[Federal Register Volume 70, Number 144 (Thursday, July 28, 2005)]
[Notices]
[Pages 43733-43735]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E5-4015]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-52095; File No. SR-Phlx-2005-46]


Self-Regulatory Organizations; Philadelphia Stock Exchange, Inc.; 
Notice of Filing and Order Granting Accelerated Approval to Proposed 
Rule Change Relating to the Extension of a Pilot Program Relating to 
Transaction Charges Applicable to Linkage ``P'' and ``P/A'' Orders

July 21, 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 July 15, 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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[[Page 43734]]

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Phlx proposes to extend, for a one-year period, a pilot 
relating to transaction fees included in the Exchange's schedule of 
dues, fees and charges applicable to the execution of Principal Acting 
as Agent Orders (``P/A Orders'') \3\ and Principal Orders (``P 
Orders'') \4\ sent to the Exchange pursuant to the Plan for the Purpose 
of Creating and Operating an Intermarket Option Linkage (the 
``Plan'').\5\ The Exchange proposes to extend the pilot through July 
31, 2006.
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    \3\ A P/A Order is an order for the principal account of a 
specialist (or equivalent entity on another Participant Exchange 
that is authorized to represent Public Customer orders), reflecting 
the terms of a related unexecuted Public Customer order for which 
the specialist is acting as agent. See Exchange Rule 1083(k)(i).
    \4\ A P Order is an order for the principal account of an 
Eligible Market Maker and is not a P/A Order. See Exchange Rule 
1083(k)(ii).
    \5\ On July 28, 2000, the Commission approved a national market 
system plan for the purpose of creating and operating an intermarket 
options market linkage (``Linkage'') proposed by the American Stock 
Exchange LLC, Chicago Board Options Exchange, Inc., and 
International Securities Exchange, Inc. See Securities Exchange Act 
Release No. 43086 (July 28, 2000), 65 FR 48023 (August 4, 2000). 
Subsequently, Phlx, Pacific Exchange, Inc., and Boston Stock 
Exchange, Inc. joined the Linkage Plan. See Securities Exchange Act 
Release Nos. 43573 (November 16, 2000), 65 FR 70851 (November 28, 
2000); 43574 (November 16, 2000), 65 FR 70850 (November 28, 2000); 
and 49198 (February 5, 2004), 69 FR 7029 (February 12, 2004).
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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 III 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
    In July, 2004, the Exchange established, on a one-year pilot basis, 
a fee of $.45 per contract for inbound P Orders (the ``pilot'').\6\ 
Subsequently, in February, 2005, the Exchange modified the pilot by (i) 
reducing the transaction charge for inbound P Orders from $.45 per 
contract to $.15 per contract, and (ii) establishing a transaction 
charge of $.15 per contract for inbound P/A Orders.\7\ The purpose of 
the proposed rule change is to extend the pilot for one year, through 
July 31, 2006.
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    \6\ See Securities Exchange Act Release No. 50125 (July 30, 
2004), 69 FR 47479 (August 5, 2004) (SR-Phlx-2004-44).
    \7\ See Securities Exchange Act Release No. 51257 (February 25, 
2005), 70 FR 10736 (March 4, 2005) (SR-Phlx-2005-10).
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    Thus, the Exchange's current schedule of dues, fees and charges 
includes a transaction charge of $.15 per contract applicable to 
Linkage P/A Orders and P Orders sent to the Exchange pursuant to the 
Plan. The pilot is scheduled to expire on July 31, 2005. The Exchange 
proposes to extend the current pilot for an additional one-year period, 
through July 31, 2006.
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)(4) of the Act \9\ in particular, in that it is it is an equitable 
allocation of reasonable fees among Exchange members.
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    \8\ 15 U.S.C. 78f(b).
    \9\ 15 U.S.C. 78f(b)(4).
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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. 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-2005-46 on the subject line.

Paper Comments

     Send paper comments in triplicate to Jonathan G. Katz, 
Secretary, Securities and Exchange Commission, 100 F Street, NE., 
Washington, DC 20549-9303.
    All submissions should refer to File Number SR-Phlx-2005-46. 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 Number SR-Phlx-2005-46 and should be submitted on or before August 
18, 2005.

IV. Commission's Findings and Order Granting Accelerated Approval of 
Proposed Rule Change

    After careful consideration, 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,\10\ and, in particular, with the requirements of Section 6(b) 
of the Act \11\ and the rules and regulations thereunder. The 
Commission finds that the proposed rule change is consistent with 
Section 6(b)(4) of the Act,\12\ which requires that the rules of the 
Exchange provide for the equitable allocation of reasonable dues, fees 
and other charges among its members and other persons using its 
facilities. The Commission believes that the extension of the Linkage 
fee pilot until July 31, 2006 will give the Commission further 
opportunity to

[[Page 43735]]

evaluate whether such fees are appropriate.
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    \10\ In approving this rule, the Commission notes that it has 
considered its impact on efficiency, competition and capital 
formation. 15 U.S.C. 78c(f).
    \11\ 15 U.S.C. 78f(b).
    \12\ 15 U.S.C. 78f(b)(4).
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    The Commission finds good cause, pursuant to Section 19(b)(2) of 
the Act,\13\ for approving the proposed rule change prior to the 
thirtieth day after the date of publication of the notice of the filing 
thereof in the Federal Register. The Commission believes that granting 
accelerating approval will preserve the Exchange's existing pilot 
program for Linkage fees without interruption as the Phlx and the 
Commission further consider the appropriateness of Linkage fees.
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    \13\ 15 U.S.C. 78s(b)(2).
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V. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the Act 
\14\ that the proposed rule change (SR-Phlx-2005-46) is hereby approved 
on an accelerated basis for a pilot period to expire on July 31, 2006.
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    \14\ Id.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\15\
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    \15\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. E5-4015 Filed 7-27-05; 8:45 am]
BILLING CODE 8010-01-P