[Federal Register Volume 70, Number 69 (Tuesday, April 12, 2005)]
[Notices]
[Page 19140]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E5-1697]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-51476; File No. SR-Phlx-2004-75]


Self-Regulatory Organizations; Philadelphia Stock Exchange, Inc.; 
Order Granting Approval to Proposed Rule Change Relating to Floor 
Official Conflicts of Interest

April 5, 2005.
    On November 9, 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 Exchange Rule 124, 
Disputes; and Option Floor Procedure Advices-27, Floor Official 
Rulings--Options (``OFPA F-27''), to authorize Exchange staff \3\ to 
disqualify a Floor Official from participating in a particular ruling 
where it appears that such Floor Official has a conflict of interest. 
The proposed rule change was published for comment in the Federal 
Register on March 4, 2005.\4\ The Commission received no comments on 
the proposal.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ ``Exchange staff'' generally refers to staff of the 
Exchange's Office of Market Surveillance present on the trading 
floor. Telephone conversation among Richard Rudolph, Director and 
Counsel, Phlx, Gordon Fuller, Counsel to the Assistant Director, 
Division of Market Regulation, Commission and Geraldine Idrizi, 
Attorney, Division, Commission on December 15, 2004.
    \4\ See Securities Exchange Act Release No. 51272 (February 28, 
2005), 70 FR 10738.
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    The proposed rule defines a ``conflict of interest'' to exist where 
a Floor Official is directly or indirectly affiliated with a party 
seeking a Floor Official ruling; is a participant or is directly or 
indirectly affiliated with a participant in a transaction that is the 
subject of a Floor Official ruling; is a debtor or creditor of a party 
seeking a Floor Official ruling; or is an immediate family member of a 
party seeking a Floor Official ruling. The proposal does not propose to 
limit the term ``conflict of interest'' to these four circumstances and 
Exchange staff are authorized to consider other circumstances, on a 
case-by-case basis, in determining the eligibility of a particular 
Floor Official to participate in a particular ruling.
    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\ and, in 
particular, the requirements of Section 6(b) of the Act \6\ and the 
rules and regulations thereunder. The Commission finds specifically 
that the proposed rule change is consistent with Section 6(b)(5) of the 
Act,\7\ in that it is 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 market system, and to protect investors and 
the public interest, by providing expressly in the Exchange's rules 
that Exchange staff are authorized to disqualify a Floor Official from 
participating in a particular ruling where it appears that such Floor 
Official has a conflict of interest. In the Commission's view, the 
proposed rule change would further the goal of fair and objective 
decision making by Floor Officials, because the Exchange would be able 
to take the steps necessary to prevent a Floor Official from 
participating in a particular ruling where it appears that the Floor 
Official has a conflict of 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).
    \7\ 15 U.S.C. 78f(b)(5).
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    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\8\ that the proposed rule change (SR-Phlx-2004-75), be, and hereby 
is, approved.

    \8\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\9\
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    \9\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. E5-1697 Filed 4-11-05; 8:45 am]
BILLING CODE 8010-01-P