Document ID: SEC-2006-0679-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: Philadelphia Stock Exchange, Inc.
Posted Date: 2006-05-25T04:00Z

[Federal Register: May 25, 2006 (Volume 71, Number 101)]
[Notices]               
[Page 30213-30214]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr25my06-119]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-53831; File No. SR-Phlx-2006-26]

 
Self-Regulatory Organizations; Philadelphia Stock Exchange, Inc.; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change 
Relating to Regulatory Services Agreements

 May 18, 2006.
    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 April 28, 2006, the Philadelphia Stock Exchange, Inc. (``Exchange'' 
or ``Phlx'') filed with the Securities and Exchange Commission 
(``Commission'') the proposed rule change as described in Items I and 
II below, which Items have been prepared by the Exchange. The Exchange 
filed the proposed rule change as a ``non-controversial'' rule change 
under Rule 19b-4(f)(6) under the Act,\3\ which rendered the proposal 
effective upon filing with the Commission. The Commission is publishing 
this notice to solicit comments on the proposed rule change from 
interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 17 CFR 240.19b-4(f)(6).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to adopt a rule concerning regulatory 
services agreements (``RSAs''), in which the Exchange would contract 
with another self-regulatory organization (``SRO'') for the performance 
of certain of the Exchange's regulatory functions. The text of the 
proposed rule change is available on the Phlx's Web site,  http://www.phlx.com
, at the Phlx's Office of the Secretary, 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 proposed rule change is to enhance the Phlx's 
ability to carry out its regulatory obligations under the Act by 
clarifying the Phlx's ability to contract with another SRO for 
regulatory services. Under any RSA with another SRO, the Phlx would 
remain an SRO registered under Section 6 of the Act \4\ and therefore 
would continue to have statutory authority and responsibility for 
enforcing compliance by its members, and persons associated with its 
members, with the Act, the rules thereunder, and the rules of the 
Exchange.
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    \4\ 15 U.S.C. 78f.
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    This rule change would have immediate applicability with respect to 
an RSA between the Phlx, the Chicago Board Options Exchange, 
Incorporated (``CBOE''), and other options markets participating in the 
proposed Options Regulatory Surveillance Authority national market 
system plan (``ORSA''). The Phlx has determined that to best discharge 
its SRO responsibilities, it will contract with CBOE, which is subject 
to Commission oversight pursuant to Sections 6 and 19 of the Act,\5\ 
for CBOE to provide certain regulatory services to the Phlx, as set 
forth in the ORSA RSA. In performing services under the ORSA RSA, CBOE 
will be operating pursuant to the statutory SRO responsibilities of the 
Phlx under Sections 6 and 19, as well as performing for itself its own 
SRO responsibilities. The proposed rule change specifically states that 
any action taken by another SRO, or its employees or authorized agents, 
operating on behalf of the Phlx pursuant to an RSA with the Exchange 
(e.g., CBOE under the ORSA RSA) will be deemed an action taken by the 
Exchange. The Phlx will retain ultimate responsibility for performance 
of its SRO duties under the RSA, and the proposed rule change states 
that the Exchange shall retain ultimate legal responsibility for and 
control of its SRO responsibilities.
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    \5\ 15 U.S.C. 78f and 15 U.S.C. 78s.
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2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act \6\ in general, and furthers the 
objectives of Sections

[[Page 30214]]

6(b)(1), 6(b)(6) and 6(b)(7) of the Act \7\ in particular, in that it 
will enhance the ability of the Exchange to enforce compliance by its 
members and persons associated with its members with the provisions of 
the Act, the rules and regulations thereunder, and the rules of the 
Exchange; it will help ensure that members and persons associated with 
members are appropriately disciplined for violations of the Act, the 
rules and regulations thereunder, and the rules of the Exchange; and it 
will provide a fair procedure for the disciplining of members and 
persons associated with members.
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    \6\ 15 U.S.C. 78f(b).
    \7\ 15 U.S.C. 78f(b)(1); 15 U.S.C. 78f(b)(6); and 15 U.S.C. 
78f(b)(7).
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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

    The Exchange has neither solicited nor received written comments on 
the proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Because the proposed rule change: (i) Does not significantly affect 
the protection of investors or the public interest; (ii) does not 
impose any significant burden on competition; and (iii) by its terms, 
does not become operative for 30 days after the date of filing, or such 
shorter time as the Commission may designate, if consistent with the 
protection of investors and the public interest, the proposed rule 
change has become effective pursuant to Section 19(b)(3)(A) of the Act 
\8\ and subparagraph (f)(6) of Rule 19b-4 thereunder.\9\ The Exchange 
has requested that the Commission waive the 30-day operative delay 
period for ``non-controversial'' proposals and make the proposed rule 
change effective and operative upon filing. The Commission hereby 
grants the request. The Commission believes that waiver of the 30-day 
operative delay is consistent with the protection of investors and the 
public interest. In this regard, the Commission believes that the 
proposal should be implemented without delay because of its immediate 
applicability with respect to the RSA among the Phlx, CBOE and the 
other ORSA participants.\10\ For this reason, the Commission designates 
the proposal to be effective and operative upon filing with the 
Commission.\11\
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    \8\ 15 U.S.C. 78s(b)(3)(A).
    \9\ 17 CFR 240.19b-4(f)(6).
    \10\ The Commission notes that the proposed rule change is based 
on a similar rule of the Boston Stock Exchange, Inc. See Securities 
Exchange Act Release No. 53436 (March 7, 2006), 71 FR 13194 (March 
14, 2006) (SR-BSE-2006-08).
    \11\ For the purposes only of accelerating the operative date of 
this proposal, the Commission has considered the proposed rule's 
impact on efficiency, competition and capital formation. 15 U.S.C. 
78c(f).
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    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 the furtherance of the purposes 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 rule-comments@sec.gov. Please include 

File Number SR-Phlx-2006-26 on the subject line.

Paper Comments

     Send paper comments in triplicate to Nancy M. Morris, 
Secretary, Securities and Exchange Commission, 100 F Street, NE., 
Washington, DC 20549-1090.

All submissions should refer to File Number SR-Phlx-2006-26. 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 inspection and 
copying in the Commission's Public Reference Room. 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-Phlx-2006-26 and should be submitted on or before June 
15, 2006.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\12\
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    \12\ 17 CFR 200.30-3(a)(12).
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Nancy M. Morris,
Secretary.
 [FR Doc. E6-7997 Filed 5-24-06; 8:45 am]

BILLING CODE 8010-01-P