Document ID: SEC-2006-0998-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: Philadelphia Stock Exchange, Inc.
Posted Date: 2006-08-03T04:00Z

[Federal Register: August 3, 2006 (Volume 71, Number 149)]
[Notices]               
[Page 44067-44070]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr03au06-88]                         

-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-54237; File No. SR-Phlx-2006-39]

 
Self-Regulatory Organizations; Philadelphia Stock Exchange, Inc.; 
Notice of Filing and Immediate Effectiveness of a Proposed Rule Change 
Relating to Conforming Changes to Its By-Laws

July 28, 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 July 21, 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 Phlx. The Phlx has 
designated this proposal as one concerned solely with the 
administration of the Exchange under Section 19(b)(3)(A)(iii) of the 
Act \3\ and Rule 19b-4(f)(3) 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.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \4\ 17 CFR 240.19b-4(f)(3).
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend various provisions of its By-Laws 
(``By-

[[Page 44068]]

Laws'') to conform the usage of terms contained in, and to make 
technical corrections to, the By-Laws. The text of the proposed rule 
change is set forth below, with italics indicating new text and 
[brackets] indicating deletions.
* * * * *
ARTICLE IV Board of Governors
Number and Composition
    SEC. 4-1. The management of the business and affairs of the 
Exchange shall be vested in the Board of Governors. The Board of 
Governors shall be composed of the Chairman of the Board of Governors, 
who shall be the individual then holding the office of the Chief 
Executive Officer of the Exchange and twenty-two (22) other Governors 
consisting of: two (2) Governors who are Member Governors who meet the 
qualifications set forth in By-Law Article [1] I, Section 1-1 with 
respect to Member Governors; one (1) Governor who is a PBOT Governor 
who meets the qualifications set forth in By-Law Article [1] I, Section 
1-1 with respect to the PBOT Governor; six (6) Governors who are 
Stockholder Governors who meet the qualifications set forth in By-Law 
Article [1] I, Section 1-1 with respect to Stockholder Governors; 
twelve (12) Governors who are Independent Governors who meet the 
qualifications set forth in By-Law Article [1] I, Section 1-1 with 
respect to Independent Governors and one (1) Governor who is the Vice-
Chairman of the Board of Governors who meets the qualifications set 
forth in By-Law Article V, Section 5-2 with respect to the Vice-
Chairman.
* * * * *
Duties and Powers
    SEC. 4-4. (a)--The Board of Governors shall be vested with all the 
powers necessary for the management of the business and affairs of the 
Exchange, the regulation of the business conduct of Members, 
participants, Member Organizations, and participant organizations, and 
persons associated with such organizations and for the promotion of the 
welfare, objects and purposes of the Exchange, and in addition to the 
power and authority conferred by these By-Laws, may exercise all powers 
of the Exchange and do all such lawful acts and things as are not by 
statute, these By-Laws or the Certificate of Incorporation directed or 
required to be exercised or done by the Stockholders.
[Amendment.
August 22, 1997 (97-31).]
    [(a)] In the exercise of its powers it may adopt such rules, issue 
such orders and directions and make such decisions as it may deem 
appropriate.
    SEC. 4.4 (b) No Change
* * * * *
Vacancies
    SEC. 4-7. Vacancies in the Board of Governors, including vacancies 
resulting from [from] the resignation of any Governors or an increase 
in the number of Governors, shall be filled by the Nominating, [and] 
Elections and Governance Committee, subject to approval by a majority 
of the Governors then in office, although less than a quorum, or by a 
sole remaining Governor, and each person so elected shall be a Governor 
until his successor is elected and qualified or until his earlier 
resignation or removal.
Disqualification of Governors
    SEC. 4-8. (a)-(b)--No change.
    (c) The last sentence of subsection (a) of this Section shall not 
apply when the interest of the relevant person is derived solely from 
being part of the general membership or of a class of [m]Members, 
unless their impartiality might reasonably be questioned.
* * * * *
ARTICLE X Standing Committees
Standing Committees
    SEC. 10-1 (a) The Standing Committees of the Exchange shall consist 
of: an Executive Committee, an Admissions Committee, an Allocation, 
Evaluation and Securities Committee, an Audit Committee, an Automation 
Committee, a Business Conduct Committee, a Compensation Committee, a 
Finance Committee, a Floor Procedure Committee, a Foreign Currency 
Options Committee, a Marketing Committee, a Nominating, [and] Elections 
and Governance Committee, a Quality of Markets Committee, and an 
Options Committee. Each of such Committees shall be composed of not 
more than nine (9) members, including ex-officio members, except for 
the Floor Procedure Committee, the Options Committee, and the Foreign 
Currency Options Committee, which shall each consist of not more than 
twelve (12) members, including ex-officio members. The Chairman of each 
Standing Committee shall be a member of the Board of Governors and at 
least one other person on each Committee shall be a Governor.
* * * * *
Vacancies in Standing Committees--Ad Interim Appointments
    SEC. 10-4. The Executive Committee shall appoint, subject to the 
approval of the Board of Governors, a person to fill any vacancy other 
than Chairman occurring in any Standing Committee except the 
Nominating, [and] Elections and Governance Committee and the Executive 
Committee. Should special exigencies require, the Chairman of the Board 
of Governors may fill any such vacancy ad interim until the next 
regular meeting of the Board of Governors.
* * * * *
Nominating, Elections and Governance Committee
    SEC. 10-19. (a)-(h)--No change.
    (i) The names of the persons nominated by the Nominating, [and] 
Elections and Governance Committee shall be identified on the ballot by 
an appropriate legend or symbol. In the event that there are more 
nominations of persons [in the categories of On-Floor and Off-Floor 
Governor] than there are vacancies on the Board of Governors which may 
be filled by such persons, the number of such persons who may be 
elected to serve on the Board of Governors in each category shall also 
be indicated on the ballot.
* * * * *
ARTICLE XI Appeals
When Allowed
    SEC. 11-1. (a)--No change.
    (b) Notwithstanding the foregoing, any appeal from a decision of 
the Nominating, [and] Elections and Governance Committee regarding the 
eligibility of any candidate for election to the Board of Governors 
shall be heard by a special committee of the Board of Governors 
composed of not less than a majority of all Governors who are not then 
candidates for office on the Board of Governors. An affected candidate 
or interested party may appeal by filing a written notice thereof with 
the Secretary of the Exchange within seven (7) days after a decision. 
Said notice shall also state the reasons for his appeal and the relief 
requested. He may appear before the special committee and present 
arguments concerning the decision. An appropriate record shall be kept. 
The decision of the special committee shall be final.
    (c)--No change.
* * * * *

[[Page 44069]]

ARTICLE XV Transfer of Foreign Currency Options Participations
Transfer of Foreign Currency Options Participations
Transfer of Equitable Title
    A transfer of equitable title only to a foreign currency options 
participation shall be made upon submission of the name of the 
transferor and the transferee thereof to the Admissions Committee. A 
transfer may not be effected pursuant to a lease agreement. Notice of 
this transfer shall be posted upon the website of the Exchange and 
shall also appear in the Weekly Bulletin mailed to the [m]Members and/
or foreign currency options participants at least seven (7) days in 
advance of the transfer's effective date. Notice of the proposed 
transfer shall specify the date on which the proposed transfer will 
become effective.
* * * * *
Contracts of Transferor
    SEC. 15-2.
* * * * *
Effect of Involuntary Transfers
    Notice of a transfer to be made pursuant to a sale of a foreign 
currency options participation by the Admissions Committee shall be 
sent to the [m]Members and the foreign currency options participants as 
in the case of a voluntary transfer, and shall have the same effect in 
respect to open contracts and unmatured debts and obligations of the 
foreign currency options participant or former foreign currency options 
participant as in the case of a voluntary transfer.
Disposition of Proceeds of Sale of Foreign Currency Options 
Participation
    SEC. 15-3.
* * * * *
Determination of Claims
    An Advisory Committee of (3) Governors, of whom at least two (2) 
shall be Independent Governors, shall be appointed by the Chairman of 
the Board of Governors to examine the validity of claims asserted 
against the [m]Members or the foreign currency options participants and 
give an advisory opinion to the Board of Governors thereon. The 
examination of the validity of the claims shall be made upon written 
submission of claimants and respondents with provision for these 
parties to request oral argument before the Advisory Committee. The 
Board of Governors, based upon the written record before the Advisory 
Committee, shall determine the payment of such sums that are or may 
become due to the claimants pursuant to these By-Laws and the rules of 
the Exchange. The decision of the Board of Governors shall be in 
writing and sent to the parties to the proceeding respecting the 
determination of claims.
* * * * *

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 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange represents that the purpose of the proposed rule 
change is to make minor, technical adjustments to certain By-Laws, in 
order to conform them to the current By-Laws as amended recently by SR-
Phlx-2005-93.\5\ The Exchange represents that the proposed amendments 
are administrative in nature and are only intended to add consistency 
to the rules in terms of form.
---------------------------------------------------------------------------

    \5\ See Securities Exchange Act Release No. 53734 (April 27, 
2006), 71 FR 26589 (May 5, 2006).
---------------------------------------------------------------------------

    The term ``member'' is being capitalized in certain places to 
clarify the intended meaning of the term. The Exchange represents that 
the purpose of this amendment is not to change the intent of its 
meaning within the By-Laws, but rather to clarify the intended meaning 
by capitalizing the term in relevant places. The capitalization should 
differentiate between intended references to the term ``Member'' as 
defined in Phlx Rule 2 \6\ from the term ``member'' as used in other 
contexts.\7\ The Exchange represents that this amendment does not 
intend to substantively amend the By-Laws, but only to correct 
inadvertent omissions in the previously referenced filing.
---------------------------------------------------------------------------

    \6\ Phlx Rule 2 states, ``The term ``Member'' means a permit 
holder which has not been terminated in accordance with the by-laws 
and these rules of the Exchange.''
    \7\ For example, the By-Laws use the term ``member'' to refer to 
members of a committee. The Exchange represents that the proposed 
rule change would not amend references to the term ``member'' in the 
Exchange's Certificate of Incorporation.
---------------------------------------------------------------------------

    The term ``Governance'' was previously added to the title of the 
Nominating and Elections Committee in the previously referenced 
filing.\8\ The failure to include the term ``Governance'', when 
referencing this Committee in certain places, was an inadvertent 
omission in the previously referenced filing. The proposed amendments 
will provide consistency throughout the By-Laws when referring to this 
Committee.
---------------------------------------------------------------------------

    \8\ See Securities Exchange Act Release No. 53734, supra note 5.
---------------------------------------------------------------------------

    The Exchange proposes to remove the references to ``Off-Floor 
Governor'' and ``On-Floor Governor'' as these terms no longer have a 
defined meaning in the By-Laws. The terms ``Off-Floor Governor'' and 
``On-Floor Governor'' were removed from the By-Laws by a previous rule 
filing.\9\ The Exchange represents that the remaining references to 
these terms in the specified By-Laws was an inadvertent oversight. The 
removal of these terms should provide clarity to the existing language 
in these By-Laws.
---------------------------------------------------------------------------

    \9\ See id.
---------------------------------------------------------------------------

2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act \10\ in general, and furthers the objectives of Section 
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 maintaining consistency in the terms referenced throughout 
the By-Laws and the intended usage of defined terms.
---------------------------------------------------------------------------

    \10\ 15 U.S.C. 78f(b).
    \11\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

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.

[[Page 44070]]

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

    The foregoing proposed rule change has become effective pursuant to 
Section 19(b)(3)(A)(iii) of the Act,\12\ and paragraph (f)(3) of Rule 
19b-4 thereunder \13\ because the Phlx has designated it as being 
concerned solely with the administration of the Exchange. 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.\14\
---------------------------------------------------------------------------

    \12\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \13\ 17 CFR 240.19b-4(f)(3).
    \14\ See 15 U.S.C. 78s(b)(3)(C).
---------------------------------------------------------------------------

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-2006-39 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-2006-39. 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 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-2006-39 
and should be submitted on or before August 24, 2006.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\15\
---------------------------------------------------------------------------

    \15\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Jill M. Peterson,
Assistant Secretary.
[FR Doc. E6-12520 Filed 8-2-06; 8:45 am]

BILLING CODE 8010-01-P