[Federal Register Volume 70, Number 5 (Friday, January 7, 2005)]
[Notices]
[Pages 1498-1499]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E5-25]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-50945; File No. SR-Phlx-2004-66]


Self-Regulatory Organizations; Philadelphia Stock Exchange, Inc.; 
Order Granting Accelerated Approval to Proposed Rule Change Relating to 
Concentration Limit Listing Standards in Phlx Rule 1009A

December 29, 2004.

I. Introduction

    On October 7, 2004, 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 1009A, Designation of the 
Index, which applies to the listing of index options. On October 25, 
2004, Phlx filed Amendment No. 1. The proposed rule change, as amended, 
was published for notice and comment in the Federal Register on 
December 1, 2004.\3\ The Commission received no comments on the 
proposal. This order approves the proposed rule change on an 
accelerated basis.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 50727 (November 23, 
2004), 69 FR 69974.
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II. Description of the Proposal

    The Exchange proposes to amend Phlx Rule 1009A, Designation of the 
Index, which applies to the listing of index options. Specifically, the 
Exchange proposes to increase certain concentration limit listing 
standards in Phlx Rule 1009A. Currently, under Phlx Rule 1009A(b), the 
Exchange may trade options on a narrow-based index without filing a 
proposed rule change under Section 19(b)(2) of the Act if certain 
conditions are satisfied.\4\ One of these conditions, set forth in Phlx 
Rule 1009A(b)(6), is that no single component security may represent 
more than 25% of the weight of the index, and that the five highest 
weighted component securities in the index may not, in the aggregate, 
account for more than 50% (60% for an index consisting of fewer than 25 
component securities) of the weight of the index. The

[[Page 1499]]

Exchange proposes to amend Phlx Rule 1009A(b)(6) to increase the 25% 
concentration limit for the highest weighted component stock to 30%, 
and to increase the concentration limit for the five mostly highly 
weighted stocks in an index consisting of fewer than 25 component 
securities from 60% to 65%.
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    \4\ The Commission approved an amendment to Phlx Rule 1009A to 
provide that certain narrow-based index options that meet generic 
listing standards may be listed and traded on the Exchange without a 
filing pursuant to Rule 19b-4(e) under the Act. See Securities 
Exchange Act Release No. 43683 (December 6, 2000), 65 FR 78235 
(December 14, 2000) (SR-Phlx-2000-67).
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 III. Discussion and Commission Findings

    The Commission has reviewed carefully the proposed rule change, as 
amended, and finds that it 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, is consistent with Section 6(b)(5) of the Act,\6\ 
which requires that the rules of an exchange be designed to promote 
just and equitable principles of trade, remove impediments to and 
perfect the mechanism of a free and open market and a national 
securities system, and, in general, protect investors and the public 
interest.
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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. See 15 U.S.C. 78c(f).
    \6\ 15 U.S.C. 78f(b)(5).
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    The Commission believes that this proposed rule change should 
provide additional flexibility to the Exchange in listing and trading 
narrow-based index options and reduce the instances in which the 
addition of a new series is restricted pursuant to Phlx Rule 1009A. The 
proposed rule change should also reduce instances where an index option 
listed on the Exchange is temporarily out of compliance with the 
concentration limits set forth under Phlx Rule 1009A because of changes 
in the market value of the underlying index components. Lastly, the 
Commission believes that that the concentration limit listing standards 
should continue to serve the purpose for which they were originally 
intended of not permitting a single security or small number of 
securities to dominate an index.
    The Exchange has requested accelerated approval of the proposed 
rule change. The Commission notes that the proposed rule change is 
similar to rules previously approved for other derivative products.\7\ 
The Commission also notes that this proposed rule change was subject to 
the full comment period, with no comments received, and acceleration by 
two days would facilitate the Exchange's trading of certain index 
options.
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    \7\ See Securities Exchange Act Release No. 44532 (July 10, 
2001), 66 FR 37078 (July 16, 2001) (SR-Amex-2001-25); Securities 
Exchange Act Release No. 45920 (May 13, 2002), 67 FR 35605 (May 20, 
2002) (SR-NASD-2002-45).
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    Accordingly, the Commission finds good cause, pursuant to Section 
19(b)(2) of the Act,\8\ for approving the proposed rule change, as 
amended, prior to the thirtieth day after the date of publication of 
notice thereof in the Federal Register.
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    \8\ 15 U.S.C. 78s(b)(2).
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IV. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\9\ that the proposed rule change (File No. SR-Phlx-2004-66) be, 
and it hereby is, approved, on an accelerated basis.
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    \9\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\10\
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    \10\ 17 CFR 200.30-3(a)(12).
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Jill M. Peterson,
Assistant Secretary.
[FR Doc. E5-25 Filed 1-6-05; 8:45 am]
BILLING CODE 8010-01-P