[Federal Register Volume 71, Number 189 (Friday, September 29, 2006)]
[Notices]
[Pages 57598-57599]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E6-15984]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-54488; File No. SR-SCCP-2006-02]


Self-Regulatory Organizations; Stock Clearing Corporation of 
Philadelphia; Notice of Filing of a Proposed Rule Change Relating to 
the Definition of a Margin Member

 September 22, 2006.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ notice is hereby given that on August 14, 2006, Stock 
Clearing Corporation of Philadelphia (``SCCP'') 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 primarily by SCCP. 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).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The proposed rule change would amend the definition of ``margin 
member'' in SCCP Rule 1, Definitions, to accommodate the proposed 
introduction of equity Market Makers on the Philadelphia Stock Exchange 
(``Phlx'') and to reflect the proposed introduction of Phlx's new 
equity trading system, XLE, which will replace Phlx's equity trading 
floor.\2\
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    \2\ Securities Exchange Act Release No. 54329 (August 17, 2006), 
71 FR 50482, (August 25, 2006) [File No. SR-Phlx-2006-43].
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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, SCCP 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. SCCP has prepared summaries, set forth in sections (A), 
(B), and (C) below, of the most significant aspects of such 
statements.\3\
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    \3\ The Commission has modified parts of these statements.
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(A) Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    The purpose of the proposed rule change is to conform SCCP's Rules 
to the proposed change that the Phlx is making to its market structure 
through the introduction of XLE and market makers. Phlx has proposed to 
eliminate its equity trading floor and to replace it with an electronic 
trading system, XLE, which will provide for the entry, display, 
ranking, routing, and execution of orders in NMS stocks \4\ for its 
members and member organizations (``XLE Participants''). As proposed by 
Phlx, the current equity specialists would be replaced by market 
makers, a type of XLE Participant, which would be liquidity providers 
on XLE.\5\
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    \4\ 17 CFR 242.600(b)(47).
    \5\ As proposed by Phlx, not every security on XLE will require 
a market maker. However, if a market maker or multiple market makers 
choose to register in a security, they must provide a two-sided 
market in that security on XLE during regular trading hours (usually 
9:30 a.m. to 4 p.m.) of the security. Therefore, some securities on 
XLE may have no market makers or may have one or more market makers.
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    SCCP Rule 1, Definitions, currently defines ``margin members'' as 
SCCP participants that are Phlx specialists, alternate specialists, or 
other Phlx floor members specifically approved by the National 
Securities Clearing Corporation to effect trading in a margin account. 
Margin members that clear and settle their transactions through SCCP's 
``omnibus clearance and settlement account'' at NSCC receive margin 
accounts from SCCP.\6\ SCCP expects that many of its current margin 
members

[[Page 57599]]

that are Phlx specialists, alternate specialists, or other Phlx floor 
members would become XLE Participants, including market makers, upon 
approval of XLE. This proposed rule change would amend the definition 
of margin member in SCCP's rules to add the term market maker \7\ and 
to remove the word floor from the term Phlx floor member. This would 
allow SCCP members that are currently margin members under Rule 1 of 
SCCP's rules to maintain their status as margin members following 
Phlx's transition to XLE.
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    \6\ SCCP Rule 9, Margin Accounts.
    \7\ The proposed rule change File No. SR-Phlx-2006-43 would 
define the term ``market maker'' in Phlx Rule 1, Definitions, 
paragraph (m). It would also add new rules 170 through 174 to set 
forth the registration requirements, rights, and obligations of Phlx 
market makers.
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    SCCP believes that the proposed rule change is consistent with 
Section 17A of the Act \8\ because the proposed rule change is designed 
to allow current SCCP Margin Members to maintain their status as they 
transition from the current floor based trading environment on Phlx to 
an electronic trading system, XLE, and would thereby promote the prompt 
and accurate clearance and settlement of securities transactions and 
remove impediments to and perfect the mechanism of a national system 
for the prompt and accurate clearance of securities transactions.
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    \8\ 15 U.S.C. 78q-1.
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(B) Self-Regulatory Organization's Statement on Burden on Competition

    SCCP does not believe that the proposed rule change would 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 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 self-regulatory organization consents, the Commission will:
    (A) By order approve the 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 Number SR-SCCP-2006-02 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-SCCP-2006-02. 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 Section, 100 F Street, 
NE., Washington, DC 20549. Copies of such filing also will be available 
for inspection and copying at the principal office of SCCP and on 
SCCP's Web site at http://www.phlx.com/SCCP/memindex_sccpproposals.html. 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-SCCP-2006-02 and should be submitted on or before October 20, 2006.

    For the Commission by the Division of Market Regulation, 
pursuant to delegated authority.\9\
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    \9\ 17 CFR 200.30-3(a)(12).
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Nancy M. Morris,
Secretary.
 [FR Doc. E6-15984 Filed 9-28-06; 8:45 am]
BILLING CODE 8010-01-P