[Federal Register Volume 68, Number 160 (Tuesday, August 19, 2003)]
[Notices]
[Pages 49835-49836]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-21178]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-48323; File No. SR-Phlx-2003-43]


Self-Regulatory Organizations; Notice of Filing of Proposed Rule 
Change by the Philadelphia Stock Exchange, Inc. Relating to By-Law 
Article 12-11, Use of Facilities

August 12, 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 June 2, 2003, the Philadelphia Stock Exchange, Inc. (``Phlx'' or 
``Exchange'') submitted to 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 
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.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Phlx proposes to amend its By-Laws to limit the liability of 
The Options Clearing Corporation (``OCC'') to members and member 
organizations resulting from their use of the Intermarket Options 
Linkage (``Linkage'').
    The text of the proposed rule change is below. Proposed additions 
are in italics.
* * * * *
Sec. 12-11 Use of Facilities of Exchange
    SEC. 12-11. The Exchange shall not be liable for any damages 
sustained by a member or a member organization growing out of the use 
or enjoyment by such member or member organization of the facilities 
afforded by the Exchange to members for the conduct of their business. 
The Options Clearing Corporation shall not be liable to members and 
member organizations with respect to the use, non-use or inability to 
use the Intermarket Options Linkage, including without limitation the 
content of orders, trades, or other business facilitated through the 
Intermarket Options Linkage, the truth or accuracy of the content of 
messages or other information transmitted through the Intermarket 
Options Linkage, or otherwise.
* * * * *

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 had 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.

[[Page 49836]]

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 limit the liability 
of OCC to Phlx members and member organizations resulting from their 
use, non-use or inability to use the Linkage. The Phlx, along with the 
American Stock Exchange LLC, the Chicago Board Options Exchange, Inc., 
the International Securities Exchange, Inc., and the Pacific Exchange, 
Inc. (together with the Phlx, known as the ``Exchanges''), entered into 
an agreement with OCC regarding the construction and on-going 
maintenance and operation of the Linkage (the ``Agreement''). In the 
Agreement, the Exchanges consented to each file a proposed rule change 
with the Commission limiting OCC's liability to the respective 
Exchanges' members. The Phlx believes that the present proposed rule 
change satisfies its respective obligation.
    The Phlx believes that the proposed rule change is a reasonable 
extension of the existing limitation of liability enjoyed by the 
Exchange in Phlx By-Law Article XII, Section 12-11 (the ``By-Law'') to 
OCC. Both the OCC and the Exchange are performing functions related to 
the on-going maintenance and operation of the Linkage, the benefits of 
which are enjoyed by the Exchange's members. While the Phlx believes 
that the By-Law would afford the Exchange protection from liability 
from members' and member organizations' use of Exchange facilities 
regarding Linkage, the By-Law, in its current form, does not extend 
similar protection to OCC. The proposed By-Law amendment would extend 
that protection to OCC, which should prevent OCC from being the target 
of liability claims made by members and member organizations who may 
look for satisfaction to an otherwise unprotected OCC. The Phlx 
believes that this protection should contribute to the efficient 
operation of the Linkage.
2. Statutory Basis
    The Phlx believes that its proposal is consistent with Section 6(b) 
of the Act \3\ in general, and furthers the objectives of Section 
6(b)(5) of the Act \4\ in particular, in that it is intended to promote 
just and equitable principles of trade, foster cooperation and 
coordination with persons engaged in processing information with 
respect to, and facilitating transactions in securities, and, in 
general, to protect investors and the public interest by promoting 
efficient operation of the Linkage by extending liability protection to 
OCC, which provides functions related to the Linkage's on-going 
maintenance and operations.
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    \3\ 15 U.S.C. 78f(b).
    \4\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Phlx 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

    The Phlx neither solicited nor received written comments concerning 
the proposed rule change.

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

    Within 35 days of the date of publication of this notice in the 
Federal Register or within such longer period (i) as the Commission may 
designate up to 90 days of such date if it finds such longer period to 
be appropriate and publishes its reasons for so finding, or (ii) as to 
which the Phlx consents, the Commission will:
    (A) By order approve such proposed rule change; or
    (B) Institute proceedings to determine whether the proposed rule 
change should be disapproved.

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 Room. Copies of such filings will also be 
available for inspection and copying at the principal office of the 
Phlx. All submissions should refer to File No. SR-Phlx-2003-43 and 
should be submitted by September 9, 2003.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\5\
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    \5\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 03-21178 Filed 8-18-03; 8:45 am]
BILLING CODE 8010-01-P