Document ID: SEC-2006-1494-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: Philadelphia Stock Exchange, Inc.
Posted Date: 2006-11-21T05:00Z

[Federal Register: November 21, 2006 (Volume 71, Number 224)]
[Notices]               
[Page 67418-67420]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr21no06-80]                         

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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-54749; File No. SR-Phlx-2006-73]

 
Self-Regulatory Organizations; Philadelphia Stock Exchange, Inc.; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change 
Relating to the Definition of Core Session for XLE

November 14, 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, 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 and 
II below, which Items have been prepared by the Phlx. The Exchange 
filed the proposal as a ``non-controversial'' rule change pursuant to 
Section 19(b)(3)(A) of the Act \3\ and Rule 19b-4(f)(6) thereunder,\4\ 
which rendered 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 modify the definition of ``Core Session'' in 
Phlx Rule 101, Supplementary Material .02(2), to state that the Core 
Session shall take place for each equity security from 9:30 a.m. until 
4 p.m., except for specified exchange-traded funds (``ETFs'') in which 
case the Core Session shall continue until 4:15 p.m. The text of the 
proposed rule change is available

[[Page 67419]]

on Phlx's Web site, http://www.phlx.com, at Phlx's principal office, 

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 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 ensure that ETFs \5\ 
that trade on the Exchange have the same primary or core trading hours 
as these securities have on their listing exchanges. When the Phlx 
begins trading using its new equity trading system, XLE,\6\ the hours 
of operation will change from the current hours of operation used on 
the physical equity trading floor. Currently, for any given security, 
the Primary Trading Session hours on Phlx are identical to the hours of 
trading for that security on its primary market.\7\ Many ETFs trade on 
their primary market until 4:15 p.m.
---------------------------------------------------------------------------

    \5\ The Exchange represents that it will publish, via an 
Exchange circular, a list of the exchange-traded funds that will 
have a Core Session that ends at 4:15 p.m.
    \6\ XLE is the new equity trading system on Phlx for trading NMS 
Stocks. See Securities Exchange Act Release No. 54538 (September 28, 
2006), 71 FR 59184 (October 6, 2006) (SR-Phlx-2006-43).
    \7\ See the pre-XLE version of Phlx Rule 101, Supplementary 
.02(i).
---------------------------------------------------------------------------

    In adopting XLE, Phlx intended to modify its trading hours for 
equities, but did not intend to change the ``primary'' or ``core'' 
hours that securities are usually traded. Specifically, Phlx adopted 
its XLE Trading Hours with a Pre Market Session, a Core Session, and a 
Post Market Session. The Exchange intended the Core Session to be 
coextensive with existing primary sessions that are employed by other 
exchanges. Phlx defined the Core Session as taking place ``for each 
security during that security's `regular trading hours' as that term is 
defined in Rule 600(b)(64) of Regulation NMS.'' However, by using the 
term ``regular trading hours'' as defined in Rule 600(b)(64) of 
Regulation NMS,\8\ Phlx inadvertently failed to make its Core Session 
coextensive with existing primary sessions employed by other exchanges 
with respect to ETF trading. The Exchange notes that while other 
exchanges have adopted rules extending their primary trading session 
until 4:15 p.m. for certain securities (i.e., ETFs), ``the Commission 
has not approved an [exchange] rule modifying the definition of regular 
trading hours [to some time other than 4 p.m] for purposes of Rule 
600(b)(64).'' \9\
---------------------------------------------------------------------------

    \8\ 17 CFR 600(b)(64).
    \9\ See Division of Market Regulation: Response to Frequently 
Asked Questions Concerning Rule 611 and Rule 610 of Regulation NMS 
Question 7.02.
---------------------------------------------------------------------------

    The Exchange now proposes to modify the definition of its Core 
Session for XLE to allow the Exchange to set the ending time of the 
Core Session to 4:15 p.m. for certain ETFs.\10\ This will allow those 
ETFs that trade until 4:15 p.m. to trade until that time during XLE's 
Core Session. The Exchange believes that this proposed rule change 
should reduce confusion among market participants who enter orders on 
multiple exchanges in these products by allowing for the harmonization 
of trading times across Phlx and other exchanges.
---------------------------------------------------------------------------

    \10\ See supra note 5 (noting that the Exchange will publish a 
circular listing the applicable ETFs).
---------------------------------------------------------------------------

2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act \11\ in general, and furthers the objectives of Section 
6(b)(5) of the Act \12\ 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.
---------------------------------------------------------------------------

    \11\ 15 U.S.C. 78f(b).
    \12\ 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 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

    The Exchange has neither solicited nor received written comments on 
the proposed rule change.

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) does not impose 
any significant burden on competition; and (iii) by its terms, does not 
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, provided that the 
Exchange has given the Commission written notice of its intent to file 
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, the proposed rule change has become 
effective pursuant to Section 19(b)(3)(A) of the Act \13\ and Rule 19b-
4(f)(6) thereunder.\14\ As required under Rule 19b-4(f)(6)(iii) under 
the Act,\15\ 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, prior to the date of the filing 
of the proposed rule change.
---------------------------------------------------------------------------

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

    A proposed rule change filed under Rule 19b-4(f)(6) under the Act 
\16\ normally may not become operative prior to 30 days after the date 
of filing. However, Rule 19b-4(f)(6)(iii) under the Act \17\ permits 
the Commission to designate a shorter time if such action is consistent 
with the protection of investors and the public interest. The Exchange 
has requested that the Commission waive the 30-day operative delay, 
which would make the rule change effective and operative upon filing. 
The Commission believes that waiver of the 30-day operative delay is 
consistent with the protection of investors and the public interest, 
because it allows the Exchange to implement this proposal without delay 
in order to accommodate the Exchange's plans to commence operations of 
XLE. The Commission notes that the Exchange has represented that its 
proposed rule change is based upon a similar rule of the Chicago Stock 
Exchange, Inc. (``CHX'').\18\ For these reasons, the Commission 
designates the

[[Page 67420]]

proposal to be effective and operative upon filing with the 
Commission.\19\
---------------------------------------------------------------------------

    \16\ 17 CFR 240.19b-4(f)(6).
    \17\ 17 CFR 240.19b-4(f)(6)(iii).
    \18\ See Securities Exchange Act Release No. 54550 (September 
29, 2006), 71 FR 59563 (October 10, 2006) (SR-CHX-2006-05) (approval 
order for CHX's new electronic trading system).
    \19\ For the purposess only of accelerating the operative date 
of this proposal, the Commission has considered the proposed rule's 
impact on efficiency, competition, and capital formation. 15 U.S.C. 
78c(f).
---------------------------------------------------------------------------

    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.\20\
---------------------------------------------------------------------------

    \20\ See 15 U.S.C. 78s(b)(3)(C).
---------------------------------------------------------------------------

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-2006-73 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-2006-73. 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-2006-73 and should be submitted on or before December 12, 2006.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\21\
---------------------------------------------------------------------------

    \21\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Nancy M. Morris,
Secretary.
[FR Doc. E6-19623 Filed 11-20-06; 8:45 am]

BILLING CODE 8011-01-P