
[Federal Register: August 18, 2008 (Volume 73, Number 160)]
[Notices]               
[Page 48268-48269]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr18au08-105]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-58340; File No. SR-Phlx-2007-33]

 
Self-Regulatory Organizations; Philadelphia Stock Exchange, Inc.; 
Order Granting Approval of a Proposed Rule Change, as Modified by 
Amendment Nos. 1 and 2 Thereto, Relating to Margining

August 11, 2008.
    On April 5, 2007, 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'' or ``Exchange Act''),\1\ and Rule 19b-4 
\2\ thereunder, a proposed rule change to amend its margin rules. On 
July 31, 2007, Phlx filed Amendment No. 1 to the proposed rule change. 
On May 19, 2008, Phlx filed Amendment No. 2 to the proposed rule 
change.\3\ The proposal was published in the Federal Register on July 
7, 2008.\4\ The Commission received no comments on the proposal. This 
order approves the proposed rule change, as modified by Amendment Nos. 
1 and 2.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ Amendment No. 2 replaced and superseded the original filing 
and Amendment No. 1 in their entirety.
    \4\ Exchange Act Release No. 58045 (June 26, 2008), 73 FR 38487.
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    The Exchange proposed to streamline and make more efficient its 
margin rules and procedures by: (1) Adding a new section to Rule 721 
(Proper and Adequate Margin) requiring each member to indicate in 
writing to the Exchange that such member shall be bound by the initial 
and maintenance margin requirements of either the Chicago Board Options 
Exchange (``CBOE'') or New York Stock Exchange (``NYSE''); and (2) 
eliminating Rules 724 (Guaranteed Accounts) and 725 (Daily

[[Page 48269]]

Record of Required Margin). The Exchange also proposes to significantly 
shorten Rules 723 (Day Trading and Prohibition on Free-Riding in Cash 
Accounts) and 722 (Margin Accounts) to eliminate redundant language 
while retaining those margin requirements that are unique to current 
Exchange margin rules. At the same time, the Exchange proposes to 
retain those margin provisions that are unique to current Exchange 
margin rules, particularly those pertaining to foreign currency 
options, which only trade on Phlx.
    After careful review of the proposal, the Commission finds that the 
proposed rule change is consistent with the requirements of the Act and 
the rules and regulations thereunder applicable to a national 
securities exchange.\5\ In particular, the Commission finds that the 
proposal is consistent with Section 6(b)(5) of the Act,\6\ which 
requires, among other things that the rules of an exchange be designed 
to prevent fraudulent and manipulative acts and practices, to promote 
just and equitable principles of trade, to remove impediments to and to 
perfect the mechanism of a free and open market and a national market 
system, and, in general, to protect investors and the public interest.
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    \5\ In approving this proposed rule change, the Commission has 
considered the proposed rule's impact on efficiency, competition, 
and capital formation. See 15 U.S.C. 78c(f).
    \6\ 15 U.S.C. 78f(b)(5).
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    The Commission believes that this proposed rule change will 
streamline the Exchange's margin rules commensurate with industry 
practice. The Commission notes that the proposed rule change will 
require Phlx member organizations to elect, via written notice to the 
Exchange, to use and follow the margin rules of either CBOE or NYSE as 
they are in effect from time to time. The Commission also notes that 
this proposal to incorporate CBOE or NYSE margin rules is similar to 
the approach used by the International Securities Exchange and the 
Boston Options Exchange requiring their members to elect and follow 
CBOE or NYSE margin rules and incorporating such rules by reference 
into their own rules.\7\
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    \7\ See Exchange Act Release Nos. 48355 (August 22, 2003), 68 FR 
50813 (August 22, 2003) (SR-BSE-2002-15); and 49260 (February 14, 
2004), 69 FR 8500 (February 24, 2004) (approval, among other things, 
of ISE rule incorporating CBOE and NYSE margin rules). The Exchange 
has, under separate cover, submitted a letter seeking an exemption 
under Section 36 of the Act from the rule filing procedures of 
Section 19(b) of the Act with respect to changes to the incorporated 
CBOE and NYSE margin rules going forward.
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    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\8\ that the proposed rule change (SR-Phlx-2007-33), as modified by 
Amendment Nos. 1 and 2, be, and hereby is, approved.
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    \8\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\9\
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    \9\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Acting Secretary.
[FR Doc. E8-19029 Filed 8-18-08; 8:45 am]

BILLING CODE 8010-01-P
