[Federal Register Volume 71, Number 144 (Thursday, July 27, 2006)]
[Notices]
[Page 42706]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E6-12002]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-54190; File No. SR-Phlx-2006-30]


Self-Regulatory Organizations; Philadelphia Stock Exchange, Inc.; 
Order Granting Approval to Proposed Rule Change and Amendment No. 1 
Thereto Relating To Reducing Staffing Requirements for Options 
Specialist Units

July 21, 2006.
    On May 4, 2006, 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 
proposed rule change to amend Phlx Rule 501(d) to reduce the mandatory 
staffing requirement to be approved as an options or foreign currency 
options specialist unit and to retain such status, while continuing to 
enable the Exchange's Options Allocation, Evaluation and Securities 
Committee (``Options Allocation Committee'') to require a unit to 
obtain additional staffing. On June 6, 2006, Phlx filed Amendment No. 1 
to the proposed rule change.\3\ The proposed rule change, as amended, 
was published for comment in the Federal Register on June 20, 2006.\4\ 
The Commission received no comments regarding the proposal, as amended. 
This order approves the proposed rule change, as amended.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ In Amendment No. 1, the Exchange clarified the rationale for 
reducing staffing for foreign currency options and made non-
substantive changes to the proposed rule change.
    \4\ See Securities Exchange Act Release No. 53979 (June 14, 
2006), 71 FR 35475 (the ``Notice'').
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    Currently, Phlx Rule 501(d) requires that to be approved as an 
options or foreign currency options specialist unit and retain such 
status, the specialist unit must have at each quarter turret or trading 
post one head specialist, two assistant specialists (at least one of 
whom must be associated with the specialist unit), and one specialist 
clerk.\5\ However, as the Exchange and member organizations continue to 
enhance options trading technology and options orders are now 
automatically executed on the Exchange over 90% of the time, the 
Exchange believes that the need to maintain the present required 
staffing levels for every specialist unit is significantly reduced. The 
Exchange believes that, in light of such technological advances, and in 
conjunction with requests from specialist units for greater staffing 
flexibility, requiring only one assistant specialist and eliminating 
the requirement for a specialist clerk is warranted.\6\ Furthermore, 
the Phlx believes that the number of foreign currency option orders 
executed on the Exchange does not warrant the continued level of 
staffing.\7\
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    \5\ The Exchange is also proposing to make non-substantive 
changes to Phlx Rule 501(d) such as deletion of obsolete references 
to quarter turrets, which are no longer used on the floor.
    \6\ The changes proposed in Phlx Rule 501(d) herein are not 
intended to alter other specialist unit obligations established by 
Phlx rules.
    \7\ In the Notice, the Exchange represented that in 2005, the 
number of foreign currency options orders executed on the Exchange 
was less than one percent of the overall number of option orders 
executed on the Exchange.
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    The Commission finds that the proposed rule change, as amended, is 
consistent with the requirements of the Act and the rules and 
regulations thereunder applicable to a national securities exchange.\8\ 
In particular, the Commission believes that the proposal, as amended, 
is consistent with Section 6(b)(5) of the Act, which requires that the 
rules of an exchange be designed to promote just and equitable 
principles of trade, and to protect investors and the public interest. 
Specifically, the proposed rule change, as amended, should provide 
flexibility in options and foreign currency options specialist unit 
staffing by reducing the mandatory staffing requirement. At the same 
time, Phlx Rule 501(d) will continue to provide the Options Allocation 
Committee with the ability to require a specialist unit to obtain 
additional staffing depending upon the number of assigned options 
classes and associated order flow.
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    \8\ In approving this proposed rule change, as amended, the 
Commission notes that it has considered the proposed rule's impact 
on efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
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    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\9\ that the proposed rule change (SR-Phlx-2006-30), as amended, is 
hereby approved.
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    \9\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\10\
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    \10\ 17 CFR 200.30-3(a)(12).
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Jill M. Peterson,
Assistant Secretary.
[FR Doc. E6-12002 Filed 7-26-06; 8:45 am]
BILLING CODE 8010-01-P