Self-Regulatory Organizations; Philadelphia Stock Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Relating To Reduce the Value of PHLX Housing SectorSM, 57919-57921 [05-19806]

Download as PDF Federal Register / Vol. 70, No. 191 / Tuesday, October 4, 2005 / Notices it does not minimize the importance of compliance with these rules and all other rules subject to the imposition of fines under the Exchange’s MRP. The Exchange relies on its MRP as a tool to address enumerated violations to provide the Exchange with greater flexibility in addressing violations that may not require formal disciplinary proceedings. Under the proposed rule change, the Exchange’s Enforcement Department would continue to exercise its discretion under PCX Rule 10.12(f) and pursue certain cases as a formal disciplinary matter under PCX Rule 10.4 to the extent that the facts or circumstances warrant such action.6 2. Statutory Basis The Exchange believes that the proposed rule change is consistent with Section 6(b) of the Act,7 in general, and furthers the objectives of Section 6(b)(5) of the Act,8 in particular, in that it would promote just and equitable principles of trade, facilitate transactions in securities, remove impediments to and perfect the mechanisms of a free and open market and a national market system, and protect investors and the public interest. The proposal is also consistent with, and furthers the objectives of, Sections 6(b)(6) and 6(b)(7) of the Act 9 in that it would help ensure that members and persons associated with members are appropriately disciplined for violations of the Act, the rules and regulations thereunder, and the rules of the Exchange, and provide a fair procedure for disciplining members and persons associated with members. B. Self-Regulatory Organization’s Statement on Burden on Competition The Exchange 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 with respect to the proposed rule change. 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 6 See supra note 5. U.S.C. 78f(b). 8 15 U.S.C. 78f(b)(5). 9 15 U.S.C. 78f(b)(6) and (7). 7 15 VerDate Aug<31>2005 16:55 Oct 03, 2005 Jkt 205001 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 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, as amended, 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 rulecomments@sec.gov. Please include File Number SR–PCX–2005–98 on the subject line. 57919 should submit only information that you wish to make available publicly. All submissions should refer to File Number SR–PCX–2005–98 and should be submitted on or before October 25, 2005. For the Commission by the Division of Market Regulation, pursuant to delegated authority.10 Jonathan G. Katz, Secretary. [FR Doc. 05–19807 Filed 10–3–05; 8:45 am] BILLING CODE 8010–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–52512; File No. SR–Phlx– 2005–50] Self-Regulatory Organizations; Philadelphia Stock Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Relating To Reduce the Value of PHLX Housing SectorSM Index Options by Half September 27, 2005. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 Paper comments (‘‘Act’’),1 and Rule 19b–4 thereunder,2 • Send paper comments in triplicate notice is hereby given that on to Jonathan G. Katz, Secretary, September 15, 2005, the Philadelphia Securities and Exchange Commission, Stock Exchange, Inc. (‘‘Phlx’’ or Station Place, 100 F Street, NE., ‘‘Exchange’’) filed with the Securities Washington, DC 20549–9303. and Exchange Commission (‘‘SEC’’ or All submissions should refer to File ‘‘Commission’’) the proposed rule Number SR–PCX–2005–98. This file change as described in Items I and II number should be included on the below, which Items have been prepared subject line if e-mail is used. To help the by the Phlx. The Phlx filed the proposal Commission process and review your pursuant to Section 19(b)(3)(A) under comments more efficiently, please use the Act,3 and Rule 19b–4(f)(6) only one method. The Commission will thereunder,4 which renders the proposal post all comments on the Commission’s effective upon filing with the Internet Web site Commission. The Commission is (http://www.sec.gov/rules/sro.shtml). publishing this notice to solicit Copies of the submission, all subsequent comments on the proposed rule change amendments, all written statements from interested persons. with respect to the proposed rule I. Self-Regulatory Organization’s change that are filed with the Statement of the Terms of Substance of Commission, and all written the Proposed Rule Change communications relating to the proposed rule change between the The Phlx proposes to reduce the value Commission and any person, other than of its PHLX Housing SectorSM Index those that may be withheld from the (‘‘Index’’) option (‘‘HGX’’) 5 to one-half public in accordance with the 10 17 CFR 200.30–3(a)(12). provisions of 5 U.S.C. 552, will be 1 15 U.S.C. 78s(b)(1). available for inspection and copying in 2 17 CFR 240.19b–4. the Commission’s Public Reference 3 15 U.S.C. 78s(b)(3)(A). Section, 100 F Street, NE., Washington, 4 17 CFR 240.19b–4(f)(6). DC 20549. Copies of such filing also will 5 The PHLX Housing SectorSM (HGXSM) is a be available for inspection and copying modified capitalization-weighted index composed of 21 companies whose primary lines of business at the principal offices of the Exchange. are directly associated with the U.S. housing All comments received will be posted construction market. The index composition without change; the Commission does encompasses residential builders, suppliers of not edit personal identifying aggregate, lumber and other construction materials, Continued information from submissions. You PO 00000 Frm 00067 Fmt 4703 Sfmt 4703 E:\FR\FM\04OCN1.SGM 04OCN1 57920 Federal Register / Vol. 70, No. 191 / Tuesday, October 4, 2005 / Notices its present value by multiplying by two the base market divisor used to calculate the Index. In addition, the option contract position and exercise limits applicable to the HGX (currently 31,500 contracts per Rule 1001A) will be increased to 63,000 contracts until all pre-split option contracts expire.6 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 self-regulatory organization 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 do a two-for-one split of the Index to reduce its value by half. A twofor-one split should have a positive effect on overall transaction volumes of options on the Index by attracting additional liquidity and making option premiums more attractive for retail investors. A split would allow investors to better utilize the HGX as a trading and hedging vehicle with a smaller capital outlay. HGX was listed on the Exchange and commenced trading on or about July 17, 2002,7 and has continued trading. As of July 3, 2005, the Index value was $571.75 and the near-month at-themanufactured housing and mortgage insurers. The Index is currently composed of the following stocks: American Standard Companies, Beazer Homes USA, Inc., Champion Enterprises, Inc., Centex Corp., DR Horton, Inc., Hovnanian Enterprises, Inc., KB Home, Lennar Corp., Masco Corp., MDC Holdings, Inc., OfficeMax, Inc., Pulte Homes, PMI Group, Inc., Radian Group, Inc., Ryland Group, Inc., Standard Pacific Corp., Temple Inland, Inc., Toll Brothers, Inc., USG Corp., Vulcan Materials Company, and Weyerhaeuser Company. 6 Phlx Rule 1002A indicates that exercise limits for index option contracts shall be equivalent to the position limits described in Phlx Rule 1001A. 7 HGX was listed for trading pursuant to Section 19b–4(e) on July 17, 2002. The initial index value of HGX was established on or about January 2, 2002, at $250 by dividing the total market value of all HGX components by a divisor to reach the $250 valuation. The HGX index value has increased substantially with the increase in the total market value of the HGX components, leading to the proposed market value split that will be achieved by increasing the divisor. VerDate Aug<31>2005 16:55 Oct 03, 2005 Jkt 205001 money call premium was $12.50 per contract. The Exchange’s proposed ‘‘two-for-one split’’ of the Index would reduce the Index value to one-half of its current value, or $285.88; the options premium would likewise be reduced by half. In order to maintain economic equivalence pre and post-split, however, the number of HGX contracts will be increased two-fold for current contract holders, such that for each HGX contract currently held, the holder would receive two contracts at the reduced post-split value, each with a strike price equal to one-half of the original strike price. For example, the holder of one HGX 570 call with a premium of $12.50 would receive two HGX 285 calls with a premium of $6.25. In addition, the position limits applicable to HGX, which are currently 31,500 contracts per Rule 1001A, would be increased to 63,000 until such time that all pre-split options expire, at which point the position limits would return to the 31,500 position limit specified in Phlx Rule 1001A. This is being done to accommodate the twofold increase in the number of contracts outstanding. By operation of Phlx Rule 1002A, exercise limits would be equivalent to the position limits established in Phlx Rule 1001A. The proposed rule change process is similar to what has been previously employed pursuant to an index value split.8 The trading symbol would remain HGX. In conjunction with the proposed split, the Exchange would continue to list strike price intervals surrounding the new lower Index value pursuant to Phlx Rule 1101A, which will not change pursuant to this proposal. The Exchange would announce the effective date of the split by way of an Exchange memorandum to the membership, which would also serve as notice of the strike price and position limit changes. 2. Statutory Basis The Exchange believes that the proposed rule change is consistent with Section 6(b) of the Act,9 in general, and furthers the objectives of Section 6(b)(5) of the Act,10 in particular, in that it is designed to promote just and equitable principles of trade and to remove impediments to and perfect the mechanism of a free and open market and a national market system, and, in 8 See Securities Exchange Act Release No. 42814 (May 23, 2000), 65 FR 35152 (June 1, 2000) (SR– Phlx–00–11) (two-for-one split of index value resulted in a doubling of the applicable position and exercise limits until the last expiration month expired or traded out, and then reverted to pre-split levels). 9 15 U.S.C. 78f(b). 10 15 U.S.C. 78f(b)(5). PO 00000 Frm 00068 Fmt 4703 Sfmt 4703 general, to protect investors and the public interest, by establishing a lower Index value, which should, in turn, facilitate trading in HGX, creating a more liquid trading environment. The Exchange believes that reducing the value of the Index should not raise manipulation concerns and should not cause adverse market impact because the Exchange will continue to employ its surveillance procedures and has proposed an orderly procedure to achieve the Index split, including adequate prior notice to market participants. B. Self-Regulatory Organization’s Statement on Burden on Competition The Exchange does not believe that the proposed rule change will impose any inappropriate burden on competition. 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 The Phlx has filed the proposed rule change pursuant to Section 19(b)(3)(A) of the Act 11 and subparagraph (f)(6) of Rule 19b-4 thereunder.12 Because the foregoing proposed rule change: (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, the proposed rule change has become effective pursuant to Section 19(b)(3)(A) of the Act and Rule 19b– 4(f)(6) thereunder. As required under Rule 19b–4(f)(6)(iii), the Phlx provided the Commission with written notice of its intent to file the proposed rule change at least five business days prior to filing the proposal with the Commission or such shorter period as designated by the Commission. A proposed rule change filed under Rule 19b–4(f)(6) normally does not become operative prior to 30 days after the date of filing. However, Rule 19b– 4(f)(6)(iii) permits the Commission to designate a shorter time if such action is consistent with the protection of investors and the public interest. The 11 15 12 17 E:\FR\FM\04OCN1.SGM U.S.C. 78s(b)(3)(A). CFR 240.19b–4(f)(6). 04OCN1 Federal Register / Vol. 70, No. 191 / Tuesday, October 4, 2005 / Notices Exchange has requested that the Commission waive the 30-day operative delay specified in Rule 19b–4(f)(6), so that all options traded on the indexes can be treated uniformly.13 The Commission believes that waiving the 30-day operative delay is consistent with the protection of investors and the public interest.14 Specifically, the Commission believes that the Phlx’s proposal raises no new issues or regulatory concerns that the Commission did not consider in approving a similar proposal of a twofor-one split.15 Additionally, the Commission notes that the Exchange will continue to employ its surveillance procedures and has proposed an orderly procedure to achieve the Index split, including adequate prior notice to market participants. For these reasons, the Commission designates that the proposal become operative immediately. At any time within 60 days of the filing of such 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 rulecomments@sec.gov. Please include File Number SR–Phlx–2005–50 on the subject line. Paper comments • Send paper comments in triplicate to Jonathan G. Katz, Secretary, Securities and Exchange Commission, 100 F Street, NE., Washington, DC 20549–9303. 13 The Exchange plans to issue a memorandum to membership announcing an effective date of the split that is prior to expiration of the 30-day operative period. Telephone conversation between Jurij Trypupenko, Director, Phlx, and Florence Harmon, Senior Special Counsel, Commission, on September 26, 2005. 14 For purposes only of waiving the operative delay for this proposal, the Commission has considered the proposed rule’s impact on efficiency, competition, and capital formation. 15 U.S.C. 78c(f). 15 See supra, note 8. VerDate Aug<31>2005 16:55 Oct 03, 2005 Jkt 205001 All submissions should refer to File Number SR–Phlx–2005–50. 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 this 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–2005–50 and should be submitted on or before October 25, 2005. For the Commission, by the Division of Market Regulation, pursuant to delegated authority.16 Jonathan G. Katz, Secretary. [FR Doc. 05–19806 Filed 10–3–05; 8:45 am] BILLING CODE 8010–01–P 57921 Submit completed loan applications to: U.S. Small Business Administration, Disaster Area Office 3, 14925 Kingsport Road Fort Worth, TX 76155. ADDRESSES: A. Escobar, Office of Disaster Assistance, U.S. Small Business Administration, 409 3rd Street, Suite 6050, Washington, DC 20416. SUPPLEMENTARY INFORMATION: Notice is hereby given that as a result of the President’s major disaster declaration on 09/24/2005, applications for disaster loans may be filed at the address listed above or other locally announced locations. The following areas have been determined to be adversely affected by the disaster: Primary Parishes: Beauregard, Calcasieu, Cameron, Jefferson Davis, and Vermilion. Contiguous Parishes/Counties: Louisiana: Acadia, Allen, Evangeline, Iberia, Lafayette, and Vernon. Texas: Jefferson, Newton, and Orange. The Interest Rates are: FOR FURTHER INFORMATION CONTACT: Percent Homeowners With Credit Available Elsewhere: ........................ Homeowners Without Credit Available Elsewhere: ................. Businesses With Credit Available Elsewhere: ................................ Businesses & Small Agricultural Cooperatives Without Credit Available Elsewhere: ................. Other (Including Non-Profit Organizations) With Credit Available Elsewhere: ................................ Businesses and Non-Profit Organizations Without Credit Available Elsewhere ......................... 5.375 2.687 6.557 4.000 4.750 4.000 SMALL BUSINESS ADMINISTRATION [Disaster Declaration #10205 and #10206] Louisiana Disaster #LA–00004 U.S. Small Business Administration ACTION: Notice. AGENCY: SUMMARY: This is a Notice of the Presidential declaration of a major disaster for the State of Louisiana (FEMA–1607–DR), dated 09/24/2005. Incident: Hurricane Rita. Incident Period: 09/23/2005 and continuing. Effective Date: 09/24/2005. Physical Loan Application Deadline Date: 11/23/2005. EIDL Loan Application Deadline Date: 06/26/2006. 16 17 PO 00000 CFR 200.30–3(a)(12). Frm 00069 Fmt 4703 Sfmt 4703 The number assigned to this disaster for physical damage is 102058 and for economic injury is 102060. (Catalog of Federal Domestic Assistance Numbers 59002 and 59008) Herbert L. Mitchell, Associate Administrator for Disaster Assistance. [FR Doc. 05–19835 Filed 10–3–05; 8:45 am] BILLING CODE 8025–01–P SMALL BUSINESS ADMINISTRATION [Disaster Declaration #10203 and #10204] Texas Disaster #TX–00066 U.S. Small Business Administration. ACTION: Notice. AGENCY: E:\FR\FM\04OCN1.SGM 04OCN1

Agencies

[Federal Register Volume 70, Number 191 (Tuesday, October 4, 2005)]
[Notices]
[Pages 57919-57921]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 05-19806]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-52512; File No. SR-Phlx-2005-50]


Self-Regulatory Organizations; Philadelphia Stock Exchange, Inc.; 
Notice of Filing and Immediate Effectiveness of a Proposed Rule Change 
Relating To Reduce the Value of PHLX Housing Sector\SM\ Index Options 
by Half

September 27, 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 September 15, 2005, the Philadelphia Stock Exchange, Inc. (``Phlx'' 
or ``Exchange'') filed with the Securities and Exchange Commission 
(``SEC'' or ``Commission'') the proposed rule change as described in 
Items I and II below, which Items have been prepared by the Phlx. The 
Phlx filed the proposal pursuant to Section 19(b)(3)(A) under the 
Act,\3\ and Rule 19b-4(f)(6) thereunder,\4\ 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.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 15 U.S.C. 78s(b)(3)(A).
    \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 Phlx proposes to reduce the value of its PHLX Housing 
Sector\SM\ Index (``Index'') option (``HGX'') \5\ to one-half

[[Page 57920]]

its present value by multiplying by two the base market divisor used to 
calculate the Index. In addition, the option contract position and 
exercise limits applicable to the HGX (currently 31,500 contracts per 
Rule 1001A) will be increased to 63,000 contracts until all pre-split 
option contracts expire.\6\
---------------------------------------------------------------------------

    \5\ The PHLX Housing Sector\SM\ (HGX\SM\) is a modified 
capitalization-weighted index composed of 21 companies whose primary 
lines of business are directly associated with the U.S. housing 
construction market. The index composition encompasses residential 
builders, suppliers of aggregate, lumber and other construction 
materials, manufactured housing and mortgage insurers. The Index is 
currently composed of the following stocks: American Standard 
Companies, Beazer Homes USA, Inc., Champion Enterprises, Inc., 
Centex Corp., DR Horton, Inc., Hovnanian Enterprises, Inc., KB Home, 
Lennar Corp., Masco Corp., MDC Holdings, Inc., OfficeMax, Inc., 
Pulte Homes, PMI Group, Inc., Radian Group, Inc., Ryland Group, 
Inc., Standard Pacific Corp., Temple Inland, Inc., Toll Brothers, 
Inc., USG Corp., Vulcan Materials Company, and Weyerhaeuser Company.
    \6\ Phlx Rule 1002A indicates that exercise limits for index 
option contracts shall be equivalent to the position limits 
described in Phlx Rule 1001A.
---------------------------------------------------------------------------

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 self-regulatory organization 
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 do a two-for-one 
split of the Index to reduce its value by half. A two-for-one split 
should have a positive effect on overall transaction volumes of options 
on the Index by attracting additional liquidity and making option 
premiums more attractive for retail investors. A split would allow 
investors to better utilize the HGX as a trading and hedging vehicle 
with a smaller capital outlay.
    HGX was listed on the Exchange and commenced trading on or about 
July 17, 2002,\7\ and has continued trading. As of July 3, 2005, the 
Index value was $571.75 and the near-month at-the-money call premium 
was $12.50 per contract. The Exchange's proposed ``two-for-one split'' 
of the Index would reduce the Index value to one-half of its current 
value, or $285.88; the options premium would likewise be reduced by 
half. In order to maintain economic equivalence pre and post-split, 
however, the number of HGX contracts will be increased two-fold for 
current contract holders, such that for each HGX contract currently 
held, the holder would receive two contracts at the reduced post-split 
value, each with a strike price equal to one-half of the original 
strike price. For example, the holder of one HGX 570 call with a 
premium of $12.50 would receive two HGX 285 calls with a premium of 
$6.25.
---------------------------------------------------------------------------

    \7\ HGX was listed for trading pursuant to Section 19b-4(e) on 
July 17, 2002. The initial index value of HGX was established on or 
about January 2, 2002, at $250 by dividing the total market value of 
all HGX components by a divisor to reach the $250 valuation. The HGX 
index value has increased substantially with the increase in the 
total market value of the HGX components, leading to the proposed 
market value split that will be achieved by increasing the divisor.
---------------------------------------------------------------------------

    In addition, the position limits applicable to HGX, which are 
currently 31,500 contracts per Rule 1001A, would be increased to 63,000 
until such time that all pre-split options expire, at which point the 
position limits would return to the 31,500 position limit specified in 
Phlx Rule 1001A. This is being done to accommodate the two-fold 
increase in the number of contracts outstanding. By operation of Phlx 
Rule 1002A, exercise limits would be equivalent to the position limits 
established in Phlx Rule 1001A. The proposed rule change process is 
similar to what has been previously employed pursuant to an index value 
split.\8\ The trading symbol would remain HGX.
---------------------------------------------------------------------------

    \8\ See Securities Exchange Act Release No. 42814 (May 23, 
2000), 65 FR 35152 (June 1, 2000) (SR-Phlx-00-11) (two-for-one split 
of index value resulted in a doubling of the applicable position and 
exercise limits until the last expiration month expired or traded 
out, and then reverted to pre-split levels).
---------------------------------------------------------------------------

    In conjunction with the proposed split, the Exchange would continue 
to list strike price intervals surrounding the new lower Index value 
pursuant to Phlx Rule 1101A, which will not change pursuant to this 
proposal. The Exchange would announce the effective date of the split 
by way of an Exchange memorandum to the membership, which would also 
serve as notice of the strike price and position limit changes.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\9\ in general, and furthers the 
objectives of Section 6(b)(5) of the Act,\10\ in particular, in that it 
is designed to promote just and equitable principles of trade and 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, by establishing a lower Index value, 
which should, in turn, facilitate trading in HGX, creating a more 
liquid trading environment. The Exchange believes that reducing the 
value of the Index should not raise manipulation concerns and should 
not cause adverse market impact because the Exchange will continue to 
employ its surveillance procedures and has proposed an orderly 
procedure to achieve the Index split, including adequate prior notice 
to market participants.
---------------------------------------------------------------------------

    \9\ 15 U.S.C. 78f(b).
    \10\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
impose any inappropriate burden on competition.

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

    The Phlx has filed the proposed rule change pursuant to Section 
19(b)(3)(A) of the Act \11\ and subparagraph (f)(6) of Rule 19b-4 
thereunder.\12\ Because the foregoing proposed rule change: (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, the proposed rule 
change has become effective pursuant to Section 19(b)(3)(A) of the Act 
and Rule 19b-4(f)(6) thereunder. As required under Rule 19b-
4(f)(6)(iii), the Phlx provided the Commission with written notice of 
its intent to file the proposed rule change at least five business days 
prior to filing the proposal with the Commission or such shorter period 
as designated by the Commission.
---------------------------------------------------------------------------

    \11\ 15 U.S.C. 78s(b)(3)(A).
    \12\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------

    A proposed rule change filed under Rule 19b-4(f)(6) normally does 
not become operative prior to 30 days after the date of filing. 
However, Rule 19b-4(f)(6)(iii) permits the Commission to designate a 
shorter time if such action is consistent with the protection of 
investors and the public interest. The

[[Page 57921]]

Exchange has requested that the Commission waive the 30-day operative 
delay specified in Rule 19b-4(f)(6), so that all options traded on the 
indexes can be treated uniformly.\13\
---------------------------------------------------------------------------

    \13\ The Exchange plans to issue a memorandum to membership 
announcing an effective date of the split that is prior to 
expiration of the 30-day operative period. Telephone conversation 
between Jurij Trypupenko, Director, Phlx, and Florence Harmon, 
Senior Special Counsel, Commission, on September 26, 2005.
---------------------------------------------------------------------------

    The Commission believes that waiving the 30-day operative delay is 
consistent with the protection of investors and the public 
interest.\14\ Specifically, the Commission believes that the Phlx's 
proposal raises no new issues or regulatory concerns that the 
Commission did not consider in approving a similar proposal of a two-
for-one split.\15\ Additionally, the Commission notes that the Exchange 
will continue to employ its surveillance procedures and has proposed an 
orderly procedure to achieve the Index split, including adequate prior 
notice to market participants. For these reasons, the Commission 
designates that the proposal become operative immediately.
---------------------------------------------------------------------------

    \14\ For purposes only of waiving the operative delay for this 
proposal, the Commission has considered the proposed rule's impact 
on efficiency, competition, and capital formation. 15 U.S.C. 78c(f).
    \15\ See supra, note 8.
---------------------------------------------------------------------------

    At any time within 60 days of the filing of such 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 rule-comments@sec.gov. Please include 
File Number SR-Phlx-2005-50 on the subject line.

Paper comments

     Send paper comments in triplicate to Jonathan G. Katz, 
Secretary, Securities and Exchange Commission, 100 F Street, NE., 
Washington, DC 20549-9303.
    All submissions should refer to File Number SR-Phlx-2005-50. 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 this 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-2005-50 and should be 
submitted on or before October 25, 2005.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\16\
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    \16\ 17 CFR 200.30-3(a)(12).
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Jonathan G. Katz,
Secretary.
[FR Doc. 05-19806 Filed 10-3-05; 8:45 am]
BILLING CODE 8010-01-P