Document ID: SEC-2007-1378-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: Philadelphia Stock Exchange, Inc.
Posted Date: 2007-10-03T04:00Z

[Federal Register: October 3, 2007 (Volume 72, Number 191)]
[Notices]               
[Page 56427-56429]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr03oc07-117]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-56541; File No. SR-Phlx-2007-63]

 
Self-Regulatory Organizations; Philadelphia Stock Exchange, Inc.; 
Notice of Filing of Proposed Rule Change Relating to Short Interest 
Reporting

September 26, 2007.
    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 August 16, 2007, the Philadelphia Stock Exchange, Inc. 
(``Phlx'' or ``Exchange'') filed with the Securities and Exchange 
Commission (``SEC'' or ``Commission''), and on September 20, 2007 
amended, the proposed rule change as described in Items I, II, and III 
below, which Items have been substantially prepared by the Phlx. The 
Commission is publishing this notice to solicit comments on the 
proposed rule change, as amended, from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Phlx, pursuant to Section 19(b)(1) of the Act \3\ and Rule 19b-
4 thereunder,\4\ proposes to make a technical amendment to the text of 
Phlx Rule 786, Supplementary Material .01, changing the reference to 
Rule 200 of Regulation SHO to Rule 200(a) of Regulation SHO. In 
addition, Phlx proposes to add a new Supplementary Material section to 
Rule 786 to amend the exceptions to the short interest reporting 
requirement for certain transactions.
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    \3\ 15 U.S.C. 78s(b)(1).
    \4\ 17 CFR 240.19b-4.
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    The text of the amended Phlx Rule is set forth below. Underlining 
indicates additions; brackets indicate deletions.
* * * * *

Rule 786.

Periodic Reports

    Member organizations shall submit, as required by the Exchange, 
periodic reports with respect to short positions in securities.
    Supplementary Material: * * *
    .01 Short Positions--Member organizations for which the Exchange is 
the designated examining authority (``DEA'') are required to report 
short positions, including odd-lots, in each stock or warrant traded on 
the Exchange, and in each other stock or warrant not traded on the 
Exchange for which short positions are not otherwise reported to 
another United States securities exchange or association, using such 
automated format and methods as prescribed by the Exchange. Such 
reports must include customer and proprietary positions and must be 
made at such times and covering such time period as may be designated 
by the Exchange. Member organizations whose short positions have 
properly been reported to, and are carried by, a non-member clearing 
organization will be in compliance with this rule if adequate 
arrangements have been made providing for the clearing organization to 
properly report such positions to the Exchange or to another United 
States securities exchange or association.
     ``Short'' positions to be reported are those resulting 
from ``short'' sales as defined in Securities and Exchange Commission 
Rule 200(a) of Regulation SHO, but excluding sales that meet an 
exception in .02 below[marked ``sell short exempt'' pursuant to Rule 
200(g) of Regulation SHO]. Also, to be excluded are ``short'' positions 
carried for other members and member organizations reporting for 
themselves.
    Only one report should be made for each stock or warrant for which 
there is a short position, if more than one ``account'' has a short 
position in the same stock or warrant, the combined aggregate should be 
reported.
    Member organizations for which the Exchange is not the DEA must 
report short positions to its DEA if such DEA has a requirement for 
such reports. If the DEA does not have such a reporting requirement, 
then such member organization must comply with the provisions of this 
rule.

.02 Exceptions

    (a) Any sale by any person, for an account in which he has an 
interest, if such person owns the security sold and intends to deliver 
such security as soon as is possible without undue inconvenience or 
expense.
    (b) Any sale of a security covered by a short sale rule on a 
national securities exchange (except a sale to a stabilizing bid 
complying with Rule 104 of Regulation M) effected with the approval of 
such exchange which is necessary to equalize the price of such security 
thereon with the current price of such security on another national 
securities exchange which is the principal exchange market for such 
security.
    (c) Any sale of a security for a special arbitrage account by a 
person who then owns another security by virtue of which he is, or 
presently will be, entitled to acquire an equivalent number of 
securities of the same class as the securities sold; provided such 
sale, or the purchase which such sale offsets, is effected for the bona 
fide purpose of profitting from a current difference between the price 
of security sold and the security owned and that such right of 
acquisition was originally attached to or represented by another 
security or was issued to all the holders of any such class of 
securities of the issuer.
    (d) Any sale of a security registered on, or admitted to unlisted 
trading privileges on, a national securities exchange effected for a 
special international arbitrage account for the bona fide purpose of 
profitting from a current difference between the price of such security 
on a securities market not within or subject to the jurisdiction of the 
United States and on a securities market subject to the jurisdiction of 
the United States; provided the seller at the time of such sale knows 
or, by virtue of information currently received, has reasonable grounds 
to believe that an offer enabling him to cover such sale is then 
available to him such foreign securities market and intends to accept 
such offer immediately.

[[Page 56428]]

    (e) Any sale by an underwriter, or any member of a syndicate or 
group participating in the distribution of a security, in connection 
with an over-allotment of securities, or any lay-off sale by such a 
person in connection with a distribution of securities through rights 
or a standby underwriting commitment.
* * * * *

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 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. The 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 purpose of the proposed rule change is to conform Phlx Rule 786 
to other proposed rule changes that other self-regulatory organizations 
(``SROs'') have filed and will soon file that will implement uniform 
changes to the short interest reporting requirements across SROs. The 
purpose of this Amendment No. 1, which replaces the original proposed 
rule change in its entirety, is to make clarifying changes to the 
original proposed rule change.
    First, Phlx proposes to make a technical change to the text of Phlx 
Rule 786, Supplementary Material .01. Phlx Rule 786, Supplementary 
Material .01 provides that, subject to certain limited exceptions, 
short positions required to be reported under the rule are those 
resulting from short sales as the term is defined in Rule 200 of 
Regulation SHO. The term ``short sale'' is actually defined in Rule 
200(a) of Regulation SHO.\5\ Therefore, Phlx is proposing to amend the 
text of Phlx Rule 786, Supplementary Material .01 to reference Rule 
200(a) of Regulation SHO, not Rule 200 of Regulation SHO to eliminate 
any confusion.
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    \5\ 17 CFR 242.200(a).
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    Second, Phlx proposes to add Supplementary Material .02, and 
conforming language in Supplementary Material .01, which adopts 
exceptions to the short interest reporting requirement. Currently, any 
transaction that is marked ``sell short exempt'' is exempt from the 
reporting requirement. Beginning on July 6, 2007, the ``short exempt'' 
marking requirement was eliminated by the Commission.\6\ Therefore, 
beginning on July 6, 2007, all transactions marked short will be 
covered by Phlx's reporting requirement. However, other SROs are 
modifying their short interest reporting rules to exclude five specific 
transactions, which were previously contained in the now eliminated 
Rule 10a-1 under the Act.\7\ The proposed change should conform Phlx's 
reporting requirement to those of other SROs and increase uniformity 
for broker-dealers as they comply with various rules across SROs, which 
should reduce costs and increase efficiency for those broker-dealers.
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    \6\ See Securities Exchange Act Release No. 55970 (June 28, 
2007), 72 FR 36348 (July 3, 2007).
    \7\ See, e.g., Securities Exchange Act Release No. 56300 (August 
22, 2007) (NYSEArca-2007-63), 72 FR 49342 (August 28, 2007).
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2. Statutory Basis
    The Exchange believes that its proposal 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 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.
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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 either solicited or 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 (ii) as to 
which Phlx consents, the Commission shall: (a) By order approve such 
proposed rule change, or (b) institute proceedings to determine whether 
the proposed rule change should be disapproved.

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-2007-63 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-2007-63. 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 the filing also will be available for 
inspection and copying at the principal office of the Phlx. 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-2007-63 and should be 
submitted on or before October 24, 2007.

[[Page 56429]]

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\10\
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    \10\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7-19487 Filed 10-2-07; 8:45 am]

BILLING CODE 8011-01-P