Document ID: SEC-2007-1613-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: Philadelphia Stock Exchange, Inc.
Posted Date: 2007-11-29T05:00Z

[Federal Register: November 29, 2007 (Volume 72, Number 229)]
[Notices]               
[Page 67618-67619]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr29no07-44]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-56836; File No. SR-Phlx-2007-55]

 
Self-Regulatory Organizations; Philadelphia Stock Exchange, Inc.; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change 
Relating to the Elimination of the Short Sale Price Test

November 21, 2007.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''), \1\ and Rule 19b-4 \2\ thereunder, notice is hereby given 
that on July 31, 2007, the Philadelphia Stock Exchange, Inc. (``Phlx'' 
or ``Exchange'') filed with the Securities and Exchange Commission 
(``SEC'' or ``Commission'') the proposed rule change as described in 
Items I and II below, which Items have been substantially prepared by 
the Phlx. Phlx has designated the proposed rule change as constituting 
a ``non-controversial'' rule change under paragraph (f)(6) of Rule 19b-
4 under the Act.\3\ The Commission is publishing this notice to solicit 
comments on the proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 17 CFR 240.19b-4(f)(6).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Phlx, pursuant to Section 19(b)(1) of the Act \4\ and Rule 19b-
4 thereunder,\5\ proposes to amend Phlx Rules 185, 455, 785 and 1072 to 
reflect the elimination of the short sale price test, including any 
tick or bid test of any self-regulatory organization (``Price Test'') 
and the elimination of the ``short exempt'' marking requirement.\6\
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    \4\ 15 U.S.C. 78s(b)(1).
    \5\ 17 CFR 240.19b-4.
    \6\ See Securities Exchange Act Release No. 55970 (June 28, 
2007).
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    The text of the proposed rule change is available at the Exchange, 
on the Exchange's Web site at http://www.Phlx.com, 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 conform Phlx Rules to 
Rules 200(g) and 201(b) of Regulation SHO.\7\ On June 28, 2007, the SEC 
approved final rules deleting the price test of Rule 10a-1 \8\ and 
amending Regulation SHO to prohibit any SRO from having a price test in 
place. In addition, Rule 200(g) of Regulation SHO was modified to 
remove the requirement upon broker-dealers to mark sell orders as 
``short exempt.''
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    \7\ 17 CFR 242.200(g) and 17 CFR 242.201(b).
    \8\ 17 CFR 240.10a-1.
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    Phlx Rules 185, 455, 785 and 1072 contain language regarding the 
Price Test and the ``short exempt'' marking requirement. Phlx Rule 185 
contains language regarding the entry, display and execution of sell 
short orders on XLE, Phlx's electronic equity trading system, that are 
subject to the Price Test. With the elimination of the Price Test, sell 
short orders will not be handled any differently by XLE and the 
amendments to this rule will so reflect. Phlx Rule 455 stated that XLE 
will not execute a sell order unless effected in compliance with Rule 
10a-1. Rule 10a-1 contained the Price Test and is being eliminated. The 
amendments to Phlx Rule 455 will reflect this.
    Phlx Rule 785 requires member organizations to make an automated 
submission of trading data, including marking orders as short exempt, 
where appropriate. Phlx Rule 785 will be amended to reflect the 
elimination of the ``short exempt'' marking requirement. Phlx Rule 1072 
outlines the requirements on options specialists and Registered Options 
Traders (``ROTs'') regarding their use of an exception to the NASD (n/
k/a Financial Industry Regulatory Authority, Inc.) bid test (which was 
a type of Price Test) available to hedging options transactions. The 
elimination of the Price Test extended to the NASD bid test and 
therefore options specialist and ROTs will not need the exemption 
outlined in Phlx Rule 1072. Phlx Rule 1072 will be deleted.
2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b)

[[Page 67619]]

of the Act \9\ in general, and furthers the objectives of Section 
6(b)(5) of the Act \10\ 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.
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    \9\ 15 U.S.C. 78f(b).
    \10\ 15 U.S.C. 78f(b)(5).
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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

    Written comments were neither solicited nor 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 within 30 days from the date on which it was 
filed, or such shorter time as the Commission may designate, it has 
become effective upon filing pursuant to Section 19(b)(3)(A) of the Act 
\11\ and Rule 19b-4(f)(6) thereunder.\12\ Phlx has requested that the 
Commission waive the 5-day pre-filing notice requirement and the 30-day 
operative delay of the proposal. The Commission believes that such 
waivers are consistent with the protection of investors and the public 
interest because the proposed rule change conforms Phlx's rules to 
currently effective Commission Rules and should eliminate potential 
confusion relating to orders on XLE.\13\ For this reason, the 
Commission designates the proposal to be operative upon filing with the 
Commission.
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    \11\ 15 U.S.C. 78s(b)(3)(A).
    \12\ 17 CFR 240.19b-4(f)(6).
    \13\ For purposes only of waiving the 30-day pre-operative 
period, the Commission has considered the impact of the proposed 
rule change on efficiency, competition and capital formation. 15 
U.S.C. 78c(f).
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    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-2007-55 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-2007-55. 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, 100 F Street, NE., 
Washington, DC 20549 on official business days between the hours of 10 
a.m. and 3 p.m. 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-2007-55 and should be 
submitted on or before December 20, 2007.
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    \14\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\14\
Nancy M. Morris,
Secretary.
[FR Doc. E7-23171 Filed 11-28-07; 8:45 am]

BILLING CODE 8011-01-P