Self-Regulatory Organizations; Philadelphia Stock Exchange, Inc.; Notice of Filing and Order Granting Accelerated Approval to a Proposed Rule Change Relating to NMS Linkage and Phlx's Covered Sale Fee, 59577-59579 [E6-16631]

Download as PDF Federal Register / Vol. 71, No. 195 / Tuesday, October 10, 2006 / Notices 19(b)(3)(A) of the Act and Rule 19b– 4(f)(6)(iii) thereunder.9 A proposed rule change filed under Rule 19b–4(f)(6) normally does not become operative for 30 days after the date of filing. However, Rule 19b– 4(f)(6)(iii) permits the Commission to waive the operative delay if such action is consistent with the protection of investors and the public interest. The Exchange has asked the Commission to waive the operative delay to permit the proposed rule change to become effective prior to the 30th day after filing. The Commission believes that waiving the 30-day operative delay is consistent with the protection of investors and the public interest. Waiving the operative delay will allow the Exchange to permit exercise of a Quarterly Options Series at any time until the close of business on its expiration date starting with the third quarter 2006 expirations on Friday, September 29, 2006, and consequently will benefit investors. Therefore the Commission has determined to waive the 30-day delay and allow the proposed rule change to become operative immediately.10 At any time within sixty (60) days of the filing of the proposed rule change, the Commission may summarily abrogate such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: 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–NYSEArca–2006–66. This file number should be included on the subject line if e-mail is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission’s Internet Web site (https://www.sec.gov/ rules/sro.shtml). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for inspection and copying in the Commission’s Public Reference Room. Copies of such filing also will be available for inspection and copying at the principal office of the Exchange. 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–NYSEArca–2006–66 and should be submitted on or before October 31, 2006. For the Commission, by the Division of Market Regulation, pursuant to delegated authority.11 Nancy M. Morris, Secretary. [FR Doc. E6–16625 Filed 10–6–06; 8:45 am] BILLING CODE 8011–01–P Electronic Comments jlentini on PROD1PC65 with NOTICES • Use the Commission’s Internet comment form (https://www.sec.gov/ rules/sro.shtml); or • Send an e-mail to rulecomments@sec.gov. Please include File Number SR–NYSEArca–2006–66 on the subject line. 9 Rule 19b–4(f)(6)(iii) requires the Exchange to give written notice to the Commission of its intent to file the proposed rule change five business days prior to filing. The Commission has determined to waive the five-day pre-filing requirement for this proposal. 10 For purposes only of waiving the operative delay of this proposal, the Commission notes that it has considered the proposed rule’s impact on efficiency, competition, and capital formation. 15 U.S.C. 78c(f). VerDate Aug<31>2005 16:42 Oct 06, 2006 Jkt 211001 SECURITIES AND EXCHANGE COMMISSION [Release No. 34–54555; File No. SR–Phlx– 2006–60] Self-Regulatory Organizations; Philadelphia Stock Exchange, Inc.; Notice of Filing and Order Granting Accelerated Approval to a Proposed Rule Change Relating to NMS Linkage and Phlx’s Covered Sale Fee October 2, 2006. Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 11 17 PO 00000 CFR 200.30–3(a)(12). Frm 00152 Fmt 4703 Sfmt 4703 59577 (‘‘Act’’) 1 and Rule 19b–4 thereunder,2 notice is hereby given that on September 25, 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 Phlx. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons and is approving the proposal on an accelerated basis. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change Phlx proposes to amend its Rule 607, its Summary of Equity Charges, and the Nasdaq-100 Index Tracking StockSM Fee Schedule 3 to allow the Exchange to charge the Covered Sale Fee to members and member organizations engaged in executing sales on another exchange or on a participant in the NASD’s Alternative Display Facility (‘‘ADF’’) that were routed over the NMS Linkage Plan or the Intermarket Trading System (‘‘ITS’’).4 Phlx also proposes to amend its Rule 607 to allow the Exchange to enter into arrangements with ADF participants to pass the Covered Sale Fee among the ADF participants where the Exchange has collected the Covered Sale Fee from its members and member organizations for sales executed on ADF participants through ITS, and when ADF participants have collected a fee from their members for sales executed on the Exchange through ITS. In addition, Phlx also proposes to amend Rule 607 to allow the Exchange to enter into arrangements with other exchanges to pass the Covered Sale Fee among the applicable exchanges where the 1 15 U.S.C. 78s(b)(1). CFR 240.19b–4. 3 The Nasdaq-100, Nasdaq-100 Index, Nasdaq, The Nasdaq Stock Market, Nasdaq-100 SharesSM, Nasdaq-100 TrustSM, Nasdaq-100 Index Tracking StockSM, and QQQSM are trademarks or service marks of The Nasdaq Stock Market, LLC (‘‘Nasdaq’’) and have been licensed for use for certain purposes by the Phlx pursuant to a License Agreement with Nasdaq. The Nasdaq-100 Index (‘‘Index’’) is determined, composed, and calculated by Nasdaq without regard to the Licensee, the Nasdaq-100 TrustSM, or the beneficial owners of Nasdaq-100 SharesSM. Nasdaq has complete control and sole discretion in determining, comprising, or calculating the Index or in modifying in any way its method for determining, comprising, or calculating the Index in the future. 4 The Commission published a notice relating to the NMS Linkage Plan. See Securities Exchange Act Release No. 54239 (July 28, 2006), 71 FR 44328 (August 4, 2006) (File No. 4–524). An NMS Linkage Plan, dated August 1, 2006, reflecting Phlx’s inclusion as a participant, was sent to the Commission on August 8, 2006. The participants requested that the NMS Linkage Plan commence on October 1, 2006. 2 17 E:\FR\FM\10OCN1.SGM 10OCN1 59578 Federal Register / Vol. 71, No. 195 / Tuesday, October 10, 2006 / Notices Exchange has collected the Covered Sale Fee from its members and member organizations for sales executed on another exchange through the NMS Linkage Plan, and when other exchanges have collected a similar fee from their members for sales executed on the Exchange through the NMS Linkage Plan. The text of the proposed rule change is available on the Exchange’s Web site (https://www.phlx.com), at the Exchange’s principal office, 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 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 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 jlentini on PROD1PC65 with NOTICES 1. Purpose The purpose of the proposed rule change is to allow Phlx to accommodate the billing and collection of its Covered Sale Fee 5 for executions that originated as orders sent to and received from the NMS Linkage Plan, which is proposed to commence on October 1, 2006. Currently, Phlx Rule 607 authorizes Phlx to charge its members and member organizations the Covered Sale Fee for sale executions on the Exchange. Phlx Rule 607 also allows Phlx to enter into arrangements to charge other exchange when their members send orders to Phlx through ITS that result in sales on Phlx. Phlx also charges its members and member organizations a Covered Sale Fee when their orders, sent over ITS, result in a sale at another exchange. Phlx then uses that fee to cover the charge received from that exchange. The NMS Linkage Plan is the successor 5 The Covered Sale Fee is currently imposed on members and member organizations engaged in executing sales on the Exchange or executing transactions, which were routed over the ITS, on another exchange during any computational period. The Covered Sale Fee is equal to (i) the section 31 fee rate multiplied by (ii) the member’s aggregate dollar amount of covered sales. See Securities Exchange Act Release No. 53088 (January 6, 2006), 71 FR 2286 (January 13, 2006) (SR–Phlx–2005–87). VerDate Aug<31>2005 16:42 Oct 06, 2006 Jkt 211001 linkage plan to ITS for the equity markets.6 The proposed changes to Phlx Rule 607 and the Phlx Fee Schedule are intended to carry the Covered Sale Fee charges and arrangements that currently exist for ITS into the NMS Linkage Plan and to ADF participants.7 2. Statutory Basis The Exchange believes that the proposed rule change is consistent with section 6(b) of the Act 8 in general, and furthers the objective of sections 6(b)(4) and 6(b)(5) of the Act 9 in particular, in that it is an equitable allocation of reasonable fees among Exchange members and issuers and other persons using its facilities, designed 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, by creating a mechanism for charging the Covered Sale Fee for transactions over the NMS Linkage Plan. B. Self-Regulatory Organization’s Statement on Burden on Competition The Exchange does not believe that the proposed rule change 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. III. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: 6 The NASD has not joined the NMS Linkage Plan and will maintain linkage for its ADF participants through ITS. 7 Phlx, along with the other exchanges, intends to file a separate proposed rule change that will allow it to charge and be charged fees, including Phlx’s Covered Sale Fee, for transactions that result from orders sent over the NMS Linkage Plan. See e.g., Securities Exchange Act Release No. 54480 (September 21, 2006), 71 FR 57596 (September 29, 2006) (SR–NYSE–2006–72). In addition, Phlx intends to make arrangements with ADF participants to charge and be charged fees, including Phlx’s Covered Sale Fee, for transactions that result from orders sent over ITS because the NASD will not be joining the NMS Linkage Plan and will not be collecting or paying these fees on behalf of the ADF participants. 8 15 U.S.C. 78f(b). 9 15 U.S.C. 78f(b)(4) and (b)(5). PO 00000 Frm 00153 Fmt 4703 Sfmt 4703 Electronic Comments • Use the Commission’s Internet comment form (https://www.sec.gov/ rules/sro.shtml); or • Send an e-mail to rulecomments@sec.gov. Please include File Number SR–Phlx–2006–60 on the subject line. Paper Comments • Send paper comments in triplicate to Nancy M. Morris, Secretary, Securities and Exchange Commission, Station Place, 100 F Street, NE., Washington, DC 20549–1090. All submissions should refer to File Number SR–Phlx–2006–60. This file number should be included on the subject line if e-mail is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission’s Internet Web site (https://www.sec.gov/ rules/sro.shtml). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for inspection and copying in the Commission’s Public Reference Room. Copies of such filing also will be available for inspection and copying at the principal office of the Exchange. 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–2006–60 and should be submitted on or before October 31, 2006. IV. Commission’s Findings and Order Granting Accelerated Approval of a Proposed Rule Change and Amendment No.1 Thereto The Commission finds that the proposed rule change is consistent with the Act and the rules and regulations thereunder applicable to a national securities exchange.10 In particular, the Commission believes that the proposal is consistent with sections 6(b)(4) of the Act, which requires that the rules of an 10 In approving this proposal, as amended, the Commission has considered its impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). E:\FR\FM\10OCN1.SGM 10OCN1 jlentini on PROD1PC65 with NOTICES Federal Register / Vol. 71, No. 195 / Tuesday, October 10, 2006 / Notices exchange provide for the equitable allocation of reasonable dues, fees, and other charges among Exchange members and issuers and other persons using its facilities. National securities exchanges obtain funds to pay their section 31 fees to the Commission by charging fees to brokerdealers who generate the covered sales on which section 31 fees are based. An exchange can obtain most of these funds by imposing a fee on one of its members whenever the member is on the sell side of a transaction. However, when the exchange accepts an ITS commitment to buy, the ultimate seller is a party on another market. The exchange lacks the ability to pass a fee to that seller directly, because the seller may not be a member of the exchange. The Commission previously approved an arrangement whereby Phlx collects fees from broker-dealers that place sell orders routed away over ITS,11 then charges fees to or accepts fees from each other ITS participant exchange, depending on whether it is a net sender or net receiver of executed ITS sell orders with respect to that other exchange. The Commission believes that the current proposal, to continue this practice under the NMS Linkage Plan, is a reasonable means for Phlx to obtain funds to pay its section 31 fees on covered sales resulting from NMS Linkage Plan trades and is consistent with the Act. Under section 19(b)(2) of the Act,12 the Commission may not approve any proposed rule change prior to the thirtieth day after the date of publication of the notice of filing thereof, unless the Commission finds good cause for so doing. Granting accelerated approval will permit the Exchange to charge the Covered Sale Fee to members and member organizations engaged in executing sale transactions on another exchange through the NMS Linkage Plan at the start of that plan’s operation. Moreover, approving this proposal will enable Phlx to charge fees to or accept fees from an ADF participant that is not a member of the Exchange, depending on the net amount of sales between them conducted through ITS. The Commission expects that a non-member ADF participant will not be charged a fee unless it has entered into an agreement with the Exchange subjecting it to such an arrangement. Therefore, the Commission finds good cause for approving the proposed rule change 11 See Securities Exchange Act Release No. 52745 (November 7, 2005), 70 FR 69182 (November 14, 2005). 12 15 U.S.C. 78s(b)(2). VerDate Aug<31>2005 16:42 Oct 06, 2006 Jkt 211001 prior to the thirtieth day after publishing notice of filing thereof in the Federal Register. The Commission believes that such action is consistent with the protection of investors and the public interest. V. Conclusion It is therefore ordered, pursuant to section 19(b)(2) of the Act,13 that the proposed rule change (SR–Phlx–2006– 60) is hereby approved on an accelerated basis. For the Commission, by the Division of Market Regulation, pursuant to delegated authority.14 Nancy M. Morris, Secretary. [FR Doc. E6–16631 Filed 10–6–06; 8:45 am] BILLING CODE 8010–01–P SMALL BUSINESS ADMINISTRATION [Disaster Declaration # 10626 and # 10627] New Mexico Disaster # NM–00002 U.S. Small Business Administration. ACTION: Notice. AGENCY: SUMMARY: This is a notice of an Administrative declaration of a disaster for the State of New Mexico dated 09/29/2006. Incident: Otero County Flash Flood. Incident Period: 06/22/2006. Effective Date: 09/29/2006. Physical Loan Application Deadline Date: 11/28/2006. Economic Injury (EIDL) Loan Application Deadline Date: 06/29/2007. ADDRESSES: Submit completed loan applications to: U.S. Small Business Administration, 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. SUPPLEMENTARY INFORMATION: Notice is hereby given that as a result of the Administrator’s disaster declaration, 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: Otero Contiguous Counties: New Mexico: Chaves, Dona Ana, Eddy, Lincoln, Sierra 13 Id. 14 17 PO 00000 CFR 200.30–3(a)(12). Frm 00154 Fmt 4703 Sfmt 4703 59579 Texas: Culberson, El Paso, Hudspeth The Interest Rates are: Percent Homeowners With Credit Available Elsewhere ......................... Homeowners Without Credit Available Elsewhere .................. Businesses With Credit Available Elsewhere ................................. Businesses & Small Agricultural Cooperatives Without Credit Available Elsewhere .................. Other (Including Non-Profit Organizations) With Credit Available Elsewhere ................................. Businesses and Non-Profit Organizations Without Credit Available Elsewhere ......................... 5.875 2.937 7.763 4.000 5.000 4.000 The number assigned to this disaster for physical damage is 10626 6 and for economic injury is 10627 0. The States which received an EIDL Declaration # are New Mexico and Texas. (Catalog of Federal Domestic Assistance Numbers 59002 and 59008). Dated: September 29, 2006. Steven C. Preston, Administrator. [FR Doc. E6–16627 Filed 10–6–06; 8:45 am] BILLING CODE 8025–01–P SMALL BUSINESS ADMINISTRATION [Disaster Declaration #10519 and #10520] New York Disaster Number NY–00022 U.S. Small Business Administration. ACTION: Amendment 3. AGENCY: SUMMARY: This is an amendment of the Presidential declaration of a major disaster for the State of New York (FEMA–1650–DR), dated 07/03/2006. Incident: Severe Storms and Flooding. Incident Period: 06/26/2006 through 07/10/2006. Effective Date: 10/02/2006. Physical Loan Application Deadline Date: 10/16/2006. EIDL Loan Application Deadline Date: 04/03/2007. 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. SUPPLEMENTARY INFORMATION: The notice of the President’s major disaster E:\FR\FM\10OCN1.SGM 10OCN1

Agencies

[Federal Register Volume 71, Number 195 (Tuesday, October 10, 2006)]
[Notices]
[Pages 59577-59579]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E6-16631]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-54555; File No. SR-Phlx-2006-60]


Self-Regulatory Organizations; Philadelphia Stock Exchange, Inc.; 
Notice of Filing and Order Granting Accelerated Approval to a Proposed 
Rule Change Relating to NMS Linkage and Phlx's Covered Sale Fee

October 2, 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 September 25, 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 Phlx. The Commission is 
publishing this notice to solicit comments on the proposed rule change 
from interested persons and is approving the proposal on an accelerated 
basis.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    Phlx proposes to amend its Rule 607, its Summary of Equity Charges, 
and the Nasdaq-100 Index Tracking StockSM Fee Schedule \3\ 
to allow the Exchange to charge the Covered Sale Fee to members and 
member organizations engaged in executing sales on another exchange or 
on a participant in the NASD's Alternative Display Facility (``ADF'') 
that were routed over the NMS Linkage Plan or the Intermarket Trading 
System (``ITS'').\4\ Phlx also proposes to amend its Rule 607 to allow 
the Exchange to enter into arrangements with ADF participants to pass 
the Covered Sale Fee among the ADF participants where the Exchange has 
collected the Covered Sale Fee from its members and member 
organizations for sales executed on ADF participants through ITS, and 
when ADF participants have collected a fee from their members for sales 
executed on the Exchange through ITS. In addition, Phlx also proposes 
to amend Rule 607 to allow the Exchange to enter into arrangements with 
other exchanges to pass the Covered Sale Fee among the applicable 
exchanges where the

[[Page 59578]]

Exchange has collected the Covered Sale Fee from its members and member 
organizations for sales executed on another exchange through the NMS 
Linkage Plan, and when other exchanges have collected a similar fee 
from their members for sales executed on the Exchange through the NMS 
Linkage Plan.
---------------------------------------------------------------------------

    \3\ The Nasdaq-100[supreg], Nasdaq-100 Index[supreg], 
Nasdaq[supreg], The Nasdaq Stock Market[supreg], Nasdaq-100 
SharesSM, Nasdaq-100 TrustSM, Nasdaq-100 Index 
Tracking StockSM, and QQQSM are trademarks or 
service marks of The Nasdaq Stock Market, LLC (``Nasdaq'') and have 
been licensed for use for certain purposes by the Phlx pursuant to a 
License Agreement with Nasdaq. The Nasdaq-100 Index[supreg] 
(``Index'') is determined, composed, and calculated by Nasdaq 
without regard to the Licensee, the Nasdaq-100 TrustSM, 
or the beneficial owners of Nasdaq-100 SharesSM. Nasdaq 
has complete control and sole discretion in determining, comprising, 
or calculating the Index or in modifying in any way its method for 
determining, comprising, or calculating the Index in the future.
    \4\ The Commission published a notice relating to the NMS 
Linkage Plan. See Securities Exchange Act Release No. 54239 (July 
28, 2006), 71 FR 44328 (August 4, 2006) (File No. 4-524). An NMS 
Linkage Plan, dated August 1, 2006, reflecting Phlx's inclusion as a 
participant, was sent to the Commission on August 8, 2006. The 
participants requested that the NMS Linkage Plan commence on October 
1, 2006.
---------------------------------------------------------------------------

    The text of the proposed rule change is available on the Exchange's 
Web site (https://www.phlx.com), at the Exchange's principal office, 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 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 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
    The purpose of the proposed rule change is to allow Phlx to 
accommodate the billing and collection of its Covered Sale Fee \5\ for 
executions that originated as orders sent to and received from the NMS 
Linkage Plan, which is proposed to commence on October 1, 2006. 
Currently, Phlx Rule 607 authorizes Phlx to charge its members and 
member organizations the Covered Sale Fee for sale executions on the 
Exchange. Phlx Rule 607 also allows Phlx to enter into arrangements to 
charge other exchange when their members send orders to Phlx through 
ITS that result in sales on Phlx. Phlx also charges its members and 
member organizations a Covered Sale Fee when their orders, sent over 
ITS, result in a sale at another exchange. Phlx then uses that fee to 
cover the charge received from that exchange. The NMS Linkage Plan is 
the successor linkage plan to ITS for the equity markets.\6\ The 
proposed changes to Phlx Rule 607 and the Phlx Fee Schedule are 
intended to carry the Covered Sale Fee charges and arrangements that 
currently exist for ITS into the NMS Linkage Plan and to ADF 
participants.\7\
---------------------------------------------------------------------------

    \5\ The Covered Sale Fee is currently imposed on members and 
member organizations engaged in executing sales on the Exchange or 
executing transactions, which were routed over the ITS, on another 
exchange during any computational period. The Covered Sale Fee is 
equal to (i) the section 31 fee rate multiplied by (ii) the member's 
aggregate dollar amount of covered sales. See Securities Exchange 
Act Release No. 53088 (January 6, 2006), 71 FR 2286 (January 13, 
2006) (SR-Phlx-2005-87).
    \6\ The NASD has not joined the NMS Linkage Plan and will 
maintain linkage for its ADF participants through ITS.
    \7\ Phlx, along with the other exchanges, intends to file a 
separate proposed rule change that will allow it to charge and be 
charged fees, including Phlx's Covered Sale Fee, for transactions 
that result from orders sent over the NMS Linkage Plan. See e.g., 
Securities Exchange Act Release No. 54480 (September 21, 2006), 71 
FR 57596 (September 29, 2006) (SR-NYSE-2006-72). In addition, Phlx 
intends to make arrangements with ADF participants to charge and be 
charged fees, including Phlx's Covered Sale Fee, for transactions 
that result from orders sent over ITS because the NASD will not be 
joining the NMS Linkage Plan and will not be collecting or paying 
these fees on behalf of the ADF participants.
---------------------------------------------------------------------------

2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with section 6(b) of the Act \8\ in general, and furthers the objective 
of sections 6(b)(4) and 6(b)(5) of the Act \9\ in particular, in that 
it is an equitable allocation of reasonable fees among Exchange members 
and issuers and other persons using its facilities, designed 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, 
by creating a mechanism for charging the Covered Sale Fee for 
transactions over the NMS Linkage Plan.
---------------------------------------------------------------------------

    \8\ 15 U.S.C. 78f(b).
    \9\ 15 U.S.C. 78f(b)(4) and (b)(5).
---------------------------------------------------------------------------

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

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition that is not necessary or appropriate 
in furtherance of the purposes of the Act.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants or Others

    No written comments were solicited or received with respect to the 
proposed rule change.

III. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's Internet comment form (https://
www.sec.gov/rules/sro.shtml); or
     Send an e-mail to rule-comments@sec.gov. Please include 
File Number SR-Phlx-2006-60 on the subject line.

Paper Comments

     Send paper comments in triplicate to Nancy M. Morris, 
Secretary, Securities and Exchange Commission, Station Place, 100 F 
Street, NE., Washington, DC 20549-1090.

All submissions should refer to File Number SR-Phlx-2006-60. This file 
number should be included on the subject line if e-mail is used. To 
help the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's Internet Web site (https://www.sec.gov/rules/
sro.shtml). Copies of the submission, all subsequent amendments, all 
written statements with respect to the proposed rule change that are 
filed with the Commission, and all written communications relating to 
the proposed rule change between the Commission and any person, other 
than those that may be withheld from the public in accordance with the 
provisions of 5 U.S.C. 552, will be available for inspection and 
copying in the Commission's Public Reference Room. Copies of such 
filing also will be available for inspection and copying at the 
principal office of the Exchange. 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-2006-60 and should be submitted on or before 
October 31, 2006.

IV. Commission's Findings and Order Granting Accelerated Approval of a 
Proposed Rule Change and Amendment No.1 Thereto

    The Commission finds that the proposed rule change is consistent 
with the Act and the rules and regulations thereunder applicable to a 
national securities exchange.\10\ In particular, the Commission 
believes that the proposal is consistent with sections 6(b)(4) of the 
Act, which requires that the rules of an

[[Page 59579]]

exchange provide for the equitable allocation of reasonable dues, fees, 
and other charges among Exchange members and issuers and other persons 
using its facilities.
---------------------------------------------------------------------------

    \10\ In approving this proposal, as amended, the Commission has 
considered its impact on efficiency, competition, and capital 
formation. See 15 U.S.C. 78c(f).
---------------------------------------------------------------------------

    National securities exchanges obtain funds to pay their section 31 
fees to the Commission by charging fees to broker-dealers who generate 
the covered sales on which section 31 fees are based. An exchange can 
obtain most of these funds by imposing a fee on one of its members 
whenever the member is on the sell side of a transaction. However, when 
the exchange accepts an ITS commitment to buy, the ultimate seller is a 
party on another market. The exchange lacks the ability to pass a fee 
to that seller directly, because the seller may not be a member of the 
exchange. The Commission previously approved an arrangement whereby 
Phlx collects fees from broker-dealers that place sell orders routed 
away over ITS,\11\ then charges fees to or accepts fees from each other 
ITS participant exchange, depending on whether it is a net sender or 
net receiver of executed ITS sell orders with respect to that other 
exchange. The Commission believes that the current proposal, to 
continue this practice under the NMS Linkage Plan, is a reasonable 
means for Phlx to obtain funds to pay its section 31 fees on covered 
sales resulting from NMS Linkage Plan trades and is consistent with the 
Act.
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    \11\ See Securities Exchange Act Release No. 52745 (November 7, 
2005), 70 FR 69182 (November 14, 2005).
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    Under section 19(b)(2) of the Act,\12\ the Commission may not 
approve any proposed rule change prior to the thirtieth day after the 
date of publication of the notice of filing thereof, unless the 
Commission finds good cause for so doing. Granting accelerated approval 
will permit the Exchange to charge the Covered Sale Fee to members and 
member organizations engaged in executing sale transactions on another 
exchange through the NMS Linkage Plan at the start of that plan's 
operation. Moreover, approving this proposal will enable Phlx to charge 
fees to or accept fees from an ADF participant that is not a member of 
the Exchange, depending on the net amount of sales between them 
conducted through ITS. The Commission expects that a non-member ADF 
participant will not be charged a fee unless it has entered into an 
agreement with the Exchange subjecting it to such an arrangement. 
Therefore, the Commission finds good cause for approving the proposed 
rule change prior to the thirtieth day after publishing notice of 
filing thereof in the Federal Register. The Commission believes that 
such action is consistent with the protection of investors and the 
public interest.
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    \12\ 15 U.S.C. 78s(b)(2).
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V. Conclusion

    It is therefore ordered, pursuant to section 19(b)(2) of the 
Act,\13\ that the proposed rule change (SR-Phlx-2006-60) is hereby 
approved on an accelerated basis.
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    \13\ Id.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\14\
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    \14\ 17 CFR 200.30-3(a)(12).
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Nancy M. Morris,
Secretary.
[FR Doc. E6-16631 Filed 10-6-06; 8:45 am]
BILLING CODE 8010-01-P