[Federal Register Volume 73, Number 175 (Tuesday, September 9, 2008)]
[Notices]
[Pages 52433-52434]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-20809]
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SECURITIES AND EXCHANGE COMMISSION
Release No. 34-58454]
Order Granting Application for Exemption Pursuant to Section
36(a) of the Exchange Act by the Philadelphia Stock Exchange, Inc. From
the Rule Filing Requirements of Section 19(b) of the Exchange Act With
Respect to Certain Rules Incorporated by Reference
September 3, 2008.
I. Introduction
On June 27, 2007,\1\ the Philadelphia Stock Exchange, Inc., n/k/a
NASDAQ OMX PHLX, Inc., (``Phlx'' or the ``Exchange'') filed with the
Securities and Exchange Commission (``Commission'') pursuant to Rule 0-
12 \2\ under the Securities Exchange Act of 1934 (``Exchange Act'') an
application for an exemption under Section 36(a)(1) of the Exchange Act
\3\ from the rule filing requirements of Section 19(b) of the Exchange
Act \4\ with respect to certain margin rules of other self-regulatory
organizations (``SROs'') that the Exchange seeks to incorporate by
reference.
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\1\ See Letter from Edith H. Hallahan, Esq., Senior Vice
President and Deputy General Counsel, Phlx, to Nancy M. Morris,
Secretary, Commission, dated June 26, 2007.
\2\ 17 CFR 240.0-12.
\3\ 15 U.S.C. 78mm(a)(1).
\4\ 15 U.S.C. 78s(b).
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II. Application for Section 36 Exemption From Section 19(b) Rule Filing
Requirements for SRO Rules Incorporated by Reference
On August 11, 2008, the Commission approved a proposed rule
change--SR-Phlx-2007-33--which, among other things, permits Phlx
members to elect to be bound by the margin rules of either the New York
Stock Exchange LLC (``NYSE'') or the Chicago Board Options Exchange,
Incorporated (``CBOE'').\5\ More specifically, Phlx amended its Rule
721 to state a member organization must elect to be bound by the
initial and maintenance margin requirements of either the NYSE or CBOE
as the same may be in effect and amended from time to time.\6\ Phlx
Rule 721 further states that upon the filing of such election, a Phlx
member shall be bound to comply with the margin rules of the NYSE or
CBOE, as applicable, as though said rules were part of Phlx's margin
rules. On June 26, 2007, Phlx submitted a formal request, pursuant to
Rule 0-12 under the Exchange Act,\7\ seeking an exemption under Section
36 of the Exchange Act from the rule filing procedures of Section 19(b)
of the Exchange Act with respect to changes to the margin rules of
either the NYSE or CBOE.\8\
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\5\ See Exchange Act Release 58340, 73 FR 48268 (August 18,
2008).
\6\ Exchange Act Release No. 58340 (August 11, 2008); see also
Exchange Act Release No. 58045 (June 26, 2008), 73 FR 38487 (July 7,
2008) (SR-Phlx-2007-33).
\7\ See 17 CFR 240.0-12.
\8\ See Letter from Edith H. Hallahan, Esq., Senior Vice
President and Deputy General Counsel, Phlx, to Nancy M. Morris,
Secretary, Commission, dated June 26, 2007.
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III. Order Granting Section 36 Exemption
Section 36 of the Exchange Act \9\ authorizes the Commission to
conditionally or unconditionally exempt any person, security, or
transaction, or any class thereof, from any provision of the Exchange
Act or rule thereunder, if necessary or appropriate in the public
interest and consistent with the protection of investors. The
Commission believes that it is appropriate to issue exemptions, subject
to the conditions described below, to allow SROs to incorporate by
reference the rules of other SROs without being subject to the rule
filing requirements of Section 19(b) of the Exchange Act whenever the
SRO's rules that are incorporated by reference change. Such exemptions
promote efficient use of Commission and SRO resources by avoiding
duplicative rule filings based on simultaneous changes to identical
rule text sought by more than one SRO.
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\9\ 15 U.S.C. 78mm.
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The Commission will consider granting requests for exemption,
pursuant to Section 36 of the Exchange Act, from the rule filing
requirements imposed by Section 19(b) of the Exchange Act, provided
that:\10\
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\10\ Exchange Act Release No. 49260 (February 17, 2004), 69 FR
8500 (February 24, 2004).
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[[Page 52434]]
(1) An SRO wishing to incorporate rules of another SRO by reference
has submitted a written request for an order exempting it from the
requirement in Section 19(b) of the Exchange Act to file proposed rule
changes relating to the rules incorporated by reference, has identified
the applicable originating SROs, together with the rules it wants to
incorporate by reference, and otherwise has complied with the
procedural requirements set forth in the Commission's release governing
procedures for requesting exemptive orders pursuant to Rule 0-12 under
the Exchange Act;\11\
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\11\ See 17 CFR 240.0-12 and Exchange Act Release No. 39624
(February 5, 1998), 63 FR 8101 (February 18, 1998) (Commission
Procedures for Filing Applications for Orders for Exemptive Relief
Pursuant to Section 36 of the Exchange Act; Final Rule).
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(2) an incorporating SRO has requested incorporation of categories
of rules (rather than individual rules within a category) that are not
trading rules (e.g., the SRO has requested incorporation of rules such
as margin, suitability, arbitration); and
(3) the incorporating SRO has reasonable procedures in place to
provide written notice to its members each time a change is proposed to
the incorporated rules of another SRO.
The Commission believes that it is appropriate to issue an
exemption, subject to the conditions described above, to allow Phlx to
incorporate by reference the margin rules of the NYSE or CBOE (by
allowing its members to elect to be bound by the margin rules of either
the NYSE or CBOE), without being subject to the rule filing
requirements of Section 19(b) of the Exchange Act whenever the SRO's
margin rules that are incorporated by reference change. The Commission
believes that this exemption will promote more efficient use of
Commission and Phlx resources by avoiding duplicative rule filings
based on simultaneous changes to identical rule text sought by more
than one SRO. The Commission notes in granting this exemption, that
Phlx by incorporating by reference another SRO's margin rules would
agree to be governed by the incorporated rules, as amended from time to
time, but not be required to file a separate proposed rule change with
the Commission each time either the NYSE or CBOE seeks to modify its
margin rules.
Phlx is requesting to incorporate by reference the whole category
of the NYSE and CBOE margin rules (i.e., did not ``cherry-pick''
certain individual rules within a category), which are regulatory rules
and not trading rules. The Commission also has previously approved the
incorporation by reference of the NYSE and CBOE margin rules for the
International Securities Exchange and the Boston Options Exchange.\12\
The Commission notes that the Exchange previously requested, and the
Commission granted, a request by Phlx to incorporate by reference, the
NASD Code of Arbitration Procedure, subject to certain conditions.\13\
Consistent with the conditions attendant to its prior exemptive
request, the Exchange has agreed to continue to provide written notice
to its members whenever the NYSE or CBOE proposes a change to its
margin rules.\14\ This procedure will provide Phlx members with notice
of a proposed rule change that affects their interests, so that they
would have the opportunity to comment on it.
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\12\ Exchange Act Release No. 49260 (February 17, 2004), 69 FR
8500 (February 24, 2004).
\13\ See Exchange Act Release No. 49260 (February 17, 2004), 69
FR 8500 (February 24, 2004).
\14\ See supra note 1.
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For the reasons discussed above, the Commission finds that the
exemption is necessary or appropriate in the public interest, and is
consistent with the protection of investors.
Accordingly, it is ordered, pursuant to Section 36 of the Exchange
Act,\15\ that Phlx, with respect to the margin rules of the NYSE and
CBOE that Phlx proposes to incorporate by reference as specified above,
and subject to the conditions described above, shall be exempt from
rule filing requirements of Section 19(b) of the Exchange Act to the
extent that Section 19(b) would otherwise require submission of a
proposed rule change filing with the Commission.
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\15\ 15 U.S.C. 78mm.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\16\
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\16\ 17 CFR 200.30-3(a)(76).
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Florence E. Harmon,
Acting Secretary.
[FR Doc. E8-20809 Filed 9-8-08; 8:45 am]
BILLING CODE 8010-01-P