[Federal Register Volume 70, Number 92 (Friday, May 13, 2005)]
[Notices]
[Pages 25641-25643]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E5-2382]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-51664; File No. SR-Phlx-2005-24]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by the Philadelphia Stock 
Exchange, Inc. Relating to Disclaimer of Warranties by SIG Indices, 
LLLP and by Standard and Poor's

May 6, 2005.
    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 April 20, 2005, the Philadelphia Stock Exchange, Inc. (``Phlx'' 
or ``Exchange'') filed with the Securities and Exchange Commission 
(``SEC'' or ``Commission'') the proposed rule change as described in 
items I and II 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 Phlx Rule 1104A (Susquehanna Indices, 
LLLP Indexes), regarding disclaimer of express or implied warranties, 
to add the new SIG Coal Producers Index TM licensed by 
Susquehanna Indices, LLLP (``SI'') to Phlx. The Exchange also proposes 
to adopt Phlx Rule 1105A (Standard and Poor's[supreg] Index), regarding 
disclaimer of express or implied warranties, with respect to the 
Standard & Poor's 500 Index (``S&P 500[supreg] Index'') that 
S&P[supreg] licensed to the Exchange.
    The text of the proposed rule change is available on Phlx's Web 
site (http://www.phlx.com), the Phlx's Office of the Secretary, and at 
the Commission's Public Reference Room.

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 amend Exchange Rule 
1104A, which applies to indexes maintained by SI, to include a new 
index that was recently licensed by SI to the Exchange.\3\ The purpose 
of the proposed rule change is also to adopt new Phlx Rule 1105A, which 
is similar to existing rule 1104A but applies to the Index developed 
and maintained by S&P[supreg], that was recently licensed to the 
Exchange and indicates that S&P[supreg] does not make specified express 
or implied warranties.\4\
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    \3\ The Exchange currently lists options on the SIG Investment 
Managers Index TM, the SIG Cable, Media & Entertainment 
Index TM, the SIG Casino Gaming Index TM, the 
SIG Semiconductor Equipment Index TM, the SIG 
Semiconductor Device Index TM, the SIG Steel Producers 
Index TM, the SIG Specialty Retail Index TM, 
the SIG Footwear & Athletic Index TM, the SIG Education 
Index TM, and the SIG Restaurant Index TM, and 
on newly-licensed index, the SIG Coal Producers Index TM, 
pursuant to a license agreement with SI and Exchange Rule 1009A(b). 
The indexes are trademarks of SIG Indices, LLLP.
    \4\ The Exchange currently lists options on Standard and Poor's 
Depository Receipts (``SPDRs''), pursuant to a license agreement 
with Standard & Poor's, a division of McGraw-Hill Companies, Inc. 
``Standard & Poor's[supreg]'', ``S&P[supreg]'', ``S&P 500[supreg]'', 
``Standard & Poor's 500'', and ``500'' are trademarks of McGraw-Hill 
Companies, Inc.
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    Phlx Rule 1104A currently provides that SI makes no warranty, 
express or implied, as to results to be obtained by any person or 
entity from the use of the SIG Investment Managers Index TM, 
the SIG Cable, Media & Entertainment Index TM, the SIG 
Casino Gaming Index TM, the SIG Semiconductor Equipment 
Index TM, the SIG Semiconductor Device Index TM, 
the SIG Steel Producers Index TM, the SIG Specialty Retail 
Index TM, the SIG Footwear & Athletic Index TM, 
the SIG Education Index TM, and the SIG Restaurant Index 
TM, and that SI makes no express or implied warranties of 
merchantability or fitness for a particular purpose for use with 
respect to any of the named indexes or any data included therein.\5\ 
The Exchange is now proposing to amend Rule 1104A to expand the 
coverage of the rule to include the newly-licensed and listed index--
the SIG Coal Producers Index TM as required by the license 
agreement issued to the Exchange.\6\
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    \5\ The Exchange noted in its filing to adopt Rule 1104A that 
the proposed disclaimer was appropriate given that it was similar to 
disclaimer provisions of American Stock Exchange Rule 902C relating 
to indexes underlying options listed on that exchange. See 
Securities Exchange Act Release No. 48135 (July 7, 2003), 68 FR 
42154 (July 16, 2003) (approving SR-Phlx-2003-21). The Exchange 
recently amended Rule 1104A to include the SIG Specialty Retail 
Index TM, the SIG Steel Producers Index TM, 
the SIG Footwear & Athletic Index TM, the SIG Education 
Index TM, and the SIG Restaurant Index TM, as 
required by the license agreement between SI and the Exchange. See 
Securities Exchange Act Release No. 51239 (February 22, 2005), 70 FR 
10015 (March 1, 2005) (SR-Phlx-2005-13).
    \6\ The SIG Coal Producers Index TM was listed 
pursuant to Sec. 19b-4(e) on March 23, 2005.
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    The Exchange is proposing to establish new Phlx Rule 1105A 
essentially based on current Phlx Rule 1104A, as required by a 
licensing agreement between S&P[supreg] and the

[[Page 25642]]

Exchange licensing it to trade options on SPDRs and products based on 
the Index maintained by S&P[supreg] and licensed to the Exchange.\7\ 
The purpose of proposed Rule 1105A is to indicate that S&P[supreg] 
makes no express or implied warranties regarding merchantability or 
fitness for a particular purpose or use with respect to the S&P 
500[supreg] Index or any data included therein, in connection with the 
trading of options contracts thereon.
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    \7\ The Exchange has been listing options on SPDRs since on or 
about January 10, 2005, pursuant to a provisional license with 
S&P[supreg]. The Exchange has subsequently entered into a permanent 
license agreement with S&P[supreg] that supersedes the provisional 
license and is proposing new Rule 1105A pursuant to the permanent 
license agreement.
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    The Exchange believes that proposed Phlx Rule 1105A is similar in 
concept to current Rule 1104A, would provide S&P[supreg] with a 
disclaimer of any implied or express warranties of merchantability or 
fitness for a particular purpose in respect of an option on an index 
that S&P[supreg] licensed to the Exchange, and would put S&P[supreg] on 
similar footing with the licensor of other options on indexes to the 
Exchange.
2. Statutory Basis
    The Exchange believes that its proposal is consistent with 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 is designed to foster 
cooperation and coordination with persons engaged in regulating, 
clearing, settling, processing information with respect to, and 
facilitating transactions in securities, 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. 
The Exchange believes that the proposed rule should encourage SIG 
Indices, LLLP and S&P[supreg] to continue to maintain indexes so that 
options on the respective indexes may be traded on the Exchange, 
thereby providing investors with enhanced investment opportunities.
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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.

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 proposed rule change is being designated by the Exchange as 
``non-controversial'' pursuant to section 19(b)(3)(A) of the Act \10\ 
and subparagraph (f)(6) of Rule 19b-4 \11\ thereunder, 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 thirty days from the date on which it was filed, or such shorter 
time as the Commission may designate if consistent with the protection 
of investors and the public interest.\12\ Consequently, the proposed 
rule change has become effective pursuant to section 19(b)(3)(A) of the 
Act \13\ and Rule 19b-4(f)(6) thereunder.\14\
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    \10\ 15 U.S.C. 78s(b)(3)(A).
    \11\ 17 CFR 240.19b-4.
    \12\ As required under Rule 19b-4(f)(6)(iii), the Exchange has 
provided the Commission with written notice of its intent to file 
the proposed rule change at least five business days prior to the 
filing date of this proposal.
    \13\ 15 U.S.C. 78s(b)(3)(A).
    \14\ 17 CFR 240.19b-4(f)(6).
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    Pursuant to Rule 19b-4(f)(6)(iii), a proposed ``non-controversial'' 
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, 
and the Phlx gave the Commission written notice of its intent to file 
the proposed rule change, along with a brief description and text of 
the proposed rule change, at least five business days prior to the date 
of filing of the proposed rule change, or such shorter time as 
designated by the Commission.\15\ The Phlx has requested that the 
Commission waive the 30-day operative delay. The Commission has 
determined that it is consistent with the protection of investors and 
the public interest to waive the 30-day operative delay.\16\ The 
Commission believes that accelerating the operative date will help to 
ensure that all options traded on the indexes are treated uniformly.
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    \15\ 17 CFR 240.19b-4(f)(6)(iii).
    \16\ For the purposes only of accelerating the operative date of 
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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    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 Act.

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-2005-24 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-2005-24. 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 the 
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

[[Page 25643]]

Number SR-Phlx-2005-24 and should be submitted on or before June 6, 
2005.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\17\
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    \17\ 17 CFR 200.30-3(a)(12).
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Jill M. Peterson,
Assistant Secretary.
[FR Doc. E5-2382 Filed 5-12-05; 8:45 am]
BILLING CODE 8010-01-P