[Federal Register Volume 71, Number 62 (Friday, March 31, 2006)]
[Notices]
[Pages 16389-16396]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E6-4701]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-53548; File No. SR-Phlx-2005-42]


Self-Regulatory Organizations; Philadelphia Stock Exchange, Inc.; 
Notice of Filing of Proposed Rule Change and Amendment Nos. 1, 2 and 3 
Thereto Relating to Establishment of a Neutral ``Referee''

March 24, 2006.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on June 10, 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, II, and III below, which Items have been prepared by the Phlx. 
On June 20, 2005, the Phlx filed Amendment No. 1 to the proposed rule 
change.\3\ On February 16, 2006, the Phlx filed Amendment No. 2 to the 
proposed rule change.\4\ On March 10, 2006, the Phlx filed Amendment 
No. 3 to the proposed rule change.\5\ The Commission is publishing this 
notice to solicit comments on the proposed rule change, as amended, 
from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ In Amendment No. 1, the Phlx indicated that the Exchange's 
Board of Governors approved the proposed amendment to Exchange By-
Law Article X, Section 10-9 for filing with the Commission on June 
15, 2005.
    \4\ Amendment No. 2 superseded and replaced in their entirety 
the orginal filing and Amendment No. 1 thereto.
    \5\ In Amendment No. 3, the Phlx made minor changes to the 
purpose section and rule text of the proposed rule change.
---------------------------------------------------------------------------

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

    The Phlx proposes to amend: (1) Exchange By-Law Article X, Section 
10-9, Audit Committee; (2) Exchange Rule 124, Disputes; Exchange Rule 
1092, Obvious Errors; (3) Option Floor Procedure Advice (``OFPA'') F-
27, Floor Official Rulings--Options; OFPA G-2, Trading Rotations, Halts 
or Reopenings; and (4) Equity Floor Procedure Advice (``EFPA'') F-27, 
Floor Official Rulings--Equity. The proposal would establish a neutral 
``Referee,'' an Exchange employee or independent contractor who would 
have authority to review and rule on appeals from Floor Official 
rulings concerning the nullification and adjustment of trades, and 
authorize the Referee to make other initial rulings currently made only 
by Floor Officials. The text of the proposed rule change is set forth 
below. [Brackets] indicate deletions; italics indicate new text.

PHILADELPHIA STOCK EXCHANGE, INC. BY-LAWS

* * * * *

Article X

Standing Committees

    Sec. 10-1.-10-8. No change.

Audit Committee

    Sec. 10-9. (a)-(c) No change.
    (d) The Audit Committee shall recommend for appointment by the 
Board of Governors a qualified Exchange employee or independent 
contractor, the Referee, to review Floor Official rulings concerning 
the nullification and/or adjustment of transactions, and to act in the 
capacity of a Floor Official respecting initial rulings concerning 
requests for relief from the requirements of certain Exchange rules, 
Equity Floor Procedure Advices and Option Floor Procedure Advices. The 
Audit Committee shall determine that the Referee has sufficient 
expertise in the area of securities trading to act in the capacity of a 
Floor Official respecting initial rulings concerning requests for 
relief and to conduct reviews of Floor Official rulings, and possesses 
sufficient knowledge of Exchange rules and the relevant sections of the 
Securities Exchange Act of 1934, as amended, and the rules thereunder.
* * * * *

PHILADELPHIA STOCK EXCHANGE, INC. RULES OF THE BOARD OF GOVERNORS

* * * * *

Disputes

    Rule 124. (a) Disputes occurring on and relating to the trading 
floor, if not settled by agreement between the members interested, 
shall be settled, if practicable, by vote of the members knowing of the 
transaction in question; if not so settled, they shall be settled by a 
Floor Official [summoned to the trading crowd] designated by Market 
Surveillance to rule on the dispute.
    In issuing decisions for the resolution of trading disputes, Floor 
Officials [may] shall institute the course of action deemed to be most 
fair to all parties under the circumstances at the time. A Floor 
Official may direct the execution of an order on the floor, or adjust 
the transaction terms or participants to an executed order on the 
floor. However, two Option Floor Officials may nullify a transaction if 
they determine the transaction to have been in violation of

[[Page 16390]]

Rules 1014 (Obligations and Restrictions Applicable to Specialist and 
ROTs), 1015 (Quotation Guarantees), 1017 (Priority and Parity at 
Openings in Options), 1033 (Bids and Offers) or 1080 (AUTOM). Two 
Equity Floor Officials may nullify a transaction if they determine the 
transaction to have been in violation of Rules 110 (Bids and Offers--
Precedence), 111 (Bids and Offers--Binding), 118 (Bids and Offers 
Outside Best Bid and Offer), 119 (Precedence of Highest Bid), 120 
(Precedence of Offers at Same Price), 126 (Crossing), 203 (Agreement of 
Specialists), 218 (Customer Order Receives Priority), 229 (PACE 
System), 232 (Handling Orders When the Primary Market is Not Open for 
Free Trading), or 455 (Short Sales). This Rule 124(a) shall not apply 
to options transactions that are the result of an Obvious Error (as 
defined in Rule 1092). Options transactions that are the result of an 
Obvious Error shall be subject to the provisions and procedures set 
forth in Rule 1092.
    (b) All rulings rendered by Floor Officials or the Referee (as 
defined in Commentary .02 to this Rule) are effective immediately and 
must be complied with promptly. Failure to promptly comply with an 
initial Floor Official ruling or a Referee [ruling] decision upon 
review of a Floor Official ruling concerning a trading dispute may 
result in referral to the Business Conduct Committee. Failure to 
promptly comply with other Floor Official rulings issued pursuant to 
Order and Decorum Regulations (Rule 60) or Floor Procedure Advices 
(Rule 970) and not concerning a trading dispute may result in an 
additional violation.
    (c) Review--Floor Official [R] rulings issued pursuant to Order and 
Decorum Regulations are reviewable pursuant to Rule 60. Floor Official 
rulings issued pursuant to Floor Procedure Advices are reviewable 
pursuant to Rule 970. All other Floor Official rulings are reviewable 
pursuant to paragraph (d) of this Rule.
    (d) Review of Floor Official Rulings (Trading Disputes)--[Options] 
All Floor Official rulings are reviewable by [a] the Referee [minimum 
of three members of the Sub-Committee on Rules and Rulings, a sub-
committee of the standing committee, which shall be empowered to review 
such rulings, or the Chairperson of the standing committee (or his 
designee) if three Sub-Committee members cannot be promptly convened. 
Equity Floor Official Rulings are reviewable by a minimum of three 
members of the Floor Procedure Committee, or the Chairperson of the 
Floor Procedure Committee (or his designee) if three members cannot be 
promptly convened. This constitutes a Review Panel for Floor Official 
rulings. Any person who appeals an Options Floor Official ruling 
concerning a trading dispute and loses will be subject to a $250.00 fee 
upon a finding by the Review Panel, that such appeal is frivolous].
    (i) Market Surveillance staff must be advised within 15 minutes of 
a Floor Official's ruling that a party to such ruling has determined to 
appeal from such ruling to the Referee. The Exchange may establish the 
procedures for the submission of a request for a review of a Floor 
Official ruling. Floor Official rulings concerning the nullification or 
adjustment of transactions may be sustained, overturned or modified by 
the Referee [a majority vote of the Review Panel members present]. In 
making a determination, the [Review Panel] Referee may consider facts 
and circumstances not available to the ruling Floor Official as well as 
action taken by the parties in reliance on the Floor Official's ruling 
(e.g., cover, hedge and related trading activity). [Decisions of the 
Review Panel will be considered final decisions of a standing floor 
committee and may be appealed to the Exchange's Board of Governors 
pursuant to Exchange By-Law Article XI.]
    (ii) All decisions made by the Referee in connection with initial 
rulings on requests for relief and with the review of a Floor Official 
ruling pursuant to this paragraph (d) shall be documented in writing 
and maintained by the Exchange in accordance with the record keeping 
requirements set forth in the Securities Exchange Act of 1934, as 
amended, and the rules thereunder.
    (iii) A member or member organization seeking the Referee's review 
of a Floor Official ruling shall be assessed a fee of $250.00 for each 
Floor Official ruling to be reviewed that is sustained and not 
overturned or modified by the Referee.
    (iv) Decisions of the Referee concerning (A) the review of Floor 
Official rulings relating to the nullification or adjustment of 
transactions, and (B) initial requests for relief shall be final and 
may not be appealed to the Exchange's Board of Governors.
    (v) As appropriate, the Chairman of the Options Committee, Foreign 
Currency Options Committee, or of the Floor Procedure Committee, or 
their respective designees, shall refer a Referee that fails to make 
any ruling in accordance with Exchange rules to the Audit Committee for 
possible disciplinary action, including removal. A Floor Official that 
fails to make any ruling in accordance with Exchange rules may be 
subject to possible disciplinary action by the Exchange.
    (vi) Failure to promptly comply with a Floor Official or Referee 
decision under this Rule may result in referral to the Business Conduct 
Committee.
    Commentary:
    .01. No change.
    .02. The Referee.
    (a) An Exchange employee or independent contractor, the Referee, 
shall be appointed by the Board of Governors on the recommendation of 
the Audit Committee to review Floor Official rulings concerning the 
nullification and adjustment of transactions in accordance with Rule 
124(d), and to act in the capacity of a Floor Official respecting 
initial rulings concerning requests for relief from the requirements of 
Exchange Rules relating to:
    (i) bid/ask differentials pursuant to Rule 1014(c) and Options 
Floor Procedure Advice (``OFPA'') F-6;
    (ii) disengagement of Exchange automatic execution systems pursuant 
to Rule 1080(e) and OFPA A-13;
    (iii) the determination pursuant to Rule 1080(c)(i) that quotes in 
options on the Exchange or another market or markets are subject to 
relief from the firm quote requirement set forth in the SEC Quote Rule, 
as defined in Exchange Rule 1082(a)(iii) (the ``Quote Rule''), and that 
quotes in options on the Exchange or another market or markets 
previously subject to such relief are no longer subject to such relief; 
and
    (iv) trading halts, openings and re-openings pursuant to Rules 
1017, 1047 and 1047A and OFPAs A-12, A-14 and G-2.
    (b) The Audit Committee shall recommend for appointment by the 
Board of Governors any other Exchange employee(s) or independent 
contractor(s) to function as the Referee in the event that the Referee 
is unavailable (``Backup Referees'') as set forth in Commentary .02(f) 
below. The Exchange's rules and procedures applicable to the Referee 
shall also apply to Backup Referees, and any reference to the Referee 
in these rules shall be deemed to include Backup Referees.
    (c) The Referee shall be an employee of the Exchange or an 
independent contractor designated by the Audit Committee. The Referee 
shall not be a member of the Exchange nor affiliated with any Exchange 
member or member organization and shall not be an immediate family 
member of any Exchange member. The Referee shall not be a debtor or 
creditor of any

[[Page 16391]]

Exchange member or member organization.
    (d) The Audit Committee shall have supervision over the Referee, 
and, based on the advice of the Exchange's General Counsel and Human 
Resources management, may recommend the level of compensation of the 
Referee to the Board of Governors, and may establish other conditions 
of employment of the Referee. The Audit Committee or its designee shall 
conduct annual performance evaluations, and shall consider any written 
complaints from members and member organizations concerning the 
Referee. The Audit Committee shall not have the authority to overrule 
or modify any ruling made by the Referee. The Audit Committee may 
terminate the employment of the Referee for good cause shown, and may 
otherwise discipline the Referee as appropriate for good cause shown.
    (e) The Exchange's General Counsel or his or her designee may 
assign additional duties and responsibilities to the Referee not 
related to Referee rulings. Notwithstanding the foregoing, the Referee 
shall not:
    (i) participate in any Exchange enforcement action, investigation, 
market surveillance activity, hearing (other than as a witness) or 
other activity related to disciplinary matters;
    (ii) issue citations for violations of Exchange rules;
    (iii) rule on any matter concerning order and decorum pursuant to 
Exchange Rule 60 and the regulations thereunder; and
    (iv) prepare, research, draft, review, or file a proposed rule 
change with the Securities and Exchange Commission pursuant to the 
Securities Exchange Act of 1934 and the rules thereunder concerning the 
Exchange's disciplinary rules.
    (f) If the Referee is unavailable or unable to make a ruling for 
any reason (including, without limitation, absence from the Exchange 
trading floor, vacation, illness, or in the process of making another 
Referee ruling), Market Surveillance staff will immediately notify the 
Exchange's General Counsel, or his/her designee, who would designate a 
Backup Referee to make such a ruling.
    (g) The Referee shall make fair and impartial rulings in accordance 
with Exchange rules and By-Laws.
* * * * *

PHILADELPHIA STOCK EXCHANGE, INC. OPTIONS RULES

* * * * *

Obvious Errors

    Rule 1092. The Exchange shall either nullify a transaction or 
adjust the execution price of a transaction that results in an Obvious 
Error as provided in this Rule.
    (a)-(e) No change.
    (f) Request for Review. If a party affected by a determination made 
under this Rule so requests within the time permitted, [a Review Panel 
of Floor Officials] the Referee will review decisions made under this 
Rule in accordance with Exchange Rule 124(d). A request for review 
under this paragraph must be made within thirty minutes after a party 
receives verbal notification of a final determination by the Floor 
Official(s) under this Rule, except that if such notification is made 
after 3:30 p.m. Eastern Time, either party has until 9:30 a.m. Eastern 
Time on the next trading day to request a review. Such a request for 
review must be in writing or otherwise documented. The [Review Panel] 
Referee shall review the facts and render a decision on the day of the 
transaction, or the next trade day in the case where a request is 
properly made after 3:30 p.m. on the day of the transaction or where 
the request is properly made the next trade day.
* * * * *

PHILADELPHIA STOCK EXCHANGE, INC. OPTIONS FLOOR PROCEDURE ADVICES AND 
ORDER AND DECORUM REGULATIONS

* * * * *

F-27 Floor Official Rulings-Options

    Floor Officials are empowered to render rulings on the trading 
floor to resolve trading disputes occurring on and respecting 
activities on the trading floor. All rulings rendered by Floor 
Officials are effective immediately and must be comp[i]lied with 
promptly. Failure to promptly comply with a ruling concerning a trading 
dispute may result in referral to the Business Conduct Committee. 
Failure to promptly comply with other rulings issued pursuant to Order 
and Decorum Regulations or Floor Procedure Advices and not concerning a 
trading dispute may result in an additional violation. Floor Officials 
need not render decisions in any instance where the request for a 
ruling was not made within a reasonable period of time. A Floor 
Official should not render a decision or authorize a citation where 
such Floor Official was involved in or affected by the dispute, as well 
as in any situation where the Floor Official is not able to objectively 
and fairly render a decision.
    Floor Officials shall endeavor to be prompt in rendering decisions. 
However, in any instance where a Floor Official has determined that the 
benefits of further discovery as to the facts and circumstances of any 
matter under review outweigh the monetary risks of a delayed rulings, 
the Floor Official may determine to delay rendering the ruling until 
such time as that further discovery is completed. In issuing decisions 
for the resolution of trading disputes, Floor Officials shall institute 
the course of action deemed by the ruling [f]Floor Official to be more 
fair to all parties under the circumstances at the time. A Floor 
Official may direct the execution of an order on the floor, o[f]r 
adjust the transaction terms or participants to an executed order on 
the floor. However, two Floor Officials may nullify a transaction if 
they determine the transaction to have been in violation of Rules 1014 
(Obligations and Restrictions Applicable to specialist and ROTs), 1015 
(Quotation Guarantees), 1017 (Priority and Parity at Openings in 
Options), 1033 (Bids and Offers) or 1080 (AUTOM).
    [A minimum of three members of the Sub-Committee on Rules and 
Rulings, a sub-committee of the standing committee, or the Chairperson 
of the standing committee (or his designee) if three Sub-Committee 
members cannot be promptly convened, shall be empowered by the standing 
committee to review Floor Official rulings (``Review Panel''). Requests 
for a review must be submitted to the Director of the Market 
Surveillance Department of the Exchange (or his designee) within 15 
minutes from the time the contested ruling was rendered. Any person who 
appeals a Floor Official ruling concerning a trading dispute and loses 
will be subject to a $250.00 fee upon a finding by the Review Panel 
that such appeal is frivolous. The Review Panel shall endeavor to meet 
on the matter as soon as practicable after notice of a request for a 
review of a Floor Official ruling. Floor Official rulings may be 
sustained, overturned or modified by a majority vote of the Review 
Panel members present. In making a determination, the Review Panel may 
consider facts and circumstances not available to the ruling Floor 
Official as well as action taken by the parties in reliance on the 
Floor Official's ruling (e.g., cover, hedge, and related trading 
activity). Decisions of the Review Panel will be considered final 
decisions of the standing committee and may be appealed to the 
Exchange's Board of Governors pursuant to Exchange By-Law Article XI. 
Neither Floor Official

[[Page 16392]]

rulings nor Review Panel decisions reviewing Floor Official rulings 
preclude a person from also availing upon the Exchange's Arbitration 
facilities.]
    Exchange staff may determine that a Floor Official is ineligible to 
participate in a particular ruling where it appears that such Floor 
Official has a conflict of interest. For purposes of this Rule, and 
without limitation, a conflict of interest exists where a Floor 
Official: (a) Is directly or indirectly affiliated with a party seeking 
a Floor Official ruling; (b) is a participant or is directly or 
indirectly affiliated with a participant in a transaction that is the 
subject of a Floor Official ruling; (c) is a debtor or creditor of a 
party seeking a Floor Official ruling; or (d) is an immediate family 
member of a party seeking a Floor Official ruling. Exchange staff may 
consider other circumstances, on a case-by-case basis, in determining 
the eligibility or ineligibility of a particular Floor Official to 
participate in a particular ruling due to a conflict of interest.
    All Floor Official rulings concerning the adjustment and 
nullification of transactions are reviewable by the Referee (as defined 
in Rule 124).
    (i) Market Surveillance staff must be advised within 15 minutes of 
a Floor Official's ruling that a party to such ruling has determined to 
appeal from such ruling to the Referee. The Exchange may establish the 
procedures for the submission of a request for a review of a Floor 
Official ruling. Floor Official rulings concerning the nullification or 
adjustment of transactions may be sustained, overturned or modified by 
the Referee. In making a determination, the Referee may consider facts 
and circumstances not available to the ruling Floor Official as well as 
action taken by the parties in reliance on the Floor Official's ruling 
(e.g., cover, hedge and related trading activity).
    (ii) All decisions made by the Referee in connection with initial 
rulings on requests for relief and with the review of a Floor Official 
ruling pursuant to Rule 124(d) shall be documented in writing and 
maintained by the Exchange in accordance with the record keeping 
requirements set forth in the Securities Exchange Act of 1934, as 
amended, and the rules thereunder.
    (iii) A member or member organization seeking the Referee's review 
of a Floor Official ruling shall be assessed a fee of $250.00 for each 
Floor Official ruling to be reviewed that is sustained and not 
overturned or modified by the Referee.
    (iv) Decisions of the Referee concerning (A) the review of Floor 
Official rulings relating to the nullification or adjustment of 
transactions, and (B) initial requests for relief shall be final and 
may not be appealed to the Exchange's Board of Governors.
    (v) As appropriate, the Chairman of the Options Committee, Foreign 
Currency Options Committee, or of the Floor Procedure Committee, or 
their respective designees, shall refer a Referee that fails to make 
any ruling in accordance with Exchange rules to the Audit Committee for 
possible disciplinary action, including removal. A Floor Official that 
fails to make any ruling in accordance with Exchange rules may be 
subject to possible disciplinary action by the Exchange.
    (vi) Failure to promptly comply with a Floor Official or Referee 
decision under this Rule may result in referral to the Business Conduct 
Committee.
    FINE SCHEDULE
    $250.00
* * * * *

G-2 Trading Rotations, Halts or Reopenings

    (a)-(b) No change.
    (c) Halts: Trading on the Exchange in any option may be halted with 
the approval of [one] two Floor Officials, with the concurrence of a 
Market Surveillance officer, whenever trading on the primary market in 
underlying securities representing more than 10% of the current index 
value is halted or suspended. Trading shall be halted whenever [the 
Exchange] two Floor Officials, with the concurrence of a Market 
Surveillance officer, deem[s] such action appropriate in the interests 
of a fair and orderly market and to protect investors. Among the 
factors that may be considered are the following:
    (i)-(iii) No change.
    (d)-(f) No change.
* * * * *

PHILADELPHIA STOCK EXCHANGE, INC. EQUITY FLOOR PROCEDURE ADVICES AND 
ORDER & DECORUM REGULATIONS

* * * * *

F-27 Floor Official Rulings--Equity

    Floor Officials are empowered to render rulings on the trading 
floor to resolve disputes occurring on and respecting activities on the 
trading floor. All rulings rendered by Floor Officials are effective 
immediately and must be compiled with promptly. Failure to promptly 
comply with a ruling concerning a trading dispute may result in 
referral to the Business Conduct Committee. Failure to promptly comply 
with other rulings issued pursuant to Order and Decorum Regulations of 
Floor Procedures Advices and no[r]t concerning a trading dispute may 
result in an additional violation. Floor Officials need not render 
decisions in any instance where the request for a ruling was not made 
within a reasonable period of time. A Floor Official should not render 
a decision or authorize a citation where such Floor Official was 
involved in or affected by the dispute, as well as in any situation 
where the Floor Official is not able to objectively and fairly render a 
decision.
    Floor Officials shall endeavor to be prompt in rendering decisions. 
However, in any instance where a Floor Official has determined that the 
benefits of further discovery as to the facts and circumstances of any 
matter under review outweigh the monetary risks of a delayed ruling, 
the Floor Official may determine to delay rendering the ruling until 
such time as that further discovery is completed. In issuing decisions 
for the resolution of trading disputes, Floor Officials shall institute 
the course of action deemed by the ruling Floor Official to be most 
fair to all parties under the circumstances at the time. A Floor 
Official may direct the execution of an order on the floor, or adjust 
the transaction terms or participants to an executed order on the 
floor. However, two Floor Officials may nullify a transaction if they 
determine the transaction to have been in violation of Rules 110 (Bids 
and Offers--Precedence), 111 (Precedence of Highest Bid), 120 
(Precedence of Offers at Same Price), 126 (Crossing), 203 (Agreement of 
Specialists), 218 (Customer's Order Receives Priority), 229 (PACE 
System), 232 (Handling Orders When the Primary Market is Not Open for 
Free Trading), or 455 (Short Sales).
    [Equity Floor Official Rulings are reviewable by a minimum of three 
members of the Floor Procedure Committee, or the Chairperson of the 
Floor Procedure Committee (or his designee) if three members cannot be 
promptly convened (``Review Panel''). Requests for a review must be 
submitted to the Director of the Market Surveillance Department of the 
Exchange (or his designee) within 15 minutes from the time the 
contested ruling was rendered. The Review Panel shall endeavor to meet 
on the matter as soon as practicable after notice of a request for a 
review of a Floor Official ruling. Floor Official rulings may be 
sustained, overturned or modified by a majority vote of the Review 
Panel members present. In making a determination, the Review Panel may

[[Page 16393]]

consider facts and circumstances not available to the ruling Floor 
Official as well as action taken by the parties in reliance on the 
Floor Official's ruling (e.g., cover, hedge, and related trading 
activity). Decisions of the Review Panel will be considered final 
decisions of a standing floor committee and may be appealed to the 
Exchange's Board of Governors pursuant to Exchange By-Law Article XI. 
Neither Floor Official rulings nor Review Panel decisions reviewing 
Floor Official rulings preclude a person from also availing upon the 
Exchange's Arbitration facilities.]
    All Floor Official rulings concerning the adjustment and 
nullification of transactions are reviewable by the Referee (as defined 
in Rule 124).
    (i) Market Surveillance staff must be advised within 15 minutes of 
a Floor Official's ruling that a party to such ruling has determined to 
appeal from such ruling to the Referee. The Exchange may establish the 
procedures for the submission of a request for a review of a Floor 
Official ruling. Floor Official rulings concerning the nullification or 
adjustment of transactions may be sustained, overturned or modified by 
the Referee. In making a determination, the Referee may consider facts 
and circumstances not available to the ruling Floor Official as well as 
action taken by the parties in reliance on the Floor Official's ruling 
(e.g., cover, hedge and related trading activity).
    (ii) All decisions made by the Referee in connection with initial 
rulings on requests for relief and with the review of a Floor Official 
ruling pursuant to Rule 124(d) shall be documented in writing and 
maintained by the Exchange in accordance with the record keeping 
requirements set forth in the Securities Exchange Act of 1934, as 
amended, and the rules thereunder.
    (iii) A member or member organization seeking the Referee's review 
of a Floor Official ruling shall be assessed a fee of $250.00 for each 
Floor Official ruling to be reviewed that is sustained and not 
overturned or modified by the Referee.
    (iv) Decisions of the Referee concerning (A) the review of Floor 
Official rulings relating to the nullification or adjustment of 
transactions, and (B) initial requests for relief shall be final and 
may not be appealed to the Exchange's Board of Governors.
    (v) As appropriate, the Chairman of the Options Committee, Foreign 
Currency Options Committee, or of the Floor Procedure Committee, or 
their respective designees, shall refer a Referee that fails to make 
any ruling in accordance with Exchange rules to the Audit Committee for 
possible disciplinary action, including removal. A Floor Official that 
fails to make any ruling in accordance with Exchange rules may be 
subject to possible disciplinary action by the Exchange.
    (vi) Failure to promptly comply with a Floor Official or Referee 
decision under this Rule may result in referral to the Business Conduct 
Committee.
    NO FINE SCHEDULE APPLICABLE.
* * * * *

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 improve the process 
of resolving trading disputes and Floor Official rulings by creating a 
new regulatory position on the Exchange, who would be either an 
Exchange employee or an independent contractor known as a neutral 
``Referee.'' The Referee would have the authority to: (1) Review and 
rule on appeals from Floor Official rulings concerning the 
nullification or adjustment of trades; and (2) act in the capacity of a 
Floor Official respecting initial rulings concerning requests for 
relief from the requirements of certain Exchange rules, Equity Floor 
Procedure Advices,\6\ and Option Floor Procedure Advices.\7\
---------------------------------------------------------------------------

    \6\ The Exchange clarified that a Referee may also have the 
authority to act in the capacity of a Floor Official respecting 
initial rulings concerning requests for relief from the requirements 
of Equity Floor Procedure Advices. Telephone conversation between 
Richard Rudolph, Vice President and Counsel, Phlx, and Jennifer 
Dodd, Special Counsel, Division of Market Regulation, Commission, on 
March 10, 2006 (``Telephone Conversation'').
    \7\ Floor Officials would retain their authority to make such 
initial rulings. The Referee would simply have the same authority as 
a Floor Official concerning such initial rulings.
---------------------------------------------------------------------------

    Current Floor Official Program. Pursuant to Exchange By-Law Article 
VIII, Floor Officials, as designees \8\ of the Chairmen of the Options 
Committee,\9\ Floor Procedure Committee,\10\ and Foreign Currency 
Options Committee,\11\ respectively, are authorized to administer the 
provisions of Exchange By-Laws and Rules of the Exchange pertaining to 
the respective trading floors and the immediately adjacent premises of 
the Exchange. They may impose penalties as applicable, for breaches of 
the Exchange's rules or regulations relating to order, decorum, health, 
safety and welfare on the respective trading floors. Additionally, they 
may rule to nullify, or adjust the terms of, executed trades under 
specific and limited conditions contained in Exchange rules, and may 
grant relief from certain requirements of on-floor members and member 
organizations if authorized to do so by rule.
---------------------------------------------------------------------------

    \8\ The designees of the respective floor Committee chairmen are 
generally members of the respective committees and subcommittees 
thereof.
    \9\ The Options Committee has general supervision of the 
dealings of members on the options trading floor. See Exchange By-
Law Article X, Section 10-20.
    \10\ The Floor Procedure Committee has general supervision of 
the dealings of members on the equity trading floor. See Exchange 
By-Law Article X, Section 10-16.
    \11\ The Foreign Currency Options Committee has general 
supervision of the dealings of members on the foreign currency 
options trading floor. See Exchange By-Law Article X, Section 10-17.
---------------------------------------------------------------------------

    Currently, Floor Official rulings and appeals for review from such 
rulings are governed by Exchange Rule 124, Disputes. Rule 124(d) 
provides that Options Floor Official rulings may be appealed to a 
Review Panel consisting of three members of the Options Subcommittee on 
Rules and Rulings (the ``Subcommittee''),\12\ or the Chairperson of the 
standing committee (or his designee) if three Subcommittee members 
cannot be promptly convened, and Equity Floor Official rulings may be 
appealed to a Review Panel consisting of three members of the Floor 
Procedure Committee, or the Chairperson of the Floor Procedure 
Committee (or his designee) if three members cannot be promptly 
convened.\13\ Decisions of the Review Panel are considered final 
decisions of the standing committee and may be appealed to an Advisory

[[Page 16394]]

Committee on Appeals of the Board of Governors.
---------------------------------------------------------------------------

    \12\ Each Standing and Special Committee may appoint such 
subcommittees as it may deem necessary for the efficient discharge 
of its duties. See Exchange By-Law Article X, Section 10-3(b). The 
Options Committee has appointed the Subcommittee to review and 
recommend the adoption of new rules or the amendment of current 
rules to the full Options Committee, and to discuss rulings made on 
the floor of the Exchange by Floor Officials.
    \13\ The Exchange clarified the current process for Equity Floor 
Official rulings. Telephone Conversation.
---------------------------------------------------------------------------

    Floor Officials are also authorized to rule on requests for relief 
from the requirements of certain rules, including, without limitation, 
quote spread parameters,\14\ and disengagement of Exchange automatic 
execution systems under extraordinary circumstances.\15\
---------------------------------------------------------------------------

    \14\ Relief from the established bid/ask differentials may be 
granted upon the receipt of an approval of two Floor Officials. See 
OFPA F-6.
    \15\ See Exchange Rule 1080(e).
---------------------------------------------------------------------------

    The Referee. The Referee would be either an Exchange employee or an 
independent contractor who is not an employee of the Exchange who has 
entered into an employment contract with the Exchange for a fixed 
period of time. The Referee would be appointed by the Exchange's Board 
of Governors pursuant to the recommendation of the Audit Committee. 
Candidates for the Referee position would be recruited in the same 
fashion as candidates for other Exchange positions through the 
Exchange's Human Resources Department. After conducting an interview 
process with the various candidates, the Audit Committee would 
recommend its selection to the Board of Governors, who would then vote 
on the Audit Committee's recommendation. Upon the Commission's approval 
of this proposal, the Referee would be appointed to the new position.
    The proposal would provide that decisions of the Referee concerning 
both (i) the review of Floor Official rulings relating to the 
nullification or adjustment of transactions, and (ii) and initial 
requests for relief, would be final and may not be appealed to the 
Exchange's Board of Governors.\16\ The Referee would be authorized to 
sustain, overturn, or modify rulings made by Floor Officials and to 
make initial rulings in certain instances (as described below).
---------------------------------------------------------------------------

    \16\ The Exchange clarified that a Referee may review Floor 
Official rulings relating to the nullification or adjustment of 
transactions. Telephone Conversation.
---------------------------------------------------------------------------

    Because the Referee would be authorized to review Floor Official 
decisions to nullify or adjust trades on both the Exchange's equity and 
options floors, the proposed rule change includes conforming amendments 
to OFPA F-27 and to EFPA F-27 concerning such reviews of Floor Official 
rulings, as discussed more fully below.
    As stated above, Floor Officials are authorized to rule on requests 
for relief from the requirements of certain rules, including, without 
limitation, quote spread parameters and disengagement of Exchange 
automatic execution systems under extraordinary circumstances. The 
proposed rule change would authorize the Referee to make such rulings 
in the same manner as Floor Officials.
    In order to ensure the neutrality of the Referee, the Referee would 
report to the Exchange's Audit Committee,\17\ which would have 
supervision over the Referee. The Exchange's General Counsel or his/her 
designee would be responsible for purely administrative matters such 
as, without limitation, personnel issues and vacation. Additionally, 
based on the advice of the Exchange's General Counsel and Human 
Resources management, the Audit Committee may recommend the level of 
compensation of the Referee to the Board of Governors, and may 
establish other conditions of employment of the Referee. The Audit 
Committee or its designee would conduct annual performance evaluations, 
and would consider any written complaints from members and member 
organizations concerning the Referee. The Audit Committee would not, 
however, have the authority to overrule or modify any ruling made by 
the Referee. The Audit Committee would have the authority to terminate 
the employment of the Referee for good cause shown, and to otherwise 
discipline the Referee as appropriate for good cause shown.
---------------------------------------------------------------------------

    \17\ See proposed Exchange By-Law Article X, Section 10-9.
---------------------------------------------------------------------------

    The Referee would have jurisdiction over all Exchange trading 
floors and systems, except with regard to issues of order and decorum 
pursuant to Exchange Rule 60. The Options Committee would continue to 
have jurisdiction over order and decorum issues on the options floor; 
\18\ the Floor Procedure Committee would continue to have jurisdiction 
over order and decorum issues on the equity floor; \19\ and the Foreign 
Currency Options Committee would continue to have jurisdiction over 
order and decorum issues on the foreign currency options floor.\20\
---------------------------------------------------------------------------

    \18\ See Exchange By-Law Article X, Section 10-20.
    \19\ See Exchange By-Law Article X, Section 10-16.
    \20\ See Exchange By-Law Article X, Section 10-17.
---------------------------------------------------------------------------

    The proposed rule change would provide that the Audit Committee 
would recommend for appointment by the Board of Governors other 
Exchange employee(s) or independent contractor(s) to function as the 
Referee in the event that the Referee is unavailable (``Backup 
Referees''). The Exchange's rules and procedures, including 
qualifications, applicable to the Referee would also apply to Backup 
Referees, and any reference to the Referee in the proposed rules would 
be deemed to include Backup Referees. This is to ensure that a Backup 
Referee would be available if the Referee is not available due to, for 
example, a ruling on another matter that is in progress, vacation, 
illness, etc.
    The proposal also would provide that the Market Surveillance staff 
would assign available Floor Officials to rule on disputes. The 
Exchange believes that this provision should ensure the neutrality of 
Floor Officials by assigning the next available Floor Official to rule 
on a particular matter.
    Qualifications of the Referee. Under the proposal, the Referee 
would be required to have sufficient expertise in the area of trading 
to act in the capacity of a Floor Official concerning requests for 
relief and to conduct reviews of Floor Official rulings concerning the 
nullification and adjustment of trades. The Referee must possess 
sufficient knowledge of Exchange rules and the relevant sections of the 
Act (and the rules thereunder) to administer the Referee's 
responsibilities and authority.
    In order to ensure neutrality, the proposal would provide that the 
Referee may not be a member of the Exchange, may not be directly or 
indirectly affiliated with any Exchange member or member organization, 
and may not be an immediate family member of any Exchange member. The 
Referee may not be a debtor or creditor of any Exchange member or 
member organization.
    Duties of the Referee. The primary responsibility of the Referee 
would be to rule on appeals from Floor Official decisions concerning 
the nullification and adjustment of trades, and to have the same 
authority as Floor Officials concerning rulings on member requests for 
relief from the requirements of certain rules. The Referee would 
replace the current three-member Review Panel, which is currently 
comprised of Floor Officials, and would be authorized to review Floor 
Official rulings concerning the adjustment of the terms of a trade, or 
the nullification or ``bust'' of trades on appeal, and either uphold, 
overturn, or modify appealed Floor Official rulings pursuant to 
proposed amended Rule 124. If the Referee is unavailable or unable to 
make a ruling for any reason (including, without limitation, absence 
from the Exchange trading floor, vacation, illness, or in the process 
of making another Referee ruling), Market Surveillance staff will 
immediately notify the Exchange's General Counsel, or his designee, who 
would designate a Backup Referee to make such a ruling.
    The proposed rule change would provide that the Exchange's General 
Counsel or his or her designee may assign additional duties and

[[Page 16395]]

responsibilities to the Referee not related to Referee rulings. In 
order to ensure the Referee's neutrality respecting any matter on which 
he or she is to rule, and to avoid the possibility that the Referee 
could be biased as a result of his or her knowledge of any pending 
investigation or disciplinary action concerning a person that is a 
party to a dispute or that requests relief from the requirements of an 
Exchange rule, the proposal would prohibit the Referee from: (i) 
Participating in any Exchange enforcement action, investigation, market 
surveillance activity, hearing (other than as a witness) or other 
activity related to disciplinary matters; (ii) issuing citations for 
violations of Exchange rules; (iii) ruling on any matter concerning 
order and decorum pursuant to Exchange Rule 60 and the regulations 
thereunder; and (iv) preparing, researching, drafting, reviewing, or 
filing of a proposed rule change with the Commission pursuant to the 
Act and the rules thereunder concerning the Exchange's disciplinary 
rules.
    The proposed rules would require the Referee to make fair and 
impartial decisions in accordance with Exchange rules and By-Laws.
    Procedures for Review of Floor Official Rulings. Proposed amended 
Rule 124(d), OFPA F-27, and EFPA F-27 would require that Market 
Surveillance staff be advised within 15 minutes of a Floor Official 
ruling concerning the nullification or adjustment of a trade that a 
party to such ruling has determined to seek the Referee's review of 
such ruling. The purpose of the notification requirement is to provide 
reasonably prompt notice to Market Surveillance and to participants in 
a trade subject to the rule that such ruling is subject to appeal and 
that the process set forth in the proposed rule has begun, and 
ultimately a decision to sustain, overturn, or modify the initial Floor 
Official decision concerning the trade will be made.\21\
---------------------------------------------------------------------------

    \21\ This is consistent with Exchange Rule 1092, Obvious Errors, 
which establishes a similar notice period. Under the proposal, Floor 
Official rulings made pursuant to Rule 1092 would be reviewed by the 
Referee, provided that the party seeking the review so requests 
within the time permitted. See proposed Rule 1092(f).
---------------------------------------------------------------------------

    As appropriate, the Chairman of the Options Committee, the Foreign 
Currency Options Committee or of the Floor Procedure Committee, or 
their respective designees,\22\ would be required to refer a Referee 
that fails to make any ruling in accordance with Exchange rules to the 
Audit Committee for possible disciplinary action, including removal. A 
Floor Official that fails to make any ruling in accordance with 
Exchange rules may be subject to possible disciplinary action by the 
Exchange.
---------------------------------------------------------------------------

    \22\ The Exchange clarified that the Chairman of the Foreign 
Currency Options Committee, or his designee, would also be required 
to refer a Referee to the Audit Committee for disciplinary action, 
if appropriate. Telephone Conversation.
---------------------------------------------------------------------------

    In order to minimize the likelihood of frivolous appeals from Floor 
Official rulings, a member or member organization seeking the Referee's 
review of a Floor Official ruling concerning the nullification or 
adjustment of a trade would be assessed a fee of $250.00 for each Floor 
Official ruling they seek to have reviewed if the Referee upholds the 
Floor Official decision. No fee would be assessed to the member or 
member organization seeking a review if the Floor Official decision is 
overturned or modified. This fee is currently imposed on options floor 
appeals that are found by the Review Panel to be frivolous.\23\ The 
Exchange believes that the proposed rule concerning the $250.00 fee 
provides an objective standard for imposition of the fee (i.e., the fee 
would be imposed in situations where the Referee sustains a Floor 
Official ruling on the nullification or adjustment of a trade). Thus, 
the Referee would not have the discretion to impose the fee that Floor 
Officials currently have, and Exchange members and member organizations 
would have actual notice of the circumstances giving rise to the 
imposition of the fee.
---------------------------------------------------------------------------

    \23\ This fee is not currently imposed on equity floor appeals. 
Telephone Conversation.
---------------------------------------------------------------------------

    Rulings on Requests for Relief. Proposed Rule 124, Commentary 
.02(a) would authorize the Referee to act in the capacity of a Floor 
Official respecting initial rulings concerning requests for relief from 
the requirements of Exchange Rules relating to: (i) Bid/ask 
differentials pursuant to Rule 1014(c) and OFPA F-6; (ii) disengagement 
of Exchange automatic execution systems pursuant to Rule 1080(e) and 
OFPA A-13; (iii) the determination that quotes in options on the 
Exchange or another market or markets are subject to relief from the 
firm quote requirement pursuant to Exchange Rule 1080(c)(i); and (iv) 
trading halts, openings and re-openings pursuant to Rules 1017, 1047 
and 1047A and OFPAs A-12, A-14 and G-2.
    Rule 1014(c) and OFPA F-6 set forth the maximum allowable bid/ask 
differentials, or quote widths, that may be disseminated by specialists 
and ROTs on the Exchange, depending on the price of the series to be 
quoted. The Exchange believes that these requirements can have the 
unintended consequence of requiring those making markets to quote at 
prices that are unnecessarily narrow, thereby exposing them to great 
risk if markets move quickly.\24\ Therefore, as stated in OFPA F-6, two 
Floor Officials may grant relief from these differentials during times 
of peak market activity where options markets and/or the market for 
securities underlying the option move quickly. Under the proposal, the 
Referee would have the same authority as a Floor Official to make such 
a ruling.
---------------------------------------------------------------------------

    \24\ See, e.g., Securities Exchange Act Release No. 50728 
(November 23, 2004), 69 FR 69982 (December 1, 2004) (SR-Phlx-2004-
74) (Notice of Filing and Immediate Effectiveness of Proposed Rule 
Change and Amendment No. 1 by the Philadelphia Stock Exchange, Inc. 
Relating to $5 Bid/Ask Differentials).
---------------------------------------------------------------------------

    Rule 1080(e) and OFPA A-13 provide that, in the event extraordinary 
circumstances with respect to a particular class of options exist, two 
Floor Officials may determine to disengage AUTO-X with respect to that 
option, in accordance with Exchange procedures. The rule and OFPA go on 
to describe the procedures to be followed to bring about such 
disengagement. Under the proposal, the Referee would have the same 
authority as a Floor Official to make such a determination.
    Rule 1080(c)(i) provides that the Chairman of the Exchange's 
Options Committee or his designee (or if neither is available, two 
Floor Officials) may determine that quotes in options on the Exchange 
or another market or markets are subject to relief from the firm quote 
requirement set forth in the SEC Quote Rule,\25\ (thereby excluding 
such quotes from the Exchange's calculation of the National Best Bid/
Offer (``NBBO'')) and that quotes in options on the Exchange or another 
market or markets previously subject to such relief are no longer 
subject to such relief. The Referee would have the same authority as a 
Floor Official in making determinations concerning the above enumerated 
rules that require Floor Official rulings.
---------------------------------------------------------------------------

    \25\ 17 CFR 242.602.
---------------------------------------------------------------------------

    Rules 1017, 1047 and 1047A and OFPAs A-12, A-14 \26\ and G-2 govern 
trading halts, openings and re-openings on the Exchange.\27\ Under the 
proposal, the Referee would have the same authority as a Floor Official 
to make rulings in the capacity of a Floor Official

[[Page 16396]]

concerning rules that require Floor Official approval, as enumerated 
above.
---------------------------------------------------------------------------

    \26\ The Exchange clarified that the Referee would also have the 
same authority as a Floor Official to make rulings in the capacity 
of a Floor Official under OFPA A-14. Telephone Conversation.
    \27\ For consistency, the Exchange is proposing a conforming 
amendment to OFPA G-2, as described below.
---------------------------------------------------------------------------

    Referee's Decision Final. As stated above, currently decisions of 
the Review Panel are considered final decisions of the standing 
committee and may be appealed to an Advisory Committee on Appeals of 
the Board of Governors. Initial rulings to grant or deny relief from 
the requirements of certain rules are not currently considered final 
decisions of a standing committee and are thus not currently appealable 
to the Exchange's Board of Governors.
    The proposed rule change would provide that decisions of the 
Referee concerning (A) the review of Floor Official rulings relating to 
the nullification or adjustment of transactions, and (B) initial 
requests for relief, shall be final and may not be appealed to the 
Exchange's Board of Governors. The Exchange does not believe that these 
are the types of decisions that are appropriate for such appeals 
particularly because the need for speedy resolution and certainty are 
important, whereas other standing committee decisions are often 
prospectively applied.
    This provision would not operate to preclude any aggrieved member 
or member organization from proceeding with any other legal remedy to 
which such member or member organization might be entitled (e.g., 
arbitration or appeal to the Commission if allowable by law).
    Obvious Errors. The Exchange also proposes to amend Exchange Rule 
1092, Obvious Errors. Currently, Rule 1092(f), Request for Review, 
provides that a Review Panel of Floor Officials will review decisions 
made under the Rule in accordance with Exchange Rule 124(d). For 
consistency, the Exchange proposes to amend Rule 1092(f) to provide 
that the Referee will review such decisions.
    Conforming Amendment to OFPA G-2. As a housekeeping matter, the 
Exchange proposes to amend OFPA G-2(c), to reflect that trading on the 
Exchange in any option may be halted with the approval of two Floor 
Officials, with the concurrence of a Market Surveillance officer. 
Current Rule 1047A(c) includes this provision, and the Exchange 
proposes to amend OFPA G-2 for consistency.
2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act \28\ in general, and furthers the objectives of Section 
6(b)(5) of the Act \29\ in particular, in that it is designed 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, by establishing a neutral Referee to rule on appeals from 
Floor Official decisions and to rule initially on requests for relief 
from certain requirements under Exchange rules. The Exchange further 
believes that the proposal is consistent with 6(b)(1) of the Act,\30\ 
in that the proposal is designed to enable the Exchange to continue to 
comply, and to enforce compliance by its members and persons associated 
with its members, with the provisions of the Act, the rules and 
regulations thereunder, and the rules of the Exchange by improving the 
Exchange's Floor Official process and improving the review process of 
Floor Official rulings.
---------------------------------------------------------------------------

    \28\ 15 U.S.C. 78f(b).
    \29\ 15 U.S.C. 78f(b)(5).
    \30\ 15 U.S.C. 78f(b)(1).
---------------------------------------------------------------------------

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition that is not necessary or appropriate 
in furtherance of the purposes of the Act.

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 the Phlx consents, the Commission will:
    (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, as amended, 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-2005-42 on the subject line.

Paper Comments

     Send paper comments in triplicate to Nancy M. Morris, 
Secretary, Securities and Exchange Commission, 100 F Street, NE., 
Washington, DC 20549-1090.

All submissions should refer to File Number SR-Phlx-2005-42. 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 -2005-42 and should be submitted on or before April 21, 2006.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\31\
---------------------------------------------------------------------------

    \31\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Nancy M. Morris,
Secretary.
 [FR Doc. E6-4701 Filed 3-30-06; 8:45 am]
BILLING CODE 8010-01-P