Document ID: SEC-2007-0950-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: Philadelphia Stock Exchange, Inc
Posted Date: 2007-07-13T04:00Z

[Federal Register: July 13, 2007 (Volume 72, Number 134)]
[Notices]               
[Page 38645-38646]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr13jy07-128]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-56030; File No. SR-Phlx-2007-42]

 
Self-Regulatory Organizations; Philadelphia Stock Exchange, Inc.; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Extend the Quarterly Options Series Pilot Program

July 9, 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 June 27, 2007, 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 substantially prepared by the Exchange. 
The Exchange has designated this proposal as non-controversial under 
Section 19(b)(3)(A)(iii) of the Act \3\ and Rule 19b-4(f)(6) 
thereunder,\4\ which renders the proposed rule change 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\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \4\ 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 amend its Rules 1012 (Series of Options 
Open for Trading) and 1101A (Terms of Option Contracts) in order to 
extend for a period of about one year an Exchange pilot program (the 
``Phlx Pilot'') to permit the listing and trading of options series 
that may be opened for trading on any business day and that expire at 
the close of business on the last business day of a calendar quarter 
(``Quarterly Options'' or ``Quarterly Options Series''). The Phlx Pilot 
continues through July 24, 2007.\5\
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    \5\ See Securities Exchange Act Release No. 55301 (February 15, 
2007), 72 FR 8238 (February 23, 2007) (File No. SR-Phlx-2007-08) 
(``Pilot Program Release''). The American Stock Exchange LLC, 
Chicago Board Options Exchange, the International Stock Exchange, 
Inc., and NYSE Arca, Inc. (f/k/a the Pacific Stock Exchange, Inc.) 
have similar Quarterly Options pilot programs that likewise continue 
through July 2007.
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    The text of the proposed rule change is available at the Exchange, 
at the Commission's Public Reference Room, and at the Exchange's Web 
site at http://www.Phlx.com/exchange/phlx-rule-fil.html.

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
    In February 2007, the Exchange filed a proposed rule change for 
immediate effectiveness that allows the listing and trading of 
Quarterly Options on the Exchange under the Phlx Pilot.\6\ The Exchange 
now proposes to extend the Phlx Pilot for a period of about one year so 
that the Exchange can continue to list and trade Quarterly Options, 
within the parameters specified in its Rules 1012 and 1101A, through 
July 10, 2008. The terms of the Phlx Pilot will remain unchanged.
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    \6\ See id.
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    In the Pilot Program Release, the Commission indicated that if the 
Exchange seeks extension, expansion, or permanent approval of the Phlx 
Pilot, it must submit a Phlx Pilot Report (the ``Report'').\7\ In 
connection with this proposed rule change, the Exchange has submitted a 
Report covering the period February 21, 2007, through April 30, 2007. 
The Report reviews the Exchange's experience with the Phlx Pilot and 
clearly supports the Exchange's belief that extension of the Phlx Pilot 
is proper. Among other

[[Page 38646]]

things, the Report shows the strength and efficacy of the Phlx Pilot on 
the Exchange as reflected by the strong volume of Quarterly Options 
traded on Phlx since the pilot's inception in February 2007. The Report 
establishes that the Phlx Pilot has not created, and in the future 
should not create, capacity problems for the Exchange or the OPRA 
(Options Price Reporting Authority) system. Moreover, the Exchange 
represents that it has the necessary systems capacity to support new 
options series that will result from the introduction of Quarterly 
Options Series.
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    \7\ See Pilot Program Release, supra note 5. The Pilot Program 
Release indicates that the Report must include, at a minimum: (1) 
Data and written analysis on the open interest and trading volume in 
the classes for which Quarterly Option Series were opened; (2) an 
assessment of the appropriateness of the options classes selected 
for the Phlx Pilot; (3) an assessment of the impact of the Phlx 
Pilot on the capacity of the Exchange, OPRA, and on market data 
vendors (to the extent data from market data vendors is available); 
(4) any capacity problems or other problems that arose during the 
operation of the Phlx Pilot and how the Exchange addressed such 
problems; (5) any complaints that the Exchange received during the 
operation of the Phlx Pilot and how the Exchange addressed them; and 
(6) any additional information that would assist in assessing the 
operation of the Phlx Pilot.
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    The Exchange believes that extending the Phlx Pilot would continue 
to provide investors with a flexible and valuable tool to manage risk 
exposure, minimize capital outlays, and be more responsive to the 
timing of events affecting the securities that underlie option 
contracts.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act \8\ in general and furthers the objectives 
of Section 6(b)(5) of the Act \9\ in particular in that it is designed 
to promote just and equitable principles of trade, to perfect the 
mechanism of a free and open market and a national market system, and, 
in general, to protect investors and the public interest. The Exchange 
believes that the proposal would achieve this by allowing continued 
listing of Quarterly Options, thereby stimulating customer interest in 
such options and creating greater trading opportunities and flexibility 
and providing customers with the ability to more closely tailor their 
investment strategies.
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    \8\ 15 U.S.C. 78f(b).
    \9\ 15 U.S.C. 78f(b)(5).
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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

    No written comments were solicited or received with respect to the 
proposed rule change.

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

    The Exchange has designated the proposed rule change as one that: 
(1) Does not significantly affect the protection of investors or the 
public interest; (2) does not impose any significant burden on 
competition; and (3) does not become operative for 30 days from the 
date of filing, or such shorter time as the Commission may designate if 
consistent with the protection of investors and the public interest. 
Therefore, the foregoing rule change has become effective pursuant to 
Section 19(b)(3)(A) of the Act \10\ and subparagraph (f)(6) of Rule 
19b-4 thereunder.\11\ The Exchange has asked the Commission to waive 
the operative delay to permit the Pilot Program extension to become 
effective prior to the 30th day after filing.\12\
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    \10\ 15 U.S.C. 78s(b)(3)(A).
    \11\ 17 CFR 240.19b-4(f)(6).
    \12\ As required under Rule 19b-4(f)(6)(iii), the Exchange 
provided the Commission with written notice of its intent to file 
the proposed rule change at least five business days before doing 
so.
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    The Commission believes that waiving the 30-day operative delay is 
consistent with the protection of investors and the public interest 
because it will allow the benefits of the Pilot Program to continue 
without interruption.\13\ Therefore, the Commission designates the 
proposal operative upon filing.\14\
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    \13\ For purposes only of waiving the 30-day operative delay, 
the Commission has considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
    \14\ As set forth in the Commission's original release providing 
notice of the Pilot Program, if the Exchange were to propose an 
extension, an expansion, or permanent approval of the Pilot Program, 
the Exchange would submit, along with any filing proposing such 
amendments to the program, a report that would provide an analysis 
of the Pilot Program covering the entire period during which the 
Pilot Program was in effect. The report would include, at a minimum, 
the information set forth in note 7, supra. The report must be 
submitted to the Commission at least sixty (60) days prior to the 
expiration date of the Pilot Program. See Pilot Program Release, 
supra note 5.
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    At any time within 60 days of the filing of the proposed rule 
change, the Commission may summarily abrogate the 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 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 No. SR-Phlx-2007-42 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-2007-42. 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, 100 F Street, NE., 
Washington, DC 20549, 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-Phlx-2007-42 and should be 
submitted on or before August 3, 2007.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\15\
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    \15\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7-13600 Filed 7-12-07; 8:45 am]

BILLING CODE 8010-01-P