Document ID: SEC-2006-1257-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: Philadelphia Stock Exchange, Inc.
Posted Date: 2006-09-28T04:00Z

[Federal Register: September 28, 2006 (Volume 71, Number 188)]
[Notices]               
[Page 57017-57019]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr28se06-99]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-54485; File No. SR-Phlx-2006-56]

 
Self-Regulatory Organizations; Philadelphia Stock Exchange, Inc.; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change 
and Amendment No. 1 Thereto Relating to Amending the Summary of Index 
Option and FXI Options Charges and the $60,000 ``Firm Related'' Equity 
Option and Index Option Cap

September 22, 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 August 31, 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 Exchange. On 
September 19, 2006, the Exchange submitted Amendment No. 1 to the 
proposed rule change.\3\ The Phlx has designated this proposal as one 
changing a fee imposed by the Phlx under section 19(b)(3)(A)(ii) of the 
Act \4\ and Rule 19b-4(f)(2) thereunder,\5\ which renders the proposal 
effective upon filing with the Commission. The Commission is publishing 
this notice to solicit comments on the proposed rule

[[Page 57018]]

change, as amended, from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ Amendment No. 1 (``Amendment No. 1'') removes all references 
in the proposed rule change that relate to clarifying who may 
receive payment for order flow funds in connection with the 
Exchange's payment for order flow program.
    \4\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \5\ 17 CFR 240.19b-4(f)(2).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Phlx proposes to remove the reference to options listed on the 
iShares FTSE/Xinhua China 25 Index Fund (``FXI Options'') from the 
Exchange's Summary of Index Option and FXI Options Charges. Therefore, 
the Exchange proposes to charge transactions involving FXI Options 
according to the Exchange's Summary of Equity Option Charges, which 
would, in turn, include payment for order flow charges, effective for 
trades settling on or after September 1, 2006.
    The Exchange also proposes to delete references to Full-size index 
options (``QCX'') and Mini index options (``QCE'') on the Nasdaq 
Composite Index, Inc.[supreg] \6\ from its current Summary of Index 
Option and FXI Options Charges and $60,000 ``Firm Related'' Equity 
Option and Index Option Cap, as these products are no longer listed or 
traded at the Exchange.
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    \6\ The Nasdaq Composite Index[supreg] is a registered trademark 
of The Nasdaq Stock Market LLC, and is licensed for use by Phlx.
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    The text of the proposed rule change is available on the Exchange's 
Web site at http://www.Phlx.com, 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 Phlx included statements 
concerning the purpose of and basis for the proposed rule change, as 
amended, and discussed any comments it received on the proposed rule 
change, as amended. 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 Exchange states that it currently charges transactions 
involving FXI options, an equity option, according to the Exchange's 
Summary of Index Option and FXI Options Charges. The Exchange states 
that it began charging FXI Options in the same manner that the Exchange 
charges for index options beginning with transactions settling on or 
after October 19, 2004. The Exchange believed, at that time, that 
charging FXI Options according to the rates set forth in the Exchange's 
Summary of Index Option and FXI Options Charges was reasonable for 
these types of products because the higher charges were to help defray 
some of the license fees incurred by the Exchange in connection with 
the listing and trading of FXI Options.
    The Exchange states that the purpose of this proposal is to remain 
competitive with other exchanges that also trade FXI Options pursuant 
to their respective equity option fee schedules. By assessing 
transactions involving FXI Options according to the Exchange's Summary 
of Equity Option Charges, the Exchange believes that the transaction 
fees would be the same or lower than the charges currently assessed, 
which should, in turn, encourage more FXI Options business to be 
transacted on the Exchange. In addition, because FXI Options would now 
be subject to the Exchange's fee schedule, a payment for order flow 
fee, as set forth on the Exchange's Summary of Equity Option Charges, 
may now be charged on FXI Option transactions, which the Exchange 
believes may also encourage additional order flow.\7\
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    \7\ Specialist units and Directed Registered Options Traders 
elect to opt into or out of the Exchange's payment for order flow 
program.
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    The Exchange states that the purpose of removing references to QCX 
and QCE from the Exchange's current Summary of Index Option and FXI 
Options Charges and $60,000 ``Firm Related'' Equity Option and Index 
Option Cap is to update these fee schedules to reflect the fact that 
these products have been delisted from, and therefore no longer trade 
on, the Exchange.
2. Statutory Basis
    The Exchange believes that its proposal, as amended, is consistent 
with section 6(b) of the Act \8\ in general, and furthers the 
objectives of sections 6(b)(4) of the Act \9\ in particular, in that it 
is an equitable allocation of reasonable dues, fees, and other charges 
among Exchange members.
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    \8\ 15 U.S.C. 78f(b).
    \9\ 15 U.S.C. 78f(b)(4).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change, as 
amended, 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

    The foregoing proposed rule change, as amended, has been designated 
as a fee change pursuant to section 19(b)(3)(A)(ii) of the Act \10\ and 
Rule 19b-4(f)(2) \11\ thereunder, because it establishes or changes a 
due, fee, or other charge imposed by the Exchange. Accordingly, the 
proposal, as amended, will take effect upon filing with the Commission. 
At any time within 60 days of the filing of such 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.\12\
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    \10\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \11\ 17 CFR 240.19b-4(f)(2).
    \12\ The effective date of the original proposed rule change is 
August 31, 2006, and the effective date of Amendment No. 1 is 
September 19, 2006. For purposes of calculating the 60-day period 
within which the Commission may summarily abrogate the proposed rule 
change, as amended, the Commission considers the period to commence 
on September 19, 2006, the date on which the Exchange submitted 
Amendment No. 1. See 15 U.S.C. 78s(b)(3)(C).
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IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change, as amended, is consistent with the Act. Comments may be 
submitted by any of the following methods:

Electronic Ccomments

     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-2006-56 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-2006-56. This file 
number should be included on the subject line if e-mail is used. To 
help the Commission process and review your

[[Page 57019]]

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 available publicly. All 
submissions should refer to File Number SR-Phlx-2006-56 and should be 
submitted on or before October 19, 2006.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\13\
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    \13\ 17 CFR 200.30-3(a)(12).
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Jill M. Peterson,
Assistant Secretary.
 [FR Doc. E6-15926 Filed 9-27-06; 8:45 am]

BILLING CODE 8010-01-P