[Federal Register Volume 67, Number 35 (Thursday, February 21, 2002)]
[Notices]
[Pages 8053-8055]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-4169]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-45440; File No. SR-PHLX-2001-109]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by the Philadelphia Stock 
Exchange, Inc. Clarifying the Applicability of Phlx Rule 606 to 
Tethered Communication Devices

February 13, 2002.
    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 December 20, 2001, 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, II, 
and III, below, which Items have been prepared by the Phlx. The Phlx 
submitted an amendment to the proposed rule change on February 7, 
2002.\3\ The Commission is publishing this notice to solicit comments 
on the proposed rule change, as amended, from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See letter from Jurij Trypupenko, Esquire, Phlx, to Sharon 
M. Lawson, Senior Special Counsel, Division of Market Regulation, 
Commission, dated February 6, 2002 (``Amendment No. 1''). Amendment 
No. 1 deletes the second sentence of proposed Supplementary Material 
.03 to Phlx Rule 606.
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I. Self-Regulatory Organization's Statement of the Terms of 
Substance of the Proposed Rule Change

    The Phlx proposes to add new Supplementary Material .03 to Phlx 
Rule 606 (Wire and Other Connections, Communications and Equipment) to 
clarify that the rule and relevant policies apply to users of all 
communication and other electronic devices on the floors of the 
Exchange, including, but not limited to, tethered \4\ as well as, 
wireless, wired, voice, and

[[Page 8054]]

data devices. The proposed amendment to Phlx Rule 606 is proposed in 
conjunction with the Exchange's installation of tether connections and 
imposition of initial and monthly fees on the users of such tethers, 
namely registered options traders and floor brokers (but not 
specialists) on the options trading floor.\5\
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    \4\ A tether is a hardwire connection to an existing Exchange 
communication network. It augments the current wireless network on 
the options floor and allows users to connect their handheld devices 
to the existing Exchange communication network and thereby interface 
with member firm communication networks.
    \5\ See Securities Exchange Act Release No. 44963 (October 19, 
2001), 66 FR 64317 (October 26, 2001) (SR-Phlx-2001-84). Footnote 6 
notes that the restrictions of Exchange Rule 606 and any other rules 
applicable to communications apply to all communications via 
tethers, and that the Exchange intends to propose a clarifying 
amendment to Rule 606.
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    The proposed rule change is set forth below. Additions are in 
italics.

Rule 606. Wire and Other Connections Rule Communications and 
Equipment

    (a) No member or member organization shall establish or maintain 
any private wire connection, private radio, television or wireless 
system, between the Exchange Trading Floor and a non-member without 
application to and approval by the Committee.
* * * * *

Supplementary Material:

* * * * *
    .03  This rule and any relevant Exchange policy are intended to 
apply to all communication and other electronic devices on the floor of 
the Exchange, including, but not limited to, wireless, wired, tethered, 
voice, and data. 

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
    Due to increases in bandwidth demands and the use of applications 
by traders, namely on the options floor, that are not designed to 
effectively operate on the Exchange's shared wireless network, the 
Exchange installed tether connections on its options floor. As a 
result, traders have a choice of how they access the Exchange's local 
area network (``LAN'') in order to receive and transmit non-trading 
data  through hardwired tether connections or wireless connections. The 
Exchange believes that traders should be subject to consistent rules 
and disciplinary processes regardless of what type of access to the LAN 
or communication device they choose. Accordingly, the Exchange proposes 
to add new Supplementary Material .03 to its Rule 606 (Communications 
and Equipment) to clarify that the rule and relevant policies apply to 
users of all communication and other electronic devices on the floors 
of the Exchange, including, but not limited to, tethered as well as 
wireless, wired, voice, and data devices.
2. Statutory Basis
    The Exchange believes that the proposed rule change, as amended, is 
consistent with Section 6(b) of the Act \6\ in general, and furthers 
the objectives of Section 6(b)(5) \7\ in particular, in that it is 
designed to promote just and equitable principles of trade, remove 
impediments to and perfect the mechanism of a free and open market and 
protect investors and the public interest by clarifying the 
applicability of the Exchange rules, and the disciplinary process 
thereunder, to member users of tethered communication devices on the 
options floor.
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    \6\ 15 U.S.C. 78f(b).
    \7\ 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, as 
amended, will impose any inappropriate burden on competition.

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

    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 for 30 days from the date on which it was filed, or 
such shorter time as the Commission may designate,\8\ provided that the 
Exchange has given the Commission written notice of its intention to 
file the proposed rule change at least five days prior to the date of 
filing, or such shorter time as designated by the Commission,\9\ it has 
become effective pursuant to Section 19(b)(3)(A) of the Act \10\ and 
Rule 19b-4(f)(6) \11\ thereunder. At any time within 60 days of the 
filing of Amendment No. 1 to 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.
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    \8\ The Exchange requested the Commission to waive the 30 day 
operative period.
    \9\ The Exchange requested, and the Commission agreed, to waive 
the five day pre-filing requirement
    \10\ 15 U.S.C. 78s(b)(3)(A).
    \11\ 17 CFR 240.19-4(f)(6).
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    The Commission believes that it is consistent with the protection 
of investors and the public interest and therefore finds good cause to 
waive the 5 day pre-filing requirement and to designate the proposal to 
become immediately operative upon filing. Waiver of the 5 day 
requirement and acceleration of the operative date will further clarify 
without undue delay the applicability of Phlx Rule 606 to various types 
of communications devices, including those connected via tethers. For 
these reasons, the Commission finds good cause to waive the 5 day pre-
filing requirement and to designate that the proposal become operative 
immediately upon filing.\12\
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    \12\ For purposes only of accelerating the operative date of 
this proposal, the Commission has considered the proposed rule's 
impact on efficiency, competition, and capital formation. 15 U.S.C. 
78c(f).
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II. Solicitation of Comments

    Interested persons are invited to submit written data, views and 
arguments concerning the foregoing, including whether the proposed rule 
change, as amended, is consistent with the Act. Persons making written 
submissions should file six copies thereof with the Secretary, 
Securities and Exchange Commission, 450 Fifth Street, NW., Washington, 
DC 20549-0609. 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

[[Page 8055]]

Room. Copies of such filing will also be available for inspection and 
copying at the principal office of the Phlx. All submissions should 
refer to File No. SR-Phlx-2001-109 and should be submitted by March 14, 
2002.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\13\
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    \13\ 7 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 02-4169 Filed 2-20-02; 8:45 am]
BILLING CODE 8010-01-P