Document ID: SEC-2009-0447-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NASDAQ OMX PHLX, Inc.
Posted Date: 2009-04-02T04:00Z

[Federal Register: April 2, 2009 (Volume 74, Number 62)]
[Notices]               
[Page 15022-15023]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr02ap09-95]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-59631; File No. SR-Phlx-2009-25]

 
Self-Regulatory Organizations; NASDAQ OMX PHLX, Inc.; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change Relating to 
an Extension of the Penny Pilot Program

March 26, 2009.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given 
that on March 25, 2009, NASDAQ OMX PHLX, Inc. (``Phlx'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``SEC'' or ``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 proposal as a ``non-controversial'' proposed 
rule change pursuant to Section 19(b)(3)(A)(iii) of the Act \3\ and 
Rule 19b-4(f)(6) thereunder.\4\ 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)(iii).
    \4\ 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 extend a pilot (the ``pilot'') that 
permits certain options series to be quoted and traded in increments of 
$0.01. The Exchange proposes to extend the pilot through July 3, 2009. 
The text of the proposed rule change is available on the Exchange's Web 
site at http://nasdaqomxphlx.cchwallstreet.com/NASDAQOMXPHLX/Filings/, 
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 continue to permit 
specified options series to be quoted and traded in increments of $0.01 
by extending the pilot through July 3, 2009.
    The pilot began on January 26, 2007.\5\ All series in options 
included in the pilot (``pilot options'') trading at a price of less 
than $3.00 are currently quoted and traded in minimum increments of 
$0.01, and pilot options with a price of $3.00 or higher are currently 
quoted and traded in minimum increments of $0.05, except that options 
overlying the PowerShares QQQ Trust (``QQQQ'') are quoted and traded in 
minimum increments of $0.01 for all series regardless of the price. A 
list of all pilot options was communicated to membership via Exchange 
circular.\6\
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    \5\ See Securities Exchange Act Release No. 55153 (January 23, 
2007), 72 FR 4553 (January 31, 2007) (SR-Phlx-2006-74). In that 
filing, the Exchange also made conforming amendments to various 
Exchange rules in order to be consistent with the pilot. These 
conforming changes were also approved on a pilot basis. Therefore, 
the Exchange is proposing to extend the effective date for these 
rules through July 3, 2009.
    \6\ Any additions to or deletions from the list will be 
published in an Options Trader Alert, which will be available on the 
Exchange's Web site.
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Report to the Commission

    Throughout the pilot, the Exchange has prepared and submitted 
periodic analytical reports (``reports'') to the Commission that 
address the impact of

[[Page 15023]]

the pilot on the quality of the Exchange's markets and option quote 
traffic and capacity. The Exchange will submit another such report not 
later than the last business day of May, 2009, covering the period from 
February 1, 2009 through April 30, 2009, and will submit further 
reports as requested by the Commission as the pilot continues. The 
Exchange will amend its rules accordingly.

Technical Changes to Rule 1034

    In addition to the above, the Exchange proposes two technical 
amendments to Rule 1034. First, Rule 1034(a)(i)(B) would be amended to 
reflect that the former Nasdaq-100 Index Tracking Stock is now known as 
the PowerShares QQQ Trust (``QQQQ'').[supreg] Second, the proposed rule 
would be amended to reflect the manner in which it notifies its members 
of changes in the Exchange's rules or systems that might affect such 
members' business. Specifically, Rule 1034(a)(i)(B) would be amended to 
reflect that such notification is no longer made via an Exchange 
Circular and is instead made via an ``Options Trader Alert'' which is 
posted on the Exchange's Web site.
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 ensuring the orderly continuity of the pilot.
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    \7\ 15 U.S.C. 78f(b).
    \8\ 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

    No written comments were either solicited or received.

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

    Because the foregoing rule does not (i) significantly affect the 
protection of investors or the public interest; (ii) impose any 
significant burden on competition; and (iii) become operative for 30 
days from the date on which it was filed, 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 \9\ and Rule 19b-4(f)(6) 
thereunder.\10\
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    \9\ 15 U.S.C. 78s(b)(3)(A).
    \10\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) 
requires the Exchange to give the Commission written notice of the 
Exchange's intent to file the proposed rule change along with a 
brief description and text of the proposed rule change, at least 
five business days prior to the date of filing of the proposed rule 
change, or such shorter time as designated by the Commission. Phlx 
has satisfied the pre-filing requirement.
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    The Exchange has requested that the Commission waive the 30-day 
operative delay so that the proposed rule change may become operative 
upon filing with the Commission pursuant to Section 19(b)(3)(A) of the 
Act \11\ and Rule 19b-4(f)(6) \12\ thereunder. The Commission believes 
that waiving the 30-day operative delay is consistent with the 
protection of investors and the public interest because such waiver 
will allow the Penny Pilot Program to continue without interruption 
through July 3, 2009.\13\ Accordingly, the Commission designates the 
proposed rule change operative upon filing with the Commission.
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    \11\ 15 U.S.C. 78s(b)(3)(A).
    \12\ 17 CFR 240.19b-4(f)(6).
    \13\ For the purposes only of waiving the 30-day operative 
delay, the Commission has considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78(c)(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 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-2009-25 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-2009-25. 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, 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 No. SR-Phlx-2009-25 and should be 
submitted on or before April 23, 2009.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\14\
Florence E. Harmon,
Deputy Secretary.
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    \14\ 17 CFR 200.30-3(a)(12).
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[FR Doc. E9-7371 Filed 4-1-09; 8:45 am]

BILLING CODE 8010-01-P