Document ID: SEC-2007-0301-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: Philadelphia Stock Exchange, Inc.
Posted Date: 2007-02-28T05:00Z

[Federal Register: February 28, 2007 (Volume 72, Number 39)]
[Notices]               
[Page 9056-9057]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr28fe07-107]                         

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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-55331; File No. SR-Phlx-2007-09]

 
Self-Regulatory Organizations; Philadelphia Stock Exchange, Inc.; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change 
Relating to the Definition of ``Complex Trade''

February 22, 2007.
    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 February 7, 2007, 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 substantially prepared by the 
Phlx. The Exchange filed the proposal pursuant to Section 19(b)(3)(A) 
of the Act \3\ and Rule 19b-4(f)(6) 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).
    \4\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------

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

    The Phlx proposes to amend Exchange Rule 1083(c) to revise the 
definition of ``Complex Trade'' as that definition applies to trades 
under the Plan for the Purpose of Creating and Operating an Options 
Intermarket Linkage (the ``Linkage Plan''). The text of the proposed 
rule change is available at the Exchange, in the Commission's Public 
Reference Room, and at http://www.phlx.com/exchange/phlx_rule_fil.html
.

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 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 amend the definition 
of ``Complex Trade'' in the Exchange's rules that relate to the Linkage 
Plan. For Linkage purposes, Exchange Rule 1083(c) currently defines a 
``Complex Trade'' as a trade reflecting the execution of an order in an 
options series in conjunction with one or more other orders in 
different series in the same underlying security for the equivalent 
number of contracts.
    Under the proposal, a ``Complex Trade'' includes a spread, 
straddle, or combination order where the number of contracts on the 
legs of the spread, straddle, or combination order differs by any ratio 
equal to or greater than one-to-three and less than or equal to three-
to-one. A Complex Trade is exempt from trade-through liability.\5\
---------------------------------------------------------------------------

    \5\ See Exchange Rule 1085(b)(7).
---------------------------------------------------------------------------

    The Exchange notes that its current rules provide that the 
components of spread, straddle, and combination orders must generally 
offset one another on a one-for-one basis,\6\ and that priority 
concerning ratio and other types of spreads currently applies only to 
foreign currency options.\7\ In order to make those rules and the 
instant proposal consistent, the Exchange has filed a separate proposed 
rule change to permit such order types on other than a one-for-one 
basis, and to establish priority for such orders in all options traded 
on the Exchange.\8\
---------------------------------------------------------------------------

    \6\ See Exchange Rules 1066(f) and (g).
    \7\ See Exchange Rules 1033(f), (g), and (h).
    \8\ See File No. SR-Phlx-2006-91.
---------------------------------------------------------------------------

    This proposal would adopt the same definition of ``Complex Trade'' 
for Linkage Plan purposes as that adopted by other options 
exchanges.\9\
---------------------------------------------------------------------------

    \9\ See Securities Exchange Act Release No. 55138 (January 19, 
2007), 72 FR 3451 (January 25, 2007) (order approving File Nos. SR-
Amex-2006-119; SR-BSE-2006-55; SR-CBOE-2006-109; SR-ISE-2006-73; and 
SR-NYSEArca-2007-01).
---------------------------------------------------------------------------

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

[[Page 9057]]

investors and the public interest by establishing a uniform definition 
of ``Complex Trade'' for purposes of the Linkage Plan.
---------------------------------------------------------------------------

    \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 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 proposed rule change 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 
\12\ and Rule 19b-4(f)(6) thereunder.\13\ As required by Rule 19b-
4(f)(6)(iii),\14\ the Phlx provided the Commission with written notice 
of its 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.
---------------------------------------------------------------------------

    \12\ 15 U.S.C. 78s(b)(3)(A).
    \13\ 17 CFR 240.19b-4(f)(6).
    \14\ 17 CFR 240.19b-4(f)(6)(iii).
---------------------------------------------------------------------------

    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-2007-09 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-2007-09. 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 the 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 available publicly. All submissions should refer to File Number 
SR-Phlx-2007-09 and should be submitted on or before March 21, 2007.

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

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

Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7-3492 Filed 2-27-07; 8:45 am]

BILLING CODE 8010-01-P