
[Federal Register: July 3, 2008 (Volume 73, Number 129)]
[Notices]               
[Page 38284-38286]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr03jy08-115]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-58039; File No. SR-Phlx-2008-44]

 
Self-Regulatory Organizations; Philadelphia Stock Exchange, Inc.; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Extend the Quarterly Options Series Pilot Program

June 26, 2008.
    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 19, 2008, the Philadelphia Stock Exchange, Inc. (``Exchange'' 
or ``Phlx'') filed with the Securities and Exchange Commission 
(``Commission'') the proposed rule change as described in Items I and 
II below, which Items have been substantially prepared by the Exchange. 
The Exchange has designated this proposal as non-controversial under 
Section 19(b)(3)(A)(iii) of the Act \3\ and Rule 19b-4(f)(6) 
thereunder,\4\ which renders the proposed rule change 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\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \4\ 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 its Rules 1012 (Series of Options 
Open for Trading) and 1101A (Terms of Option Contracts), in order to 
extend for a period of one year an Exchange pilot program (the ``Pilot 
Program'') to permit the listing and trading of options series that may 
be opened for trading on any business day and expire at the close of 
business on the last business day of a calendar quarter (``Quarterly 
Options'' or ``Quarterly Options Series''). The Pilot Program currently 
continues through July 10, 2008.\5\ The text of the proposed rule 
change is available on the Exchange's Web site (http://www.phlx.com/
regulatory/reg_rulefilings.aspx.), at the principal office of the 
Exchange, and at the Commission's Public Reference Room.
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    \5\ See Securities Exchange Act Release No. 56030 (July 9, 
2007), 72 FR 38645 (July 13, 2007) (SR-Phlx-2007-42).
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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, 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.

[[Page 38285]]

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 extend the Pilot 
Program for a period of one year so that the Exchange may continue to 
list and trade Quarterly Options within the parameters specified in its 
Rules 1012 and 1101A. In February 2007, the Commission approved the 
Pilot Program allowing the listing and trading of Quarterly Options on 
the Exchange, and thereafter extended the Pilot Program through July 
10, 2008.\6\ The Exchange is proposing to extend the Pilot Program for 
one year through July 10, 2009. The Exchange is not proposing any 
changes to the Pilot Program.\7\
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    \6\ See Securities Exchange Act Release Nos. 55301 (February 15, 
2007), 72 FR 8238 (February 23, 2007) (SR-Phlx-2007-08) 
(establishing the Pilot Program) and 56030 (July 9, 2007), 72 FR 
38645 (July 13, 2007) (SR-Phlx-2007-42) (extending the Pilot 
Program).
    \7\ The Pilot Program was expanded and amended when the Exchange 
filed a proposed rule change, pursuant to Section 19(b)(3)(A)(iii) 
of the Act and Rule 19b-4(f)(6) thereunder, to list additional 
series and implement a delisting policy for outlying series with no 
open interest. See Securities Exchange Act Release No. 57583 (March 
31, 2008), 73 FR 18589 (April 4, 2008) (SR-Phlx-2008-23).
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    In the Commission Order approving the Pilot Program, the Commission 
indicated that if the Exchange seeks extension, expansion, or permanent 
approval of the Pilot Program, it must submit a Pilot Program Report 
(the ``Report'') that must include, at a minimum: (1) Data and written 
analysis on the open interest and trading volume in the classes for 
which Quarterly Option Series were opened; (2) an assessment of the 
appropriateness of the options classes selected for the Phlx Pilot; (3) 
an assessment of the impact of the Pilot Program on the capacity of 
Phlx, Options Price Reporting Authority (``OPRA''), and on market data 
vendors (to the extent data from market data vendors is available); (4) 
any capacity problems or other problems that arose during the operation 
of the Pilot Program and how Phlx addressed such problems; (5) any 
complaints that the Phlx received during the operation of the Pilot 
Program and how the Phlx addressed them; and (6) any additional 
information that would assist in assessing the operation of the Pilot 
Program.\8\ In connection with the Pilot Program expansion,\9\ the 
Commission further requested that the Report include analysis of: (1) 
The impact of the additional series on the Exchange's market and quote 
capacity, and (2) the implementation and effects of the delisting 
policy, including the number of series eligible for delisting during 
the period covered by the report, the number of series actually 
delisted during that period (pursuant to the delisting policy or 
otherwise), and documentation of any customer requests to maintain 
Quarterly Options Series strikes that were otherwise eligible for 
delisting. The Exchange has submitted, under separate cover, a Report 
in connection with this filing, which Report seeks confidential 
treatment under the Freedom of Information Act.
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    \8\ See Securities Exchange Act Release No. 55301, supra note 6.
    \9\ See Securities Exchange Act Release No. 57583, supra note 7.
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    The Report reviews the Exchange's experience with the Pilot Program 
and clearly supports the Exchange's belief that extension of the Pilot 
Program is proper. Among other things, the Exchange believes that the 
Report shows the strength and efficacy of the Pilot Program on the 
Exchange as reflected by the strong volume of Quarterly Options traded 
on Phlx since the Pilot Program's inception in February 2007. The 
Exchange further believes that the Report establishes that the Pilot 
Program has not created, and in the future should not create, capacity 
problems for the Exchange or the OPRA system. Moreover, the Exchange 
represents that it has the necessary systems capacity to support new 
options series that will result from the introduction of Quarterly 
Options Series.
    The Exchange believes that extending the Pilot Program would 
continue to provide investors with a flexible and valuable tool to 
manage risk exposure, minimize capital outlays, and be more responsive 
to the timing of events affecting the securities that underlie option 
contracts.
2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act,\10\ in general, and furthers the objectives of Section 
6(b)(5), specifically,\11\ in that it is designed to promote just and 
equitable principles of trade, to perfect the mechanism of a free and 
open market and the national market system, and, in general, to protect 
investors and the public interest. The Exchange believes that the 
proposal would achieve this by allowing continued listing of Quarterly 
Options, thereby stimulating customer interest in such options and 
creating greater trading opportunities and flexibility and providing 
customers with the ability to more closely tailor their investment 
strategies.
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    \10\ 15 U.S.C. 78f(b).
    \11\ 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 solicited or received with respect to the 
proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    The Exchange has designated the proposed rule change as one that: 
(1) Does not significantly affect the protection of investors or the 
public interest; (2) does not impose any significant burden on 
competition; and (3) does not become operative for 30 days from the 
date of filing, or such shorter time as the Commission may designate if 
consistent with the protection of investors and the public interest. 
Therefore, the foregoing rule change has become effective pursuant to 
Section 19(b)(3)(A) of the Act \12\ and subparagraph (f)(6) of Rule 
19b-4 thereunder.\13\
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    \12\ 15 U.S.C. 78s(b)(3)(A).
    \13\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) 
requires a self-regulatory organization to provide the Commission 
with written notice of its intent to file the proposed rule change, 
along with a brief description and text of 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. The Exchange has fulfilled this requirement.
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    The Exchange has asked the Commission to waive the operative delay 
to permit the proposed rule change to become operative prior to the 
30th day after filing. The Commission has determined that waiving the 
30-day operative delay of the Exchange's proposal is consistent with 
the protection of investors and the public interest and will promote 
competition because such waiver will allow Phlx to continue the 
existing Pilot without interruption.\14\ Therefore, the Commission 
designates the proposal operative upon filing.
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    \14\ 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

[[Page 38286]]

the 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 rule-comments@sec.gov. Please include 
File No. SR-Phlx-2008-44 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-Phlx-2008-44. 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 available publicly. All 
submissions should refer to File No. SR-Phlx-2008-44 and should be 
submitted on or before July 24, 2008.
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    \15\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\15\
Florence E. Harmon,
Acting Secretary.
[FR Doc. E8-15099 Filed 7-2-08; 8:45 am]

BILLING CODE 8010-01-P
