions and 

deletions to the Index will be publicly 

announced in early June, and changes to 

the Index will be made effective after 

the close of trading on the third Friday 

in June. If at any time during the year, 

a component security is determined to 

become ineligible for continued 

inclusion in the Index based on the 

continued eligibility criteria, that 

component security will be replaced 

with a component not currently in the 

Index that met the appropriate 

eligibility criteria.17

In the event a class of index options 

listed on the Exchange fails to satisfy 

the maintenance listing standards, the 

Exchange shall not open for trading any 

additional series of options of that class 

unless such failure is determined by the 

Exchange not to be significant and the 

Commission concurs in that 

determination, or unless the continued 

listing of that class of index options has 

been approved by the Commission 

under Section 19(b)(2) of the Act.18

The Exchange represents that, if the 

Index ceases to be maintained or 

calculated, or if the Index values are not 

disseminated at least every fifteen 

seconds by a widely available source, 

the Exchange will promptly notify the 

Division of Trading and Markets of the 

Commission, and the Exchange will not 

list any additional series for trading and 

will limit all transactions in such 

options to closing transactions only for 

the purpose of maintaining a fair and 

orderly market and protecting investors. 

Contract Specifications 

The contract specifications for the 

proposed expanded Index options are, 

as previously noted, identical to the 

current narrow-based Index options that 

are currently listed and traded on the 

Exchange.19 Options on the Index are 

American-style and A.M. cash-settled. 

The Exchange’s trading hours for index 

options (9:30 a.m. to 4 p.m. ET), will 

apply to options on SOX.20 Exchange 

rules that are applicable to the trading 

of options on indexes will continue to 

apply to the trading of options on 

SOX.21

The strike price intervals for SOX 

options contracts will remain the same 

as those currently in use: $2.50 and $1 

if the strike price is below $200.22 The 

minimum increment size for series 

trading below $3 will remain $0.05, and 

for series trading at or above $3 will 

remain $0.10.23 The Exchange’s margin 

rules will be applicable.24 The Exchange 

will continue to list options on SOX in 

up to three months from the March, 

June, September, December cycle plus 

two additional near-term months (that 

is, as many as five months at all 

times).25 The trading of SOX options 

will continue to be subject to the same 

rules that govern the trading of all of the 

Exchange’s index options, including 

sales practice rules, margin 

requirements, and trading rules. 

Surveillance and Capacity 

The Exchange represents that it has an 

adequate surveillance program in place 

for options traded on the Index and 

intends to apply those same program 

procedures that it applies to the 

Exchange’s current SOX options and 

other index options. Additionally, the 

Exchange is a member of the 

Intermarket Surveillance Group (‘‘ISG’’) 

under the Intermarket Surveillance 

Group Agreement, dated June 20, 

1994.26 ISG members generally work 

together to coordinate surveillance and 

investigative information sharing in the 

stock and options markets. In addition, 

the major futures exchanges are 

affiliated members of the ISG, which 

allows for the sharing of surveillance 

information for potential intermarket 

trading abuses. 

The Exchange represents that it has 

the necessary systems capacity to 

continue to support listing and trading 

SOX options. 

2. Statutory Basis 

The Exchange believes that its 

proposal is consistent with Section 6(b) 

of the Act 27 in general, and furthers the 

objectives of Section 6(b)(5) of the Act 28

in particular, in that it is designed to 

prevent fraudulent and manipulative 

acts and practices, to promote just and 

equitable principles of trade, to foster 

cooperation and coordination with 

persons engaged in facilitating 

transactions in securities, and to remove 

impediments to and perfect the 

mechanisms of a free and open market 

and a national market system. The 

Exchange believes that the proposal to 


jlentini on DSKJ8SOYB1PROD with NOTICES
8768 Federal Register / Vol. 75, No. 37 / Thursday, February 25, 2010 / Notices 

29 17 CFR 200.30–3(a)(12). 

1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

3See Securities Exchange Act Release No. 61319 

(January 8, 2010), 75 FR 2897 (‘‘Notice’’). 

4 In approving this proposal, the Commission has 

considered the proposed rule’s impact on 

efficiency, competition and capital formation. See 

15 U.S.C. 78c(f). 

5 15 U.S.C. 78o–3(b)(6). 

expand the SOX index will allow the 

Exchange to seamlessly continue listing 

this premiere index in a manner that 

even more effectively reflects the 

semiconductor sector. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The Exchange 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 either 

solicited or received. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

Within 35 days of the date of 

publication of this notice in the Federal 

Register or within such longer period (i) 

as the Commission may designate up to 

90 days of such date if it finds such 

longer period to be appropriate and 

publishes its reasons for so finding or 

(ii) as to which the Exchange consents, 

the Commission shall: (a) By order 

approve such proposed rule change, or 

(b) institute proceedings to determine 

whether the proposed rule change 

should be disapproved. 

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 (http://www.sec.gov/ 

rules/sro.shtml); or 

• Send an e-mail to rulecomments@sec.gov. Please include File 

Number SR–Phlx-2010–20 on the 

subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Elizabeth M. Murphy, Secretary, 

Securities and Exchange Commission, 

100 F Street, NE., Washington, DC 

20549–1090. 

All submissions should refer to File 

Number SR–Phlx-2010–20. 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 (http://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 Web site viewing and 

printing in the Commission’s Public 

Reference Room, 100 F Street, NE., 

Washington, DC 20549, on official 

business days between the hours of 10 

a.m. and 3 p.m. Copies of the filing also 

will be available for inspection and 

copying at the principal office of the 

Exchange. 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 Number SR–Phlx2010–20 and should be submitted on or 

before March 18, 2010. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.29

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. 2010–3777 Filed 2–24–10; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–61542; File No. SR–FINRA– 

2009–093] 

Self-Regulatory Organizations; 

Financial Industry Regulatory 

Authority, Inc.; Order Approving 

Proposed Rule Change To Repeal 

NASD Rule 2450 (Installment or Partial 

Sales), NASD Interpretive Material 

2830–2 (‘‘IM–2830–2’’) (Maintaining the 

Public Offering Price) and Incorporated 

NYSE Rule 413 (Uniform Forms) as 

Part of the Process of Developing a 

Consolidated FINRA Rulebook 

February 18, 2010. 

On December 23, 2009, the Financial 

Industry Regulatory Authority, Inc. 

(‘‘FINRA’’) (f/k/a National Association of 

Securities Dealers, Inc. (‘‘NASD’’)) filed 

with the Securities and Exchange 

Commission (‘‘Commission’’), pursuant 

to Section 19(b)(1) of the Securities 

Exchange Act of 1934 (‘‘Act’’) 1 and Rule 

19b–4 thereunder,2 a proposed rule 

change to repeal NASD Rule 2450 

(Installment or Partial Sales), NASD 

Interpretive Material 2830–2 (‘‘IM– 

2830–2’’) (Maintaining the Public 

Offering Price), and Incorporated NYSE 

Rule 413 (Uniform Forms), as part of the 

process of developing a consolidated 

FINRA rulebook. The proposed rule 

change was published for comment in 

the Federal Register on January 19, 

2010.3 The Commission received no 

comments on the proposal. This order 

approves the proposed rule change. 

The Commission finds that the 

proposed rule change is consistent with 

the requirements of the Act and the 

rules and regulations thereunder 

applicable to a national securities 

association.4 In particular, the 

Commission finds that the proposed 

rule change is consistent with the 

provisions of Section 15A(b)(6) of the 

Act,5 which requires, among other 

things, that FINRA rules be designed to 

prevent fraudulent and manipulative 

acts and practices, to promote just and 

equitable principles of trade, and, in 

general, to protect investors and the 

public interest. 

The Commission believes that the 

proposed rule change is appropriate to 

eliminate confusion and reduce 

regulatory overlap by eliminating rules 

that are outdated, duplicative of other 

FINRA rules, or addressed by the 

Federal rules or regulations. As further 

described in the Notice, FINRA stated 

that NASD Rule 2450 should be 

repealed in light of the explicit 

provisions in Regulation T requiring the 

deposit of sufficient funds within the 

specified payment period. FINRA also 

stated that the hypothecation 

prohibition in NASD Rule 2450 should 

be repealed because it would no longer 

be relevant as it is predicated on a 

partial or installment payment under 

the rule. In addition, FINRA noted that, 

since the adoption of NASD IM–2830– 

2, the laws governing broker-dealers 

have changed, and today virtually all 

broker-dealers doing business with the 

public are FINRA members. FINRA also 

noted that NASD IM–2830–2 largely 

duplicates the requirement in Section 

22(d) of the Investment Company Act to 

sell mutual fund shares to investors at 

the current public offering price. As a 


jlentini on DSKJ8SOYB1PROD with NOTICES