[Federal Register Volume 74, Number 26 (Tuesday, February 10, 2009)]
[Notices]
[Pages 6681-6682]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-2699]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-59346; File No. SR-Phlx-2009-07]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by NASDAQ OMX PHLX, Inc. To 
Eliminate the $3 Price Requirement for Continued Approval for an 
Underlying Security and Listing Additional Series of Options

February 3, 2009.
    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 February 2, 2009, NASDAQ OMX PHLX, Inc. (``Phlx'' or the 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission'') the proposed rule change as described in Items I and 
II below, which Items have been prepared by the Exchange. Phlx has 
designated the proposed rule change as constituting a non-controversial 
rule change under Rule 19b-4(f)(6) under the Act,\3\ which renders the 
proposal effective upon filing with the Commission. 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.
    \3\ 17 CFR 240.19b-4(f)(6).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend Phlx Rule 1010, Withdrawal of 
Approval of Underlying Securities or Options, to eliminate the $3 
market price per share requirement for continued approval for an 
underlying security. The Exchange also proposes to amend Rule 1010 by 
eliminating the prohibition against listing additional series of 
options on an underlying security at any time when the price per share 
of such underlying security is less than $3.
    The text of the proposed rule change is available on the Exchange's 
Web site at http://www.nasdaqtrader.com/micro.aspx?id=PHLXRulefilings, 
at the principal office of the Exchange, and at the Commission's Public 
Reference Room.

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 Exchange 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 Exchange 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 eliminate the $3 
market price per share requirement from the Exchange's requirements for 
continued approval for an underlying security from Phlx Rule 1010. This 
proposed rule change also amends Rule 1010 by eliminating the 
prohibition against listing additional series or options on an 
underlying security at any time when the price per share of such 
underlying security is less than $3.
    Phlx's rules require that the market price for a security be at 
least $3 on the previous trading day for the continued listing of 
options on that underlying security. If the price of an underlying 
security falls below $3, the Exchange can continue to trade then-listed 
series on that underlying security, but is unable to list new series of 
options. The Exchange believes that the current $3 market price per 
share requirement could have a negative effect on investors. For 
example, in the current volatile market environment in which the market 
price for a large number of securities has fallen below $3, the

[[Page 6682]]

Exchange is currently unable to list new series on underlying 
securities trading below $3. If there is market demand for series below 
$3, the Exchange would be unable to accommodate such requests and 
investors would be unable to hedge their positions with options series 
with strikes below $3.
    The Exchange believes that the $3 market price per share 
requirement is no longer necessary or appropriate, and therefore 
proposes that underlying securities meeting the remaining continued 
listing criteria set forth in Phlx Rule 1010 will be eligible for 
continued listing and the listing of additional options series.
2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act \4\ in general, and furthers the objectives of Section 
6(b)(5) of the Act \5\ 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. 
In particular, the proposed rule change will permit the Exchange to 
make options on underlying securities available even if the price of 
the underlying security is less than $3 thus providing investors 
additional opportunities to hedge their positions.
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    \4\ 15 U.S.C. 78f(b).
    \5\ 15 U.S.C. 78f(b)(5).
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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 burden on competition 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

    Because the foregoing proposed rule change does not: (i) 
Significantly affect the protection of investors or the public 
interest; (ii) impose any significant burden on competition; and (iii) 
become operative for 30 days from the date on which it was filed, or 
such shorter time as the Commission may designate, it has become 
effective pursuant to Section 19(b)(3)(A) of the Act \6\ and Rule 19b-
4(f)(6) thereunder.\7\
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    \6\ 15 U.S.C. 78s(b)(3)(A).
    \7\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6) 
requires a self-regulatory organization to give the Commission 
written notice of its intent to file the proposed rule change at 
least five business days prior to the date of filing of the proposed 
rule change, or such shorter time as designated by the Commission. 
Phlx has satisfied this requirement.
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    A proposed rule change filed pursuant to Rule 19b-4(f)(6) under the 
Act \8\ normally does not become operative for 30 days after the date 
of its filing. However, Rule 19b-4(f)(6) \9\ permits the Commission to 
designate a shorter time if such action is consistent with the 
protection of investors and the public interest. Phlx requests that the 
Commission waive the 30-day operative delay. The Commission notes that 
this proposed rule change is substantially identical to a proposed rule 
change that was approved by the Commission after an opportunity for 
public comment,\10\ and does not raise any new substantive issues. The 
Exchange believes that waiving the 30-day operative delay would enable 
it to not be at a competitive disadvantage in respect of other 
exchanges. For these reasons, the Commission believes that waiving the 
30-day operative delay \11\ is consistent with the protection of 
investors and the public interest and designates the proposal operative 
upon filing.
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    \8\ 17 CFR 240.19b-4(f)(6).
    \9\ 17 CFR 240.19b-4(f)(6).
    \10\ Phlx's proposed rule change is substantially identical to a 
proposed rule change by the Chicago Board Options Exchange 
(``CBOE'') recently approved by the Commission. See Securities 
Exchange Act Release No. 59336 (February 2, 2009) (SR-CBOE-2008-
127).
    \11\ For purposes only of waiving the 30-day operative delay, 
the Commission has considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
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    At any time within 60 days of the filing of the proposed rule 
change, the Commission may summarily abrogate such rule change if it 
appears to the Commission that such action is necessary or appropriate 
in the public interest, for the protection of investors, or otherwise 
in furtherance of the purposes of the Act.

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-Phlx-2009-07 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-Phlx-2009-07. 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, 100 F Street, NE., 
Washington, DC 20549, on official business days between the hours of 10 
a.m. and 3 p.m. Copies of such filing also will be available for 
inspection and copying at the principal office of the Exchange. 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 publicly available. All 
submissions should refer to File Number SR-Phlx-2009-07 and should be 
submitted on or before March 3, 2009.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\12\
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    \12\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9-2699 Filed 2-9-09; 8:45 am]
BILLING CODE 8011-01-P