Self-Regulatory Organizations; Philadelphia Stock Exchange, Inc.; Notice of Filing of Proposed Rule Change, and Amendment Nos. 1 and 2 Thereto, Relating to the Deletion of Certain Exchange Rules, 28893-28897 [E6-7566]
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the scheduled matters at the Closed
Meeting.
Commissioner Nazareth, as duty
officer, voted to consider the items
listed for the closed meetings in closed
session, and determined that no earlier
notice thereof was possible.
The subject matter of the Open
Meeting scheduled for Monday, May 22,
2006 will be: The Commission will hear
oral argument in an appeal by Gateway
International Holdings, Inc., and its
president and chief executive officer,
Lawrence A. Consalvi, from an
administrative law judge’s decision. The
law judge found that Gateway failed to
file with the Commission a total of
seven annual and quarterly reports due
between May 2003 and December 2004,
and that, by doing so, Gateway violated
Section 13(a) of the Securities Exchange
Act of 1934 and Rules 13a–1 and 13a–
13 thereunder. The law judge also found
that Consalvi caused Gateway’s
violations. The law judge revoked the
registration of Gateway’s common stock
and ordered Consalvi to cease and desist
from committing or causing any
violations or future violations of
Exchange Act Section 13(a) and
Exchange Act Rules 13a–1 and 13a–3.
Among the issues likely to be argued is
whether and to what extent sanctions
should be imposed on Respondents.
The subject matter of the Closed
Meeting scheduled for Monday, May 22,
2006 will be: Post-argument discussion.
The subject matter of the Closed
Meeting scheduled for Thursday, May
25, 2006 will be: Formal orders of
investigation; Institution and settlement
of injunctive actions; Institution and
settlement of administrative
proceedings of an enforcement nature;
Request for information in an
investigative file; Resolution of
litigation claims; and Litigation matters.
At times, changes in Commission
priorities require alterations in the
scheduling of meeting items.
For further information and to
ascertain what, if any, matters have been
added, deleted or postponed, please
contact: The Office of the Secretary at
(202) 551–5400.
Dated: May 16, 2006.
Jill M. Peterson,
Assistant Secretary.
[FR Doc. 06–4706 Filed 5–16–06; 3:52 pm]
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28893
SECURITIES AND EXCHANGE
COMMISSION
withdrawn outside of the Exchange is
prohibited.]
[Release No. 34–53795; File No. SR–Phlx–
2005–61]
Rule 241 [Special Offerings] Reserved
[Notwithstanding the provisions of
other Rules, which might otherwise
apply, the Exchange may, subject to the
conditions specified in this Rule and to
compliance with the provisions
contained herein, permit a ‘‘Special
Offering’’ (as herein defined) to be made
through the facilities of the Exchange,
provided that the Exchange (after
consulting and with the concurrence of
a Governor who is active on the Floor
of the Exchange) shall have determined
that the regular market on the Exchange
cannot, within a reasonable time and at
a reasonable price or prices, absorb the
particular block of a security which is
to be the subject of such Special
Offering. In making such determination
the following factors shall be taken into
consideration, via:
(a) Price range and the volume of
transactions in such security on the
Floor of the Exchange during the
preceding six months;
(b) Attempts which have been made
to dispose of the security in the regular
market on the Floor of the Exchange;
(c) The apparent past and current
interest in such security in such regular
market on the Floor; and
(d) The number of shares or bonds
and the current market value of the
block of such security proposed to be
covered by such Special Offering.
Except in special circumstances a
Special Offering will not be permitted
unless the offering involves at least
1,000 shares of stock with an aggregate
market value of not less than $25,000,
or $15,000 par value in bonds with an
aggregate market value of not less than
$10,000.]
Self-Regulatory Organizations;
Philadelphia Stock Exchange, Inc.;
Notice of Filing of Proposed Rule
Change, and Amendment Nos. 1 and 2
Thereto, Relating to the Deletion of
Certain Exchange Rules
May 12, 2006.
Pursuant to section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’),1 and 19b–4 thereunder,2 notice
is hereby given that on October 14,
2005, 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, II, and III, below, which Items
have been prepared by the Phlx. On
March 10, 2006, the Exchange submitted
Amendment No. 1 to the proposed rule
change.3 Phlx filed amendment No. 2 to
the proposed rule change on May 1,
2006.4 The Commission is publishing
this notice to solicit comments on the
proposed rule change, as amended, from
interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Phlx, pursuant to section 19(b)(1)
of the Act 5 and Rule 19b–4 thereunder,6
proposes to delete Phlx Rules 129, 241–
248, and 923.
The text of the proposed rule change,
as amended, appears below. Additions
are italicized; deletions are [bracketed].
*
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*
*
Rule 129 [Withdrawal of Orders]
Reserved
[The withdrawal from the Floor of the
Exchange of an order for the purchase
or sale of securities, or any part thereof,
at the request of another member of the
Exchange, for the purpose of the
purchase or sale of the securities so
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 Amendment No. 1, which replaced the original
filing in its entirety, made clarifying changes to the
proposed rule change and sought to retain Phlx
Rules 229 Supplementary Material .07(c)(ii) and
236.
4 Amendment No. 2, which replaced the original
filing and Amendment No. 1 in their entirety, made
general clarifying changes to the proposed rule
change and sought to retain Phlx Rule 219, as well
as Phlx Rules 229 Supplementary Material .07(c)(ii)
and 236. Phlx states that it plans to propose to
delete Phlx Rules 219, 229 Supplementary Material
.07(c)(ii), and 236 in a future proposed rule change
regarding a change to Phlx systems.
5 15 U.S.C. 78s(b)(1).
6 17 CFR 240.19b–4.
2 17
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Rule 242 [Definition] Reserved
[A Special Offering is defined as an
offering (designated as a fixed price
offering) by one or more members or
member organizations acting for his or
its own account or for the account of
one or more other persons, for the sale
of a block of a security dealt in on the
Exchange through the facilities of the
Exchange at a price not in excess of the
last sale of such security or the current
offer of such security in the regular
market on the Floor of the Exchange,
whichever is the lower, but equal to or
higher than the current bid for such
security in such market, whereby the
offer or agrees to pay a special
commission to such members and
member organizations as may accept all
or any part of such Offering for the
account of his or its customers;
provided, that the security which is the
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subject of such Offering is a security to
which the exemption afforded by Rule
240.10b–2(d)(1) issued by the Securities
and Exchange Commission, and such
amendments thereto as have been or
may be from time to time adopted, is
available at the time of such Offering.]
Rule 243 [Conditions] Reserved
[No Special Offering, as provided in
these Rules shall be made unless each
of the following conditions is complied
with, via:
(a) The person for whose account
such Special Offering is to be made
shall at the time of such Offering be the
owner of the entire block of the security
so to be offered, except that, for the
purpose of stabilizing, there also may be
sold for such person’s account, or for
the account of any member organization
offering the block of security on his
behalf, as part of the Special Offering,
an amount not to exceed 10% of the
shares or bonds owned and originally
offered in the Special Offering by such
person.
(b) The person for whose account
such Special Offering is to be made
shall include within the Offering all of
the security which he then intends to
offer within a reasonable time, and there
shall be furnished to the Exchange
before the Offering is made a written
statement by the offeror to that effect or
a written statement by his broker stating
that the broker has been so advised by
the offeror.
(c) A Special Offering shall be
automatically suspended as long as an
offering exists ‘‘regular way’’ at a price
which would permit a purchase at a
lower net cost than in the Special
Offering. Unless otherwise specifically
exempted by the Exchange, every
Special Offering shall remain open for a
minimum period of 15 minutes,
inclusive of any period during which it
is suspended by operation of the above
provision. A Special Offering which has
not been completed in the 15 minute
minimum period shall not be
withdrawn before completion without
the approval of the Exchange.
(d) The person for whose account
such Special Offering is made shall
agree that during the period such
offering is open, he will not offer in the
regular market on the floor of the
Exchange any shares or bonds of the
security which is the subject of such
Special Offering, unless the prior
permission of the Exchange is first
obtained.
(e) The special commission referred to
in Rule 242 shall not exceed $1 per
share on purchases at a price of $50 or
less per share, or 2% of the purchase
price on purchases at a price in excess
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of $50 per share. In the case of bonds
such commission shall not exceed 21⁄2%
of the purchase price.
(f) No member or member
organization shall directly or indirectly
receive any part of the special
commission referred to in Rule 242 in
connection with any purchase for his or
its own account or the account of a
partner thereof or a stockholder therein
or for the account of any other member
or member organization or partner
thereof or stockholder therein, made
pursuant to a Special Offering.
(g) A Special Offering shall not be
made unless it can be accepted in a
lesser amount or amounts than the total
of the securities offered.
(h) A Special Offering shall be made
for acceptance in round lots or in odd
lots, without preference, and in the case
of an odd-lot purchase no differential
shall be added to the gross purchase
price of the Special Offering.
(i) When buying orders in a Special
Offering exceed the amount available in
the offering, the offered security will be
allocated in reasonably proportionate
amounts.]
Rule 244 [When Effective] Reserved
[A Special Offering, when approved,
shall become effective upon
announcement by the Exchange on the
tape of the terms and conditions of such
Offering.]
Rule 245 [Terms of Offering on Tape]
Reserved
[The terms of a Special Offering shall
be printed on the tape before it is
effective, with a statement, if such be
the fact, that stabilizing transactions
have been effected or are contemplated
and that it is intended to over allot as
permitted by Rule 243(a). Transactions
effected pursuant to a Special Offering
shall when feasible be printed currently
on the tape, and the tape shall show the
gross price and the special commission
in a legend such as: ‘‘SP OFF 100 XYZ
40 COM .50’’, as well as the number of
orders involved in such transaction
where more than one order is involved;
and after the close of the market, any
unprinted remainder of such
transactions executed during the day
shall be so printed. When the offering is
terminated, an announcement to that
effect shall be printed on the tape; and
when the intention to stabilize is
terminated, such fact shall be
announced on the tape, together with a
statement that stabilizing transactions
have been effected, if such be the fact.]
Rule 246 [Odd Lots] Reserved
[Transactions effected pursuant to a
Special Offering shall not elect the
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execution of any outstanding ‘‘regular
way’’ odd-lot orders.]
Rule 247 [Authorization] Reserved
[(a) A Special Offering may be
approved and made only if the person
or persons for whose account it is
proposed to be made shall have
specifically authorized such Offering
and its terms.
Disclosure
(b) A member organization effecting
for the account of a customer a purchase
pursuant to a Special Offering shall
confirm such transaction to such
customer at the offering price and shall
not charge to or collect from such
customer any commission on account of
such transaction.
The confirmation by a member
organization to a buyer or seller in a
Special Offering shall state in full the
terms and conditions of the Special
Offering. The confirmation to a buyer
shall state at least:
(1) That the purchase was part of a
Special Offering;
(2) That no commission is to be
charged to the customer;
(3) That the seller is to pay a special
commission to the member
organization, if such be the fact;
(4) The amount of such special
commission;
(5) The information printed on the
tape regarding stabilizing transactions or
the intention to stabilize; and
(6) The nature of the member
organization’s interest in the Special
Offering, if any, other than its interest as
a recipient of the special commission.
(c) A member organization soliciting
purchase orders for execution pursuant
to a Special Offering shall advise the
person so solicited of the terms and
conditions of such Offering before
effecting any transaction for such person
pursuant thereto. Such disclosure shall
include at least the items described in
paragraphs (1) to (6) of Rule 247(b).
(d) A member organization with an
order for the purchase of a security
which is the subject of a Special
Offering shall effect such purchase in
the regular market whenever a ‘‘regular
way’’ offering is available which would
permit such purchase at a lower net cost
than in the Special Offering. Every order
for purchase in a Special Offering shall
be accepted pursuant to the above
condition.]
Rule 248 [Information Regarding Special
Offerings] Reserved
[It is not the purpose of these Rules
to supersede the auction market or
supplant approved secondary
distributions, but to provide means for
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the handling of blocks of securities dealt
in on the Exchange, through the
facilities of the Exchange, where such
blocks, under current conditions, cannot
readily be absorbed in the auction
market within a reasonable time and at
a reasonable price.
Rules 241–248 are intended primarily
to provide for Special Offerings on an
agency basis by members or member
organizations on behalf of their nonmember customers. However, the Rules
do not prohibit a Special Offering by a
member or member organization for his
or its own account.
.01 Preliminary Information
Required.—The broker for the offeror
will be required to furnish the following
information to the Exchange prior to the
announcement of the Special Offering
on the tape:
(a) Name of the security and ticker
symbol.
(b) Number of shares or bonds.
(c) Special Offering price.
(d) Special commission.
(e) Name of the offeror.
(f) Written assurance of the offeror, or
of the broker upon advice from the
offeror, that the shares or bonds
contained in the Offering are all of the
security which he then intends to offer
within a reasonable time, as required in
Rule 243(b).
(g) Assurance of agreement of offeror
to terms of Offering.
(h) Statement as to whether stabilizing
operations will be engaged in to
facilitate Special Offering.
(i) Statement as to whether the offeror
or his agent intends, for the purpose of
stabilizing, to sell shares or bonds in the
Special Offering in excess of that owned
and included in the original offer as
permitted by Rule 243(a).
(j) Statement that the shares or bonds
covered by the application do or do not
require registration under the Securities
Act of 1933, together with explanation
thereof. This information should be
given to the Exchange as soon as
possible in advance of the time it is
proposed to make the Special Offering.
Announcement will not be made on the
tape of the Special Offering (and the
Special Offering thus cannot become
effective) until the Exchange has the
requisite information and has approved
it.
.02 Ownership.—The offeror in a
Special Offering must be the bona fide
owner of the entire block of security
offered, net of any short account the
offeror may have in such security. Sales
for the purpose of stabilizing as
permitted by Rule 243(a) are excepted.
.03 ‘‘Piecemeal.’’—‘‘All or None’’
Offerings. ‘‘Piecemeal’’ or successive
offerings of the same security by the
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same offeror, and offerings on an ‘‘allor-none’’ basis, will not be permitted.
.04 Minimum Period of Offering.—
Rule 243(c) provides in part that unless
otherwise specifically exempted by the
Exchange, every Special Offering shall
remain open for a minimum period of
15 minutes. An exemption from this
minimum requirement is specifically
given to any offering which has been
announced on the Exchange ticker tape
at least one hour before the offering
becomes effective. An offering so
exempted from the minimum 15 minute
requirement shall not be closed without
the approval of the Exchange.
.05 Other Offers by Offeror.—It
should be noted that, under Rule 243(d),
an offeror may not, while his Special
Offering is open, offer any shares or
bonds of the same security in the regular
auction market, without prior
permission of the Exchange.
.06 Orders after Close.—Orders
accumulated after the close shall be
completed on the Floor of the Exchange
at the opening of the next market
session.
.07 Handling of Special Offering
Transactions.—Purchases against
Special Offerings must be completed on
the Floor of the Exchange at the post
where the security is dealt in. The
handling of the Floor end of the
business, on either the purchase or the
offering side, may be entrusted to a
Floor broker or in the same manner as
in the case of regular commission
orders. In reference to Rule 247
attention is directed to the fact that in
connection with a Special Offering, the
broker for the buyer is acting in an
agency capacity and the agency
obligation to buy at the most
advantageous cost to the customer shall
be observed.
.08 Stabilizing.—The right to sell an
amount not to exceed 10 per cent of the
number of shares or bonds owned and
originally offered in the Special
Offering, for the purpose of stabilizing
and as part of a Special Offering, is
subject to the prior approval of the
Exchange. Stabilizing operations in
connection with Special Offerings must
be discussed in advance with the staff
of the Exchange.
.09 Stop Orders—Odd-lot Orders.—
Transactions effected pursuant to
Special Offerings shall not elect stoporders or open odd-lot orders for
execution in the regular market.
.10 Confirmations.—The
information to be furnished on
confirmations in conformity with Rule
247(b) may be inserted on the face of an
appropriate form of confirmation in type
no smaller than other surrounding type
or it may appear on the back of such
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28895
confirmation in the same type, provided
the face of the confirmation contains the
following legend in the type illustrated
as follows:
‘‘IMPORTANT—SEE REVERSE SIDE’’
The information may also be attached
and made a part of an appropriate form
of confirmation in type no smaller than
8 point.
.11 Reports.—The applicant shall
submit to the Exchange at the close of
each day a report of all transactions in
the offered security effected for the
account of any person having an
interest, as seller or as agent, offering
the block of the security on the seller’s
behalf, in the Special Offering. Such
reports shall cover the period beginning
with the date of commencement of the
offering or the stabilizing, whichever is
earlier, and ending with the date on
which the short position has been
covered or the Special Offering account
has been terminated, whichever is later.]
Rule 923 [Member Officers] Reserved
[A member of the Exchange shall be
an officer of the member organization
that is a corporation. He shall own and
continue to own such an interest in the
voting stock of said corporation as shall
be acceptable to the Committee;
provided that the Committee may waive
such requirement of voting stock
ownership, if the voting stock
ownership is otherwise satisfactory to
the Committee.]
*
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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,
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. 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, as amended, is to update Phlx’s
rules to remove rules that, according to
the Exchange, are no longer applicable
due to changes in the law or methods of
business on the Exchange.
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Phlx Rule 129 Withdrawal of Orders
Phlx Rule 129 prohibits the
withdrawal of an order from the
Exchange, at the request of another
member, for the purpose of the purchase
or sale of the securities outside of the
Exchange. The Exchange speculates that
this rule was possibly adopted in the
1930’s or 1940’s to keep orders
presented on the Phlx market subject to
the regulatory protections available to
them on the Exchange. Since that time,
the over the counter markets have
become more sophisticated. Currently, it
is understood that members, in
exercising their agency duty to obtain
best execution for orders entrusted to
them, may remove orders from the
Exchange and seek execution in other
venues. Therefore, the Exchange
believes that deletion of Phlx Rule 129
should assist members in fulfilling their
best execution obligations.
Phlx Rules 241–248 Rules for Special
Offerings
Phlx Rules 241–248 concern special
offerings of securities on the Exchange.
In 1942, the Commission amended Rule
10b–2 under the Act 7 to permit an
exemption for special offerings under a
plan filed with the Commission by an
exchange.8 Phlx’s Plan, contained in
Phlx Rules 241–248, permits special
offerings, at a fixed price and for a fixed
period of time, on the Exchange where
the quantity of stock involved cannot be
absorbed in the regular auction market
within a reasonable time and at a
reasonable price. Phlx Rules 241–248
permit a person making a special
offering to pay a special commission to
a broker for a purchasing customer.
Generally, Phlx Rules 241–248 specify
a minimum share size of 1,000 shares,
with a value of $25,000. According to
the Exchange, by today’s standards,
1,000 shares of stock with a value of
$25,000 is not a quantity of stock that
cannot readily be absorbed in the
regular auction market. Phlx Rules 241–
248 predate Phlx crossing Rule 126,
which has special cross provisions for
Trust Shares of 25,000 shares or greater
and all securities of 5,000 shares or
greater, and PACE, which is described
in Phlx Rule 229 and sets minimum
automatic execution sizes for securities
on the system of 599 shares, noting that
specialists may set higher levels.
In proposing the rescission of Rule
10b–2, the Commission indicated that it
believed that the significant changes
that have taken place in the securities
7 17
CFR 240.10b–2.
filed its plan in 1943. See Securities
Exchange Act Release No. 3487 (September 23,
1943).
8 Phlx
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markets since Rule 10b–2’s adoption,
and the coverage of other anti-fraud and
anti-manipulation provisions of the
federal securities laws, such as Rules
10b–5 9 and 10b–6 10 under the Act,
made it appropriate to rescind Rule
10b–2. The Exchange now proposes to
delete Phlx Rules 241–248, the plan
adopted in response to Rule 10b–2,
because it believes that these rules are
obsolete as the Commission rescinded
Rule 10b–2 and the Exchange has not
utilized Phlx Rules 241–248 in the past
twenty years.11
Phlx Rule 923 Member Officers
Phlx Rule 923 requires members
associated with member corporations to
be officers and voting stockholders of
those member corporations, noting that
the Exchange may waive the voting
stock requirement of the rule. This rule
was adopted at least fifty years ago,
when most member corporations were
small regional companies. The purpose
of this rule at that time may have been
to provide an additional means of
obtaining security for the debts of the
member corporation by requiring that
the members who were trading the
securities also be officers and/or owners
of the corporation. Today, the Phlx has
other rule-based means to require
adequate financial security for the debts
of member corporations and for
ensuring that member corporations are
generally financially solvent. Phlx Rule
909 requires member organizations to
provide and maintain security for any
claims owed to the Exchange and other
members and member organizations.12
Phlx Rule 924 complements Phlx Rule
909 by making the member organization
liable for the fees, fines, dues, penalties
and other amounts imposed by the
Exchange on its members. This
provision applies regardless of the
officer or ownership status of the
member. Finally, Rule 15c3–1 under the
Act 13 requires certain minimum net
capital requirements for broker-dealers,
which include Exchange member
corporations. Therefore, Phlx does not
believe that the requirement in Phlx
Rule 923 serves to protect the Exchange
and believes deletion gives a member
corporation maximum flexibility to
9 17
CFR 240.10b–5.
CFR 240.10b–6.
11 Similarly, the New York Stock Exchange
(‘‘NYSE’’) rescinded a rule (NYSE Rule 391) similar
to Phlx Rules 241–248 in 1993 in response to the
Commission’s rescission of Rule 10b–2. See
Securities Exchange Act Release No. 32822 (August
31, 1993), 58 FR 47484 (September 9, 1993) (SR–
NYSE–93–20).
12 Phlx notes that member corporations are a
subset of member organizations. Therefore, Phlx
Rules 909 and 924 apply to member corporations.
13 17 CFR 240.15c3–1.
10 17
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choose whom in their company to
employ as members of the Exchange.
2. Statutory Basis
The Exchange believes that its
proposal, as amended, is consistent with
section 6(b) of the Act,14 in general, and
furthers the objectives of section 6(b)(5)
of the Act,15 in particular, in that it is
designed 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 to protect investors and the public
interest by updating the Exchange’s
rules.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange 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
Written comments on the proposed
rule change were neither solicited nor
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 Phlx consents, the
Commission will:
(A) By order approve such proposed
rule change, as amended, or
(B) Institute proceedings to determine
whether the proposed rule change, as
amended, 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 (https://www.sec.gov/
rules/sro.shtml); or
14 15
15 15
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U.S.C. 78f(b).
U.S.C. 78f(b)(5).
18MYN1
Federal Register / Vol. 71, No. 96 / Thursday, May 18, 2006 / Notices
• Send an e-mail to rulecomments@sec.gov. Please include File
Number SR–Phlx–2005–61 on the
subject line.
Congress that the following countries
are not cooperating fully with United
States antiterrorism efforts:
Cuba
Iran
Paper Comments
North Korea
• Send paper comments in triplicate
Syria
to Nancy M. Morris, Secretary,
Venezuela
Securities and Exchange Commission,
I hereby notify that the decision not
100 F Street, NE., Washington, DC
to include Libya on the list of countries
20549–1090.
not cooperating fully with U.S.
All submissions should refer to File
antiterrorism efforts comes as the result
Number SR–Phlx–2005–61. This file
of a comprehensive review of Libya’s
number should be included on the
record of support for terrorism over the
subject line if e-mail is used. To help the last three years. Libya has taken
Commission process and review your
significant and meaningful steps during
comments more efficiently, please use
this time to repudiate its past support
only one method. The Commission will for terrorism and to cooperate with the
post all comments on the Commission’s United States in our antiterrorism
Internet Web site (https://www.sec.gov/
efforts.
rules/sro.shtml). Copies of the
This determination and certification
submission, all subsequent
shall be transmitted to the Congress and
amendments, all written statements
published in the Federal Register.
with respect to the proposed rule
Dated: May 8, 2006.
change, as amended, that are filed with
Condoleezza Rice,
the Commission, and all written
Secretary of State, Department of State.
communications relating to the
[FR Doc. 06–4656 Filed 5–17–06; 8:45 am]
proposed rule change, as amended,
BILLING CODE 4710–10–P
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 DEPARTMENT OF STATE
be available for inspection and copying
[Public Notice 5410]
in the Commission’s Public Reference
Bureau of Educational and Cultural
Room. Copies of the filing also will be
Affairs (ECA); Request for Grant
available for inspection and copying at
Proposals: Regional Educational
the principal office of the Phlx. All
Advising Coordinator Program
comments received will be posted
without change; the Commission does
Announcement Type: New
not edit personal identifying
Cooperative Agreement.
information from submissions. You
Funding Opportunity Number: ECA/
should submit only information that
A/S/A–07–03.
you wish to make available publicly. All
Catalog of Federal Domestic
submissions should refer to File
Assistance Number: 00.000.
Number SR–Phlx–2005–61 and should
Key Dates: Program start date: October
be submitted on or before June 8, 2006.
1, 2006.
For the Commission, by the Division of
Market Regulation, pursuant to delegated
authority.16
J. Lynn Taylor,
Assistant Secretary.
[FR Doc. E6–7566 Filed 5–17–06; 8:45 am]
BILLING CODE 8010–01–P
DEPARTMENT OF STATE
[Public Notice 5411]
wwhite on PROD1PC61 with NOTICES
Determination and Certification Under
Section 40A of the Arms Export
Control Act
Pursuant to section 40A of the Arms
Export Control Act (22 U.S.C. 2781), and
Executive Order 11958, as amended, I
hereby determine and certify to the
16 17
CFR 200.30–3(a)(12).
VerDate Aug<31>2005
17:06 May 17, 2006
Jkt 208001
Application Deadline: July 10, 2006.
Executive Summary: The Educational
Information and Resources Branch in
the Office of Global Educational
Programs of the Bureau of Educational
and Cultural Affairs (ECA) announces
an open competition for a cooperative
agreement to support the Regional
Educational Advising Coordinator
(REAC) Program. The underlying goal of
this cooperative agreement is to foster
international student mobility between
the United States and the rest of the
world. The grantee organization will
provide programmatic oversight and
coordination, communication and
information channels, training and
logistical support, and human resource
services to eight REACs, thus assuring
their capacity to supply the
EducationUSA network of 450 State
Department-supported educational
PO 00000
Frm 00048
Fmt 4703
Sfmt 4703
28897
advising centers with adequate
resources and professional training, and
in turn, hundreds of thousands of
overseas students with objective,
accurate and timely information on U.S.
higher education. The grantee
organization will also ensure that the
Bureau, U.S. embassies and Fulbright
commissions receive thoughtful
assessments of issues concerning
advising centers and regional trends in
student mobility from the REACs.
Non-profit higher education
organizations with the infrastructure to
manage programs in all regions of the
world may submit proposals which
demonstrate their knowledge of
international student mobility,
understanding of the needs of the
EducationUSA network, and the
capacity to support REACs based in
Ghana, Germany, Mexico, Morocco,
Pakistan, Peru, Russia, and Thailand.
Pending availability of FY07 funding,
this grant will provide an assistance
award in the range of $1,273,000 to
$1,433,000.
I. Funding Opportunity Description
Authority
Overall grant making authority for
this program is contained in the Mutual
Educational and Cultural Exchange Act
of 1961, Public Law 87–256, as
amended, also known as the FulbrightHays Act. The purpose of the Act is ‘‘to
enable the Government of the United
States to increase mutual understanding
between the people of the United States
and the people of other countries* * *;
to strengthen the ties which unite us
with other nations by demonstrating the
educational and cultural interests,
developments, and achievements of the
people of the United States and other
nations...and thus to assist in the
development of friendly, sympathetic
and peaceful relations between the
United States and the other countries of
the world.’’ The funding authority for
the program above is provided through
legislation.
Purpose
The State Department and ECA are
committed to facilitating and increasing
the flow of international students to the
U.S. in order to provide future world
leaders with opportunities to
understand U.S. society, culture and
values. The REACs’ role is critical to the
Bureau’s pursuit of this objective.
REACs and the EducationUSA
advisers they support are catalysts for
the exchange of U.S. Governmentsponsored students and scholars as well
as those who pursue U.S. educational
programs through their own means or
E:\FR\FM\18MYN1.SGM
18MYN1
]]>Agencies
[Federal Register Volume 71, Number 96 (Thursday, May 18, 2006)]
[Notices]
[Pages 28893-28897]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E6-7566]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-53795; File No. SR-Phlx-2005-61]
Self-Regulatory Organizations; Philadelphia Stock Exchange, Inc.;
Notice of Filing of Proposed Rule Change, and Amendment Nos. 1 and 2
Thereto, Relating to the Deletion of Certain Exchange Rules
May 12, 2006.
Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and 19b-4 thereunder,\2\ notice is hereby given that on
October 14, 2005, 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, II,
and III, below, which Items have been prepared by the Phlx. On March
10, 2006, the Exchange submitted Amendment No. 1 to the proposed rule
change.\3\ Phlx filed amendment No. 2 to the proposed rule change on
May 1, 2006.\4\ The Commission is publishing this notice to solicit
comments on the proposed rule change, as amended, from interested
persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ Amendment No. 1, which replaced the original filing in its
entirety, made clarifying changes to the proposed rule change and
sought to retain Phlx Rules 229 Supplementary Material .07(c)(ii)
and 236.
\4\ Amendment No. 2, which replaced the original filing and
Amendment No. 1 in their entirety, made general clarifying changes
to the proposed rule change and sought to retain Phlx Rule 219, as
well as Phlx Rules 229 Supplementary Material .07(c)(ii) and 236.
Phlx states that it plans to propose to delete Phlx Rules 219, 229
Supplementary Material .07(c)(ii), and 236 in a future proposed rule
change regarding a change to Phlx systems.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Phlx, pursuant to section 19(b)(1) of the Act \5\ and Rule 19b-
4 thereunder,\6\ proposes to delete Phlx Rules 129, 241-248, and 923.
---------------------------------------------------------------------------
\5\ 15 U.S.C. 78s(b)(1).
\6\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
The text of the proposed rule change, as amended, appears below.
Additions are italicized; deletions are [bracketed].
* * * * *
Rule 129 [Withdrawal of Orders] Reserved
[The withdrawal from the Floor of the Exchange of an order for the
purchase or sale of securities, or any part thereof, at the request of
another member of the Exchange, for the purpose of the purchase or sale
of the securities so withdrawn outside of the Exchange is prohibited.]
Rule 241 [Special Offerings] Reserved
[Notwithstanding the provisions of other Rules, which might
otherwise apply, the Exchange may, subject to the conditions specified
in this Rule and to compliance with the provisions contained herein,
permit a ``Special Offering'' (as herein defined) to be made through
the facilities of the Exchange, provided that the Exchange (after
consulting and with the concurrence of a Governor who is active on the
Floor of the Exchange) shall have determined that the regular market on
the Exchange cannot, within a reasonable time and at a reasonable price
or prices, absorb the particular block of a security which is to be the
subject of such Special Offering. In making such determination the
following factors shall be taken into consideration, via:
(a) Price range and the volume of transactions in such security on
the Floor of the Exchange during the preceding six months;
(b) Attempts which have been made to dispose of the security in the
regular market on the Floor of the Exchange;
(c) The apparent past and current interest in such security in such
regular market on the Floor; and
(d) The number of shares or bonds and the current market value of
the block of such security proposed to be covered by such Special
Offering.
Except in special circumstances a Special Offering will not be
permitted unless the offering involves at least 1,000 shares of stock
with an aggregate market value of not less than $25,000, or $15,000 par
value in bonds with an aggregate market value of not less than
$10,000.]
Rule 242 [Definition] Reserved
[A Special Offering is defined as an offering (designated as a
fixed price offering) by one or more members or member organizations
acting for his or its own account or for the account of one or more
other persons, for the sale of a block of a security dealt in on the
Exchange through the facilities of the Exchange at a price not in
excess of the last sale of such security or the current offer of such
security in the regular market on the Floor of the Exchange, whichever
is the lower, but equal to or higher than the current bid for such
security in such market, whereby the offer or agrees to pay a special
commission to such members and member organizations as may accept all
or any part of such Offering for the account of his or its customers;
provided, that the security which is the
[[Page 28894]]
subject of such Offering is a security to which the exemption afforded
by Rule 240.10b-2(d)(1) issued by the Securities and Exchange
Commission, and such amendments thereto as have been or may be from
time to time adopted, is available at the time of such Offering.]
Rule 243 [Conditions] Reserved
[No Special Offering, as provided in these Rules shall be made
unless each of the following conditions is complied with, via:
(a) The person for whose account such Special Offering is to be
made shall at the time of such Offering be the owner of the entire
block of the security so to be offered, except that, for the purpose of
stabilizing, there also may be sold for such person's account, or for
the account of any member organization offering the block of security
on his behalf, as part of the Special Offering, an amount not to exceed
10% of the shares or bonds owned and originally offered in the Special
Offering by such person.
(b) The person for whose account such Special Offering is to be
made shall include within the Offering all of the security which he
then intends to offer within a reasonable time, and there shall be
furnished to the Exchange before the Offering is made a written
statement by the offeror to that effect or a written statement by his
broker stating that the broker has been so advised by the offeror.
(c) A Special Offering shall be automatically suspended as long as
an offering exists ``regular way'' at a price which would permit a
purchase at a lower net cost than in the Special Offering. Unless
otherwise specifically exempted by the Exchange, every Special Offering
shall remain open for a minimum period of 15 minutes, inclusive of any
period during which it is suspended by operation of the above
provision. A Special Offering which has not been completed in the 15
minute minimum period shall not be withdrawn before completion without
the approval of the Exchange.
(d) The person for whose account such Special Offering is made
shall agree that during the period such offering is open, he will not
offer in the regular market on the floor of the Exchange any shares or
bonds of the security which is the subject of such Special Offering,
unless the prior permission of the Exchange is first obtained.
(e) The special commission referred to in Rule 242 shall not exceed
$1 per share on purchases at a price of $50 or less per share, or 2% of
the purchase price on purchases at a price in excess of $50 per share.
In the case of bonds such commission shall not exceed 2\1/2\% of the
purchase price.
(f) No member or member organization shall directly or indirectly
receive any part of the special commission referred to in Rule 242 in
connection with any purchase for his or its own account or the account
of a partner thereof or a stockholder therein or for the account of any
other member or member organization or partner thereof or stockholder
therein, made pursuant to a Special Offering.
(g) A Special Offering shall not be made unless it can be accepted
in a lesser amount or amounts than the total of the securities offered.
(h) A Special Offering shall be made for acceptance in round lots
or in odd lots, without preference, and in the case of an odd-lot
purchase no differential shall be added to the gross purchase price of
the Special Offering.
(i) When buying orders in a Special Offering exceed the amount
available in the offering, the offered security will be allocated in
reasonably proportionate amounts.]
Rule 244 [When Effective] Reserved
[A Special Offering, when approved, shall become effective upon
announcement by the Exchange on the tape of the terms and conditions of
such Offering.]
Rule 245 [Terms of Offering on Tape] Reserved
[The terms of a Special Offering shall be printed on the tape
before it is effective, with a statement, if such be the fact, that
stabilizing transactions have been effected or are contemplated and
that it is intended to over allot as permitted by Rule 243(a).
Transactions effected pursuant to a Special Offering shall when
feasible be printed currently on the tape, and the tape shall show the
gross price and the special commission in a legend such as: ``SP OFF
100 XYZ 40 COM .50'', as well as the number of orders involved in such
transaction where more than one order is involved; and after the close
of the market, any unprinted remainder of such transactions executed
during the day shall be so printed. When the offering is terminated, an
announcement to that effect shall be printed on the tape; and when the
intention to stabilize is terminated, such fact shall be announced on
the tape, together with a statement that stabilizing transactions have
been effected, if such be the fact.]
Rule 246 [Odd Lots] Reserved
[Transactions effected pursuant to a Special Offering shall not
elect the execution of any outstanding ``regular way'' odd-lot orders.]
Rule 247 [Authorization] Reserved
[(a) A Special Offering may be approved and made only if the person
or persons for whose account it is proposed to be made shall have
specifically authorized such Offering and its terms.
Disclosure
(b) A member organization effecting for the account of a customer a
purchase pursuant to a Special Offering shall confirm such transaction
to such customer at the offering price and shall not charge to or
collect from such customer any commission on account of such
transaction.
The confirmation by a member organization to a buyer or seller in a
Special Offering shall state in full the terms and conditions of the
Special Offering. The confirmation to a buyer shall state at least:
(1) That the purchase was part of a Special Offering;
(2) That no commission is to be charged to the customer;
(3) That the seller is to pay a special commission to the member
organization, if such be the fact;
(4) The amount of such special commission;
(5) The information printed on the tape regarding stabilizing
transactions or the intention to stabilize; and
(6) The nature of the member organization's interest in the Special
Offering, if any, other than its interest as a recipient of the special
commission.
(c) A member organization soliciting purchase orders for execution
pursuant to a Special Offering shall advise the person so solicited of
the terms and conditions of such Offering before effecting any
transaction for such person pursuant thereto. Such disclosure shall
include at least the items described in paragraphs (1) to (6) of Rule
247(b).
(d) A member organization with an order for the purchase of a
security which is the subject of a Special Offering shall effect such
purchase in the regular market whenever a ``regular way'' offering is
available which would permit such purchase at a lower net cost than in
the Special Offering. Every order for purchase in a Special Offering
shall be accepted pursuant to the above condition.]
Rule 248 [Information Regarding Special Offerings] Reserved
[It is not the purpose of these Rules to supersede the auction
market or supplant approved secondary distributions, but to provide
means for
[[Page 28895]]
the handling of blocks of securities dealt in on the Exchange, through
the facilities of the Exchange, where such blocks, under current
conditions, cannot readily be absorbed in the auction market within a
reasonable time and at a reasonable price.
Rules 241-248 are intended primarily to provide for Special
Offerings on an agency basis by members or member organizations on
behalf of their non-member customers. However, the Rules do not
prohibit a Special Offering by a member or member organization for his
or its own account.
.01 Preliminary Information Required.--The broker for the offeror
will be required to furnish the following information to the Exchange
prior to the announcement of the Special Offering on the tape:
(a) Name of the security and ticker symbol.
(b) Number of shares or bonds.
(c) Special Offering price.
(d) Special commission.
(e) Name of the offeror.
(f) Written assurance of the offeror, or of the broker upon advice
from the offeror, that the shares or bonds contained in the Offering
are all of the security which he then intends to offer within a
reasonable time, as required in Rule 243(b).
(g) Assurance of agreement of offeror to terms of Offering.
(h) Statement as to whether stabilizing operations will be engaged
in to facilitate Special Offering.
(i) Statement as to whether the offeror or his agent intends, for
the purpose of stabilizing, to sell shares or bonds in the Special
Offering in excess of that owned and included in the original offer as
permitted by Rule 243(a).
(j) Statement that the shares or bonds covered by the application
do or do not require registration under the Securities Act of 1933,
together with explanation thereof. This information should be given to
the Exchange as soon as possible in advance of the time it is proposed
to make the Special Offering. Announcement will not be made on the tape
of the Special Offering (and the Special Offering thus cannot become
effective) until the Exchange has the requisite information and has
approved it.
.02 Ownership.--The offeror in a Special Offering must be the bona
fide owner of the entire block of security offered, net of any short
account the offeror may have in such security. Sales for the purpose of
stabilizing as permitted by Rule 243(a) are excepted.
.03 ``Piecemeal.''--``All or None'' Offerings. ``Piecemeal'' or
successive offerings of the same security by the same offeror, and
offerings on an ``all-or-none'' basis, will not be permitted.
.04 Minimum Period of Offering.--Rule 243(c) provides in part that
unless otherwise specifically exempted by the Exchange, every Special
Offering shall remain open for a minimum period of 15 minutes. An
exemption from this minimum requirement is specifically given to any
offering which has been announced on the Exchange ticker tape at least
one hour before the offering becomes effective. An offering so exempted
from the minimum 15 minute requirement shall not be closed without the
approval of the Exchange.
.05 Other Offers by Offeror.--It should be noted that, under Rule
243(d), an offeror may not, while his Special Offering is open, offer
any shares or bonds of the same security in the regular auction market,
without prior permission of the Exchange.
.06 Orders after Close.--Orders accumulated after the close shall
be completed on the Floor of the Exchange at the opening of the next
market session.
.07 Handling of Special Offering Transactions.--Purchases against
Special Offerings must be completed on the Floor of the Exchange at the
post where the security is dealt in. The handling of the Floor end of
the business, on either the purchase or the offering side, may be
entrusted to a Floor broker or in the same manner as in the case of
regular commission orders. In reference to Rule 247 attention is
directed to the fact that in connection with a Special Offering, the
broker for the buyer is acting in an agency capacity and the agency
obligation to buy at the most advantageous cost to the customer shall
be observed.
.08 Stabilizing.--The right to sell an amount not to exceed 10 per
cent of the number of shares or bonds owned and originally offered in
the Special Offering, for the purpose of stabilizing and as part of a
Special Offering, is subject to the prior approval of the Exchange.
Stabilizing operations in connection with Special Offerings must be
discussed in advance with the staff of the Exchange.
.09 Stop Orders--Odd-lot Orders.--Transactions effected pursuant to
Special Offerings shall not elect stop-orders or open odd-lot orders
for execution in the regular market.
.10 Confirmations.--The information to be furnished on
confirmations in conformity with Rule 247(b) may be inserted on the
face of an appropriate form of confirmation in type no smaller than
other surrounding type or it may appear on the back of such
confirmation in the same type, provided the face of the confirmation
contains the following legend in the type illustrated as follows:
``IMPORTANT--SEE REVERSE SIDE''
The information may also be attached and made a part of an appropriate
form of confirmation in type no smaller than 8 point.
.11 Reports.--The applicant shall submit to the Exchange at the
close of each day a report of all transactions in the offered security
effected for the account of any person having an interest, as seller or
as agent, offering the block of the security on the seller's behalf, in
the Special Offering. Such reports shall cover the period beginning
with the date of commencement of the offering or the stabilizing,
whichever is earlier, and ending with the date on which the short
position has been covered or the Special Offering account has been
terminated, whichever is later.]
Rule 923 [Member Officers] Reserved
[A member of the Exchange shall be an officer of the member
organization that is a corporation. He shall own and continue to own
such an interest in the voting stock of said corporation as shall be
acceptable to the Committee; provided that the Committee may waive such
requirement of voting stock ownership, if the voting stock ownership is
otherwise satisfactory to the Committee.]
* * * * *
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, 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. 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, as amended, is to update
Phlx's rules to remove rules that, according to the Exchange, are no
longer applicable due to changes in the law or methods of business on
the Exchange.
[[Page 28896]]
Phlx Rule 129 Withdrawal of Orders
Phlx Rule 129 prohibits the withdrawal of an order from the
Exchange, at the request of another member, for the purpose of the
purchase or sale of the securities outside of the Exchange. The
Exchange speculates that this rule was possibly adopted in the 1930's
or 1940's to keep orders presented on the Phlx market subject to the
regulatory protections available to them on the Exchange. Since that
time, the over the counter markets have become more sophisticated.
Currently, it is understood that members, in exercising their agency
duty to obtain best execution for orders entrusted to them, may remove
orders from the Exchange and seek execution in other venues. Therefore,
the Exchange believes that deletion of Phlx Rule 129 should assist
members in fulfilling their best execution obligations.
Phlx Rules 241-248 Rules for Special Offerings
Phlx Rules 241-248 concern special offerings of securities on the
Exchange. In 1942, the Commission amended Rule 10b-2 under the Act \7\
to permit an exemption for special offerings under a plan filed with
the Commission by an exchange.\8\ Phlx's Plan, contained in Phlx Rules
241-248, permits special offerings, at a fixed price and for a fixed
period of time, on the Exchange where the quantity of stock involved
cannot be absorbed in the regular auction market within a reasonable
time and at a reasonable price. Phlx Rules 241-248 permit a person
making a special offering to pay a special commission to a broker for a
purchasing customer.
---------------------------------------------------------------------------
\7\ 17 CFR 240.10b-2.
\8\ Phlx filed its plan in 1943. See Securities Exchange Act
Release No. 3487 (September 23, 1943).
---------------------------------------------------------------------------
Generally, Phlx Rules 241-248 specify a minimum share size of 1,000
shares, with a value of $25,000. According to the Exchange, by today's
standards, 1,000 shares of stock with a value of $25,000 is not a
quantity of stock that cannot readily be absorbed in the regular
auction market. Phlx Rules 241-248 predate Phlx crossing Rule 126,
which has special cross provisions for Trust Shares of 25,000 shares or
greater and all securities of 5,000 shares or greater, and PACE, which
is described in Phlx Rule 229 and sets minimum automatic execution
sizes for securities on the system of 599 shares, noting that
specialists may set higher levels.
In proposing the rescission of Rule 10b-2, the Commission indicated
that it believed that the significant changes that have taken place in
the securities markets since Rule 10b-2's adoption, and the coverage of
other anti-fraud and anti-manipulation provisions of the federal
securities laws, such as Rules 10b-5 \9\ and 10b-6 \10\ under the Act,
made it appropriate to rescind Rule 10b-2. The Exchange now proposes to
delete Phlx Rules 241-248, the plan adopted in response to Rule 10b-2,
because it believes that these rules are obsolete as the Commission
rescinded Rule 10b-2 and the Exchange has not utilized Phlx Rules 241-
248 in the past twenty years.\11\
---------------------------------------------------------------------------
\9\ 17 CFR 240.10b-5.
\10\ 17 CFR 240.10b-6.
\11\ Similarly, the New York Stock Exchange (``NYSE'') rescinded
a rule (NYSE Rule 391) similar to Phlx Rules 241-248 in 1993 in
response to the Commission's rescission of Rule 10b-2. See
Securities Exchange Act Release No. 32822 (August 31, 1993), 58 FR
47484 (September 9, 1993) (SR-NYSE-93-20).
---------------------------------------------------------------------------
Phlx Rule 923 Member Officers
Phlx Rule 923 requires members associated with member corporations
to be officers and voting stockholders of those member corporations,
noting that the Exchange may waive the voting stock requirement of the
rule. This rule was adopted at least fifty years ago, when most member
corporations were small regional companies. The purpose of this rule at
that time may have been to provide an additional means of obtaining
security for the debts of the member corporation by requiring that the
members who were trading the securities also be officers and/or owners
of the corporation. Today, the Phlx has other rule-based means to
require adequate financial security for the debts of member
corporations and for ensuring that member corporations are generally
financially solvent. Phlx Rule 909 requires member organizations to
provide and maintain security for any claims owed to the Exchange and
other members and member organizations.\12\ Phlx Rule 924 complements
Phlx Rule 909 by making the member organization liable for the fees,
fines, dues, penalties and other amounts imposed by the Exchange on its
members. This provision applies regardless of the officer or ownership
status of the member. Finally, Rule 15c3-1 under the Act \13\ requires
certain minimum net capital requirements for broker-dealers, which
include Exchange member corporations. Therefore, Phlx does not believe
that the requirement in Phlx Rule 923 serves to protect the Exchange
and believes deletion gives a member corporation maximum flexibility to
choose whom in their company to employ as members of the Exchange.
---------------------------------------------------------------------------
\12\ Phlx notes that member corporations are a subset of member
organizations. Therefore, Phlx Rules 909 and 924 apply to member
corporations.
\13\ 17 CFR 240.15c3-1.
---------------------------------------------------------------------------
2. Statutory Basis
The Exchange believes that its proposal, as amended, is consistent
with section 6(b) of the Act,\14\ in general, and furthers the
objectives of section 6(b)(5) of the Act,\15\ in particular, in that it
is designed 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 to protect investors and the public interest by updating
the Exchange's rules.
---------------------------------------------------------------------------
\14\ 15 U.S.C. 78f(b).
\15\ 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, 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
Written comments on the proposed rule change were neither solicited
nor 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 Phlx consents, the Commission will:
(A) By order approve such proposed rule change, as amended, or
(B) Institute proceedings to determine whether the proposed rule
change, as amended, 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 (https://
www.sec.gov/rules/sro.shtml); or
[[Page 28897]]
Send an e-mail to rule-comments@sec.gov. Please include
File Number SR-Phlx-2005-61 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-2005-61. 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, as
amended, that are filed with the Commission, and all written
communications relating to the proposed rule change, as amended,
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 the 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-2005-61 and should be
submitted on or before June 8, 2006.
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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J. Lynn Taylor,
Assistant Secretary.
[FR Doc. E6-7566 Filed 5-17-06; 8:45 am]
BILLING CODE 8010-01-P
