Document ID: SEC-2011-1787-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NASDAQ OMX PHLX LLC
Posted Date: 2011-11-21T05:00Z

[Federal Register Volume 76, Number 224 (Monday, November 21, 2011)]
[Notices]
[Pages 72018-72019]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-29872]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-65745; File No. SR-Phlx-2011-149]

Self-Regulatory Organizations; NASDAQ OMX PHLX LLC; Notice of 
Filing of Proposed Rule Change Relating to the Exchange Rule 795, 
Member Officer or Director

November 14, 2011.
    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 November 3, 2011, NASDAQ OMX PHLX LLC (``Phlx'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``SEC'' or ``Commission'') the proposed rule change as described in 
Items I, II, and III below, which Items have been prepared by the 
Exchange. 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.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to eliminate Exchange Rule 795 entitled 
``Member Officer or Director.''
    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 Exchange 
Rule 795 entitled ``Member Officer or Director.'' The Exchange does not 
believes it is necessary for a member, who is an officer or director of 
a corporation engaged in a securities business or a member who owns or 
controls, directly or indirectly, a corporation engaged in a securities 
business, to obtain the written permission of the Exchange. The 
Exchange believes that this Rule is unnecessary and is not pertinent to 
the Exchange's business or regulatory obligations. In addition, the 
Exchange is able to ascertain other business relationships of an 
officer or director from disclosures made by members on a Uniform 
Application for Securities Industry Registration or Transfer (``Form 
U4'').
    Exchange Rule 795 was adopted prior to demutualization \3\ at a 
time in the Exchange's history when it operated as a member-owned 
organization. The Exchange believes that there may have been an 
interest at that time to be notified of and for the Exchange to approve 
a member's role in another entity. The Exchange has not utilized this 
Rule in a long time \4\ and does not believe that it should be in a 
position to control a member's role in another entity. In addition, the 
Exchange is unable to locate such a rule at other options exchanges.
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    \3\ The Exchange demutualized in 2004. See Securities Exchange 
Act 49098 (January 16, 2004), 69 FR 3974 (January 27, 2004) (SR-
Phlx-2003-73).
    \4\ The Exchange has not utilized this Rule in over ten years.
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    The Exchange does require prospective members to complete 
applications as prescribed in Exchange Rule 900.2 entitled ``Membership

[[Page 72019]]

Applications.'' The Exchange also requires disclosure regarding the 
business of its members.\5\ In addition, the Exchange also has rules 
regarding disclosure of other ownership and financial information.\6\ 
The Exchange therefore proposes to eliminate Exchange Rule 795.
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    \5\ See Exchange Rules 602 (status), 610 (Change in Business), 
704 (Assignment of Partnerships), 792 (Control of Voting Stock), 794 
(Assignment of Holdings), 902 (Admission to Partnership--Partnership 
Arrangements) and 906 (Notice of Change in Partnership), 907 
(Partners and Officers).
    \6\ See Exchange Rules 750 (Speculative Transactions for 
Employees of Certain Employers), 751 (Accounts of Employees of 
Member Organizations), 756 (Accounts of General Partners), 771 
(Excessive Trading of Members), 772 (Trading for Joint Account), 773 
(Participation in Joint Accounts),783 (Report of Financial 
Arrangements) and 784 (Report of Options).
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2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act \7\ in general, and furthers the objectives of Section 
6(b)(5) of the Act \8\ 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 requiring its members to comply with By-Laws and Rules which further 
a specific business or regulatory purpose for the Exchange.
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    \7\ 15 U.S.C. 78f(b).
    \8\ 15 U.S.C. 78f(b)(5).
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    Exchange Rule 795 requires members to provide information to the 
Exchange which is available on the Form U4 and also requires a member 
to obtain the Exchange's permission to even indirectly own a 
substantial interest in a securities business. The Exchange believes it 
is unnecessary to require a member who is an officer or director of a 
corporation engaged in a securities business or a member who owns or 
controls, directly or indirectly, a corporation engaged in a securities 
business to obtain the written permission of the Exchange or to report 
ownership information which is already available to the Exchange. In 
addition, the Exchange believes that the requirement to obtain 
permission is unnecessary for the Exchange to carry out its regulatory 
functions.
    As previously stated herein, the Exchange has not utilized this 
Rule in a long time and is unable to locate such a rule at other 
exchanges. Additionally, the Exchange is able to ascertain other 
business relationships of a member from disclosures made by members on 
their Form U4. Finally, the Exchange does not believe it is necessary 
to require a member who is an officer or director of a corporation 
engaged in a securities business or a member who owns or controls, 
directly or indirectly, a substantial interest in a corporation engaged 
in a securities business to obtain the written permission of the 
Exchange or to report ownership information in order to protect 
investors or the public interest.

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

    Within 45 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 the Exchange consents, the Commission shall:
    (a) By order approve or disapprove 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 email to rule-comments@sec.gov. Please include 
File Number SR-Phlx-2011-149 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-2011-149. This file 
number should be included on the subject line if email 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 Web site viewing and 
printing 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 available publicly. All 
submissions should refer to File Number SR-Phlx-2011-149 and should be 
submitted on or before December 12, 2011.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\9\
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    \9\ 17 CFR 200.30-3(a)(12).
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Elizabeth M. Murphy,
Secretary.
[FR Doc. 2011-29872 Filed 11-18-11; 8:45 am]
BILLING CODE 8011-01-P