[Federal Register Volume 67, Number 249 (Friday, December 27, 2002)]
[Notices]
[Pages 79221-79222]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-32793]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-47059; File No. SR-Phlx-2002-11]


Self-Regulatory Organizations; Order Approving a Proposed Rule 
Change and Amendment No. 1 Thereto by the Philadelphia Stock Exchange, 
Inc. Proposing To Amend Phlx Rule 201A(b), Alternate Specialist 
Assignment

December 20, 2002.

I. Introduction

    On February 11, 2002, the Philadelphia Stock Exchange, Inc. 
(``Phlx'' or ``Exchange'') filed with the Securities and Exchange 
Commission (``SEC'' or ``Commission''), pursuant to Section 19(b)(1) of 
the Securities Exchange Act of 1934 (``Act''),\1\ and Rule 19b-4 
thereunder,\2\ a proposed rule change to amend Phlx Rule 201A(b), 
Alternate Specialist Assignment, to delete restrictions on members, 
member organizations and persons affiliated with member organizations 
from acting as an alternate specialist while that member, member 
organization or person affiliated with member organization is either a 
specialist in the options overlying the equity issue or a Registered 
Options Trader (``ROT'') with an assignment in the overlying options. 
The Exchange filed Amendment No. 1 to the proposed rule change on 
September 10, 2002.\3\ The proposed rule change, as amended, was 
published for comment in the Federal Register on November 7, 2002.\4\ 
The Commission received no comment letters on the proposed rule change. 
This order approves the proposed rule change, as amended.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ On September 10, 2002, the Exchange filed a Form 19b-4, 
which replaced the original filing in its entirety (``Amendment No. 
1'').
    \4\ See Securities Exchange Act Release No. 46758 (October 31, 
2002), 67 FR 67885.
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    After careful review, the Commission finds that the proposed rule 
change, as amended, is consistent with the requirements of the Act and 
the rules and regulations thereunder applicable to a national 
securities exchange.\5\ In particular, the Commission finds that the 
proposed rule change to eliminate the restriction on an alternate 
specialist being affiliated with a specialist or ROT in the overlying 
option is consistent with Section 6(b)(5) of the Act,\6\ which 
requires, among other things, that the rules of an exchange be designed 
to promote just and equitable principles of trade and to remove 
impediments to and perfect the mechanism of a free and open market.
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    \5\ In approving this proposed rule change, the Commission has 
considered the proposed rule's impact on efficiency, competition, 
and capital formation. 15 U.S.C. 78c(f).
    \6\ 15 U.S.C. 78f(b)(5).
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    The Exchange's rules do not restrict a Phlx primary equity 
specialist from being affiliated with a specialist or ROT trade in the 
overlying option. The Commission does not believe that such a 
restriction is necessary for alternate specialists. The Commission also 
believes that the potential for manipulative or other improper trading 
activity is minimized by the physical separation of the Exchange's 
options and equity trading floors. Further, the Commission notes that 
the Exchange's Market Surveillance and Examinations Departments will 
continue to monitor and surveil for improper trading activity.

[[Page 79222]]

II. Conclusion

    For the foregoing reasons, the Commission finds that the proposed 
rule change, as amended, is consistent with the requirements of the Act 
and rules and regulations thereunder.
    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\7\ that the proposed rule change (SR-Phlx-2002-11), as amended, is 
approved.
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    \7\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\8\
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    \8\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 02-32793 Filed 12-26-02; 8:45 am]
BILLING CODE 8010-01-P