Document ID: SEC-2009-0183-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NASDAQ OMX PHLX, Inc.
Posted Date: 2009-02-10T05:00Z

[Federal Register: February 10, 2009 (Volume 74, Number 26)]
[Notices]
[Page 6681-6682]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr10fe09-127]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-59346; File No. SR-Phlx-2009-07]

Self-Regulatory Organizations; Notice of Filing and Immediate
Effectiveness of Proposed Rule Change by NASDAQ OMX PHLX, Inc. To
Eliminate the $3 Price Requirement for Continued Approval for an
Underlying Security and Listing Additional Series of Options

February 3, 2009.
    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 2, 2009, NASDAQ OMX PHLX, Inc. (``Phlx'' or the
``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 prepared by the Exchange. Phlx has
designated the proposed rule change as constituting a non-controversial
rule change under Rule 19b-4(f)(6) under the Act,\3\ which renders 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 amend Phlx Rule 1010, Withdrawal of
Approval of Underlying Securities or Options, to eliminate the $3
market price per share requirement for continued approval for an
underlying security. The Exchange also proposes to amend Rule 1010 by
eliminating the prohibition against listing additional series of
options on an underlying security at any time when the price per share
of such underlying security is less than $3.
    The text of the proposed rule change is available on the Exchange's
Web site at http://www.nasdaqtrader.com/micro.aspx?id=PHLXRulefilings,
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, 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 eliminate the $3
market price per share requirement from the Exchange's requirements for
continued approval for an underlying security from Phlx Rule 1010. This
proposed rule change also amends Rule 1010 by eliminating the
prohibition against listing additional series or options on an
underlying security at any time when the price per share of such
underlying security is less than $3.
    Phlx's rules require that the market price for a security be at
least $3 on the previous trading day for the continued listing of
options on that underlying security. If the price of an underlying
security falls below $3, the Exchange can continue to trade then-listed
series on that underlying security, but is unable to list new series of
options. The Exchange believes that the current $3 market price per
share requirement could have a negative effect on investors. For
example, in the current volatile market environment in which the market
price for a large number of securities has fallen below $3, the

[[Page 6682]]

Exchange is currently unable to list new series on underlying
securities trading below $3. If there is market demand for series below
$3, the Exchange would be unable to accommodate such requests and
investors would be unable to hedge their positions with options series
with strikes below $3.
    The Exchange believes that the $3 market price per share
requirement is no longer necessary or appropriate, and therefore
proposes that underlying securities meeting the remaining continued
listing criteria set forth in Phlx Rule 1010 will be eligible for
continued listing and the listing of additional options series.
2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section
6(b) of the Act \4\ in general, and furthers the objectives of Section
6(b)(5) of the Act \5\ in particular, in that it is designed to promote
just and equitable principles of trade, 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.
In particular, the proposed rule change will permit the Exchange to
make options on underlying securities available even if the price of
the underlying security is less than $3 thus providing investors
additional opportunities to hedge their positions.
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    \4\ 15 U.S.C. 78f(b).
    \5\ 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 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 proposed rule change does not: (i)
Significantly affect the protection of investors or the public
interest; (ii) impose any significant burden on competition; and (iii)
become operative for 30 days from the date on which it was filed, or
such shorter time as the Commission may designate, it has become
effective pursuant to Section 19(b)(3)(A) of the Act \6\ and Rule 19b-
4(f)(6) thereunder.\7\
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    \6\ 15 U.S.C. 78s(b)(3)(A).
    \7\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)
requires a self-regulatory organization to give the Commission
written notice of its intent to file 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 this requirement.
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    A proposed rule change filed pursuant to Rule 19b-4(f)(6) under the
Act \8\ normally does not become operative for 30 days after the date
of its filing. However, Rule 19b-4(f)(6) \9\ permits the Commission to
designate a shorter time if such action is consistent with the
protection of investors and the public interest. Phlx requests that the
Commission waive the 30-day operative delay. The Commission notes that
this proposed rule change is substantially identical to a proposed rule
change that was approved by the Commission after an opportunity for
public comment,\10\ and does not raise any new substantive issues. The
Exchange believes that waiving the 30-day operative delay would enable
it to not be at a competitive disadvantage in respect of other
exchanges. For these reasons, the Commission believes that waiving the
30-day operative delay \11\ is consistent with the protection of
investors and the public interest and designates the proposal operative
upon filing.
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    \8\ 17 CFR 240.19b-4(f)(6).
    \9\ 17 CFR 240.19b-4(f)(6).
    \10\ Phlx's proposed rule change is substantially identical to a
proposed rule change by the Chicago Board Options Exchange
(``CBOE'') recently approved by the Commission. See Securities
Exchange Act Release No. 59336 (February 2, 2009) (SR-CBOE-2008-
127).
    \11\ 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).
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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 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-2009-07 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-Phlx-2009-07. 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 publicly available. All
submissions should refer to File Number SR-Phlx-2009-07 and should be
submitted on or before March 3, 2009.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\12\
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    \12\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9-2699 Filed 2-9-09; 8:45 am]

BILLING CODE 8011-01-P