Document ID: SEC-2010-0503-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NASDAQ OMX PHLX, Inc.
Posted Date: 2010-04-02T04:00Z

[Federal Register: April 2, 2010 (Volume 75, Number 63)]
[Notices]               
[Page 16887-16888]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr02ap10-131]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-61796; File No. SR-Phlx-2010-20]

 
Self-Regulatory Organizations; NASDAQ OMX PHLX, Inc.; Order 
Granting Approval of Proposed Rule Change To Expand the Number of 
Components in the PHLX Semiconductor SectorSM Known as 
SOXSM, on Which Options are Listed and Traded

March 29, 2010.
    On February 2, 2010, NASDAQ OMX PHLX, Inc. (``Phlx'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission'') a proposed rule change pursuant to Section 19(b)(1) of 
the Securities Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 \2\ 
thereunder to expand the number of components in the PHLX Semiconductor 
Sector\SM\ known as SOX\SM\, on which options are listed and traded.\3\ 
The proposed rule change was published for comment in the Federal 
Register on February 25, 2010 for a 21-day comment period.\4\ The 
Commission received no comment letters regarding 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\ PHLX Semiconductor Sector\SM\ may also be known as PHLX 
Semiconductor Index or PHLX Semiconductor Sector\SM\ Index.
    \4\ See Securities Exchange Act Release No. 61539 (February 18, 
2010), 75 FR 8765 (``Notice'').
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    SOX is a modified market capitalization-weighted index composed of 
twenty-one companies primarily involved in the design, distribution, 
manufacture, and sale of semiconductors, and is one of several narrow-
based sector indexes on which options are listed and traded on the 
Exchange. Options on the SOX index are currently listed pursuant to 
``generic'' initial listing and maintenance standards in Phlx Rule 
1009A for narrow-based indexes.\5\ The Exchange proposes to expand the 
number of components in the SOX index to thirty. The Exchange 
represents that the expanded SOX index would continue to meet all the 
index maintenance requirements in subsection (c) of Rule 1009A 
applicable to options on narrow-based indexes, except subsection 
(c)(2), which indicates that the total number of component securities 
in the index may not increase or decrease by more than 33\1/3\% from 
the total number of securities in the index at the time of its initial 
listing.
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    \5\ A narrow-based index or industry index is defined as: An 
index designed to be representative of a particular industry or a 
group of related industries. The term ``narrow-based index'' 
includes indices the constituents of which are all headquartered 
within a single country. See Phlx Rule 1000A(b)(12).
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    After careful consideration, 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 \6\ and, in particular, the requirements of Section 6 of the 
Act.\7\ Specifically, the Commission finds that the proposed rule 
change is consistent with Section 6(b)(5) of the Act,\8\ 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 foster 
cooperation and coordination with persons engaged in facilitating 
transactions in securities, and to remove impediments to and perfect 
the mechanisms of a free and open market and a national market system.
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    \6\ In approving this proposed rule change, the Commission has 
considered the proposed rule's impact on efficiency, competition, 
and capital formation. 15 U.S.C. 78c(f).
    \7\ 15 U.S.C. 78f.
    \8\ 15 U.S.C. 78f(b)(5).
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Listing and Trading of Options on the SOX Index

    As set out more fully in the Notice, Phlx has represented that 
options on an expanded thirty-component SOX index would continue to 
meet all of the initial and maintenance generic index listing standards 
contained in Sections (b) and (c) of Phlx Rule 1009A except subsection 
(c)(2) of Phlx Rule 1009A. Subsection (c)(2) of Phlx Rule 1009A only 
permits a maximum increase of 33\1/3\% from the total number of 
securities in the index at the time of its initial listing, i.e., an 
increase to 28 components, whereas Phlx proposes an increase to 30 
components. Additionally, the Exchange has represented that no other 
changes are being made to the SOX index as it currently exists. Based 
on these representations, the Commission believes that the proposed 
expansion to the SOX index is appropriate and that Phlx should continue 
to be able to list and trade options on the SOX index.

Surveillance

    The Commission notes that the Exchange has represented that it has 
an adequate surveillance program in place for options traded on the 
proposed expanded SOX index and intends to apply those same program 
procedures that it applies to the Exchange's current SOX options and 
other index options. Additionally, the Exchange is a member of the 
Intermarket Surveillance Group (``ISG'') under the Intermarket 
Surveillance Group Agreement, dated June 20, 1994.\9\ In addition, the 
major futures exchanges are affiliated members of the ISG, which allows 
for the sharing of surveillance information for potential intermarket 
trading abuses. The Exchange also represented that it has the necessary 
systems capacity to continue to support listing and trading

[[Page 16888]]

SOX options. This order is based on these representations.
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    \9\ A list of the current members and affiliate members of ISG 
can be found at http://www.isgportal.com.
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    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\10\ that the proposed rule change (SR-Phlx-2010-20) is hereby 
approved.
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    \10\ 15 U.S.C. 78s(b)(2).
    \11\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\11\
Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-7464 Filed 4-1-10; 8:45 am]
BILLING CODE 8011-01-P