Document ID: SEC-2007-0535-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: Philadelphia Stock Exchange, Inc.
Posted Date: 2007-04-12T04:00Z

[Federal Register: April 12, 2007 (Volume 72, Number 70)]
[Notices]               
[Page 18505-18507]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr12ap07-94]                         

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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-55591; File No. SR-Phlx-2007-30]

 
 Self-Regulatory Organizations; Philadelphia Stock Exchange, 
Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule 
Change Relating to Ratio Spreads

April 6, 2007.
    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 March 27, 2007, 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 substantially by the Phlx.

[[Page 18506]]

The Exchange filed the proposal pursuant to Section 19(b)(3)(A) of the 
Act \3\ and Rule 19b-4(f)(6) thereunder,\4\ which renders the proposal 
effective upon filing with the Commission.\5\ 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).
    \5\ The Phlx has asked the Commission to waive the 30-day 
operative delay provided in Rule 19b-4(f)(6)(iii), 17 CFR 240.19b-
4(f)(6)(iii).
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Phlx proposes to amend Phlx Rules 1033, ``Bids and Offers--
Premium,'' and 1066, ``Certain Types of Orders Defined,'' to define and 
permit ratio spreads in all options traded on the Exchange.
    The text of the proposed rule change is available at the Exchange, 
in the Commission's Public Reference Room, and at http://www.phlx.com.

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 define and permit 
ratio spreads in options overlying equities, indexes, and Exchange 
Traded Fund Shares (``ETFs''), and to establish by rule permissible 
ratios for such orders.
    Currently, Phlx Rule 1033 permits members to trade spread orders in 
which the respective legs consist of different numbers of contracts 
(ratio spreads) for foreign currency options only. The proposed rule 
change would expand the rule to permit ratio spreads for all options 
traded on the Exchange by deleting from the rules language limiting 
such orders to options overlying foreign currencies.
    Specifically, the Phlx proposes to amend Phlx Rule 1033(g) to 
permit ratio spreads for spread, straddle, and combination orders, as 
defined in Phlx Rule 1066, in equity, ETF, and index options by 
deleting the current language that limits such orders to foreign 
currency options. The amended rules would permit spread, straddle, and 
combination orders in equity, ETF, and index options with a ratio that 
is equal to or greater than one-to-three and less than or equal to 
three-to-one.
    Phlx Rule 1066 currently defines a ``spread order'' as an order to 
buy a stated number of option contracts and to sell the same number of 
option contracts in a different series of the same option. The proposed 
amendment would re-define the term ``spread order'' as an order to buy 
a stated number of option contracts and to sell a stated number of 
option contracts (which may be a different number of contracts) in a 
different series of the same option. The definition would also clarify 
that such an order may be bid for or offered on a total net debit or 
credit basis.
2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act \6\ in general, and furthers the objectives of Section 
6(b)(5) of the Act \7\ 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 by 
permitting ratio spreads in all options traded on the Exchange.
---------------------------------------------------------------------------

    \5\ 15 U.S.C. 78f(b).
    \6\ 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 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 Phlx has filed the proposed rule change pursuant to Section 
19(b)(3)(A) of the Act \8\ and subparagraph (f)(6) of Rule 19b-4 
thereunder.\9\ Because the Phlx has designated the foregoing proposed 
rule change as one that does not: (i) Significantly affect the 
protection of investors or the public interest; (ii) impose any 
significant burden on competition; and (iii) 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, the proposed rule change has become effective 
pursuant to Section 19(b)(3)(A) of the Act and Rule 19b-4(f)(6) 
thereunder. As required by Rule 19b-4(f)(6)(iii) under the Act,\10\ the 
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, at least five business days prior to filing 
the proposal with the Commission or such shorter period as designated 
by the Commission.
---------------------------------------------------------------------------

    \8\ 15 U.S.C. 78s(b)(3)(A).
    \9\ 17 CFR 240.19b-4(f)(6).
    \10\ 17 CFR 240.19b-4(f)(6)(iii).
---------------------------------------------------------------------------

    A proposed rule change filed under Rule 19b-4(f)(6) under the Act 
\11\ normally does not become operative prior to 30 days after the date 
of filing. However, Rule 19b-4(f)(6)(iii) permits the Commission to 
designate a shorter time if such action is consistent with the 
protection of investors and the public interest.\12\ The Phlx has asked 
the Commission waive the 30-day operative delay to allow the Phlx to 
have the same rules governing ratio spreads as those currently in 
effect on other options exchanges.\13\
---------------------------------------------------------------------------

    \11\ 17 CFR 240.19b-4(f)(6).
    \12\ 17 CFR 240.19b-4(f)(6)(iii).
    \13\ See American Stock Exchange LLC Rule 950(e)(v); Chicago 
Board Options Exchange, Incorporated Rule 6.53(n); International 
Securities Exchange, LLC Rule 722(a)(6); and NYSE Arca, Inc. Rule 
6.62(j).
---------------------------------------------------------------------------

    The Commission believes that waiving the 30-day operative delay is 
consistent with the protection of investors and the public interest 
because it would allow the Phlx to implement rules governing ratio 
spreads consistent with those adopted by other options exchanges 
without delay.\14\ For this reason, the Commission designates that the 
proposal become operative immediately.
---------------------------------------------------------------------------

    \14\ See note 13, supra. For the purposes only of waiving the 
30-day operative delay, 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,

[[Page 18507]]

or otherwise in furtherance of the purposes of the Act.\15\
---------------------------------------------------------------------------

    \15\ 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-2007-30 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-2007-30. 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-2007-30 and should be submitted on or before May 3, 
2007.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\16\
---------------------------------------------------------------------------

    \16\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Florence E. Harmon,
Deputy Secretary.
 [FR Doc. E7-6878 Filed 4-11-07; 8:45 am]

BILLING CODE 8010-01-P