Self-Regulatory Organizations; Philadelphia Stock Exchange, Inc.; Notice of Filing and Order Granting Accelerated Approval of a Proposed Rule Change and Amendments No. 1 and 2 Thereto To Amend the Phlx's Rules Governing the Hours of Trading in Equity Options and Narrow-Based Index Options, 8037-8039 [E6-2115]
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Federal Register / Vol. 71, No. 31 / Wednesday, February 15, 2006 / Notices
V. Conclusion
It is therefore ordered, pursuant to
section 19(b)(2) of the Act,17 that the
proposed rule change and Amendments
No. 1 and 2 thereto (SR–PCX–2005–138)
be, and hereby are, approved on an
accelerated basis.
For the Commission, by the Division of
Market Regulation, pursuant to delegated
authority.18
J. Lynn Taylor,
Secretary.
[FR Doc. E6–2129 Filed 2–14–06; 8:45 am]
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–53247; File No. SR–Phlx–
2006–01]
Self-Regulatory Organizations;
Philadelphia Stock Exchange, Inc.;
Notice of Filing and Order Granting
Accelerated Approval of a Proposed
Rule Change and Amendments No. 1
and 2 Thereto To Amend the Phlx’s
Rules Governing the Hours of Trading
in Equity Options and Narrow-Based
Index Options
February 7, 2006.
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 January 4,
2006, the Philadelphia Stock Exchange,
Inc. (‘‘Phlx’’ or ‘‘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 Phlx. On January
20, 2006, the Exchange filed
Amendment No. 1 to the proposed rule
change.3 The Exchange filed
Amendment No. 2 to the proposed rule
change on January 31, 2006.4 The
Commission is publishing this notice to
solicit comments on the proposed rule
change, as amended, from interested
persons and to approve the amended
proposal on an accelerated basis.
cprice-sewell on PROD1PC66 with NOTICES
17 15
U.S.C. 78s(b)(2).
18 17 CFR 200.30–3(a)(12).
1 15 U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 In Amendment No. 1, replacing the original
filing in its entirety, the Exchange made clarifying
changes to the proposed rule text and its
discussion.
4 In Amendment No. 2, the Exchange requested
that the implementation date for the new closing
time be changed from February 1, 2006, as was
originally proposed, to February 13, 2006.
VerDate Aug<31>2005
13:17 Feb 14, 2006
Jkt 208001
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Phlx proposes to amend Phlx
Rules 101, 1012, 1047, 1047A and
1101A and Phlx Floor Procedure Advice
(‘‘OFPA’’) G–2 to indicate that equity
options and narrow-based index options
may trade until 4 p.m. and not 4:02 p.m.
(e.s.t.). The Exchange proposes that
these changes be implemented on
February 13, 2006.5 The text of the
proposed rule change, as amended, is
available on the Phlx’s Web site (https://
www.phlx.com), at the principal office
of the Phlx, 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, as amended,
and discussed any comments it received
on the proposed rule change, as
amended. The text of these statements
may be examined at the places specified
in Item III 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
According to the Exchange, the
purpose of the proposed rule change, as
amended, is to amend Phlx Rules
governing the hours of trading in equity
options and narrow-based index
options. Specifically, the Phlx proposes
to amend its rules to change the close
of normal trading hours in equity
options and in narrow-based (industry)
index options from 4:02 p.m. to 4 p.m.
(e.s.t.). After the change, the time of the
close of trading in these Phlx options
will correspond to the normal time set
for the close of trading on the primary
exchanges listing the stocks underlying
the Phlx options. The primary
exchanges generally close at 4 p.m.
(e.s.t.).
The Exchange notes that, in 1997, the
closing time for equity options and
narrow-based index options was
changed from 4:10 p.m. to 4:02 p.m.
(e.s.t.). The rationale to continue trading
options for some limited period of time
after the close of trading on the primary
markets for the underlying securities
5 Id.
PO 00000
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Fmt 4703
Sfmt 4703
8037
was that the extended period allowed
options traders to respond to late reports
of closing prices over the consolidated
tape. If the price of a late reported trade
on an underlying security was
substantially different from the previous
reported price, the extended trading
session would give options traders the
opportunity to bring options quotes in
line with the closing price of the
underlying security.
However, because of improvements in
the processing and reporting of
transactions, the Phlx believes that there
are no longer significant delays in the
reporting of closing prices, and,
therefore, a two minute session is no
longer needed to trade options after the
underlying securities close trading.
Additionally, the Exchange believes that
pricing aberrations can occur if an
option is traded when the underlying
stock is no longer trading, since there is
a close relationship in the price of the
underlying stock and the overlying
option. As a result, the Phlx believes
that it is difficult for the market to price
options accurately when the underlying
security is not trading.
At this time, the Exchange is not
proposing to change the closing time of
4:15 p.m. (e.s.t.) for broad-based
(market) index options because it does
not believe that a significant news
announcement by the issuer of one
component stock of a broad-based index
is likely to have a significant effect on
the price of that broad-based index.6
The Exchange recognizes, however, that
indexes that are narrow-based may be
subject to the same pricing problems as
options on individual stocks 7 and, as
noted above, proposes to change the
relevant closing time to 4:00 p.m. (e.s.t.).
Accordingly, the Phlx proposes to
amend Phlx Rules 101, 1012, 1047,
1047A and 1101A and OFPA G–2 to
change the references to times from 4:02
p.m. to 4 p.m. (e.s.t.) for equity options
and certain index based options as
described above.8
The Exchange notes that, if it or some
but not all options exchanges were to
unilaterally modify its closing time, the
existence of dissimilar closing times
applicable to the different options
exchanges would likely lead to
6 Nor is the Exchange proposing to change the
closing time of 4:15 p.m. (e.s.t.) for ExchangeTraded Fund Share Options. However, the
Exchange is proposing technical changes in the
noted rules to clarify that options on ExchangeTraded Fund Shares and broad-based index options
may trade until 4:15 p.m. (e.s.t.).
7 According to the Exchange, a significant news
announcement on one component of such an index
could have a significant effect on the index.
8 In addition, the Exchange notes that the
reference to a 4:10 p.m. closing time in Phlx Rule
101 will similarly be changed to 4:00 p.m. (e.s.t.).
E:\FR\FM\15FEN1.SGM
15FEN1
8038
Federal Register / Vol. 71, No. 31 / Wednesday, February 15, 2006 / Notices
confusion for options investors and
broker-dealers. It is the Phlx’s
understanding that all of the options
exchanges have determined to change
their respective rules to revise the
closing time in equity options and
narrow-based index options from 4:02
p.m. to 4 p.m. (e.s.t.). The Phlx further
understands that the options exchanges
collectively have determined that they
would implement this new closing time
on February 13, 2006.9
2. Statutory Basis
The Exchange believes that the
proposed rule change, as amended, is
consistent with Section 6(b) of the Act 10
in general, and furthers the objectives of
Section 6(b)(5) of the Act 11 in
particular, because it is designed to
prevent fraudulent and manipulative
acts and practices, 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.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Phlx does not believe that the
proposed rule change, as amended, will
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, as amended.
III. 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:
cprice-sewell on PROD1PC66 with NOTICES
Electronic Comments
• Use the Commission’s Internet
comment form at (https://www.sec.gov/
rules/sro.shtml); or
• Send an e-mail to rulecomments@sec.gov. Please include File
Number SR–Phlx–2006–01 on the
subject line.
Paper Comments
• Send paper comments in triplicate
to Nancy M. Morris, Secretary,
9 See
Amendment No. 2, supra note 4.
U.S.C. 78f(b).
11 15 U.S.C. 78f(b)(5).
10 15
VerDate Aug<31>2005
13:17 Feb 14, 2006
Jkt 208001
Securities and Exchange Commission,
100 F Street, NE., Washington, DC
20549–1090.
All submissions should refer to File
Number SR–Phlx–2006–01. 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
Section. 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–2006–01 and should
be submitted on or before March 8,
2006.
IV. Commission’s Findings and Order
Granting Accelerated Approval of
Proposed Rule Change
After careful review, the Commission
finds that the proposed rule change, as
amended, is consistent with the
requirements of the Act and the rules
and regulations thereunder applicable to
a national securities exchange.12 In
particular, the Commission finds that
the proposal is consistent with Section
6(b)(5) of the Act,13 which requires,
among other things, that the rules of a
national securities exchange be
designed to prevent fraudulent and
manipulative acts and practices, to
promote just and equitable principles of
trade, to foster cooperation and
coordination with persons engaged in
facilitating transactions in securities, 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.
The Commission notes that the
Exchange believes that the need to
continue trading options for some
period of time after the close of trading
in the underlying securities markets is
no longer necessary because
improvements in the processing and
reporting of transactions have obviated
the need to respond to late reports of
closing prices over the consolidated
tape in order to bring options quotes in
line with the closing price of the
underlying security. Moreover, the
Exchange believes that allowing two
additional minutes of options trading
after trading on the underlying primary
exchanges has ended may actually
result in pricing aberrations. Because
the two minute delay between the close
of normal trading in equity options and
narrow-based index options and the
corresponding underlying equity
markets is no longer necessary, the
Commission believes that eliminating
the delay is in the public interest and
appropriate for the protection of
investors and the maintenance of fair
and orderly markets. Therefore, the
Commission finds that it is consistent
with the Act for the Exchange to amend
its rules to change the close of normal
trading hours in equity and narrowbased index options from 4:02 p.m.
(e.s.t.) to 4 p.m. (e.s.t.).
The Commission finds good cause for
approving this proposed rule change, as
amended, before the thirtieth day after
publication of notice thereof in the
Federal Register. The Commission notes
that all of the options exchanges have
filed substantially similar proposals and
seek to implement these industry-wide
changes simultaneously on February 13,
2006.14 For example, on December 20,
2005, the Commission published for
comment in the Federal Register a
similar proposed rule change submitted
by the Chicago Board Options Exchange,
Incorporated (‘‘CBOE’’).15 The
Commission received no comments on
the CBOE’s proposed rule change. The
Commission believes that the Phlx’s
proposed rule change, as amended,
raises no new issues or novel regulatory
questions. Accordingly, the Commission
finds good cause, pursuant to Section
19(b)(2) of the Act,16 for approving the
proposed rule change, as amended,
prior to the thirtieth day after
publication in the Federal Register. In
14 See
note 17, infra.
Securities Exchange Act Release No. 52949
(December 13, 2005), 70 FR 75513 (December 20,
2005) (SR–CBOE–2005–104). See also Securities
Exchange Act Release No. 53055 (January 5, 2006),
71 FR 2279 (January 13, 2006) (SR–ISE–2005–58).
16 15 U.S.C. 78s(b)(2).
15 See
12 In approving this proposal, the Commission has
considered the proposed rule’s impact on
efficiency, competition, and capital formation. 15
U.S.C. 78c(f).
13 15 U.S.C. 78f(b)(5).
PO 00000
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Fmt 4703
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E:\FR\FM\15FEN1.SGM
15FEN1
Federal Register / Vol. 71, No. 31 / Wednesday, February 15, 2006 / Notices
addition, because the existence of
dissimilar closing times among the
options exchanges could lead to
confusion for options investors and
broker-dealers, the Commission finds
good cause to accelerate approval of the
proposed rule change, as amended, to
enable the six options exchanges to
simultaneously amend their hours of
trading on an industry-wide basis in a
uniform manner.17
V. Conclusion
It is therefore ordered, pursuant to
Section 19(b)(2) of the Act,18 that the
proposed rule change and Amendments
No. 1 and 2 thereto (SR–Phlx–2006–01)
be, and hereby are, approved on an
accelerated basis.
For the Commission, by the Division of
Market Regulation, pursuant to delegated
authority.19
J. Lynn Taylor,
Assistant Secretary.
[FR Doc. E6–2115 Filed 2–14–06; 8:45 am]
BILLING CODE 8010–01–P
SMALL BUSINESS ADMINISTRATION
[Disaster Declaration # 10368 and # 10369]
California Disaster # CA–00029
Small Business Administration.
Notice.
AGENCY:
ACTION:
cprice-sewell on PROD1PC66 with NOTICES
SUMMARY: This is a Notice of the
Presidential declaration of a major
disaster for the State of California
(FEMA–1628–DR) dated 02/03/2006.
Incident: Severe Storms, Flooding,
Mudslides, and Landslides.
Incident Period: 12/17/2005 through
01/03/2006.
DATES: Effective Date: 02/03/2006.
Physical Loan Application Deadline
Date: 04/04/2006.
Economic Injury (EIDL) Loan
Application Deadline Date: 11/03/2006.
ADDRESSES: Submit completed loan
applications to: U.S. Small Business
Administration, National Processing
And Disbursement Center,14925
Kingsport Road, Fort Worth, TX 76155.
FOR FURTHER INFORMATION CONTACT: A.
Escobar, Office of Disaster Assistance,
U.S. Small Business Administration,
409 3rd Street, SW., Suite 6050,
Washington, DC 20416.
17 The Commission notes that it is simultaneously
approving similar proposals from the other options
exchanges. See Securities Exchange Act Release
Nos. 53244 (SR–Amex–2006–003); 53245(SR–BSE–
2006–02); 53246 (SR–CBOE–2005–104); 53248 (SR–
ISE–2005–58); and 53249 (SR–PCX–2005–138)
(February 7, 2006).
18 15 U.S.C. 78s(b)(2).
19 17 CFR 200.30–3(a)(12).
VerDate Aug<31>2005
13:17 Feb 14, 2006
Jkt 208001
8039
applications for the Defense Trade
Advisory Group (DTAG).
DATE: The Bureau will accept
applications for two weeks from the
effective date of this notice.
FOR FURTHER INFORMATION CONTACT:
Mary F. Sweeney, Office of Defense
Trade Controls Management, Directorate
of Defense Trade Controls, Bureau of
Political-Military Affairs, Department of
State, (202) 663–2865.
SUPPLEMENTARY INFORMATION: The DTAG
was established as a continuing
committee under the authority of 22
U.S.C. 2656 and the Federal Advisory
Committee Act, 5 U.S.C. App. I et seq.
(‘‘FACA’’).
The purpose of the DTAG is to
provide the Bureau of Political-Military
Affairs with a formal channel for regular
consultation and coordination with U.S.
private sector defense exporters and
defense trade specialists on issues
involving U.S. laws, policies, and
regulations for munitions exports. The
DTAG advises the Bureau on its support
Percent
for and regulation of defense trade to
For Physical Damage:
help ensure that impediments to
Homeowners With Credit
legitimate exports are reduced while the
Available Elsewhere ..........
5.375
foreign policy and national security
Homeowners Without Credit
Available Elsewhere ..........
2.687 interests of the U.S. continue to be
protected and advanced in accordance
Businesses With Credit Available Elsewhere ..................
6.557 with the Arms Export Control Act
(AECA), as amended. Major topics
Other (Including Non-Profit
Organizations) With Credit
addressed by the DTAG include (a)
Available Elsewhere ..........
5.000 Policy issues on commercial defense
Businesses And Non-Profit
trade and technology transfer; (b)
Organizations
Without
regulatory and licensing procedures
Credit Available Elsewhere
4.000
applicable to defense articles, services,
For Economic Injury:
and technical data; (c) technical issues
Businesses & Small Agriculinvolving the U.S. Munitions List
tural Cooperatives Without
Credit Available Elsewhere
4.000 (USML); and (d) questions relating to
actions designed to carry out the AECA
and International Traffic in Arms
The number assigned to this disaster
Regulations (ITAR).
for physical damage is 10368B and for
Members are appointed by the
economic injury is 103690.
Assistant Secretary of State for Political(Catalog of Federal Domestic Assistance
Military Affairs for the purpose of
Numbers 59002 and 59008)
obtaining, from the point of view and
Herbert L. Mitchell,
perspective of industry and other nonAssociate Administrator for Disaster
governmental interest groups and
Assistance.
stakeholders, substantive and technical
[FR Doc. E6–2095 Filed 2–14–06; 8:45 am]
expertise on defense trade and related
issues. As such, DTAG members are
BILLING CODE 8025–01–P
drawn from a representative crosssection of U.S. defense industry,
association, academic, and foundation
DEPARTMENT OF STATE
personnel, including appropriate
[Public Notice: 5305]
technical and military experts. All
Defense Trade Advisory Group; Notice DTAG members shall be aware of the
Department of State’s mandate that arms
of Membership
transfers must further U.S. national
security and foreign policy interests.
AGENCY: Department of State.
DTAG members also shall be versed in
ACTION: Notice.
the complexity of commercial defense
SUMMARY: The U.S. Department of
trade and industrial competitiveness,
State’s Bureau of Political-Military
and all members must be able to advise
Affairs is accepting membership
the Bureau on these matters. Further,
Notice is
hereby given that as a result of the
President’s major disaster declaration on
02/03/2006, 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 Counties (Physical Damage and
Economic Injury Loans):
Contra Costa; Del Norte; Lake Marin;
Mendocino; Napa; Sacramento;
Siskiyou; Solano; Sonoma.
Contiguous Counties (Economic Injury
Loans Only):
California: Alameda; Amador; Colusa;
El Dorado; Glenn; Humboldt;
Modoc; Placer; San Joaquin; Shasta;
Sutter; Tehama; Trinity; Yolo.
Oregon: Curry; Jackson; Josephine;
Klamath.
The Interest Rates are:
SUPPLEMENTARY INFORMATION:
PO 00000
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Fmt 4703
Sfmt 4703
E:\FR\FM\15FEN1.SGM
15FEN1
]]>Agencies
[Federal Register Volume 71, Number 31 (Wednesday, February 15, 2006)]
[Notices]
[Pages 8037-8039]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E6-2115]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-53247; File No. SR-Phlx-2006-01]
Self-Regulatory Organizations; Philadelphia Stock Exchange, Inc.;
Notice of Filing and Order Granting Accelerated Approval of a Proposed
Rule Change and Amendments No. 1 and 2 Thereto To Amend the Phlx's
Rules Governing the Hours of Trading in Equity Options and Narrow-Based
Index Options
February 7, 2006.
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 January 4, 2006, the Philadelphia Stock Exchange, Inc. (``Phlx'' or
``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 Phlx. On January 20,
2006, the Exchange filed Amendment No. 1 to the proposed rule
change.\3\ The Exchange filed Amendment No. 2 to the proposed rule
change on January 31, 2006.\4\ The Commission is publishing this notice
to solicit comments on the proposed rule change, as amended, from
interested persons and to approve the amended proposal on an
accelerated basis.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ In Amendment No. 1, replacing the original filing in its
entirety, the Exchange made clarifying changes to the proposed rule
text and its discussion.
\4\ In Amendment No. 2, the Exchange requested that the
implementation date for the new closing time be changed from
February 1, 2006, as was originally proposed, to February 13, 2006.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Phlx proposes to amend Phlx Rules 101, 1012, 1047, 1047A and
1101A and Phlx Floor Procedure Advice (``OFPA'') G-2 to indicate that
equity options and narrow-based index options may trade until 4 p.m.
and not 4:02 p.m. (e.s.t.). The Exchange proposes that these changes be
implemented on February 13, 2006.\5\ The text of the proposed rule
change, as amended, is available on the Phlx's Web site (https://
www.phlx.com), at the principal office of the Phlx, and at the
Commission's Public Reference Room.
---------------------------------------------------------------------------
\5\ Id.
---------------------------------------------------------------------------
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, as
amended, and discussed any comments it received on the proposed rule
change, as amended. The text of these statements may be examined at the
places specified in Item III 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
According to the Exchange, the purpose of the proposed rule change,
as amended, is to amend Phlx Rules governing the hours of trading in
equity options and narrow-based index options. Specifically, the Phlx
proposes to amend its rules to change the close of normal trading hours
in equity options and in narrow-based (industry) index options from
4:02 p.m. to 4 p.m. (e.s.t.). After the change, the time of the close
of trading in these Phlx options will correspond to the normal time set
for the close of trading on the primary exchanges listing the stocks
underlying the Phlx options. The primary exchanges generally close at 4
p.m. (e.s.t.).
The Exchange notes that, in 1997, the closing time for equity
options and narrow-based index options was changed from 4:10 p.m. to
4:02 p.m. (e.s.t.). The rationale to continue trading options for some
limited period of time after the close of trading on the primary
markets for the underlying securities was that the extended period
allowed options traders to respond to late reports of closing prices
over the consolidated tape. If the price of a late reported trade on an
underlying security was substantially different from the previous
reported price, the extended trading session would give options traders
the opportunity to bring options quotes in line with the closing price
of the underlying security.
However, because of improvements in the processing and reporting of
transactions, the Phlx believes that there are no longer significant
delays in the reporting of closing prices, and, therefore, a two minute
session is no longer needed to trade options after the underlying
securities close trading. Additionally, the Exchange believes that
pricing aberrations can occur if an option is traded when the
underlying stock is no longer trading, since there is a close
relationship in the price of the underlying stock and the overlying
option. As a result, the Phlx believes that it is difficult for the
market to price options accurately when the underlying security is not
trading.
At this time, the Exchange is not proposing to change the closing
time of 4:15 p.m. (e.s.t.) for broad-based (market) index options
because it does not believe that a significant news announcement by the
issuer of one component stock of a broad-based index is likely to have
a significant effect on the price of that broad-based index.\6\ The
Exchange recognizes, however, that indexes that are narrow-based may be
subject to the same pricing problems as options on individual stocks
\7\ and, as noted above, proposes to change the relevant closing time
to 4:00 p.m. (e.s.t.). Accordingly, the Phlx proposes to amend Phlx
Rules 101, 1012, 1047, 1047A and 1101A and OFPA G-2 to change the
references to times from 4:02 p.m. to 4 p.m. (e.s.t.) for equity
options and certain index based options as described above.\8\
---------------------------------------------------------------------------
\6\ Nor is the Exchange proposing to change the closing time of
4:15 p.m. (e.s.t.) for Exchange-Traded Fund Share Options. However,
the Exchange is proposing technical changes in the noted rules to
clarify that options on Exchange-Traded Fund Shares and broad-based
index options may trade until 4:15 p.m. (e.s.t.).
\7\ According to the Exchange, a significant news announcement
on one component of such an index could have a significant effect on
the index.
\8\ In addition, the Exchange notes that the reference to a 4:10
p.m. closing time in Phlx Rule 101 will similarly be changed to 4:00
p.m. (e.s.t.).
---------------------------------------------------------------------------
The Exchange notes that, if it or some but not all options
exchanges were to unilaterally modify its closing time, the existence
of dissimilar closing times applicable to the different options
exchanges would likely lead to
[[Page 8038]]
confusion for options investors and broker-dealers. It is the Phlx's
understanding that all of the options exchanges have determined to
change their respective rules to revise the closing time in equity
options and narrow-based index options from 4:02 p.m. to 4 p.m.
(e.s.t.). The Phlx further understands that the options exchanges
collectively have determined that they would implement this new closing
time on February 13, 2006.\9\
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\9\ See Amendment No. 2, supra note 4.
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2. Statutory Basis
The Exchange believes that the proposed rule change, as amended, is
consistent with Section 6(b) of the Act \10\ in general, and furthers
the objectives of Section 6(b)(5) of the Act \11\ in particular,
because it is designed to prevent fraudulent and manipulative acts and
practices, 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.
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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 Phlx does not believe that the proposed rule change, as
amended, will 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, as amended.
III. 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 at (https://
www.sec.gov/rules/sro.shtml); or
Send an e-mail to rule-comments@sec.gov. Please include
File Number SR-Phlx-2006-01 on the subject line.
Paper Comments
Send paper comments in triplicate to Nancy M. Morris,
Secretary, Securities and Exchange Commission, 100 F Street, NE.,
Washington, DC 20549-1090.
All submissions should refer to File Number SR-Phlx-2006-01. 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 Section. 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-2006-01 and should be submitted on or before March
8, 2006.
IV. Commission's Findings and Order Granting Accelerated Approval of
Proposed Rule Change
After careful review, the Commission finds that the proposed rule
change, as amended, is consistent with the requirements of the Act and
the rules and regulations thereunder applicable to a national
securities exchange.\12\ In particular, the Commission finds that the
proposal is consistent with Section 6(b)(5) of the Act,\13\ which
requires, among other things, that the rules of a national securities
exchange be designed to prevent fraudulent and manipulative acts and
practices, to promote just and equitable principles of trade, to foster
cooperation and coordination with persons engaged in facilitating
transactions in securities, 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.
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\12\ In approving this proposal, the Commission has considered
the proposed rule's impact on efficiency, competition, and capital
formation. 15 U.S.C. 78c(f).
\13\ 15 U.S.C. 78f(b)(5).
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The Commission notes that the Exchange believes that the need to
continue trading options for some period of time after the close of
trading in the underlying securities markets is no longer necessary
because improvements in the processing and reporting of transactions
have obviated the need to respond to late reports of closing prices
over the consolidated tape in order to bring options quotes in line
with the closing price of the underlying security. Moreover, the
Exchange believes that allowing two additional minutes of options
trading after trading on the underlying primary exchanges has ended may
actually result in pricing aberrations. Because the two minute delay
between the close of normal trading in equity options and narrow-based
index options and the corresponding underlying equity markets is no
longer necessary, the Commission believes that eliminating the delay is
in the public interest and appropriate for the protection of investors
and the maintenance of fair and orderly markets. Therefore, the
Commission finds that it is consistent with the Act for the Exchange to
amend its rules to change the close of normal trading hours in equity
and narrow-based index options from 4:02 p.m. (e.s.t.) to 4 p.m.
(e.s.t.).
The Commission finds good cause for approving this proposed rule
change, as amended, before the thirtieth day after publication of
notice thereof in the Federal Register. The Commission notes that all
of the options exchanges have filed substantially similar proposals and
seek to implement these industry-wide changes simultaneously on
February 13, 2006.\14\ For example, on December 20, 2005, the
Commission published for comment in the Federal Register a similar
proposed rule change submitted by the Chicago Board Options Exchange,
Incorporated (``CBOE'').\15\ The Commission received no comments on the
CBOE's proposed rule change. The Commission believes that the Phlx's
proposed rule change, as amended, raises no new issues or novel
regulatory questions. Accordingly, the Commission finds good cause,
pursuant to Section 19(b)(2) of the Act,\16\ for approving the proposed
rule change, as amended, prior to the thirtieth day after publication
in the Federal Register. In
[[Page 8039]]
addition, because the existence of dissimilar closing times among the
options exchanges could lead to confusion for options investors and
broker-dealers, the Commission finds good cause to accelerate approval
of the proposed rule change, as amended, to enable the six options
exchanges to simultaneously amend their hours of trading on an
industry-wide basis in a uniform manner.\17\
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\14\ See note 17, infra.
\15\ See Securities Exchange Act Release No. 52949 (December 13,
2005), 70 FR 75513 (December 20, 2005) (SR-CBOE-2005-104). See also
Securities Exchange Act Release No. 53055 (January 5, 2006), 71 FR
2279 (January 13, 2006) (SR-ISE-2005-58).
\16\ 15 U.S.C. 78s(b)(2).
\17\ The Commission notes that it is simultaneously approving
similar proposals from the other options exchanges. See Securities
Exchange Act Release Nos. 53244 (SR-Amex-2006-003); 53245(SR-BSE-
2006-02); 53246 (SR-CBOE-2005-104); 53248 (SR-ISE-2005-58); and
53249 (SR-PCX-2005-138) (February 7, 2006).
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V. Conclusion
It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\18\ that the proposed rule change and Amendments No. 1 and 2
thereto (SR-Phlx-2006-01) be, and hereby are, approved on an
accelerated basis.
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\18\ 15 U.S.C. 78s(b)(2).
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\19\
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\19\ 17 CFR 200.30-3(a)(12).
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J. Lynn Taylor,
Assistant Secretary.
[FR Doc. E6-2115 Filed 2-14-06; 8:45 am]
BILLING CODE 8010-01-P
