[Federal Register Volume 69, Number 40 (Monday, March 1, 2004)]
[Notices]
[Pages 9673-9674]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-4510]


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Securities and Exchange Commission

[Release No. 34-49311; File No. SR-Phlx-2003-72]


Self-Regulatory Organizations; Philadelphia Stock Exchange, Inc.; 
Order Granting Approval of Proposed Rule Change To Reduce Strike Prices 
for Index Options

February 24, 2004.
    On December 4, 2003, the Philadelphia Stock Exchange, Inc. 
(``Phlx'' or ``Exchange'') filed with the Securities and Exchange 
Commission (``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 1101A (``Terms 
of Option Contracts'') to provide that strike price intervals for index 
options \3\ shall be $2.50 for the three consecutive near-term months, 
$5 for the fourth month, and $10 for the fifth month. The proposed rule 
change was published for comment in the Federal Register on January 21, 
2004.\4\ The Commission received no comments on the proposal. This 
order approves the proposed rule change.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ Index options traded on the Exchange are also known as 
sector index options.
    \4\ See Securities Exchange Act Release No. 49074 (January 14, 
2004), 69 FR 2959.
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    The Commission finds that the proposed rule change 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 believes the proposal is consistent with 
Section 6(b)(5) of the Act \6\ which requires, among other things, that 
the Exchange's rules be designed to promote just and equitable 
principles of trade, to remove impediments to and perfect the mechanism 
of a free and open market and a national market system, and, in 
general, to protect investors and the public interest.
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    \5\ In approving this proposed rule change, the Commission notes 
that it 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 Commission believes that by reducing strike price intervals to 
$2.50 strikes for three consecutive near-term months, $5 for the fourth 
month, and $10 for the fifth month, the proposed rule change should 
increase the ability to trade an options series that is likely to 
expire in-the-money. In addition, the Commission notes that the 
Exchange has represented that there is sufficient

[[Page 9674]]

Options Price Reporting Authority (``OPRA'') system capacity to 
accommodate the reduced strike price intervals.
    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\7\ that the proposed rule change (SR-Phlx-2003-72) 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. 04-4510 Filed 2-27-04; 8:45 am]
BILLING CODE 8010-01-P