Document ID: SEC-2007-0289-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: Philadelphia Stock Exchange, Inc.
Posted Date: 2007-02-27T05:00Z

[Federal Register: February 27, 2007 (Volume 72, Number 38)]
[Notices]               
[Page 8831-8832]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr27fe07-155]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-55321; File No. SR-Phlx-2006-85]

 
Self-Regulatory Organizations; Philadelphia Stock Exchange, Inc.; 
Order Granting Accelerated Approval of Proposed Rule Change Relating To 
Listing Standards for Basket Linked Notes

February 21, 2007.

I. Introduction

    On December 12, 2006, the Philadelphia Stock Exchange, Inc. 
(``Phlx'' or ``Exchange'') filed with the Securities and Exchange 
Commission (``Commission''), pursuant to Section 19(b)(1) of the 
Securities Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 
thereunder,\2\ a proposal to amend Phlx Rule 803--Criteria for 
Listing--Tier 1, to increase the number of underlying securities that 
may be linked to a Basket Linked Note (``BLN''). The proposed rule 
change was published for comment in the Federal Register on January 31, 
2007 for a 15-day comment period.\3\ The Commission received no 
comments regarding the proposal. This order approves the proposed rule 
change on an accelerated basis.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 55173 (January 25, 
2007), 72 FR 4552.
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II. Description of the Proposal

    A BLN is non-convertible debt of an issuer whose value is based, at 
least in part, on the performance of highly capitalized, actively 
traded common stock, or non-convertible preferred stock of other 
issuers.\4\ Rule 803(k) currently permits the Exchange to list and 
trade BLNs linked to more than one equity security but no more than 
20.\5\ Phlx proposes to amend Rule 803(k) to increase the number of 
underlying securities that may be linked to a BLN from no more than 20 
to no more than 30.
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    \4\ Phlx Rule 803(k)(3) currently requires, among other things, 
that each of the underlying securities linked to a BLN either: (i) 
Have a minimum market capitalization of $3 billion and during the 12 
months preceding listing are shown to have traded at least 2.5 
million shares; (ii) have a minimum market capitalization of $1.5 
billion and during the 12 months preceding listing are shown to have 
traded at least 10 million shares; or (iii) have a minimum market 
capitalization of $500 million and during the 12 months preceding 
listing are shown to have traded at least 15 million shares.
    \5\ See Securities Exchange Act Release No. 43690 (December 7, 
2000), 65 FR 78523 (December 15, 2000) (SR-Phlx-2000-90).

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[[Page 8832]]

III. Discussion

    After careful consideration, the Commission finds that the proposed 
rule change is consistent with the requirements of the Act and the 
rules and regulations thereunder applicable to a national securities 
exchange \6\ and, in particular, the requirements of Section 6 of the 
Act.\7\ Specifically, the Commission finds that the proposed rule 
change is consistent with Section 6(b)(5) of the Act,\8\ which 
requires, among other things, that the rules of a national securities 
exchange be 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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    \6\ In approving this proposed rule change, the Commission has 
considered the proposed rule's impact on efficiency, competition, 
and capital formation. 15 U.S.C. 78c(f).
    \7\ 15 U.S.C. 78f.
    \8\ 15 U.S.C. 78f(b)(5).
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    The Commission believes that expanding the basket of equity 
securities that may be linked to a BLN may enhance competition and 
benefit investors and the marketplace through additional product 
choices and alternatives. The Commission does not believe that there 
would be investor protection concerns with expanding the number of 
equity securities that may be linked to a BLN from more than one common 
stock to up to thirty common stocks. The Commission notes that the 
proposed rule change to Phlx's listing standards for BLNs, specifically 
Phlx Rule 803(k), is substantially similar to the listing standards of 
the American Stock Exchange LLC regarding equity linked term notes, 
which are substantially similar investment products.\9\
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    \9\ See Amex Company Guide Section 107B; and Securities Exchange 
Act Release No. 47055 (December 19, 2002), 67 FR 79669 (December 30, 
2002) (SR-Amex-2002-110).
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    The Commission finds good cause to grant accelerated approval of 
the proposed rule change because it will enable the Exchange to 
immediately consider listing and trading a BLN consistent with the 
rules of other national securities exchanges and does not raise any new 
regulatory issues. Accordingly, the Commission finds good cause for 
approving the proposed rule change prior to the thirtieth day after the 
notice is published for comment in the Federal Register pursuant to 
Section 19(b)(2) of the Act.\10\
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    \10\ 15 U.S.C. 78s(b)(2).
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IV. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\11\ that the proposed rule change (SR-Phlx-2006-85) is hereby 
approved on an accelerated basis.
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    \11\ 15 U.S.C. 78s(b)(2).
    \12\ CFR 200.30-3(a)(12).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\12\
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7-3292 Filed 2-26-07; 8:45 am]

BILLING CODE 8010-01-P