[Federal Register Volume 70, Number 26 (Wednesday, February 9, 2005)]
[Notices]
[Pages 6918-6920]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 05-2477]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-51127; File No. SR-Phlx-2005-11]


Self-Regulatory Organizations; Notice of Filing of Proposed Rule 
Change by the Philadelphia Stock Exchange, Inc. Relating to Article 
III, Section 3-6 and Article IV, Section 4-1 of Its By-laws

February 2, 2005.
    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 January 31, 2005, the Philadelphia Stock Exchange, Inc. (``Phlx'' or 
the ``Exchange'') filed with the Securities and Exchange Commission 
(``SEC'' or ``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 Article III, Section 3-6 and Article IV, 
Section 4-1 its By-Laws to convert one of the On-Floor Equity Governor 
positions on the Board of Governors into a Philadelphia Board of Trade, 
Inc. (``PBOT'') representative Governor position.
    The text of the proposed amendments to Article III, Section 3-6 and 
Article IV, Section 4-1 of the Exchange's By-laws is set forth below.
    Italics indicate new text; brackets indicate deletions.
* * * * *

[[Page 6919]]

Article III

Sec. 3-6

Open Meetings of Nominating and Elections Committee--Recommendations--
Notice
    (a) The Nominating and Elections Committee shall hold at least two 
(2) open meetings during the month of January in each year for the 
purpose of receiving recommendations as to candidates for positions as 
On-Floor Governors. Recommendations for On-Floor Governors may be made 
by any member, participant or Member Organization Representative or by 
any member of the Nominating and Elections Committee then in office. 
With respect to the On-Floor PBOT Governor, recommendations shall be 
submitted by the PBOT Board of Governors. Recommendations may be 
submitted in writing or they may be presented in person. Notice of such 
meetings and of the period within which recommendations may be 
submitted in writing or presented in person shall be given by the 
Secretary of the Exchange to all members, participants and Member 
Organization Representatives.
    (b) No change.
* * * * *

Article IV

Sec. 4-1

Number and Composition
    The management of the business and affairs of the Exchange shall be 
vested in the Board of Governors. The Board of Governors shall be 
composed of the Chairman of the Board of Governors, who shall be the 
individual then holding the office of Chief Executive Officer of the 
Exchange, and 21 Governors as hereafter provided. There shall be five 
(5) Governors (On-Floor Governors) consisting of: [Two (2)] One (1) 
Governor[s] who [are] is an industry Governor[s] and [are] is a 
member[s] primarily engaged in business on the Exchange's Equity Floor 
or a general partner[s], executive officer[s] (vice president and 
above) or member[s] associated with a member organization[s] primarily 
engaged in business on the Exchange's Equity Floor (On-Floor Equity 
Governor[s]); one (1) Governor who is an industry Governor and is a 
member of the Philadelphia Board of Trade (On-Floor PBOT Governor); one 
(1) Governor who is an industry Governor and is a member primarily 
engaged in business as a specialist on the Exchange's Equity Options 
Floor or a general partner, executive officer (vice president and 
above) or a member associated with a member organization primarily 
engaged in specialist business on the Exchange's Equity Options Floor 
(On-Floor Equity Options Specialist Governor); one (1) Governor who is 
an industry Governor and is a member primarily engaged in business as a 
registered options trader on the Exchange's Equity Options Floor or a 
general partner, executive officer (vice president and above) or a 
member associated with a member organization primarily engaged in 
registered options trader business on the Exchange's Equity Options 
Floor (On-Floor Equity Options Registered Options Trader Governor); and 
one (1) Governor who is an industry Governor and is a member primarily 
engaged in business on the Exchange's Equity Options Floor as a floor 
broker (On-Floor Equity Options Broker Governor). There shall be five 
(5) Governors (Off-Floor Governors) who are industry Governors and are 
general partners, executive officers (vice president or above), or 
members or participants associated with member or participant 
organizations which conduct a non-member or nonparticipant public 
customer business and shall individually not be primarily engaged in 
business activities on the Exchange Floor (Off-Floor Governors). There 
shall be eleven (11) nonindustry Governors, of whom at least five (5) 
shall be public Governors. There also shall be one (1) On-Floor and one 
(1) Off-Floor Vice Chairman of the Board of Governors.
* * * * *

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 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.

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 change the 
composition of the Phlx's Board of Governors to better reflect the 
Exchange's business by replacing an On-Floor Equity Governor position 
with a PBOT representative Governor position. PBOT is a subsidiary of 
the Exchange.
    With regard to changes to By-Law Article III, Sections 3-6 and 
Article IV, Section 4-1, the proposed amendment converts an On-Floor 
Equity Governor position into that of a PBOT representative Governor 
position. Recommendations for the PBOT Governor position candidate 
would be submitted to the Nominating and Elections Committee by the 
PBOT Board of Governors.\3\ The Phlx's Board of Governors believes that 
such a change in composition is appropriate to reflect the investment 
in and strategic initiatives regarding the Exchange's ownership 
interests in the PBOT. The Phlx believes that the new Board of 
Governors composition, with a PBOT representative Governor, would more 
accurately represent the strategic ownership and on-going business 
interests of the Exchange while still affording appropriate 
proportional representation of On-Floor Governors--three from the 
options trading floor, one from the equities trading floor and one from 
the PBOT.
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    \3\ To the extent that the proposed rule change runs counter to 
the Commission's recent governance and transparency proposals, 
Securities Exchange Act Release No. 50699 (November 18, 2004), 69 
CFR 71125 (December 8, 2004), the Phlx will conform its By-laws 
accordingly. Telephone conversation among Scott Donnini, Vice 
President, Phlx, Nancy Sanow, Assistant Director, Division of Market 
Regulation (``Division''), Commission, Gordon Fuller, Counsel to the 
Assistant Director, Division, Commission and Geraldine Idrizi, 
Attorney, Division, Commission, on January 26, 2005.
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2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act,\4\ in general, and furthers the objectives of Section 
6(b)(3) of the Act,\5\ in particular, in that it assures a fair 
representation of its members in the selection of its directors and 
administration of its affairs and that it is designed, in general, to 
protect investors and the public interest.
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    \4\ 15 U.S.C. 78f(b)
    \5\ 15 U.S.C. 78f(b)(3).
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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

    No written comments were solicited or received.

[[Page 6920]]

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 Exchange consents, the Commission shall:
    (a) By order approve such 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. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an e-mail to [email protected]. Please include 
File Number SR-Phlx-2005-11 on the subject line.

Paper Comments

     Send paper comments in triplicate to Jonathan G. Katz, 
Secretary, Securities and Exchange Commission, 450 Fifth Street, NW., 
Washington, DC 20549-0609. All submissions should refer to File Number 
SR-Phlx-2005-11. This file number should be included on the subject 
line if e-mail is used. To help the Commission process and review your 
comments more efficiently, please use only one method. The Commission 
will post all comments on the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). 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 also will be available for 
inspection and copying at the principal office of the Phlx. All 
comments received will be posted without change; the Commission does 
not edit personal identifying information from submissions. You should 
submit only information that you wish to make available publicly. All 
submissions should refer to File Number SR-Phlx-2005-11 and should be 
submitted on or before March 2, 2005.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority. \6\
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    \6\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 05-2477 Filed 2-8-05; 8:45 am]
BILLING CODE 8010-01-M