[Federal Register Volume 70, Number 129 (Thursday, July 7, 2005)]
[Notices]
[Pages 39351-39352]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E5-3555]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-51928; File No. SR-Phlx-2005-036]


Self-Regulatory Organizations; Philadelphia Stock Exchange, Inc.; 
Notice of Filing of Proposed Rule Change Relating to an Amendment of 
Phlx Rule 1023

June 28, 2005.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given 
that on May 19, 2005, the Philadelphia Stock Exchange, Inc. (``Phlx'' 
or ``Exchange'') filed with the Securities and Exchange Commission 
(``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 Phlx Rule 1023, ``Specialist's 
Transactions with Listed Company.''
    The text of the proposed rule change is below. Proposed new 
language is in italics.
* * * * *

Rule 1023. Specialist's Transactions With Listed Company

    (a) No specialist or his member organization, or any member, 
limited partner, officer, employee, approved person or party approved 
shall directly or indirectly, effect any business transaction with a 
company or any officer, director or 10% stockholder of a company in 
which options of such company the specialist is registered, except for 
business transactions in goods and services on terms generally 
available to the public.
    (b) No Change.
* * * * *

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
    Phlx Rule 1023(a) generally prohibits options specialists from 
effecting any business transaction with the issuer of the stock 
underlying the option or related persons. The Exchange proposes to add 
an exception for doing business in goods and services on terms 
generally available to the public on the theory that such transactions 
will not provide access to material non-public information relating to 
the issuer, nor would they give rise to any control relationship 
between the issuer and the specialist. The prohibition against such 
transactions is therefore proposed to be eliminated in that it serves 
no useful purpose and imposes unnecessary restrictions upon options 
specialists.\3\
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    \3\ The Exchange has previously stated that certain business 
transactions enumerated in Phlx Rule 511(b)(ii) are not the types of 
business transactions contemplated under Phlx Rule 1023. For 
purposes of Phlx Rule 511(b)(ii), Phlx Rule 1023 was deemed by the 
Exchange to prohibit only business transactions which are material 
in value either to the issuer or the specialist, would provide 
access to material nonpublic information relating to the issuer, or 
would give rise to a control relationship between the issuer and the 
specialist unit. The Exchange also stated that the receipt of 
routine business services, goods, materials, insurance, on terms 
that would be generally available would not be deemed a business 
transaction for the purposes of Phlx Rule 1023. See Securities 
Exchange Act Release No. 46214 (July 16, 2002), 67 FR 48693 (July 
25, 2002) (order approving File No. SR-Phlx-2001-63), at footnote 6.
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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)(5) of the Act \5\ in particular, in that it removes an unnecessary 
restriction on specialists' activity which should result in increased 
liquidity in the market, to the benefit of investors.
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    \4\ 15 U.S.C. 78f(b).
    \5\ 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

    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 Phlx consents, the Commission shall: (a) By order approve such 
proposed 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 No. SR-Phlx-2005-036 on the subject line.

Paper Comments:

     Send paper comments in triplicate to Jonathan G. Katz, 
Secretary, Securities and Exchange Commission, Station Place, 100 F 
Street, NE., Washington, DC 20549-9303.
    All submissions should refer to File Number SR-Phlx-2005-036. This 
file number should be included on the subject line if e-mail is used. 
To help the Commission process and review your

[[Page 39352]]

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-2005-036 
and should be submitted by July 28, 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. E5-3555 Filed 7-6-05; 8:45 am]
BILLING CODE 8010-01-P