[Federal Register Volume 70, Number 160 (Friday, August 19, 2005)]
[Notices]
[Page 48794]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E5-4534]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-52254; File No. SR-Phlx-2005-36]


Self-Regulatory Organizations; Philadelphia Stock Exchange, Inc.; 
Order Approving a Proposed Rule Change Relating to Phlx Rule 1023

August 15, 2005.

I. Introduction

    On May 19, 2005, 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 
proposal to amend Phlx Rule 1023, ``Specialist's Transactions with 
Listed Company.'' The proposed rule change was published for comment in 
the Federal Register on July 7, 2005.\3\ The Commission received no 
comments regarding the proposal. This order approves the proposed rule 
change.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 51928 (June 28, 
2005), 70 FR 39351.
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II. Description of the Proposal

    Phlx Rule 1023(a) currently prohibits a specialist from effecting 
any business transaction with a company or any officer, director, or 
10% shareholder of a company underlying an option in which the 
specialist is registered. The Phlx proposes to amend Phlx Rule 1023(a) 
to exclude from its restriction on an option specialist's business 
transactions with the issuer of the underlying stock and related 
persons business transactions in goods and services on terms generally 
available to the public. The Phlx believes that the proposed exception 
will not provide the option specialist with access to material non-
public information concerning the issuer or give rise to a control 
relationship between the issuer and the specialist.

III. Discussion

    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.\4\ In 
particular, the Commission finds that the proposed rule change is 
consistent with Section 6(b)(5) of the Act,\5\ which requires, among 
other things, that the rules of a national securities exchange be 
designed to prevent fraudulent and manipulative acts and practices, to 
promote just and equitable principles of trade, 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.
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    \4\ In approving this proposed rule change, the Commission has 
considered the proposed rule's impact on efficiency, competition, 
and capital formation. 15 U.S.C. 78c(f).
    \5\ 15 U.S.C. 78f(b)(5).
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    The Commission believes that the proposal will ease the restriction 
in Phlx Rule 1023(a) on a specialist's business transactions with the 
issuer of the stock underlying an option in which the specialist is 
registered and related persons without providing the specialist with 
access to material non-public information regarding the issuer or 
giving rise to a control relationship between the issuer and the 
specialist. In addition, the Commission notes that Phlx Rule 1023(a), 
as amended, is substantially similar to Chicago Board Options Exchange 
Rule (``CBOE'') 8.91(b).\6\
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    \6\ CBOE Rule 8.9(b) provides, in part, that ``Neither a DPM for 
an equity option, nor any member affiliated with the DPM, shall 
engage in any material business transaction with the issuer of the 
security that underlies the equity option or with any officer, 
director, or 10% shareholder of the issuer of the security * * *. 
For purposes of this paragraph (b), a material business transaction 
shall be deemed to be a transaction which is material in value 
either to the issuer or the DPM, would provide access to material 
non-public information relating to the issuer, or would give rise to 
a control relationship between the issuer and the DPM. 
Notwithstanding the foregoing, the receipt of routine business 
services, goods, materials, or insurance, on terms that would be 
generally available shall not be deemed a material business 
transaction for the purposes of this paragraph (b).''
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IV. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\7\ that the proposed rule change (SR-Phlx-2005-36) is approved.
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    \7\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\8\
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    \8\ 17 CFR 200.30-3(a)(12).
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Jonathan G. Katz,
Secretary.
[FR Doc. E5-4534 Filed 8-18-05; 8:45 am]
BILLING CODE 8010-01-P