Self-Regulatory Organizations; Notice of Filing of Proposed Rule Change by the Philadelphia Stock Exchange, Inc. Relating to Floor Official Conflicts of Interest, 10738-10740 [E5-899]
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Federal Register / Vol. 70, No. 42 / Friday, March 4, 2005 / Notices
and regulations thereunder. The
Commission finds that the proposed
rule change is consistent with Section
6(b)(4) of the Act,13 which requires that
the rules of the Exchange provide for the
equitable allocation of reasonable dues,
fees and other charges among its
members and other persons using its
facilities. The Commission believes that
lowering the fee for inbound P Orders
retroactively to transactions that settled
on or after February 1, 2005 should
reduce a financial disincentive to send
P Orders to the Phlx. The Commission
also believes that implementing a fee for
inbound P/A Orders is consistent with
the practices of the other Participants.
The Commission believes that
approving the proposed rule change, as
amended, on a pilot basis, until July 31,
2005, will give the Exchange and the
Commission further opportunity to
evaluate whether Linkage fee are
appropriate.
The Commission believes that the
proposed rule change, as amended, is
generally consistent with the practices
of other Participants and presents no
new regulatory issues. Accordingly, the
Commission finds good cause pursuant
to Section 19(b)(2) of the Act,14 for
approving this proposed rule change, as
amended, prior to the thirtieth day after
publication of notice thereof in the
Federal Register.
V. Conclusion
It is therefore ordered, pursuant to
Section 19(b)(2) of the Act,15 that the
proposed rule change (SR–Phlx–2005–
10), as amended, is hereby approved on
an accelerated basis for a pilot period to
expire on July 31, 2005.
For the Commission, by the Division of
Market Regulation, pursuant to delegated
authority.16
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. E5–878 Filed 3–3–05; 8:45 am]
BILLING CODE 8010–01–P
13 15
U.S.C. 78f(b)(4).
U.S.C. 78s(b)(2).
15 15 U.S.C. 78s(b)(2).
16 17 CFR 200.30–3(a)(12).
14 15
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SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–51272; File No. SR–Phlx–
2004–75]
Self-Regulatory Organizations; Notice
of Filing of Proposed Rule Change by
the Philadelphia Stock Exchange, Inc.
Relating to Floor Official Conflicts of
Interest
on a case-by-case basis, in determining
the eligibility or ineligibility of a
particular Floor Official to participate in
a particular ruling due to a conflict of
interest.
*
*
*
*
*
F–27 Floor Official Rulings—Options
Floor Officials are empowered to
render rulings on the trading floor to
resolve trading disputes occurring on
February 28, 2005.
and respecting activities on the trading
Pursuant to Section 19(b)(1) of the
floor. All rulings rendered by Floor
Securities Exchange Act of 1934
Officials are effective immediately and
(‘‘Act’’) 1 and Rule 19b–4 thereunder,2
must be complied with promptly.
notice is hereby given that on November Failure to promptly comply with a
9, 2004, the Philadelphia Stock
ruling concerning a trading dispute may
Exchange, Inc. (‘‘Phlx’’ or the
result in referral to the Business
‘‘Exchange’’) filed with the Securities
Conduct Committee. Failure to
and Exchange Commission (‘‘SEC’’ or
promptly comply with other rulings
‘‘Commission’’) the proposed rule
issued pursuant to Order and Decorum
change as described in Items I, II, and
Regulations or Floor Procedure Advices
and not concerning a trading dispute
III below, which Items have been
may result in an additional violation.
prepared by the Phlx. The Commission
Floor Officials need not render
is publishing this notice to solicit
decisions in any instance where the
comments on the proposed rule change
request for a ruling was not made within
from interested persons.
a reasonable period of time. A Floor
I. Self-Regulatory Organization’s
Official should not render a decision or
Statement of the Terms of Substance of
authorize a citation where such Floor
the Proposed Rule Change
Official was involved in or affected by
The Phlx proposes to amend
the dispute, as well as in any situation
Exchange Rule 124, Disputes, and
where the Floor Official is not able to
Option Floor Procedure Advices–27,
objectively and fairly render a decision.
Floor Official Rulings—Options (‘‘OFPA
Floor Officials shall endeavor to be
prompt in rendering decisions.
F–27’’), to authorize Exchange staff to
However, in any instance where a Floor
determine that a Floor Official is
Official has determined that the benefits
ineligible to participate in a particular
of further discovery as to the facts and
ruling where it appears that such Floor
circumstances of any matter under
Official has a conflict of interest.
Below is the amended text of the
review outweigh the monetary risks of
proposed rule change. Proposed new
a delayed rulings, the Floor Official may
language is in italics.
determine to delay rendering the ruling
until such time as that further discovery
*
*
*
*
*
is completed. In issuing decisions for
Disputes
the resolution of trading disputes, Floor
Officials shall institute the course of
Rule 124. (a)–(d) * * * No change.
Commentary:
action deemed by the ruling Floor
.01. Exchange staff may determine
Official to be more fair to all parties
that a Floor Official is ineligible to
under the circumstances at the time. A
participate in a particular ruling where
Floor Official may direct the execution
it appears that such Floor Official has
of an order on the floor, to adjust the
a conflict of interest. For purposes of
transaction terms or participants to an
this Rule, and without limitation, a
executed order on the floor. However,
conflict of interest exists where a Floor
two Floor Officials may nullify a
Official: (a) is directly or indirectly
transaction if they determine the
affiliated with a party seeking a Floor
transaction to have been in violation of
Official ruling; (b) is a participant or is
Rules 1014 (Obligations and Restrictions
directly or indirectly affiliated with a
Applicable to specialist and ROTs),
participant in a transaction that is the
1015 (Quotation Guarantees), 1017
(Priority and Parity at Openings in
subject of a Floor Official ruling; (c) is
Options), 1033 (Bids and Offers) or 1080
a debtor or creditor of a party seeking
(AUTOM).
a Floor Official ruling; or (d) is an
A minimum of three members of the
immediate family member of a party
seeking a Floor Official ruling. Exchange Sub-Committee on Rules and Rulings, a
staff may consider other circumstances, sub-committee of the standing
committee, or the Chairperson of the
1 15 U.S.C. 78s(b)(1).
standing committee (or his designee) if
2 17 CFR 240.19b–4.
three Sub-Committee members cannot
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Federal Register / Vol. 70, No. 42 / Friday, March 4, 2005 / Notices
be promptly convened, shall be
empowered by the standing committee
to review Floor Official rulings
(‘‘Review Panel’’). Requests for a review
must be submitted to the Director of the
Market Surveillance Department of the
Exchange (or his designee) within 15
minutes from the time the contested
ruling was rendered. Any person who
appeals a Floor Official ruling
concerning a trading dispute and loses
will be subject to a $250.00 fee upon a
finding by the Review Panel that such
appeal is frivolous. The Review Panel
shall endeavor to meet on the matter as
soon as practicable after notice of a
request for a review of a Floor Official
ruling. Floor Official rulings may be
sustained, overturned or modified by a
majority vote of the Review Panel
members present. In making a
determination, the Review Panel may
consider facts and circumstances not
available to the ruling Floor Official as
well as action taken by the parties in
reliance on the Floor Official’s ruling
(e.g., cover, hedge, and related trading
activity). Decisions of the Review Panel
will be considered final decisions of the
standing committee and may be
appealed to the Exchange’s Board of
Governors pursuant to Exchange ByLaw Article XI. Neither Floor Official
rulings nor Review Panel decisions
reviewing Floor Official rulings
preclude a person from also availing
upon the Exchange’s Arbitration
facilities.
Exchange staff may determine that a
Floor Official is ineligible to participate
in a particular ruling where it appears
that such Floor Official has a conflict of
interest. For purposes of this Rule, and
without limitation, a conflict of interest
exists where a Floor Official: (a) Is
directly or indirectly affiliated with a
party seeking a Floor Official ruling; (b)
is a participant or is directly or
indirectly affiliated with a participant in
a transaction that is the subject of a
Floor Official ruling; (c) is a debtor or
creditor of a party seeking a Floor
Official ruling; or (d) is an immediate
family member of a party seeking a
Floor Official ruling. Exchange staff may
consider other circumstances, on a caseby-case basis, in determining the
eligibility or ineligibility of a particular
Floor Official to participate in a
particular ruling due to a conflict of
interest.
FINE SCHEDULE * * * No change.
*
*
*
*
*
*
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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
Phlx 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 Phlx 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 preclude Floor Officials
from participating in rulings where they
have conflicts of interest that may
interfere with their ability to make fair
and objective decisions. Accordingly,
the proposed rule change would provide
expressly that Exchange staff would be
authorized to disqualify a Floor Official
from participation in a particular ruling
where it appears that such Floor Official
has a conflict of interest.
Currently, Exchange Rule 124 and
OFPA F–27 authorize Phlx Floor
Officials to render rulings on the trading
floor to resolve trading disputes
occurring on and respecting activities
on the trading floor. Floor Officials are
also authorized to rule on Phlx member
requests for relief from the requirements
of certain rules in certain circumstances.
The Exchange believes that a Floor
Official should not, however, render a
decision or authorize a citation where
such Floor Official is involved in or
affected by the dispute, as well as in any
situation where the Floor Official is not
able to objectively and fairly render a
decision.
The proposed rule change would
authorize Exchange staff 3 to disqualify
a Floor Official from participation in a
particular ruling where it appears that
such Floor Official has a conflict of
interest. Generally, Exchange staff
would assign a Floor Official to hear
and rule on a trading dispute or member
request for relief from the requirements
of an Exchange rule. The proposed rule
staff’’ generally refers to staff of the
Exchange’s Office of Market Surveillance present on
the trading floor. Telephone conversation among
Richard Rudolph, Director and Counsel, Phlx,
Gordon Fuller, Counsel to the Assistant Director,
Division of Market Regulation, Commission and
Geraldine Idrizi, Attorney, Division, Commission
on December 15, 2004.
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10739
change would require Exchange staff,
prior to making any such assignment, to
determine whether the Floor Official
has a conflict of interest with respect to
that particular dispute or request. If a
conflict exists, then such Floor Official
would be ineligible to participate in that
ruling.4 The proposed rule would define
a ‘‘conflict of interest’’ to exist where a
Floor Official is directly or indirectly
affiliated with a party seeking a Floor
Official ruling; is a participant or is
directly or indirectly affiliated with a
participant in a transaction that is the
subject of a Floor Official ruling; is a
debtor or creditor of a party seeking a
Floor Official ruling; or is an immediate
family member of a party seeking a
Floor Official ruling. The proposed rule
would not limit the term ‘‘conflict of
interest’’ to these four circumstances
and Exchange staff would be authorized
to consider other circumstances, on a
case-by-case basis, in determining the
eligibility of a particular Floor Official
to participate in a particular ruling.
2. Statutory Basis
The Exchange believes that its
proposal is consistent with Section 6(b)
of the Act 5 in general, and furthers the
objectives of Section 6(b)(5) of the Act 6
in particular, in that it is designed to
promote just and equitable principles of
trade, remove impediments to and
perfect the mechanism of a free and
open market and a national market
system, and to protect investors and the
public interest, by providing expressly
in the Exchange’s rules that Exchange
staff would be authorized to disqualify
a Floor Official from participation in a
particular ruling where it appears that
such Floor Official has a conflict of
interest, thus ensuring that the
Exchange is able to take all necessary
steps to prevent Floor Officials from
making rulings where they have
conflicts of interest that may interfere
with their ability to make fair and
objective decisions.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Phlx does not believe that the
proposed rule change will impose any
inappropriate burden on competition.
4 Telephone conversation among Richard
Rudolph, Director and Counsel, Phlx, Gordon
Fuller, Counsel to the Assistant Director, Division
of Market Regulation, Commission and Geraldine
Idrizi, Attorney, Division, Commission on
December 15, 2004.
5 15 U.S.C. 78s(b).
6 15 U.S.C. 78s(b)(5).
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Federal Register / Vol. 70, No. 42 / Friday, March 4, 2005 / Notices
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 Exchange consents,
the Commission shall:
(a) By order approve such 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 (https://www.sec.gov/
rules/sro.shtml); or
• Send an e-mail to rulecomments@sec.gov. Please include File
Number SR–Phlx–2004–75 on the
subject line.
provisions of 5 U.S.C. 552, will be
available for inspection and copying in
the Commission’s Public Reference
Room. Copies of such filing also will be
available for inspection and copying at
the principal office of the Phlx. 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–Phlx–2004–75 and should
be submitted on or before March 25,
2005.
For the Commission, by the Division of
Market Regulation, pursuant to delegated
authority.7
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. E5–899 Filed 3–3–05; 8:45 am]
BILLING CODE 8010–01–P
SMALL BUSINESS ADMINISTRATION
[Disaster Declaration # 10043 and # 10044]
Illinois Disaster # IL–00001
U.S. Small Business
Administration.
ACTION: Notice.
AGENCY:
19:07 Mar 03, 2005
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(Catalog of Federal Domestic Assistance
Numbers 59002 and 59008)
Dated: February 23, 2005.
Hector V. Barreto,
Administrator.
[FR Doc. 05–4237 Filed 3–3–05; 8:45 am]
BILLING CODE 8025–01–P
SUMMARY: This is a notice of an
Administrative declaration of a disaster
for the State of Illinois, dated 02/23/
2005.
Incident: Flooding.
Incident Period: 01/01/2005 through
02/12/2005.
Effective Date: 02/23/2005.
Physical Loan Application Deadline
Paper Comments
Date: 04/25/2005.
• Send paper comments in triplicate
EIDL Loan Application Deadline Date:
to Jonathan G. Katz, Secretary,
11/23/2005.
Securities and Exchange Commission,
ADDRESSES: Submit completed loan
450 Fifth Street, NW., Washington, DC
applications to: U.S. Small Business
20549–0609.
Administration, Disaster Area Office 1,
All submissions should refer to File
360 Rainbow Blvd. South 3rd Floor,
Number SR–Phlx–2004–75. This file
Niagara Falls, NY 14303.
number should be included on the
subject line if e-mail is used. To help the FOR FURTHER INFORMATION CONTACT:
Alan Escobar, Office of Disaster
Commission process and review your
Assistance, U.S. Small Business
comments more efficiently, please use
only one method. The Commission will Administration, 409 3rd Street, Suite
post all comments on the Commission’s 6050, Washington, DC 20416.
Internet Web site (https://www.sec.gov/
SUPPLEMENTARY INFORMATION: Notice is
rules/sro.shtml). Copies of the
hereby given that as a result of the
submission, all subsequent
Administrator’s disaster declaration on
amendments, all written statements
02/23/2005, applications for disaster
with respect to the proposed rule
loans may be filed at the address listed
change that are filed with the
above or other locally announced
Commission, and all written
locations.
communications relating to the
The following areas have been
proposed rule change between the
determined to be adversely affected by
Commission and any person, other than the disaster:
those that may be withheld from the
7 17 CFR 200.30–3(a)(12).
public in accordance with the
VerDate jul<14>2003
Primary Counties: Iroquois.
Contiguous Counties: Illinois, Ford,
Kankakee, Vermilion, Indiana, Benton,
and Newton.
The Interest Rates are:
Homeowners With Credit Available
Elsewhere—5.875
Homeowners Without Credit Available
Elsewhere—2.937
Businesses With Credit Available
Elsewhere—5.800
Businesses and Small Agricultural
Cooperatives Without Credit
Available Elsewhere—4.000
Other (Including Non-Profit
Organizations) With Credit Available
Elsewhere—4.750
Businesses And Non-Profit
Organizations Without Credit
Available Elsewhere—4.000
The number(s) assigned to this
disaster for physical damage is 10043 6
and for economic injury is 10044 0.
The States which received EIDL Decl
# are: Illinois and Indiana.
TENNESSEE VALLEY AUTHORITY
Paperwork Reduction Act of 1995, as
Amended by Public Law 104–13;
Proposed Collection, Comment
Request.
Tennessee Valley Authority.
Proposed collection; comment
AGENCY:
ACTION:
request.
SUMMARY: The proposed information
collection described below will be
submitted to the Office of Management
and Budget (OMB) for review, as
required by the Paperwork Reduction
Act of 1995 (44 U.S.C. Chapter 35, as
amended). The Tennessee Valley
Authority is soliciting public comments
on this proposed collection as provided
by 5 CFR Section 1320.8(d)(1). Requests
for information, including copies of the
information collection proposed and
supporting documentation, should be
directed to the Agency Clearance
Officer: Alice D. Witt, Tennessee Valley
Authority, 1101 Market Street (EB 5B),
Chattanooga, Tennessee 37402–2801;
(423) 751–6832. (SC: 001DCCB)
Comments should be sent to the
Agency Clearance Officer no later than
May 3, 2005.
SUPPLEMENTARY INFORMATION:
Type of Request: Regular submission.
E:\FR\FM\04MRN1.SGM
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]]>Agencies
[Federal Register Volume 70, Number 42 (Friday, March 4, 2005)]
[Notices]
[Pages 10738-10740]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E5-899]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-51272; File No. SR-Phlx-2004-75]
Self-Regulatory Organizations; Notice of Filing of Proposed Rule
Change by the Philadelphia Stock Exchange, Inc. Relating to Floor
Official Conflicts of Interest
February 28, 2005.
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 November 9, 2004, the Philadelphia Stock Exchange, Inc. (``Phlx'' or
the ``Exchange'') filed with the Securities and Exchange Commission
(``SEC'' or ``Commission'') the proposed rule change as described in
Items I, II, and III below, which Items have been prepared by the Phlx.
The Commission is publishing this notice to solicit comments on the
proposed rule change from interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Phlx proposes to amend Exchange Rule 124, Disputes, and Option
Floor Procedure Advices-27, Floor Official Rulings--Options (``OFPA F-
27''), to authorize Exchange staff to determine that a Floor Official
is ineligible to participate in a particular ruling where it appears
that such Floor Official has a conflict of interest.
Below is the amended text of the proposed rule change. Proposed new
language is in italics.
* * * * *
Disputes
Rule 124. (a)-(d) * * * No change.
Commentary:
.01. Exchange staff may determine that a Floor Official is
ineligible to participate in a particular ruling where it appears that
such Floor Official has a conflict of interest. For purposes of this
Rule, and without limitation, a conflict of interest exists where a
Floor Official: (a) is directly or indirectly affiliated with a party
seeking a Floor Official ruling; (b) is a participant or is directly or
indirectly affiliated with a participant in a transaction that is the
subject of a Floor Official ruling; (c) is a debtor or creditor of a
party seeking a Floor Official ruling; or (d) is an immediate family
member of a party seeking a Floor Official ruling. Exchange staff may
consider other circumstances, on a case-by-case basis, in determining
the eligibility or ineligibility of a particular Floor Official to
participate in a particular ruling due to a conflict of interest.
* * * * *
F-27 Floor Official Rulings--Options
Floor Officials are empowered to render rulings on the trading
floor to resolve trading disputes occurring on and respecting
activities on the trading floor. All rulings rendered by Floor
Officials are effective immediately and must be complied with promptly.
Failure to promptly comply with a ruling concerning a trading dispute
may result in referral to the Business Conduct Committee. Failure to
promptly comply with other rulings issued pursuant to Order and Decorum
Regulations or Floor Procedure Advices and not concerning a trading
dispute may result in an additional violation. Floor Officials need not
render decisions in any instance where the request for a ruling was not
made within a reasonable period of time. A Floor Official should not
render a decision or authorize a citation where such Floor Official was
involved in or affected by the dispute, as well as in any situation
where the Floor Official is not able to objectively and fairly render a
decision.
Floor Officials shall endeavor to be prompt in rendering decisions.
However, in any instance where a Floor Official has determined that the
benefits of further discovery as to the facts and circumstances of any
matter under review outweigh the monetary risks of a delayed rulings,
the Floor Official may determine to delay rendering the ruling until
such time as that further discovery is completed. In issuing decisions
for the resolution of trading disputes, Floor Officials shall institute
the course of action deemed by the ruling Floor Official to be more
fair to all parties under the circumstances at the time. A Floor
Official may direct the execution of an order on the floor, to adjust
the transaction terms or participants to an executed order on the
floor. However, two Floor Officials may nullify a transaction if they
determine the transaction to have been in violation of Rules 1014
(Obligations and Restrictions Applicable to specialist and ROTs), 1015
(Quotation Guarantees), 1017 (Priority and Parity at Openings in
Options), 1033 (Bids and Offers) or 1080 (AUTOM).
A minimum of three members of the Sub-Committee on Rules and
Rulings, a sub-committee of the standing committee, or the Chairperson
of the standing committee (or his designee) if three Sub-Committee
members cannot
[[Page 10739]]
be promptly convened, shall be empowered by the standing committee to
review Floor Official rulings (``Review Panel''). Requests for a review
must be submitted to the Director of the Market Surveillance Department
of the Exchange (or his designee) within 15 minutes from the time the
contested ruling was rendered. Any person who appeals a Floor Official
ruling concerning a trading dispute and loses will be subject to a
$250.00 fee upon a finding by the Review Panel that such appeal is
frivolous. The Review Panel shall endeavor to meet on the matter as
soon as practicable after notice of a request for a review of a Floor
Official ruling. Floor Official rulings may be sustained, overturned or
modified by a majority vote of the Review Panel members present. In
making a determination, the Review Panel may consider facts and
circumstances not available to the ruling Floor Official as well as
action taken by the parties in reliance on the Floor Official's ruling
(e.g., cover, hedge, and related trading activity). Decisions of the
Review Panel will be considered final decisions of the standing
committee and may be appealed to the Exchange's Board of Governors
pursuant to Exchange By-Law Article XI. Neither Floor Official rulings
nor Review Panel decisions reviewing Floor Official rulings preclude a
person from also availing upon the Exchange's Arbitration facilities.
Exchange staff may determine that a Floor Official is ineligible to
participate in a particular ruling where it appears that such Floor
Official has a conflict of interest. For purposes of this Rule, and
without limitation, a conflict of interest exists where a Floor
Official: (a) Is directly or indirectly affiliated with a party seeking
a Floor Official ruling; (b) is a participant or is directly or
indirectly affiliated with a participant in a transaction that is the
subject of a Floor Official ruling; (c) is a debtor or creditor of a
party seeking a Floor Official ruling; or (d) is an immediate family
member of a party seeking a Floor Official ruling. Exchange staff may
consider other circumstances, on a case-by-case basis, in determining
the eligibility or ineligibility of a particular Floor Official to
participate in a particular ruling due to a conflict of interest.
FINE SCHEDULE * * * No change.
* * * * * *
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 Phlx 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 Phlx 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 preclude Floor
Officials from participating in rulings where they have conflicts of
interest that may interfere with their ability to make fair and
objective decisions. Accordingly, the proposed rule change would
provide expressly that Exchange staff would be authorized to disqualify
a Floor Official from participation in a particular ruling where it
appears that such Floor Official has a conflict of interest.
Currently, Exchange Rule 124 and OFPA F-27 authorize Phlx Floor
Officials to render rulings on the trading floor to resolve trading
disputes occurring on and respecting activities on the trading floor.
Floor Officials are also authorized to rule on Phlx member requests for
relief from the requirements of certain rules in certain circumstances.
The Exchange believes that a Floor Official should not, however, render
a decision or authorize a citation where such Floor Official is
involved in or affected by the dispute, as well as in any situation
where the Floor Official is not able to objectively and fairly render a
decision.
The proposed rule change would authorize Exchange staff \3\ to
disqualify a Floor Official from participation in a particular ruling
where it appears that such Floor Official has a conflict of interest.
Generally, Exchange staff would assign a Floor Official to hear and
rule on a trading dispute or member request for relief from the
requirements of an Exchange rule. The proposed rule change would
require Exchange staff, prior to making any such assignment, to
determine whether the Floor Official has a conflict of interest with
respect to that particular dispute or request. If a conflict exists,
then such Floor Official would be ineligible to participate in that
ruling.\4\ The proposed rule would define a ``conflict of interest'' to
exist where a Floor Official is directly or indirectly affiliated with
a party seeking a Floor Official ruling; is a participant or is
directly or indirectly affiliated with a participant in a transaction
that is the subject of a Floor Official ruling; is a debtor or creditor
of a party seeking a Floor Official ruling; or is an immediate family
member of a party seeking a Floor Official ruling. The proposed rule
would not limit the term ``conflict of interest'' to these four
circumstances and Exchange staff would be authorized to consider other
circumstances, on a case-by-case basis, in determining the eligibility
of a particular Floor Official to participate in a particular ruling.
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\3\ ``Exchange staff'' generally refers to staff of the
Exchange's Office of Market Surveillance present on the trading
floor. Telephone conversation among Richard Rudolph, Director and
Counsel, Phlx, Gordon Fuller, Counsel to the Assistant Director,
Division of Market Regulation, Commission and Geraldine Idrizi,
Attorney, Division, Commission on December 15, 2004.
\4\ Telephone conversation among Richard Rudolph, Director and
Counsel, Phlx, Gordon Fuller, Counsel to the Assistant Director,
Division of Market Regulation, Commission and Geraldine Idrizi,
Attorney, Division, Commission on December 15, 2004.
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2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act \5\ in general, and furthers the objectives of Section
6(b)(5) of the Act \6\ in particular, in that it is designed to promote
just and equitable principles of trade, remove impediments to and
perfect the mechanism of a free and open market and a national market
system, and to protect investors and the public interest, by providing
expressly in the Exchange's rules that Exchange staff would be
authorized to disqualify a Floor Official from participation in a
particular ruling where it appears that such Floor Official has a
conflict of interest, thus ensuring that the Exchange is able to take
all necessary steps to prevent Floor Officials from making rulings
where they have conflicts of interest that may interfere with their
ability to make fair and objective decisions.
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\5\ 15 U.S.C. 78s(b).
\6\ 15 U.S.C. 78s(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition
The Phlx does not believe that the proposed rule change will impose
any inappropriate burden on competition.
[[Page 10740]]
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 Exchange consents, the Commission shall:
(a) By order approve such 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 (https://
www.sec.gov/rules/sro.shtml); or
Send an e-mail to rule-comments@sec.gov. Please include
File Number SR-Phlx-2004-75 on the subject line.
Paper Comments
Send paper comments in triplicate to Jonathan G. Katz,
Secretary, Securities and Exchange Commission, 450 Fifth Street, NW.,
Washington, DC 20549-0609.
All submissions should refer to File Number SR-Phlx-2004-75. 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 (https://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. Copies of such
filing also will be available for inspection and copying at the
principal office of the Phlx. 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-Phlx-2004-75 and should be submitted on or before March
25, 2005.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\7\
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\7\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. E5-899 Filed 3-3-05; 8:45 am]
BILLING CODE 8010-01-P
