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###### Securities and Exchange Commission

          - Release No. 34-58454] 

## I. Introduction 

                    On June 27, 2007,[1]                                          the Philadelphia Stock Exchange, Inc., n/k/a NASDAQ OMX PHLX, Inc., (“Phlx” or the “Exchange”) filed with the Securities and Exchange Commission (“Commission”) pursuant to Rule 0-12 [2]                                          under the Securities Exchange Act of 1934 (“Exchange Act”) an application for an exemption under Section 36(a)(1) of the Exchange Act [3]                                          from the rule filing requirements of Section 19(b) of the Exchange Act [4]                                          with respect to certain margin rules of other self-regulatory organizations (“SROs”) that the Exchange seeks to incorporate by reference.                 

## II. Application for Section 36 Exemption From Section 19(b) Rule Filing Requirements for SRO Rules Incorporated by Reference 

                    On August 11, 2008, the Commission approved a proposed rule change—SR-Phlx-2007-33—which, among other things, permits Phlx members to elect to be bound by the margin rules of either the New York Stock Exchange LLC (“NYSE”) or the Chicago Board Options Exchange, Incorporated (“CBOE”).[5]                                          More specifically, Phlx amended its Rule 721 to state a member organization must elect to be bound by the initial and maintenance margin requirements of either the NYSE or CBOE as the same may be in effect and amended from time to time.[6]                                          Phlx Rule 721 further states that upon the filing of such election, a Phlx member shall be bound to comply with the margin rules of the NYSE or CBOE, as applicable, as though said rules were part of Phlx's margin rules. On June 26, 2007, Phlx submitted a formal request, pursuant to Rule 0-12 under the Exchange Act,[7]                                          seeking an exemption under Section 36 of the Exchange Act from the rule filing procedures of Section 19(b) of the Exchange Act with respect to changes to the margin rules of either the NYSE or CBOE.[8] 

## III. Order Granting Section 36 Exemption 

                    Section 36 of the Exchange Act [9]                                          authorizes the Commission to conditionally or unconditionally exempt any person, security, or transaction, or any class thereof, from any provision of the Exchange Act or rule thereunder, if necessary or appropriate in the public interest and consistent with the protection of investors. The Commission believes that it is appropriate to issue exemptions, subject to the conditions described below, to allow SROs to incorporate by reference the rules of other SROs without being subject to the rule filing requirements of Section 19(b) of the Exchange Act whenever the SRO's rules that are incorporated by reference change. Such exemptions promote efficient use of Commission and SRO resources by avoiding duplicative rule filings based on simultaneous changes to identical rule text sought by more than one SRO.                 

                    The Commission will consider granting requests for exemption, pursuant to Section 36 of the Exchange Act, from the rule filing requirements imposed by Section 19(b) of the Exchange Act, provided that:[10] 
      ( print page 52434)    
                    (1) An SRO wishing to incorporate rules of another SRO by reference has submitted a written request for an order exempting it from the requirement in Section 19(b) of the Exchange Act to file proposed rule changes relating to the rules incorporated by reference, has identified the applicable originating SROs, together with the rules it wants to incorporate by reference, and otherwise has complied with the procedural requirements set forth in the Commission's release governing procedures for requesting exemptive orders pursuant to Rule 0-12 under the Exchange Act;[11] 

                    (2) an incorporating SRO has requested incorporation of categories of rules (rather than individual rules within a category) that are not trading rules (                    *e.g.*, the SRO has requested incorporation of rules such as margin, suitability, arbitration); and                 

(3) the incorporating SRO has reasonable procedures in place to provide written notice to its members each time a change is proposed to the incorporated rules of another SRO. 

The Commission believes that it is appropriate to issue an exemption, subject to the conditions described above, to allow Phlx to incorporate by reference the margin rules of the NYSE or CBOE (by allowing its members to elect to be bound by the margin rules of either the NYSE or CBOE), without being subject to the rule filing requirements of Section 19(b) of the Exchange Act whenever the SRO's margin rules that are incorporated by reference change. The Commission believes that this exemption will promote more efficient use of Commission and Phlx resources by avoiding duplicative rule filings based on simultaneous changes to identical rule text sought by more than one SRO. The Commission notes in granting this exemption, that Phlx by incorporating by reference another SRO's margin rules would agree to be governed by the incorporated rules, as amended from time to time, but not be required to file a separate proposed rule change with the Commission each time either the NYSE or CBOE seeks to modify its margin rules. 

                    Phlx is requesting to incorporate by reference the whole category of the NYSE and CBOE margin rules (                    *i.e.*                    , did not “cherry-pick” certain individual rules within a category), which are regulatory rules and not trading rules. The Commission also has previously approved the incorporation by reference of the NYSE and CBOE margin rules for the International Securities Exchange and the Boston Options Exchange.[12]                                          The Commission notes that the Exchange previously requested, and the Commission granted, a request by Phlx to incorporate by reference, the NASD Code of Arbitration Procedure, subject to certain conditions.[13]                                          Consistent with the conditions attendant to its prior exemptive request, the Exchange has agreed to continue to provide written notice to its members whenever the NYSE or CBOE proposes a change to its margin rules.[14]                                          This procedure will provide Phlx members with notice of a proposed rule change that affects their interests, so that they would have the opportunity to comment on it.                 

For the reasons discussed above, the Commission finds that the exemption is necessary or appropriate in the public interest, and is consistent with the protection of investors. 

                    Accordingly,                     *it is ordered*                    , pursuant to Section 36 of the Exchange Act,[15]                                          that Phlx, with respect to the margin rules of the NYSE and CBOE that Phlx proposes to incorporate by reference as specified above, and subject to the conditions described above, shall be exempt from rule filing requirements of Section 19(b) of the Exchange Act to the extent that Section 19(b) would otherwise require submission of a proposed rule change filing with the Commission.                 

                        For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.[16] 

Florence E. Harmon, 

Acting Secretary.

# Footnotes

1.                                                     *See*                         Letter from Edith H. Hallahan, Esq., Senior Vice President and Deputy General Counsel, Phlx, to Nancy M. Morris, Secretary, Commission, dated June 26, 2007.                     
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2.                             17 CFR 240.0-12.                     
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3.                             15 U.S.C. 78mm(a)(1).                     
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4.                             15 U.S.C. 78s(b).                     
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5.                                                     *See*                         Exchange Act Release 58340, 73 FR 48268 (August 18, 2008).                     
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6.                             Exchange Act Release No. 58340 (August 11, 2008);                         *see also*                         Exchange Act Release No. 58045 (June 26, 2008), 73 FR 38487 (July 7, 2008) (SR-Phlx-2007-33).                     
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7.                                                     *See*17 CFR 240.0-12.                     
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8.                                                     *See*                         Letter from Edith H. Hallahan, Esq., Senior Vice President and Deputy General Counsel, Phlx, to Nancy M. Morris, Secretary, Commission, dated June 26, 2007.                     
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9.                             15 U.S.C. 78mm.                     
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10.                             Exchange Act Release No. 49260 (February 17, 2004), 69 FR 8500 (February 24, 2004).                     
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11.                                                     *See*17 CFR 240.0-12 and Exchange Act Release No. 39624 (February 5, 1998), 63 FR 8101 (February 18, 1998) (Commission Procedures for Filing Applications for Orders for Exemptive Relief Pursuant to Section 36 of the Exchange Act; Final Rule).                     
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12.                             Exchange Act Release No. 49260 (February 17, 2004), 69 FR 8500 (February 24, 2004).                     
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13.                                                     *See*                         Exchange Act Release No. 49260 (February 17, 2004), 69 FR 8500 (February 24, 2004).                     
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14.                                                     *See supra*                         note 1.                     
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15.                             15 U.S.C. 78mm.                     
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16.                                 17 CFR 200.30-3(a)(76).                         
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[FR Doc. E8-20809 Filed 9-8-08; 8:45 am] 

BILLING CODE 8010-01-P