30780 Federal Register / Vol. 66, No. 110 / Thursday, June 7, 2001 / Notices

6 15 U.S.C. 78q–1(b)(3)(F).

7 17 CFR 200.30–3(a)(12).

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

2 17 CFR 240.19b–4.

3Telephone conversation between Edith

Hallahan, First Vice President & Deputy General

Counsel, Phlx, and Florence Harmon, Senior

Special Counsel, Division of Market Regulation

(‘‘Division’’), Commission on May 31, 2001.

responsible.6 For the reasons set forth

below, the Commission believes that

OCC’s proposed rule change is

consistent with OCC’s obligations under

the Act.

OCC has requested that the

Commission find good cause for

approving the proposed rule change

prior to the thirtieth day after

publication of the notice of filing. The

Commission finds good cause for so

approving the proposed rule change

because accelerated approval will

permit OCC to immediately give OCC

the benefit of protection against such

failures to settle. Accordingly, the

Commission finds that the rule change

is consistent with OCC’s obligations to

assure the safeguarding of securities and

funds which are in the custody or

control of the clearing agency or for

which it is responsible because it

should provide OCC with strengthened

protection against the risk of a

suspended member’s failure to settle by

providing OCC with express recourse to

the suspended member’s deposits.

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 in

the Commission’s Public Reference

Section, 450 Fifth Street, NW.,

Washington, DC 20549. Copies of such

filing also will be available for

inspection and copying at the principal

office of OCC. All submissions should

refer to File No. SR–OCC–00–09 and

should be submitted by June 28, 2001.

V. Conclusion

On the basis of the foregoing, the

Commission finds that the proposed

rule change is consistent with the

requirements of the Act and in

particular Section 17A of the Act and

the rules and regulations thereunder.

It is therefore ordered, pursuant to

section 19(b)(2) of the Act, that the

proposed rule change (File No. SR–

OCC–00–09) be and hereby is approved.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.7

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 01–14311 Filed 6–6–01; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 44372; File No. SR–Phlx–2001–

59]

Self-Regulatory Organizations; Notice

of Filing and Order Granting

Accelerated Approval of Proposed

Rule Change by the Philadelphia Stock

Exchange, Inc. Relating to Dealing

Directly With Specialist and Registered

Options Traders in Foreign Currency

Options

May 32, 2001.

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 May 30,

2001, the Philadelphia Stock Exchange,

Inc. (‘‘Phlx’’ or ‘‘Exchange’’) filed with

the Securities and Exchange

Commission (‘‘SEC’’ or ‘‘Commission’’)

the proposed rule change as described

in Items I, II, and III, below, which Items

have been prepared by the selfregulatory organization. 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 proposes to adopt new

Phlx Rule 1089 entitled ‘‘Dealing

Directly With Specialist and Registered

Options Trader in Foreign Currency

Options’’ on a one-year pilot basis. The

pilot will expire on May 31, 2002.3

Proposed new language is in italics.

* * * * *

Dealing Directly With Specialist and

Registered Option Trader in Foreign

Currency Options

Rule 1089.(a) Applicability. The provisions

in this Rule are applicable to options on

foreign currencies and supercede any Rules

of general applicability to trading of options

which are or may be construed as contrary

to or inconsistent with these Rules.

(b) Non-Customized Foreign Currency

Options. In the vent that there is no floor

broker present to accept and execute orders

for non-customized foreign currency options

on the trading floor for such options:

(1) Market and Limit Orders. Foreign

currency options participants and foreign

currency options participant organizations

may transmit market and limit orders for

such options directly to the specialist by

telephone or other means. In addition, any

person who is not a foreign currency options

participant or participant organization may,

pursuant to authorization of a foreign

currency options participant organization

and subject to the consent of the specialist,

transmit limit orders, marketable limit orders

and market orders for such options directly

to the specialist by telephone or other means.

(2) Complex Orders. Foreign currency

options participants and foreign currency

options participant organizations may

contact the specialist directly by telephone to

negotiate the total debit or credit for

transacting a complex order, provided that

the specialist is responsible for complying

with Rules 1033 and 1066 in setting the price

of the individual option legs of the order. In

addition, a person who is not a foreign

currency options participant or participant

organization may, (provided that such

person’s account is not with the specialist’s

firm) pursuant to authorization of a foreign

currency options participant organization

and subject to the consent of the specialist,

contact the specialist directly by telephone to

negotiate the total debit or credit for

transacting a complex order, provided that

the specialist is responsible for complying

with Rules 1033 and 1066 in setting the price

of the individual option legs of the order.

Complex orders include orders consisting of

two or more option series of non-customized

foreign currency options such as spreads,

straddles and combinations. In no event shall

the specialist accept complex orders for

representation or placement onto the

specialist’s book.

(c) Customized Foreign Currency Options.

In the event that there is no floor broker

present to accept and execute orders for

customized foreign currency options on the

trading floor for such options; foreign

currency options participants and foreign

currency options participant organizations

may submit a request for quote (‘‘RFQ’’)

under Rule 1069 for a customized foreign

currency option directly to an ROT on the

floor by telephone or other means, and, if

applicable, negotiate a transaction with an

ROT. In addition, a person who is not a

foreign currency options participant or

participant organization may, pursuant to

authorization of a foreign currency options

participant organization and subject to the

consent of the ROT, submit an RFQ under

Rule 1069 for a customized foreign currency

option directly to an ROT on the floor by

telephone or other means, and if applicable,

negotiate a transaction with an ROT.

* * * * *

Federal Register / Vol. 66, No. 110 / Thursday, June 7, 2001 / Notices 30781

4Customized foreign currency options are traded

pursuant to Rule 1069. Securities Exchange Act

Release No. 34925 (November 1, 1994), 59 FR 55720

(November 8, 1994) (approving SR–Phlx–94–18). 5Any person who is not a foreign currency

options participant or participant organization must

be authorized by a foreign currency options

participant organization to engage in the

enumerated activities because the foreign currency

options participant organization is responsible for

such person’s activities on the Exchange. Similar to

the Nasdaq market, the specialist or ROT, as

applicable, is entitled to know with whom they are

dealing on the telephone to assure themselves of

proper authorization by a foreign currency options

participant and appropriate financial responsibility

by a clearing firm on any trade executed. Usually,

such authorization includes written ‘‘give-up

agreements’’ or other similar documentation, in

addition to general validation of the individual on

the telephone, whether at first dealing or routinely. 6See Proposed Phlx Rule 1089(b). The Exchange

notes that in addition to accepting market or limit

orders, the specialist may negotiate and execute

such orders as well. See infra note 11. 7See Proposed Phlx Rule 1089(b).

8See Proposed Phlx Rule 1089(c).

9The provisions applicable to recordkeeping and

timestamping of orders and trades continue to

apply. See e.g., Rule 17a–3 under the Act.

10Securities Exchange Act Release No. 34721

(September 26, 1994), 59 FR 50310 (October 23,

1994) (approving SR–Phlx–92–03).

11The Exchange believes that the proposal is not

inconsistent with Advice A–2 because the foreign

currency options specialist is not accepting a

complex order for representation or placement on

the book. The proposal allows an order-sending

firm or customer who telephones a specialist to

directly negotiate with the specialist as contra-side

the total debit or credit for transacting a complex

order; but the order sending firm or customer is not

giving the order to the specialist for representation

or for placement on the book. Rather, at the

conclusion of the negotiation there will be a

completed transaction based upon that total debit

or credit. As such, the Exchange does not believe

that the proposal would allow the specialist to

accept discretionary orders, which could

theoretically raise a question under Section 11(a) of

the Act. Section 11(a)(1), among other things,

prohibits a member of an exchange from effecting

on the exchange any transaction for an account over

which the member exercises ‘‘investment

discretion.’’ The legislative history of Section 11(a)

indicates that the discretionary account prohibition

in that Section was intended in large part to address

potential abuses arising out of the combination of

brokerage and money management. See Securities

Exchange Act Release No. 14563 (March 14, 1978),

43 FR 11542 (March 17, 1978). ‘‘Investment

discretion’’ is defined in Section 3(a)(35) of the Act

to include a relationship where a person ‘‘directly

or indirectly (A) is authorized to determine what

securities * * * shall be purchased or sold by or

for the account, (B) makes decisions as to what

securities * * * shall be purchased or sold by or

for the account * * * or (C) otherwise exercises

such influence with respect to the purchase and

sale of securities * * * by or for the account as the

Commission, by rule, determines * * * should be

subject to the operation of the [Act] * * * ’’ The

Commission has not adopted any rules under

Subsection C. Given the fact that the specialist has

no discretion in executing the legs of a complex

order to affect either the price, timing or individual

options purchased or sold, the Exchange does not

believe that the specialist has the type of

investment discretion that was intended to be

Continued

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 a 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 proposed rule is

to establish special procedures for

transmitting orders and requests for

quotes for non-customized and

customized foreign currency options to

the floor, and for executing transactions

in such options on the floor, when no

floor broker is present. The Exchange is

proposing the rules as an alternative

mechanism for handling orders and

executing transactions in foreign

currency options in the event that there

are no floor brokers present on the

trading floor for such options.

Since the late 1980s, the number of

foreign currency options participants

and firms clearing foreign currency

options has steadily declined as the

market has increasingly shifted to overthe-counter trading. Currently, the

Exchange has one foreign currency

options participant registered as the

specialist unit in all non-customized

foreign currency options listed on the

Exchange. Similarly, there is also one

foreign currency options participant

organization acting as floor broker to

accept and handle foreign currency

options orders. The use of floor brokers

is currently the only mechanism for

customer trading interest to be

communicated on the foreign currency

options floor. In the event that, for

whatever reason, there is no longer any

qualified floor broker on the foreign

currency options floor to handle and

execute customers orders, it would

effectively make it impossible for the

foreign currency option floor to

continue to operate. Therefore, the

Exchange is adopting an alternative

mechanism for communicating trading

interest to the specialist or Registered

Options Trader (‘‘ROT’’) (for customized

foreign currency options).

Proposed Phlx Rule 1089 would apply

to trading of non-customized and

customized foreign currency options

and would supercede any contrary or

inconsistent Exchange rules applicable

to options trading. The Exchange

represents that the distinction between

non-customized and customized options

is relevant because they are traded

differently under Phlx rules. Whereas

the Phlx trading rules for noncustomized foreign currency options

provide for a traditional specialist

model, the rules for the customized

options do not, principally because their

highly tailored nature is not conducive

to continuous quoting of markets.

Instead, Phlx rules contemplate trading

of customized options by floor brokers

(on behalf of customers) and registered

options traders (‘‘ROTs’’) as market

makers trading for their own account

through Request-for-Quote (‘‘RFQ’’)

procedures.4

Proposed Phlx Rules 1089(b) and

1089(c) would set out the terms for

submitting orders and RFQs to the floor

and executing trades on the floor for

non-customized options (including

complex orders) and customized

options, respectively. The proposal

would permit foreign currency options

participants and foreign currency

options participant organizations, and,

subject to certain conditions,5 persons

who are not such participants or

participant organizations to: (1) Place

market and limit orders for noncustomized foreign currency options

directly with the registered specialist for

such options by telephone or other

mean; 6 (2) negotiate and execute

complex orders consisting of

combinations of two or more series of

non-customized foreign currency

options at a total debit or credit directly

with the specialist over the telephone; 7

and (3) submit RFQs under Phlx Rule

1069 directly with an ROT and, if

applicable, to negotiate a transaction

with an ROT.8

As explained above, the new rule will

supercede any contrary or inconsistent

Exchange rules that would otherwise

apply, on the narrow terms proposed.9

Most notably, the Exchange intends for

the proposal to:

• Provide a limited exemption from

the provisions of Phlx Rule 104 to

permit a specialist or ROT to negotiate

and execute trades with non-members

over the phone, including for complex

orders and customized foreign currency

options;

• Clarify that Phlx Options Floor

Procedure Advice A–2 (as last amended

September 26, 1994) 10 does not prohibit

a specialist negotiating the terms of

complex orders in non-customized

foreign currency options directly with

order sending firms or customers; 11 and

30782 Federal Register / Vol. 66, No. 110 / Thursday, June 7, 2001 / Notices

covered by Section 11(a). Similarly the Exchange

believes that the proposal is consistent with Section

11(b) of the Act because the specialist is only

effecting on the Exchange as broker transactions

upon ‘‘market or limited price’’ orders.

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

13 15 U.S.C. 78f(b)(5).

14 In approving this proposed rule change, the

Commission notes that it has considered the

proposed rule’s impact on efficiency, competition,

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

15 15 U.S.C. 78k(a) and (b).

16Section 11(a) of the Act states that it is

‘‘unlawful for any member of a national securities

exchange to effect any transaction on such exchange

for its own account, the account of an associated

person, or an account with respect to which it or

an associated person thereof exercises investment

discretion[.]’’

17Section 11(b) of the Act states that it is

‘‘unlawful for a specialist permitted to act as a

broker and dealer to effect on the exchange as

broker any transaction except upon a market or

limited price order.’’

18The Commission notes that the Exchange has

represented that, currently, the specialist firm in

foreign currency options does not carry customer

accounts. Telephone conversation between Edith

Hallahan, Vice President & Deputy General

Counsel, Phlx, and Florence Harmon, Senior

Special Counsel, Division, Commission on May 30,

2001.

19 15 U.S.C. 78o(b)(8).

20 15 U.S.C. 78f(b).

21 15 U.S.C. 78f(b)(5).

22 15 U.S.C. 78k(a).

23 15 U.S.C. 78k(b).

24 15 U.S.C. 78s(b)(2)(B).

25 15 U.S.C. 78s(b)(2).

• Expand the scope of Phlx Circular

No. 86–09 to permit persons who are

not foreign currency options

participants and participant

organizations to have direct telephone

access to foreign currency options

specialists and ROTs as well as floor

brokers.

2. Statutory Basis

The Exchange believes that the

proposed rule change is consistent with

section 6 of the Act,12 in general, and

with section 6(b)(5) 13 of the Act in

particular, in that it is designed to

promote just and equitable principles of

trade, foster cooperation and

coordination with persons engaged in

facilitating transactions in securities,

and protect investors and the public

interest.

B. Self-Regulatory Organization’s

Statement on Burden on Competition

The Exchange does not believe that

the proposed rule change will impose

any inappropriate or unnecessary

burden on competition.

C. Self-Regulatory Organization’s

Statement on Comments on the

Proposed Rule Change Received From

Members, Participants or Others

Written comments were neither

solicited nor received.

III. Solicitation of Comments

Interested persons are invited to

submit written data, views and

arguments concerning the foregoing

including whether the proposal 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 filings will also be

available for inspection and copying at

the principal office of the Exchange. All

submissions should refer to File No.

SR–Phlx–2001–59 and should be

submitted by June 28, 2001.

IV. Commission’s Findings and Order

Granting Accelerated Approval of

Proposed Rule Change

After careful review, the Commission

finds that the proposed rule change on

a one-year pilot basis is consistent with

the Act and the rules and regulations

under the Act applicable to a national

securities exchange.14 In approving the

proposed rule change, the Commission

has considered the implications of the

proposed rules under sections 11(a) and

11(b) of the Act.15 The Commission

finds that the proposed rule change is

consistent with section 11(a) 16 because

the foreign currency options specialist is

not accepting a complex order for

representation or placement on the

specialist book. The specialist will have

no discretion in executing the legs of a

complex order to affect either the price,

timing or individual options purchased

or sold. Therefore, the Commission

believes that under the proposed rules

the specialist will not have the type of

investment discretion prohibited by

section 11(a). The Commission also

finds that the proposed rule change is

consistent with section 11(b) 17 because

the specialist will not accept complex

orders from customers of the firm with

which it is associated.18 The

Commission notes that Phlx’s rules,

including the proposed rule change,

permit the specialist to deal directly

with customers. In this regard, the

Commission notes that section 15(b)(8)

of the Act 19 states that it is unlawful for

‘‘any registered broker or dealer to effect

any transaction in, or induce or attempt

to induce the purchase or sale of any

security * * * unless such broker or

dealer is a member of a securities

association registered pursuant to

section 15A of this title or effects

transactions in securities solely on a

national securities exchange of which it

is a member.’’

Finally, the Commission believes that

the proposed rule change is consistent

with section 6(b) of the Act 20 in general,

and furthers the objectives of section

6(b)(5) of the Act 21 in particular in that

it is designated to promote just and

equitable principles of trade, to facilitate

transactions in securities, to remove

impediments to and perfect the

mechanism of a free and open market,

and to protect investors and the public

interest. Specifically, the Commission

believes that the proposed rule change

will ensure that in the event there is no

longer a qualified floor broker on the

foreign currency options floor, there are

provisions in place that will allow the

floor to continue to operate, thus

facilitating transactions in securities.

Moreover, the Commission believes that

the proposed rule change will protect

investors from potential conflicts of

interest on the part of the specialist in

that the specialist will not have the type

of investment discretion prohibited by

section 11(a) 22 and will not act as a

broker in violation of section 11(b).23

The Exchange requests accelerated

approval pursuant to Rule 19(b)(2)(B).24

The Exchange has requested accelerated

approval because in the event there is

no longer a qualified floor broker on the

foreign currency options floor, rules will

be in place to allow the floor to continue

to operate, thus facilitating transactions

in securities. The Commission believes

that it is appropriate to approve the

proposed rules on an accelerated basis,

to ensure that persons wishing to trade

on the Exchange’s foreign currency

options floor can communicate directly

with the specialist to communicate

trading interest in the event there are no

floor brokers, but only a specialist, on

the floor. Therefore, the Commission

finds good cause for approving the

proposed rule change prior to the

thirtieth day after the date of

publication of notice thereof in the

Federal Register.

It is therefore ordered, pursuant to

section 19(b)(2) 25 of the Act that the

proposed rule change (SR–Phlx–2001–

59) be, and hereby is, approved.

Federal Register / Vol. 66, No. 110 / Thursday, June 7, 2001 / Notices 30783

26 17 CFR 200.30–3(a)(12).

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

2 17 CFR 240.19b–4.

3See United States v. American Stock Exchange

LLC, Civil Action No. 00–CV–02174 (EGS) (D.C.

Cir., December 6, 2000); In re Certain Activities of

Options Exchanges, Securities Exchange Act

Release No. 43268 (September 11, 2000).

4See Securities Exchange Act Release No. 44057

(March 9, 2001), 66 FR 15312 (March 16, 2001)

(notice and accelerated partial approval of SR–

Phlx–01–03).

5 15 U.S.C. 78f.

6 15 U.S.C. 78f(b)(5).

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.26

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 01–14312 Filed 6–6–01; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–44373; File No. SR–Phlx–

2001–19]

Self-Regulatory Organizations; Notice

of Filing of Proposed Rule Change by

the Philadelphia Stock Exchange, Inc.

To Institute an Antitrust Compliance

Policy

May 31, 2001.

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 March 5,

2001, 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.

I. Self-Regulatory Organization’s

Statement of the Terms of Substance of

the Proposed Rule Change

Phlx has proposed to adopt an

Antitrust Compliance Policy

(‘‘Compliance Policy’’). The Compliance

Policy, which applies to Exchange

governors, committee members,

employees, members, and member

organizations (‘‘Covered Persons’’), is

designed to highlight certain activities

known to raise antitrust and

competition-related concerns, provide

general guidance in these areas, and

suggest when Covered Persons may

want to consult with the Phlx Antitrust

Compliance Officer or his designated

staff.

The Compliance Policy states that it is

the policy of the Exchange to comply

with the antitrust laws and the

settlements that Phlx and the other

options exchanges entered into on

September 11, 2000, with the

Department of Justice (‘‘DOJ’’) and the

Commission.3 The Compliance Policy

also discusses the consequences of noncompliance with the antitrust laws, the

settlements, and certain Exchange rules.

The Compliance Policy discusses

certain types of conduct that may raise

behavioral issues. For example, the

Compliance Policy state that certain

agreements with other exchanges are

prohibited by the settlements, various

exchange rules, and/or codes of

conduct: those indicating that any

option class will be traded on only one

exchange; those indicating that trading

of option classes will be allocated

among exchanges; and those requiring,

preventing, or limiting the listing,

delisting, or trading of any options class.

The Compliance Policy states that

engaging in harassment or other

improper behavior connected with

listing decisions or competitive-related

practices is prohibited. It states also that

listing and delisting decisions must be

made in accordance with Exchange

rules, policies, and procedures.

In addition, the Compliance Policy

states that harassment, retaliation, or

intimidation relating to listing

decisions, prices, spreads, or trade

allocation should be reported to the

Antitrust Compliance Officer or his

designated staff.

The text of the proposed rule change

is available 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,

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. Phlx 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 Exchange has long insisted that

Covered Persons observe the highest

standards of business ethics and fair

dealing and has therefore filed with the

Commission its Employee Code of

Conduct and Code of Conduct of Board

Members and Committed Members.4 In

an effort to reinforce such standards, in

particular with regard to antitrust and

competition-related behavior, the

Exchange is now proposing to file the

Compliance Policy with the

Commission.

The purpose of the Compliance Policy

is to provide general guidance regarding

antitrust and compliance-related issues,

highlights activities known to raise

concerns, and provide suggestions when

to consult the Antitrust Compliance

Officers or his designated staff. In

addition, the compliance policy

specifically deals with issues raised in

the DOJ and Commission settlement

orders.

The Exchange believes that, by filing

the Compliance Policy with the

Commission, it would be uniformly

applicable to, and violations enforceable

against, all Covered Persons: Exchange

governors, committee members,

employees, members, and member

organizations.

2. Statutory Basis

Phlx believes the proposed rule

change is consistent with section 6 of

the Act 5 in general, and furthers the

objectives of section 6(b)(5) 6 in

particular, in that it is designed to

prevent unsuitable actions by Exchange

governors, committee members,

employees, members, and member

organizations regarding antitrust law

and competition-related behavior.

B. Self-Regulatory Organization’s

Statement on Burden on Competition

Phlx does not believe that the

proposed rule change would impose any

burden on competition.

C. Self-Regulatory Organization’s

Statement on Comments on the

Proposed Rule Change Received From

Members, Participants, or Others

Written comments were neither

solicited nor 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