Document ID: SEC-2011-0722-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NASDAQ OMX PHLX LLC
Posted Date: 2011-05-18T04:00Z

[Federal Register Volume 76, Number 96 (Wednesday, May 18, 2011)]
[Notices]
[Page 28840]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-12154]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-64478; File No. SR-Phlx-2011-28]

Self-Regulatory Organizations; NASDAQ OMX PHLX LLC; Order 
Approving Proposed Rule Change To Expand the Number of Components in 
the PHLX Oil Service Sector\SM\ Known as OSX\SM\, and Changing the 
Weighting Methodology From Price-Weighted to Capitalization-Weighted

May 12, 2011.

I. Introduction

    On March 2, 2011, NASDAQ OMX PHLX LLC (``Phlx'' or ``Exchange'') 
filed with the Securities and Exchange Commission (``SEC'' or 
``Commission'') pursuant to Section 19(b)(1) of the Securities Exchange 
Act of 1934 (``Act''),\1\ and Rule 19b-4 thereunder, \2\ a proposed 
rule change to expand the number of components in the Phlx Oil Service 
Sector\SM\ (the ``Index'') and to change the Index's weighting 
methodology. The proposed rule change was published in the Federal 
Register on March 17, 2011.\3\ The Commission received no comments on 
the proposal. This order approves the proposed rule change.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 64075 (March 11, 
2011), 76 FR 14702. On April 8, 2011, the Commission extended the 
time to act on SR-Phlx-2011-28 by 45 days. See Securities Exchange 
Act Release No. 64282 (April 8, 2011), 76 FR 21084 (April 14, 2011).
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II. Description of the Proposal

    The Exchange proposes to expand the number of components in the 
Index from fifteen to thirty components and to change the Index 
weighting methodology from price-weighted to modified capitalization-
weighted. No other changes are made to the Index or the options 
thereon.
    The Exchange stated in its filing that the purpose of the proposed 
rule change is to expand the number of components in the Index, and to 
change the Index weighting methodology to modified capitalization-
weighted.
    Index options subsequent to the proposed rule change will be 
identical to Index options that are currently listed and trading and 
will trade pursuant to similar contract specifications (updated 
regarding components and weighting methodology).\4\ The only post-
proposal difference in Index options is that they will overlie an Index 
with thirty components (as opposed to fifteen) and the Index will be 
modified capitalization-weighted (the Index is currently price-
weighted).\5\
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    \4\ The contract specifications for the Index options are 
available at https://www.nasdaqtrader.com/micro.aspx?id=phlxsectorscontractspecs.
    \5\ For a detailed description of the Index and its components, 
see Release No. 64075, supra note 3.
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III. Discussion and Commission Findings

    After careful review, the Commission finds that the proposed rule 
change is consistent with the requirements of the Act and the rules and 
regulations thereunder applicable to a national securities exchange. In 
particular, the Commission finds that the proposal is consistent with 
Section 6(b)(5) of the Act,\6\ which requires, among other things, that 
the rules of a national securities exchange be designed to prevent 
fraudulent and manipulative acts and practices, 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.\7\
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    \6\ 15 U.S.C. 78f(b)(5).
    \7\ In approving the proposed rule change, the Commission notes 
that it has considered the proposed rule's impact on efficiency, 
competition and capital formation. 15 U.S.C. 78c(f).
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    The Commission believes that the proposed rule change is 
appropriate given the changes that have occurred to the sector of the 
economy that the Index overlies. The increase in the number of 
components from 15 to 30 will provide more depth to the Index, even as 
it continues to meet the definition of a narrow-based index under the 
Exchange's rules.\8\ Likewise, the change from capitalization-weighted 
to price-weighted is within the parameters of the Exchange's generic 
rules for narrow-based indices.
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    \8\ See Exchange Rule 1009A.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\9\
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    \9\ 17 CFR 200.30-3(a)(12).
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Cathy H. Ahn,
Deputy Secretary.
[FR Doc. 2011-12154 Filed 5-17-11; 8:45 am]
BILLING CODE 8011-01-P