Federal Register / Vol. 72, No. 40 / Thursday, March 1, 2007 / Notices 9371 

8 In approving this proposed rule change, the 

Commission has considered the proposed rule’s 

impact on efficiency, competition, and capital 

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

9 15 U.S.C. 78f. 

10 15 U.S.C. 78f(b)(5). 

11 15 U.S.C. 78s(b)(2). 

12 17 CFR 200.30–3(a)(12). 

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)(6). 

5LEAPS are Long-term Equity Anticipation 

Securities or long-term options series. See Phlx 

Rules 1079, 1012, and 1101A. 

6See Securities Exchange Act Release No. 35993 

(July 19, 1995), 60 FR 38073 (July 25, 1995) (SR–

Phlx–95–08, SR–Amex–95–12, SR–PSE–95–07, SR–

CBOE–95–19, and SR–NYSE–95–12). 

their responsibility to obtain price 

improvement for orders. 

In its response letter, NYSE noted that 

specialists are not currently obligated to 

stop stock and further noted that, in 

fact, specialists infrequently choose to 

stop stock. NYSE reiterated its belief 

that there are many opportunities for 

price improvement in the Hybrid 

Market and stated that specialists were 

not ‘‘being relieved of their 

responsibility to obtain price 

improvement.’’ The Exchange argued 

that it was eliminating a practice that its 

data showed was rarely used. The 

Exchange also argued that retaining the 

manual process for the specialist to stop 

stock would increase specialist risk if 

used. 

The commenter also asserted that 

NYSE could easily reprogram its 

systems to replicate electronically the 

manual practice of stopping stock. In 

response, NYSE disagreed, indicating 

that there are difficulties inherent in 

maintaining the stopping stock 

functionality amid systems designed to 

enable increased automatic executions. 

Further, NYSE argued that the decision 

to remove systemic support for stopped 

orders was based in part on data that 

showed that specialists do not stop 

stock frequently. 

IV. Discussion 

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 

exchange 8 and, in particular, the 

requirements of Section 6 of the Act.9

Specifically, the Commission finds that 

the proposed rule change is consistent 

with Section 6(b)(5) of the Act,10 which 

requires, among other things, that the 

rules of a national securities exchange 

be 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 

regulating, clearing, settling, processing 

information with respect to, and 

facilitating transactions in securities, to 

remove impediments to and perfect the 

mechanism of a free and open market 

and a national market system, and, in 

general, to protect investors and the 

public interest. 

According to the Exchange, the 

practice of stopping stock by specialists 

is rarely used. Therefore, the Exchange 

decided that it would not develop an 

electronic, systemic process to support 

this little used, voluntary function. The 

Exchange also argued that retaining a 

manual process to stop stock in the 

Hybrid Market would be inefficient. 

Accordingly, the Commission finds that 

eliminating specialists’ ability to stop 

stock is reasonable and consistent with 

the Act. 

IV. Conclusion 

It is therefore ordered, pursuant to 

Section 19(b)(2) of the Act,11 that the 

proposed rule change (SR–NYSE–2006–

04), as modified by Amendment Nos. 1 

and 2, be, and it hereby is approved. 

For the Commission, by the Division of 

Market Regulation, pursuant to delegated 

authority.12

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E7–3556 Filed 2–28–07; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–55338; File No. SR–Phlx–

2007–04] 

Self-Regulatory Organizations; 

Philadelphia Stock Exchange, Inc.; 

Notice of Filing and Immediate 

Effectiveness of Proposed Rule 

Change Relating to Listing LEAPS 

Pursuant to the $2.50 Strike Price 

Program 

February 23, 2007. 

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 

21, 2007, 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 substantially prepared by Phlx. 

The Exchange has filed the proposal as 

a ‘‘non-controversial’’ rule change 

pursuant to Section 19(b)(3)(A) of the 

Act 3 and Rule 19b–4(f)(6) thereunder,4

which renders it effective upon filing 

with the Commission. 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 

Phlx proposes to clarify that LEAPS 5

can be listed at $2.50 strike price 

intervals pursuant to the $2.50 Strike 

Price Program set forth in Commentary 

.05 to Phlx Rule 1012 (Series of Options 

Open for Trading). There is no new rule 

text. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing 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. 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 

clarify that LEAPS can be listed at $2.50 

strike price intervals pursuant to the 

$2.50 Strike Price Program. 

The current $2.50 Strike Price 

Program is set forth in Commentary .05 

to Phlx Rule 1012. The $2.50 Strike 

Price Program permits the Exchange to 

list options with $2.50 strike price 

intervals for selected options trading at 

strike prices greater than $25 but less 

than $75. In addition, each options 

exchange is permitted to list options 

with $2.50 strike price intervals on any 

option class that another options 

exchange selects under the $2.50 Strike 

Price Program. 

Initially adopted in 1995 as a pilot 

program, the pilot $2.50 Strike Price 

Program allowed options exchanges to 

list options with $2.50 strike price 

intervals for options trading at strike 

prices greater than $25 but less than $50 

on a total of up to 100 option classes.6

In 1998, the pilot program was 

permanently approved and expanded to 

allow the options exchanges to select up 

to 200 option classes for the $2.50 Strike 


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9372 Federal Register / Vol. 72, No. 40 / Thursday, March 1, 2007 / Notices 

7See Securities Exchange Act Release No. 40662 

(November 12, 1998), 63 FR 64297 (November 19, 

1998) (SR–Amex–98–21, SR–CBOE–98–29, SR–

PCX–98–31, and SR–Phlx–98–26). 

8The allocation is not changed by this proposed 

rule filing. 

9The term ‘‘primary market’’ is defined in Phlx 

Rule 1000 in respect of an underlying stock or 

Exchange-Traded Fund Share as the principal 

market in which the underlying stock or ExchangeTraded Fund Share is traded. 

10See Securities Exchange Act Release No. 52961 

(December 15, 2005), 70 FR 76095 (December 22, 

2005) (SR–Phlx–2005–77). See also Securities 

Exchange Act Release Nos. 52893 (December 5, 

2005), 70 FR 73488 (December 12, 2005) (SR–

Amex–2005–067); 52892 (December 5, 2005), 70 FR 

73492 (December 12, 2005) (SR–CBOE–2005–39); 

52960 (December 15, 2005), 70 FR 76090 (December 

22, 2005) (SR–ISE–2005–59); and 52986 (December 

20, 2005), 70 FR 76897 (December 28, 2005) (SR–

PCX–2005–137). 

11 15 U.S.C. 78f(b). 

12 15 U.S.C. 78f(b)(5). 

13 15 U.S.C. 78s(b)(3)(A). 

14 17 CFR 240.19b–4(f)(6). 

15 17 CFR 240.19b–4(f)(6)(iii). In addition, Rule 

19b–4(f)(6)(iii) requires that a self-regulatory 

organization submit to the Commission written 

notice of its intent to file the proposed rule change, 

along with a brief description and text of the 

proposed rule change, at least five business days 

prior to the date of filing of the proposed rule 

change, or such shorter time as designated by the 

Commission. Phlx has satisfied the five-day prefiling requirement. 

16 Id. 

17For purposes only of waiving the operative 

delay, the Commission has considered the proposed 

rule’s impact on efficiency, competition, and capital 

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

Price Program.7 Of the 200 options 

classes eligible for the $2.50 Strike Price 

Program, 46 have been allocated to 

Phlx.8 In 2005, the $2.50 Strike Price 

Program was expanded to permit the 

listing of options with $2.50 strike price 

intervals for options with strike prices 

between $50 and $75, provided that the 

$2.50 strike price intervals are no more 

than $10 from the closing price of the 

underlying stock in its primary market 9

on the preceding day.10 With the 

expansion of the $2.50 Strike Price 

Program to options with strike prices 

below $75, for example, if an option 

class has been selected as part of the 

$2.50 Strike Price Program, and the 

underlying stock closed at $48.50 in its 

primary market, the Exchange may list 

options with strike prices of $52.50 and 

$57.50 on the next business day; and if 

an underlying security closed at $54, the 

Exchange may list options with strike 

prices of $52.50, $57.50, and $62.50 on 

the next business day. Moreover, an 

option class would remain in the $2.50 

Strike Price Program until the Exchange 

otherwise designates and sends a 

decertification notice to the Options 

Clearing Corporation. 

The Exchange is hereby clarifying that 

it, like other options exchanges with the 

$2.50 Strike Price Program, may list 

LEAPS at $2.50 strike price intervals at 

all strike prices that are available 

pursuant to the $2.50 Strike Price 

Program. The Exchange believes that the 

$2.50 Strike Price Program has benefited 

the marketplace by creating additional 

trading opportunities for customers in 

all options including LEAPS by 

affording such customers the ability to 

more closely tailor investment strategies 

to the precise movement of the 

underlying security. The availability of 

$2.50 strike price intervals for LEAPS 

will likewise benefit the marketplace 

and is in conformity with current 

industry practice. 

2. Statutory Basis 

The Exchange believes that its 

proposal is consistent with Section 6(b) 

of the Act 11 in general, and furthers the 

objective of Section 6(b)(5) of the Act 12

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 

mechanism of a free and open market 

and the national market system. 

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 

Because the foregoing rule change 

does not: (1) Significantly affect the 

protection of investors or the public 

interest; (2) impose any significant 

burden on competition; and (3) become 

operative for 30 days from the date of 

this filing, or such shorter time as the 

Commission may designate, it has 

become effective pursuant to Section 

19(b)(3)(A) of the Act 13 and Rule 19b–

4(f)(6) thereunder.14

A proposed rule change filed under 

19b–4(f)(6) normally may not become 

operative prior to 30 days after the date 

of filing.15 However, Rule 19b–

4(f)(6)(iii) 16 permits the Commission to 

designate a shorter time if such action 

is consistent with the protection of 

investors and the public interest. The 

Exchange has requested that the 

Commission waive the 30-day operative 

delay. The Commission believes that 

waiving the 30-day operative delay is 

consistent with the protection of 

investors and in the public interest so 

that it is clear that the Exchange has the 

immediate ability to list and trade 

LEAPS at $2.50 strike price intervals at 

all strike prices that are available 

pursuant to the $2.50 Strike Price 

Program. For this reason, the 

Commission designates the proposed 

rule change to be operative upon filing 

with the Commission.17

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 Act. 

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 

No. SR–Phlx–2007–04 on the subject 

line. 

Paper Comments 

• Send paper comments in triplicate 

to Nancy M. Morris, Secretary, 

Securities and Exchange Commission, 

Station Place, 100 F Street, NE., 

Washington, DC 20549–1090. 

All submissions should refer to File No. 

SR–Phlx–2007–04. 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 


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Federal Register / Vol. 72, No. 40 / Thursday, March 1, 2007 / Notices 9373 

18 17 CFR 200.30–3(a)(12). 

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 

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 No. 

SR–Phlx–2007–04 and should be 

submitted on or before March 22, 2007. 

For the Commission, by the Division of 

Market Regulation, pursuant to delegated 

authority.18

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E7–3563 Filed 2–28–07; 8:45 am] 

BILLING CODE 8010–01–P 

SOCIAL SECURITY ADMINISTRATION 

[Docket No. SSA 2007–0013] 

Privacy Act of 1974 as Amended; 

Computer Matching Program (SSA/ 

Department of Veterans Affairs (VA), 

Veterans Benefit Administration 

(VBA))—Match Number 1008 

AGENCY: Social Security Administration 

(SSA). 

ACTION: Notice of a renewal of a 

computer matching program. 

SUMMARY: In accordance with the 

provisions of the Privacy Act, as 

amended, this notice announces a 

renewal of a computer matching 

program that SSA will conduct with 

VA/VBA. 

DATES: SSA will file a report of the 

subject matching program with the 

Committee on Homeland Security and 

Governmental Affairs of the Senate, the 

Committee on Government Reform of 

the House of Representatives, and the 

Office of Information and Regulatory 

Affairs, Office of Management and 

Budget (OMB). The matching program 

will be effective as indicated below. 

ADDRESSES: Interested parties may 

comment on this notice by either 

telefaxing to (410) 965–8582 or writing 

to the Associate Commissioner, Office of 

Income Security Programs, 252 

Altmeyer Building, 6401 Security 

Boulevard, Baltimore, MD 21235–6401. 

All comments received will be available 

for public inspection at this address. 

FOR FURTHER INFORMATION CONTACT: The 

Associate Commissioner for Income 

Security Programs as shown above. 

SUPPLEMENTARY INFORMATION: 

A. General 

The Computer Matching and Privacy 

Protection Act of 1988 (Pub. L. 100–

503), amended the Privacy Act (5 U.S.C. 

552a) by describing the manner in 

which computer matching involving 

Federal agencies could be performed 

and adding certain protections for 

individuals applying for, and receiving, 

Federal benefits. Section 7201 of the 

Omnibus Budget Reconciliation Act of 

1990 (Pub. L. 101–508) further amended 

the Privacy Act regarding protections for 

such individuals. The Privacy Act, as 

amended, regulates the use of computer 

matching by Federal agencies when 

records in a system of records are 

matched with other Federal, State, or 

local government records. 

It requires Federal agencies involved 

in computer matching programs to: 

(1) Negotiate written agreements with 

the other agency or agencies 

participating in the matching programs; 

(2) Obtain the Data Integrity Boards’

approval of the match agreements; 

(3) Publish notice of the computer 

matching program in the Federal 

Register; 

(4) Furnish detailed reports about 

matching programs to Congress and 

OMB; 

(5) Notify applicants and beneficiaries 

that their records are subject to 

matching; and 

(6) Verify match findings before 

reducing, suspending, terminating, or 

denying an individual’s benefits or 

payments. 

B. SSA Computer Matches Subject to 

the Privacy Act 

We have taken action to ensure that 

all of SSA’s computer matching 

programs comply with the requirements 

of the Privacy Act, as amended. 

Dated: February 22, 2007. 

Martin H. Gerry, 

Deputy Commissioner for Disability and 

Income Security Programs. 

Notice of Computer Matching Program, 

Social Security Administration (SSA) 

With Department of Veterans Affairs 

(VA), Veterans Benefit Administration 

(VBA) Match Number 1008 

A. Participating Agencies 

SSA and VA/VBA. 

B. Purpose of the Matching Program 

The purpose of this matching program 

is to establish the conditions for VA/ 

VBA as the source agency to disclose 

VA compensation and pension payment 

data to SSA, the recipient agency. This 

disclosure will provide SSA with 

information necessary to identify certain 

Supplemental Security Income (SSI) 

and Special Veterans Benefit (SVB) 

recipients under titles XVI and VIII of 

the Social Security Act (the Act) 

respectively, who receive VAadministered benefits. SSA will then 

update the SSI/SVB records to reflect 

the presence of such payments. 

The disclosure will also enable SSA 

to efficiently implement a Medicare 

outreach program mandated by Section 

1144 of title XI of the Act. Information 

disclosed by VA will enable SSA to 

identify income limits for certain 

individuals; to determine their potential 

eligibility for Medicare Savings 

Programs, and to identify these 

individuals to the States. 

C. Authority for Conducting the 

Matching Program 

The legal authority for SSA to 

conduct this matching activity is 

contained in sections 1631(e)(1)(B) and 

1631(f) of the Act, (42 U.S.C. 

1383(e)(1)(B) and 1383(f)(SSI)), and 

section 806(b) of the Act, (42 U.S.C. 

1006(b)(SVB)) and section 1144 of the 

Act, (42 U.S.C. 1320b–14). SSA is 

required to verify declarations of 

applicants for, and recipients of, SSI 

payments before making a 

determination of eligibility or payment 

amount. 

The legal authority for VA to disclose 

information for this match is contained 

in section 1631(f) of the Act, (42 U.S.C. 

Section 1383(f)). That section requires 

Federal agencies to provide such 

information as the Commissioner of 

Social Security needs for purposes of 

determining eligibility for or amount of 

benefits, or verifying other information 

with respect thereto. 

D. Categories of Records and 

Individuals Covered by the Matching 

Program 

VA will provide SSA with electronic 

files containing compensation and 

pension payment data from its system of 

records entitled the Compensation, 

Pension, Education and Rehabilitation 

Records—VA (58VA21/22) first 

published at 41 FR 9294 (March 3, 

1976), and last amended at 70 FR 34186 

(June 13, 2005), with other amendments 

as cited therein. SSA will then match 

VA data with SSI/SVB payment 

information maintained in its system of 

records entitled Supplemental Security 

Income Record and Special Veterans 

Benefits (SSA/OEEAS 60–0103.) 

Routine use 21 of 58VA21/22 and 

routine use 3 of 60–0103 permits 


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