Document ID: SEC-2006-0604-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: Philadelphia Stock Exchange, Inc.
Posted Date: 2006-05-10T04:00Z

[Federal Register: May 10, 2006 (Volume 71, Number 90)]
[Notices]               
[Page 27303-27304]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr10my06-115]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-53757; File No. SR-Phlx-2005-69]

 
Self-Regulatory Organizations; Philadelphia Stock Exchange, Inc.; 
Notice of Filing of Proposed Rule Change To Amend Phlx Rule 784, 
Reports of Options

May 3, 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 November 9, 2005, 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 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 amend Phlx Rule 784, Reports of Options. 
The text of the proposed rule change is set forth below. Proposed 
deletions are in [brackets].

Rule 784, Report of Options

    Each member and member organization shall report to the Exchange 
such information as may be required with respect to any substantial 
option relating to listed securities, or securities admitted to 
unlisted trading privileges on the Exchange, in which such member, 
member organization or partner or stockholder therein is directly or 
indirectly interested or of which such member, member organization or 
partner or stockholder has knowledge by reason of transactions executed 
by or through such member or organization; provided that this Rule 
shall not apply to an option which is a matter of record in a 
prospectus or registration statement filed with the Exchange, or with 
the Securities and Exchange Commission.
    The Exchange may disapprove of the connection of any member, member 
organization or partner or stockholder therein with any such option 
which it shall determine to be contrary to the best interest or welfare 
of the Exchange, or to be likely to create prices which will not fairly 
reflect market values.
[* * * Supplementary Material: * * *
    The Committee on Business Conduct, pursuant to such Rule, adopted 
the following directive: Each member and member organization is 
required to report all substantial options, selling agreements and 
kindred arrangements (excluding purchase warrants, puts and calls) 
relating to securities listed on the Exchange, or securities admitted 
to unlisted trading privileges on the Exchange, in which options they 
are directly or indirectly interested, or of which they have knowledge 
by reason of transactions executed by or through them. Such reports are 
to be made in letter form, addressed to the Committee on Business 
Conduct, and must be filed as soon as such interest therein or 
knowledge thereof has been acquired.

Information Required in Report of Options

    The report should contain the following information for each 
option:
    (a) The name of the security; if a stock, the number of shares; if 
a bond, the principal amount thereof;
    (b) The duration and terms of the option;
    (c) The names of the grantors and grantees;
    (d) The names of all persons entitled as of the date of the report 
to exercise such option; and
    (e) Copies of any agreements or instruments in writing relating to 
the option thus reported. Only an initial report of each option is 
required unless changes occur in the terms thereof, in which case such 
changes should be reported at once to the Committee.]
* * * * *

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 had received on the proposed rule change. The 
text of these statements may be examined at the places specified in 
Item IV below. The Phlx 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 delete a requirement 
set forth in the Supplementary Material to Phlx Rule 784 to provide 
particular information items regarding over-the-counter options trades 
to the Exchange. Phlx Rule 784 is intended to facilitate the Exchange's 
surveillance for and enforcement of rules against manipulation in 
connection with over-the-counter options trading. However, the Exchange 
does not believe that the specific information required by the 
Supplementary Material to the rule is always necessary for assessing 
whether manipulative activity has occurred. The Exchange believes that 
the Supplementary Material's requirement that members and member 
organizations supply the specified information is therefore needlessly 
burdensome. The proposed rule change would in any event retain the 
Exchange's authority, pursuant to the main text of Phlx Rule 784, to 
require members and member organizations to report to the Exchange such 
information as the Exchange may require regarding the options that are 
covered by the rule. The Exchange would thus retain the flexibility to 
require this and other information at such time or times as the 
Exchange may determine would be beneficial for the Exchange's 
surveillance and enforcement efforts.
2. Statutory Basis
    The Exchange believes the proposed rule change is consistent with 
Section 6(b) of the Act,\3\ in general, and furthers the objectives of 
Section 6(b)(5) of the Act,\4\ 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. Specifically, the proposal would

[[Page 27304]]

streamline Exchange Rule 784 by eliminating an outdated and superfluous 
requirement to provide specific items of information which the Exchange 
does not necessarily need to monitor for manipulation. At the same 
time, the proposal will retain the Exchange's ability to require 
particular information to be provided from time to time as the Exchange 
may see fit.
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    \3\ 15 U.S.C. 78f(b).
    \4\ 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 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 35 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 Phlx consents, the Commission will:
    (A) By order approve 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 e-mail to rule-comments@sec.gov. Please include 

File Number SR-Phlx-2005-69 on the subject line.

Paper Comments

     Send paper comments in triplicate to Nancy M. Morris, 
Secretary, Securities and Exchange Commission, Station Place, 100 F 
Street, NE., Washington, DC 20549-1090.

All submissions should refer to File Number SR-Phlx-2005-69. 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 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 publicly available. All submissions should refer to 
File Number SR-Phlx-2005-69 and should be submitted on or before May 
31, 2006.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\5\
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    \5\ 17 CFR 200.30-3(a)(12).
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Nancy M. Morris,
Secretary.
 [FR Doc. E6-7103 Filed 5-9-06; 8:45 am]

BILLING CODE 8010-01-P