[Federal Register Volume 69, Number 28 (Wednesday, February 11, 2004)]
[Notices]
[Pages 6711-6712]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-2948]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-49193; File No. SR-Phlx-2004-12]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by the Philadelphia Stock 
Exchange, Inc. Relating to Member Organizations' Compliance With Phlx 
Rule 972

February 4, 2004.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act'') \1\, and Rule 19b-4 \2\ thereunder, notice is hereby given 
that on February 3, 2004, 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 
Exchange. 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 Exchange proposes to amend Phlx Rule 972, Continuation of 
Status After the Merger, to extend the filing period of a member 
organizations' qualifying permit holder pursuant to Phlx Rule 921(a), 
following the transition of the Exchange from a non-stock to a stock 
corporation (the ``Demutualization'').\3\ Specifically, the Exchange 
proposes to extend the time period from 15 days to 45 days after the 
closing of the Demutualization. The text of the proposed rule change is 
available at the Exchange and at the Commission.
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    \3\ See Securities Exchange Act Release No. 49098 (January 16, 
2004), 69 FR 3974 (January 27, 2004) (SR-Phlx-2003-73).
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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 aspects 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 facilitate the 
administration of new Phlx Rule 972, which was recently adopted as part 
of the Exchange's Demutualization. The Exchange believes that the minor 
change proposed in this filing would make it easier for the Exchange to 
administer the new rule, because it allows more time for member 
organizations to comply.
    Phlx Rule 972 currently establishes three deadlines for member 
organizations; two of the deadlines are within 15 days after the 
closing of Demutualization \4\ and one is within 45 days after the 
closing of Demutualization. First, the requirement that member 
organizations specify the Member Organization Representative within 15 
days is not being changed. Second, Rule 972 requires that member 
organizations provide the security required by Rule 909 within 45 days. 
Rule 909 requires member organizations provide security to the Exchange 
for the payment of any claims owed to the Exchange, the Stock Clearing 
Corporation of Philadelphia (``SCCP''),\5\ and other Exchange members 
or member organizations (the ``Security Requirement'').\6\ Third, Rule 
972 requires member organizations to comply with Rule 921(a) within 15 
days. Rule 921 requires that the member who proposes to qualify an 
entity as a member organization file a form with the Exchange.
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    \4\ The closing of the Demutualization, also referred to as the 
Merger, occurred on January 20, 2004.
    \5\ SCCP, a subsidiary of Phlx, is a registered clearing agency.
    \6\ The Exchange recently, in SR-Phlx-2004-06, extended the 
compliance date for the Security Requirement from 15 days to 45 days 
after the closing of Demutualization and provided an additional 
method of complying with the Security Requirement, which is by 
entering into an acceptable agreement among the Exchange, SCCP and 
the member organization (a ``Security Agreement''). The Security 
Agreement establishes and assigns to the Exchange a first priority 
perfected lien on and continuing security interest in the excess 
margin funds held in such member organization's SCCP margin account.
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    The purpose of the proposed amendment to Rule 972 is to extend the 
time member organizations have to satisfy the requirements of 921(a) in 
order for member organizations to avoid suspension.\7\ The Exchange is 
proposing to extend the 15-day time period to 45 days. The Exchange 
believes that this extension will provide member organizations with 
sufficient time to process and complete the tasks necessary to meet the 
requirements and avoid suspension.
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    \7\ See Rule 972(a).
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2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the requirements of Section 6(b) of the Act,\8\ in general, and 
furthers the objectives of Section 6(b)(5) of the Act,\9\ in 
particular, in that it promotes just and equitable principles of trade, 
removes impediments to and perfects the mechanisms of a free and open 
market, and in general, protects investors and the public interest by 
allowing member organizations more time to comply with Rule 972, and 
thus, continue their status as a member organization without 
disruption.
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    \8\ 15 U.S.C. 78f(b).
    \9\ 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.

[[Page 6712]]

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

    The foregoing rule change has become effective pursuant to Section 
19(b)(3)(A) of the Act \10\ and subparagraph (f)(6) of Rule 19b-4 
thereunder,\11\ because the 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) does not become operative for 30 days from the date on which it 
was filed, or such shorter time as the Commission may designate; and 
the Exchange has given the Commission written notice of its intention 
to file the proposed rule change. At any time within 60 days of the 
filing of 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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    \10\ 15 U.S.C. 78s(b)(3)(A).
    \11\ 17 CFR 240.19b-4(f)(6).
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    Under Rule 19b-4(f)(6)(iii) of the Act,\12\ the proposed rule 
change does not become operative for 30 days after the date of filing, 
or such shorter time as the Commission may designate if consistent with 
the protection of investors and the public interest. The Exchange has 
requested that the Commission accelerate the thirty-day operative date 
of the proposal and also waive the requirement that the Exchange submit 
written notice of its intent to file the proposed rule change at least 
five business days prior to the filing date, in order to facilitate 
member organization compliance with new Phlx Rule 972 and to avoid 
disruption of their status as member organizations. The Commission, 
consistent with the protection of investors and the public interest, 
has determined to accelerate the 30-day operative date to February 3, 
2004,\13\ the date of filing of the proposed rule change. Such waiver 
would facilitate member organization compliance with new Phlx Rule 972 
and thus would avoid disruption of their status as member 
organizations. In addition, the Commission has determined to waive the 
five-day pre-filing requirement.
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    \12\ 17 CFR 240.19b-4(f)(6)(iii).
    \13\ For purposes only of accelerating the 30-day operative 
period for 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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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. 
Comments may also be submitted electronically at the following e-mail 
address: rule [email protected]. All comment letters should refer to 
File No. SR-Phlx-2004-12. This file number should be included on the 
subject line if e-mail is used. To help the Commission process and 
review comments more efficiently, comments should be sent in hardcopy 
or by e-mail but not by both methods. 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 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-2004-12 and should be 
submitted by March 3, 2004.

    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. 04-2948 Filed 2-10-04; 8:45 am]
BILLING CODE 8010-01-U