[Federal Register Volume 68, Number 108 (Thursday, June 5, 2003)]
[Notices]
[Pages 33754-33755]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-14172]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-47938; File No. SR-Phlx-2003-22]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by the Philadelphia Stock 
Exchange, Inc. Relating to Elimination of the Prospectus Delivery 
Requirement

May 28, 2003.
    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 May 5, 2003, the Philadelphia Stock Exchange LLC (``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 Exchange. The 
proposed rule change has been filed by Phlx as a ``non-controversial'' 
rule change under Rule 19b-4(f)(6) 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

    Phlx proposes to eliminate all references in its rules to 
``prospectus'' in connection with options trading, due to the fact that 
standardized options issued by The Options Clearing Corporation (the 
``OCC'') have become exempt from the Securities Act of 1933 
(``Securities Act'') (except for its antifraud provisions) and from the 
registration provisions of the Act \4\.
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    \4\ See Exemption for Standardized Options From Provisions of 
the Securities Act of 1933 and From the Registration Requirements of 
the Securities Exchange Act of 1934, Securities Act Release No. 8171 
and Securities Exchange Act Release No. 47082 (December 23, 2002), 
68 FR 188 (January 2, 2003).
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    Phlx Rule 1029(b) requires that every member and member 
organization deliver a current OCC Prospectus to each customer on 
request (the ``Prospectus Delivery Requirement''). The Exchange is 
proposing to delete Phlx Rule 1029(b) and renumber current Phlx Rule 
1029(c) as Phlx Rule 1029(b). A conforming change is being made to the 
title of Phlx Rule 1029 and to Commentary .03 to eliminate references 
to a prospectus.
    Other Phlx rules refer tangentially to the Prospectus Delivery 
Requirement, such as Phlx Rules 213 and 454 (each of which refer to 
exchange-traded options ``covered by a prospectus'') and Commentary .05 
to Phlx Rule 1024 (which makes reference to Phlx Rule 1029).\5\ The 
Exchange is proposing to delete references to a prospectus in each of 
these rules. The text of the proposed rule change is available at the 
Exchange and at the Commission.
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    \5\ Phlx Rule 784 refers to a prospectus in respect of 
``options.'' However, the Exchange represents that the rule is not 
applied to standardized options, so Phlx is not proposing to amend 
the language in Phlx Rule 784. Information about standardized 
options positions held by members and member organizations, that is 
also requested by Phlx Rule 784 in respect of options, is instead 
obtained by the Exchange pursuant to Phlx Rule 1003.
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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 Exchange 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 Exchange has prepared summaries, set forth in 
Sections A, B, and C below, of the most significant parts 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 eliminate all 
references to a ``prospectus'' in connection with options trading on 
the Exchange due to the fact that standardized options issued by the 
OCC have become exempt from the Securities Act (except for its

[[Page 33755]]

antifraud provisions)\6\ and from the registration provisions of the 
Act.
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    \6\ On January 10, 2003, the OCC filed a post-effective 
amendment to its registration statement under the Securities Act to 
remove from registration all put and call options that remain unsold 
as of the date of the post-effective amendment.
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    On January 2, 2003, final Commission rules became effective 
regarding whether standardized options should be registered with the 
Commission under the Securities Act or the Act.\7\ In this release, the 
Commission concluded that standardized options issued by registered 
clearing agencies, such as the OCC, and traded on a registered national 
securities exchange or a registered national securities association, 
shall be exempt from all provisions of the Securities Act (other than 
the anti-fraud provisions) and shall be exempt from the registration 
requirements of the Act.
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    \7\ See supra note 4.
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    Given this recent development, there is no longer a need for the 
delivery of OCC Prospectuses to options customers on request pursuant 
to Phlx Rule 1029(b). Other references to a ``prospectus'' in 
connection with options trading on the Exchange are no longer 
necessary. These changes do not affect the requirement that an Options 
Disclosure Document be delivered to customers of members and member 
organizations at the time such customer's account is approved to trade 
options.\8\
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    \8\ See Phlx Rule 1029(a).
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2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with section 6(b) 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 facilitate transactions in securities, and to remove 
impediments to and perfect the mechanism of a free and open market and 
a national market system.
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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 inappropriate burden on competition.

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 with respect 
to the proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Because, the foregoing proposed rule change (1) does not 
significantly affect the protection of investors or the public 
interest; (2) does not impose any significant burden on competition; 
and (3) by its terms, does not become operative until 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, and the exchange provided the Commission with written notice 
of its intent to file the proposed rule change at least five business 
days prior to the date of filing of the proposed rule change,\11\ it 
has become effective pursuant to section 19(b)(3)(A) of the Act \12\ 
and Rule 19b-4(f)(6) thereunder.\13\
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    \11\ See e-mail from Mark Salvacion, Director and Counsel, Phlx, 
to Frank N. Genco, Attorney, Division of Market Regulation, 
Commission, dated April 30, 2003.
    \12\ 15 U.S.C. 78s(b)(3)(A).
    \13\ 17 CFR 240.19b-4(f)(6).
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    At any time within 60 days of the filing of this 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. 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 Section. 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-2003-22 and 
should be submitted by June 26, 2003.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\14\
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    \14\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 03-14172 Filed 6-4-03; 8:45 am]
BILLING CODE 8010-01-P