Document ID: SEC-2006-0739-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: Philadelphia Stock Exchange, Inc.
Posted Date: 2006-06-08T04:00Z

[Federal Register: June 8, 2006 (Volume 71, Number 110)]
[Notices]               
[Page 33330-33331]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr08jn06-96]                         

[[Page 33330]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-53933; File No. SR-Phlx-2006-29]

 
Self-Regulatory Organizations; Philadelphia Stock Exchange, Inc.; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change 
Relating to the PHLX/KBW Bank Index

 June 1, 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 May 4, 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 change the method of calculation and 
dissemination of the PHLX/KBW Bank Index (``Index''). In particular, 
the Exchange proposes to calculate and disseminate current index values 
itself, in the event that the official calculation agent, Bridge Data, 
is temporarily unable to calculate and disseminate the values due to 
technical difficulties.\4\
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    \4\ Telephone conference between Carla Behnfeldt, Director, 
Legal Department, New Product Development Group, Phlx, and Florence 
E. Harmon, Senior Special Counsel, Division of Market Regulation, 
Commission, on June 1, 2006.
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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 permit the Exchange 
itself, in certain circumstances, to calculate and disseminate current 
index values of the Index, an index developed by Keefe, Bruyette & 
Woods, Inc. (``KBW''), a registered broker-dealer that specializes in 
U.S. bank stocks. Under the proposal, the Exchange would calculate and 
disseminate the index values itself in the event that Bridge Data, the 
official calculation agent, is temporarily unable to calculate and 
disseminate the values due to technical difficulties. No other changes 
are being made to the Index. The Exchange seeks continued approval to 
list and trade options on the Index in view of this change.
    The Index was originally listed in 1992 as a narrow-based 
(industry) index. The Commission's approval order (``Approval Order'') 
\5\ contains the following language regarding the calculation of the 
underlying current index value:

    \5\ See Securities Exchange Act Release No. 31145 (September 3, 
1992), 57 FR 41531 (September 10, 1992) (SR-Phlx-91-27).
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    Even though the Index will be maintained by KBW, the Phlx 
represents that the Exchange will be solely responsible for the 
calculation of the Index and that the Index value will be calculated 
and disseminated in such a way that neither KBW nor any other party 
will be in receipt of the Index value prior to the public 
dissemination of the value. In this connection, the Phlx has made 
arrangements for the Index to be calculated by an independent third 
party, Bridge Data, a vendor of financial information. Bridge Data 
will calculate and disseminate the Index value to the Options Price 
Reporting Authority (``OPRA'') four times per minute during the 
trading day, using the last sale prices of the component stocks in 
the Index. * * * OPRA, in turn, will disseminate the Index value to 
other financial vendors such as Reuters, Telerate, and Quotron.\6\

    \6\ Id.
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    The Exchange is now capable of calculating and disseminating the 
Index value at least every 15 seconds per trading day,\7\ using the 
last sale prices of the component stocks in the Index, without 
utilizing the services of Bridge Data. The Exchange seeks approval to 
continue listing and trading options on the Index from time to time 
without the participation or intervention of Bridge Data in the process 
of calculating or disseminating the Index value.\8\ In connection with 
this filing, Phlx has reconfirmed that KBW has appropriate information 
barriers around the personnel who have access to information concerning 
changes and adjustments to the Index and confirmed that the Exchange, 
as calculation agent for the Index, is independent from KBW, a broker-
dealer.\9\
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    \7\ Telephone conference between Carla Behnfeldt, Director, 
Legal Department, New Product Development Group, Phlx, and David L. 
Orlic, Special Counsel, Division of Market Regulation, Commission, 
on May 26, 2006.
    \8\ The Exchange notes that Index values are disseminated not to 
OPRA, but rather to the Consolidated Tape Association for further 
dissemination to major market data vendors.
    \9\ See supra note 6.
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2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act \10\ in general, and furthers the 
objectives of Sections 6(b)(5) of the Act \11\ 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, by permitting the calculation and 
dissemination of current index values to be accomplished by Exchange 
personnel, in addition to by Bridge Data, which should assure 
continuity in the availability of the Index's current value in the 
event that Bridge Data is unavailable to calculate and disseminate the 
values as described in the Approval Order.
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    \10\ 15 U.S.C. 78f(b).
    \11\ 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

    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

[[Page 33331]]

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 \12\ and 
subparagraph (f)(6) of Rule 19b-4 thereunder.\13\ The Exchange has 
requested that the Commission waive the five-day pre-filing notice and 
the 30-day operative delay for ``non-controversial'' proposals and make 
the proposed rule change effective and operative upon filing. The 
Commission believes that waiver of the five-day pre-filing notice and 
the 30-day operative delay is consistent with the protection of 
investors and the public interest. By waiving the five-day pre-filing 
notice and the 30-day operative delay, the continued availability of 
current Index values may be assured, notwithstanding any unavailability 
of Bridge Data to calculate and disseminate those values. For this 
reason, the Commission designates the proposal to be effective and 
operative upon filing with the Commission.\14\
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    \12\ 15 U.S.C. 78s(b)(3)(A).
    \13\ 17 CFR 240.19b-4(f)(6).
    \14\ 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-2006-29 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-2006-29. 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-2006-29 and should be submitted on or before June 
29, 2006.

    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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J. Lynn Taylor,
Assistant Secretary.
 [FR Doc. E6-8883 Filed 6-7-06; 8:45 am]

BILLING CODE 8010-01-P