Document ID: SEC-2006-1638-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: Philadelphia Stock Exchange, Inc.
Posted Date: 2006-12-15T05:00Z

[Federal Register: December 15, 2006 (Volume 71, Number 241)]
[Notices]               
[Page 75604-75606]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr15de06-124]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-54874; File No. SR-Phlx-2006-78]

 
Self-Regulatory Organizations; Philadelphia Stock Exchange, Inc.; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Eliminate Certain License Fees

December 5, 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 November 27, 2006, the Philadelphia Stock Exchange, Inc. 
(``Phlx'' or ``Exchange'') filed with the Securities and Exchange 
Commission (``Commission'') the proposed rule change as described in 
Items I, II, and III below, which Items have been prepared by the 
Exchange. The Exchange has designated this proposal as one establishing 
or changing a due, fee, or other charge imposed by a self-regulatory 
organization pursuant to Section 19(b)(3)(A) of the Act, \3\ and Rule 
19b-4(f)(2) thereunder, \4\ 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\ 15 U.S.C. 78s(b)(3)(A).
    \4\ 17 CFR 240.19b-4(f)(2).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Phlx proposes to modify its fee schedule to eliminate certain 
licensing fees and to not charge or rebate, when applicable, those 
license fees that were collected during the time period that the 
license fees were deemed to be no longer in effect. 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 Phlx included statements 
concerning the purpose of and basis for the proposed rule change and 
discussed any comments it received on the proposal. 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 the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    Currently, the Exchange imposes a license fee of $0.10 per contract 
side for equity option and index option ``firm'' transactions on 
certain licensed products after a cap of $60,000 per member 
organization is reached. \5\ The Exchange also assesses a license fee 
of $0.10 per contract side after a 14,000 cap is reached on Registered 
Options Traders (``ROT'') comparison charges and ROT and specialist 
transaction charges in connection with non-AUTOM delivered equity 
option contracts on those products that carry a license fee.\6\ 
Additionally, the Exchange imposes a license fee of $0.05 per contract 
side for dividend and short stock interest strategies in connection 
with certain products that carry license fees, if applicable.\7\ The 
list of product symbols that are assessed a license fee are listed on 
the Exchange's $60,000 ``Firm-Related'' Equity Option and Index Option 
Cap Fee Schedule.
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    \5\ The $60,000 cap applies to all ``firm-related'' equity 
option and index option comparison and transaction charges combined. 
``Firm-related'' charges include equity option firm/proprietary 
comparison charges, equity option firm/proprietary transaction 
charges, equity option firm/proprietary facilitation transaction 
charges, index option firm/proprietary comparison charges, index 
option firm/proprietary transaction charges, and index option firm/
proprietary facilitation transaction charges (collectively ``firm-
related'' charges). See e.g., Securities Exchange Act Release No. 
53287 (February 14, 2006), 71 FR 9186 (February 22, 2006) (SR-Phlx-
2006-10).
    \6\ See Securities Exchange Act Release No. 54659 (October 27, 
2006), 71 FR 64603 (November 2, 2006) (SR-Phlx-2006-67).
    \7\ See e.g., Securities Exchange Act Release No. 54424 
(September 11, 2006), 71 FR 54699 (September 18, 2006) (SR-Phlx-
2006-55).
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    The Exchange is proposing to eliminate the $0.10 per contract side 
and $0.05 per contract side license fees described above on the 
following products: iShares Lehman 1-3 Year Treasury Bond Fund, traded 
under the symbol SHY; iShares Lehman 7-10 Year Treasury Bond Fund, 
traded under the symbol IEF; iShares Lehman 20+ Treasury Bond Fund, 
traded under the symbol TLT; iShares Lehman Aggregate Bond Fund, traded 
under the symbol AGG; iShares Lehman TIPS Bond Fund, traded under the 
symbol TIP (collectively ``iShares Lehman products''); Standard & 
Poor's Depositary Receipts[supreg], Trust Series 1, traded under the 
symbol SPY; \8\ iShares S&P 100 Index, traded under the symbol OEF; 
iShares S&P Europe 350, traded under the symbol IEV; iShares S&P Global 
100 Index, traded under the symbol IOO; iShares S&P Global Energy 
Sector Index, traded under the symbol IXC; iShares S&P Global Financial 
Sector Index, traded under the symbol IXG; iShares S&P Global 
Healthcare Sector Index, traded under the symbol IXJ; iShares S&P 
Global Information Technology Sector Index, traded under the symbol 
IXN; iShares S&P Global Telecom Sector Index, traded under the symbol 
IXP; iShares S&P Latin America 40, traded under the symbol ILF ; 
iShares S&P MidCap 400, traded under the symbol IJH; iShares S&P 
SmallCap 600, traded under the symbol IJR; iShares S&P TOPIX 150, 
traded under the symbol ITF; iShares S&P 500, traded under the symbol 
IVV; S&P Industrial Select Sector SPDR, traded under the symbol XLI; 
S&P Technology Select Sector SPDR, traded under the symbol XLK; S&P 
Utilities Select Sector SPDR, traded under the symbol XLU; S&P Consumer 
Staples Select Sector SPDR, traded under the symbol XLP; S&P

[[Page 75605]]

Energy Select Sector SPDR, traded under the symbol XLE; S&P Financial 
Select Sector SPDR, traded under the symbol XLF; S&P Health Care Select 
Sector SPDR, traded under the symbol XLV; S&P Materials Select Sector 
SPDR, traded under the symbol XLB; S&P Consumer Discretionary Select 
Sector SPDR, traded under the symbol XLY; MidCap SPDR, traded under the 
symbol MDY (collectively ``S&P products''); State Street Global 
Advisors', a division of State Street Bank and Trust Company 
(``SSGA''), streetTracks based on the Dow Jones & Co., Inc. (``Dow 
Jones'') Global Titans 50 IndexSM, traded under the symbol DGT; SSGA's 
streetTracks based on the Dow Jones Wilshire 5000 IndexSM, 
traded under the symbol TMW; BGI's iShares Dow Jones Select Dividend 
IndexSM, traded under the symbol DVY; iShares Dow Jones U.S. 
Total Market IndexSM, traded under the symbol IYY; iShares 
Dow Jones U.S. Basic Materials IndexSM, traded under the 
symbol IWY; iShares Dow Jones U.S. Consumer Services Sector 
IndexSM, traded under the symbol IYC; iShares Dow Jones U.S. 
Financial Sector IndexSM, traded under the symbol IYF; 
iShares Dow Jones U.S. Financial Services Sector IndexSM, 
traded under the symbol IYG; iShares Dow Jones U.S. Healthcare Sector 
IndexSM, traded under the symbol IYH; iShares Dow Jones U.S. 
Industrial Sector IndexSM, traded under the symbol IYJ; 
iShares Dow Jones U.S. Consumer Goods Sector IndexSM, traded 
under the symbol IYK; iShares Dow Jones U.S. Real Estate Sector 
IndexSM, traded under the symbol IYR; iShares Dow Jones U.S. 
Technology Sector IndexSM, traded under the symbol IYW; 
iShares Dow Jones U.S. Telecommunications Sector IndexSM, 
traded under the symbol IYZ; iShares Dow Jones U.S. Utilities Sector 
IndexSM, traded under the symbol IDU; and First Trust's ETF 
based on the Dow Jones Select Microcap IndexSM, traded under 
the symbol FDM, (collectively ``Dow Jones products''); \9\ NYSE 
Composite Index, traded under the symbol NYC; and NYSE U.S. 100 Index, 
traded under the symbol NY, (collectively ``NYSE products''); and 
Nasdaq-100 Index Tracking Stock, traded under the symbol QQQQ 
(``QQQQ'')SM.\10\
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    \8\ Standard & Poor's[supreg],'' ``S&P[supreg],'' ``S&P 
500[supreg],'' ``Standard & Poor's 500[supreg]'', ``Standard & 
Poor's Depositary Receipts[supreg],'' and ``500'' are trademarks of 
The McGraw-Hill Companies, Inc., and have been licensed for use by 
the Philadelphia Stock Exchange, Inc., in connection with the 
listing and trading of SPDRs, on the Phlx. These products are not 
sponsored, sold or endorsed by S&P, a division of The McGraw-Hill 
Companies, Inc., and S&P makes no representation regarding the 
advisability of investing SPDRs.
    \9\ ``Dow Jones'' and ``SSGA's streetTracks based on the Dow 
Jones Global Titans 50 IndexSM'', ``SSGA's streetTracks 
based on the Dow Jones Wilshire 5000 IndexSM'', ``BGI's 
iShares Dow Jones Select Dividend IndexSM'', ``iShares 
Dow Jones U.S. Total Market IndexSM'', ``iShares Dow 
Jones U.S. Basic Materials IndexSM'', ``iShares Dow Jones 
U.S. Consumer Services Sector IndexSM'', ``iShares Dow 
Jones U.S. Financial Sector IndexSM'', ``iShares Dow 
Jones U.S. Financial Services Sector IndexSM'', ``iShares 
Dow Jones U.S. Healthcare Sector IndexSM'', ``iShares Dow 
Jones U.S. Industrial Sector IndexSM'', ``iShares Dow 
Jones U.S. Consumer Goods Sector IndexSM'', ``iShares Dow 
Jones U.S. Real Estate Sector IndexSM'', ``iShares Dow 
Jones U.S. Technology Sector IndexSM'', ``iShares Dow 
Jones U.S. Telecommunications Sector IndexSM'', ``iShares 
Dow Jones U.S. Utilities Sector IndexSM'', and ``First 
Trust's ETF based on the Dow Jones Select Microcap 
IndexSM'', are service marks of Dow Jones & Company, Inc. 
and have been licensed for use for certain purposes by the 
Philadelphia Stock Exchange, Inc. The Dow Jones products are not 
sponsored, endorsed, sold or promoted by Dow Jones, and Dow Jones 
makes no representation regarding the advisability of investing in 
such product(s).
    \10\ The Nasdaq-100[supreg], Nasdaq-100 Index[supreg], 
Nasdaq[supreg], The Nasdaq Stock Market[supreg], Nasdaq-100 
SharesSM, Nasdaq-100 TrustSM, Nasdaq-100 Index 
Tracking StockSM, and QQQSM are trademarks or 
service marks of The Nasdaq Stock Market, Inc. (Nasdaq) and have 
been licensed for use for certain purposes by the Phlx pursuant to a 
License Agreement with Nasdaq. The Nasdaq-100 Index[supreg] (the 
Index) is determined, composed, and calculated by Nasdaq without 
regard to the Licensee, the Nasdaq-100 TrustSM, or the 
beneficial owners of Nasdaq-100 SharesSM. Nasdaq has 
complete control and sole discretion in determining, comprising, or 
calculating the Index or in modifying in any way its method for 
determining, comprising, or calculating the Index in the future.
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    The proposed rule change would remove references to the product 
symbols listed above from the Exchange's $60,000 ``Firm Related'' 
Equity Option and Index Option Cap because the Exchange no longer pays 
a license fee in connection with the trading of these products. 
Accordingly, there is no need to assess a license fee. Therefore, for 
trades settling on or after November 28, 2006, the Exchange will 
eliminate the $0.10 and $0.05 license fees for the above-referenced 
products. In addition, the Exchange will either not charge any license 
fees, or rebate any license fees that were collected, for iShares 
Lehman products, S&P products, Dow Jones products and NYSE products for 
trades settling on or after June 16, 2006 through November 27, 2006. 
Additionally, the Exchange will either not charge any license fees, or 
rebate any license fees that were collected, on QQQQ for trades 
settling on or after October 13, 2006 through November 27, 2006.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act \11\ in general, and furthers the 
objectives of Section 6(b)(4) of the Act \12\ in particular, in that it 
is an equitable allocation of reasonable fees and other charges among 
Exchange members.
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    \11\ 15 U.S.C. 78f(b).
    \12\ 15 U.S.C. 78f(b)(4).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Phlx believes that the proposed rule change would impose no 
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 did not solicit or receive any written comments with 
respect to the proposal.

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

    The foregoing proposed rule change has been designated as a fee 
change pursuant to Section 19(b)(3)(A)(ii) of the Act \13\ and Rule 
19b-4(f)(2) \14\ thereunder. Accordingly, the proposal is effective 
upon filing with the Commission. 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.
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    \13\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \14\ 17 CFR 240.19b-4(f)(2).
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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-2006-78 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-Phlx-2006-78. 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

[[Page 75606]]

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-2006-78 and should be 
submitted on or before January 5, 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. E6-21338 Filed 12-14-06; 8:45 am]

BILLING CODE 8011-01-P