[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