Self-Regulatory Organizations; Philadelphia Stock Exchange, Inc.; Notice of Filing of Proposed Rule Change Relating to a Direct Registration System, 71013-71015 [E6-20726]
Download as PDF
Federal Register / Vol. 71, No. 235 / Thursday, December 7, 2006 / Notices
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
The Exchange has neither solicited
nor received written comments on the
proposed rule change.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Within 35 days of the date of
publication of this notice in the Federal
Register or within such longer period (i)
as the Commission may designate up to
90 days of such date if it finds such
longer period to be appropriate and
publishes its reasons for so finding or
(ii) as to which the self-regulatory
organization consents, the Commission
will:
a. By order approve the proposed rule
change, or
b. Institute proceedings to determine
whether the proposed rule change
should be disapproved.
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 NYSE. 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–NYSE–2006–97 and should
be submitted on or before December 28,
2006.
For the Commission, by the Division of
Market Regulation, pursuant to delegated
authority.4
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E6–20733 Filed 12–6–06; 8:45 am]
BILLING CODE 8011–01–P
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
Electronic Comments
sroberts on PROD1PC70 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–NYSE–2006–97 on the
subject line.
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–54834; File No. SR–Phlx–
2006–69]
Self-Regulatory Organizations;
Philadelphia Stock Exchange, Inc.;
Notice of Filing of Proposed Rule
Change Relating to a Direct
Registration System
November 29, 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 October
31, 2006, the Philadelphia Stock
Paper Comments
Exchange, Inc. (‘‘Phlx’’) filed with the
• Send paper comments in triplicate
Securities and Exchange Commission
to Nancy M. Morris, Secretary,
(‘‘Commission’’) and on November 14,
Securities and Exchange Commission,
2006, amended the proposed rule
100 F Street, NE., Washington, DC
change described in Items I, II, and III
20549–1090.
below, which items have been prepared
All submissions should refer to File
primarily by Phlx. The Commission is
Number SR–NYSE–2006–97. This file
publishing this notice to solicit
number should be included on the
comments on the proposed rule change
subject line if e-mail is used. To help the from interested parties.
Commission process and review your
I. Self-Regulatory Organization’s
comments more efficiently, please use
only one method. The Commission will Statement of the Terms of Substance of
post all comments on the Commission’s the Proposed Rule Change
Internet Web site (https://www.sec.gov/
Phlx proposes to adopt new Rule 868
rules/sro.shtml). Copies of the
to require certain listed securities to be
submission, all subsequent
eligible for a Direct Registration System
amendments, all written statements
(‘‘DRS’’) operated by a securities
with respect to the proposed rule
depository registered as a clearing
change that are filed with the
Commission, and all written
4 17 CFR 200.30–3(a)(12).
1 15 U.S.C. 78s(b)(1).
communications relating to the
2 17 CFR 240.19b–4.
proposed rule change between the
VerDate Aug<31>2005
17:29 Dec 06, 2006
Jkt 211001
PO 00000
Frm 00068
Fmt 4703
Sfmt 4703
71013
agency under Section 17A of the Act
starting on January 1, 2007.
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 these statements.3
(A) Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
(1) Purpose
The purpose of proposed new Phlx
Rule 868 4 is to reduce the cots, risks,
and delays associated with the physical
delivery of securities certificates by
requiring that certain securities be
eligible for DRS.5 Proposed Rule 868
would require that on or after January 1,
2007, all securities initially listing on
Phlx must be eligible for DRS operated
by a securities depository that is a
clearing agency registered under Section
17A of the Act (‘‘securities depository’’).
This provision would not extend to (i)
securities of companies which already
have securities listed on Phlx; (ii)
securities of companies which
immediately prior to such listing had
securities listed on another national
securities exchange; (iii) derivative
products,6 or (iv) securities (other than
stocks) which are book-entry-only.
3 The Commission has modified portions of the
text of the summaries prepared by the Phlx.
4 The exact text of the Phlx proposed rule change
is set forth in its filing, which can be found at
https://www.phlx.com/exchange/rulefilngs/2006/S2006-69.pdf.
5 The Commission has approved similar rule
changes filed by the New York Stock Exchange LLC,
NASDAQ Stock Market LLC, the American Stock
Exchange LLC, and the NYSE Arca, Inc. that require
certain listed companies securities become DRS
eligible. Securities Exchange Act Release Nos.
54289 (August 8, 2006), 71 FR 47278 (August 16,
2006) [File No. SR–NYSE–2006–29]; 54288 (August
8, 2006), 71 FR 47276 (August 16, 2006) [File No.
SR–NASDAQ–2006–008]; 54290 (August 8, 2006),
71 FR 47262 (August 16, 2006) [File No. SR–Amex–
2006–40]; 54410 (September 7, 2006), 71 FR 54316
(September 14, 2006) [File No. SR–NYSE Arca–
2006–31].
6 For purposes of proposed Rule 868, the term
‘‘derivative products’’ means standardized options
issued by The Options Clearing Corporation
(‘‘OCC’’) or other securities that are issued by OCC
or another limited purpose entity or trust and that
are based solely on the performance of an index or
E:\FR\FM\07DEN1.SGM
Continued
07DEN1
71014
Federal Register / Vol. 71, No. 235 / Thursday, December 7, 2006 / Notices
sroberts on PROD1PC70 with NOTICES
Proposed Rule 868 would also require
that on or after January 1, 2008, all
securities listed on the Phlx must be
eligible for DRS operated by a securities
depository. This provision would not
extend to derivative products or
securities (other than stocks) that are
book-entry-only.
Securities certificates are used by
issuers as a means to evidence and
transfer ownership. Because securities
certificates require manual processing,
significant delays, expenses, and risks
associated with lost, stolen, and forged
certificates are attendant in processing
securities transactions involving
securities certificates. In Section 17A of
the Act, Congress recognized these
concerns by calling for the
establishment of a national system for
the prompt and accurate clearance and
settlement of securities transactions,
including the transfer of record
ownership and the safeguarding of
securities.7
DRS allows an investor to establish,
either through an issuer’s transfer agent
or through the investor’s broker-dealer,
a book-entry position in a security and
to electronically transfer that position
between the transfer agent and the
investor’s broker-dealer of the investor’s
choice through a facility currently
administered by The Depository Trust
Company (‘‘DTC’’).8 By using DRS,
investors receive a DRS statement as
evidence of share ownership instead of
a securities certificate. Investors retain
all the rights associated with securities
certificates, including such rights as
control of ownership and voting rights,
without having the responsibility of
holding and safeguarding securities
certificates. In addition, in corporate
actions such as reverse stock splits and
mergers, cancellation of old securities
positions and issuance of new securities
positions is handled electronically with
no securities certificates to be returned
to or received from transfer agents.
Issuers and their transfer agents may
incur initial costs when making an issue
DRS-eligible as required by this
proposed rule change. In order to make
a security DRS-eligible, the issuer must
portfolio of other publicly traded securities. The
term ‘‘derivative product’’ does not include
warrants of any type or closed-end management
investment companies.
7 15 U.S.C. 78q–1
8 Currently, the only registered clearing agency
operating a DRS is DTC. For a description of DRS
and the DRS facilities administered by DTC, see
Securities Exchange Act Release Nos. 37931
(November 7, 1996), 61 FR 58600 (November 15,
1996), [File No. SR–DTC–96–15] (order granting
approval to establish DRS) and 41862 (September
10, 1999), 64 FR 51162 (September 21, 1999), [File
No. SR–DTC–99–16] (order approving
implementation of the Profile Modification System).
VerDate Aug<31>2005
17:29 Dec 06, 2006
Jkt 211001
have a transfer agent which is a DRS
Limited Participant at DTC.9 Transfer
agents will need to meet certain DTC
criteria, such as insurance and
connectivity requirements, in order to
become a DRS Limited Participant.
Further, issuers may need to amend
their corporate documents, such as their
by-laws or charter, in order to permit
the issuance of book-entry shares. Phlx
believes that the proposed deadlines for
DRS eligibility coupled with instructive
communication by Phlx to issuers, will
allow issuers sufficient time to make the
necessary changes to comply with the
proposed rule change.
While the proposed rule change
should significantly reduce the number
of transactions in securities for which
settlement is effected by the physical
delivery of securities certificates, the
propose rule change will not eliminate
the ability of investors to obtain
securities certificates provided the
issuer chooses to issue or continue to
issue certificates.
(C) Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
(2) Statutory Basis
IV. Solicitation of Comments
Phlx believes the proposed rule
change is consistent with the
requirements of the Act and the rules
and regulations thereunder that are
applicable to a national securities
exchange. In particular, the proposed
rule change is consistent with Section
6(b)(5) of the Act because it would
promote just and equitable principles of
trade, foster cooperation and
coordination with persons engaged in
regulating, clearing, settling, processing
information with respect to, and
facilitating transactions in securities, to
remove impediments to 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 confirming that
certain Phlx’s issuers would be required
to make their securities eligible for a
DRS operated by a securities
depository.10
(B) Self-Regulatory Organization’s
Statement on Burden on Competition
Phlx 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.
9 DTC’s rules require that a transfer agent
(including an issuer acting as its own transfer agent)
acting for a company issuing securities in DRS must
be a DRS Limited Participant. Securities Exchange
Act Release No. 37931 (November 7, 1996), 61 FR
58600 (November 15, 1996), [File No. SR–DTC–96–
15].
10 15 U.S.C. 78f(b)(5).
PO 00000
Frm 00069
Fmt 4703
Sfmt 4703
Phlx has neither solicited nor
received written comments on the
proposed rule change.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Within thirty-five 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 ninety days of such date if it finds
such longer period to be appropriate
and publishes its reasons for so finding
or (ii) as to which the self-regulatory
organization consents, the Commission
will:
(A) By order approve such proposed
rule change or
(B) Institute proceedings to determine
whether the proposed rule change
should be disapproved.
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
Electronic Comments
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/sro.shtml) or
• Send an e-mail to rulecomments@sec.gov. Please include File
Number SR–Phlx–2006–69 in the
subject line.
Paper Comments
• Send paper comments in triplicate
to Nancy M. Morris, Secretary,
Securities and Exchange Commission,
100 F Street, NE., Washington, DC
20549–1090.
All submissions should refer to File
Number SR–Phlx–2006–69. 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
E:\FR\FM\07DEN1.SGM
07DEN1
Federal Register / Vol. 71, No. 235 / Thursday, December 7, 2006 / Notices
Commission and any person, other than
those that may be withheld from the
public in accordance with the
provisions of 5 U.S.C. 552, will be
available for inspection and copying in
the Commission’s Public Reference
Section, 100 F Street, NE., Washington,
DC 20549. Copies of such filings also
will be available for inspection and
copying at the principal office of Phlx
and on Phlx’s Web site, https://
www.phlx.com. 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–
2006–69 and should be submitted on or
before December 28, 2006.
For the Commission by the Division of
Market Regulation, pursuant to delegated
authority.11
Nancy M. Morris,
Secretary.
[FR Doc. E6–20726 Filed 12–6–06; 8:45 am]
BILLING CODE 8011–01–P
SMALL BUSINESS ADMINISTRATION
[Disaster Declaration # 10741 and # 10742]
Alabama Disaster # AL–00006
sroberts on PROD1PC70 with NOTICES
AGENCY: U.S. Small Business
Administration.
ACTION: Notice.
SUMMARY: This is a notice of an
Administrative declaration of a disaster
for the State of Alabama dated 11/29/
2006.
Incident: Severe Storms and
Tornadoes.
Incident Period: 11/16/2006.
Effective Date: 11/29/2006.
Physical Loan Application Deadline
Date: 01/29/2007.
Economic Injury (Eidl) Loan
Application Deadline Date: 08/29/2007.
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
11 17
CFR 200.30–3(a)(12).
VerDate Aug<31>2005
17:29 Dec 06, 2006
Jkt 211001
71015
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:
Montgomery.
Contiguous Counties: Alabama
Autauga, Bullock, Crenshaw, Elmore,
Lowndes, Macon, Pike.
The Interest Rates are:
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
Percent
the disaster:
Homeowners With Credit AvailPrimary County: Essex.
able Elsewhere .........................
6.000
Contiguous Counties:
Homeowners
Without
Credit
Massachusetts: Middlesex, Suffolk.
Available Elsewhere ..................
3.000
New Hampshire: Hillsborough,
Businesses With Credit Available
Elsewhere .................................
8.000 Rockingham.
The Interest Rates are:
Businesses & Small Agricultural
Homeowners With Credit Available
Cooperatives Without Credit
Available Elsewhere ..................
4.000 Elsewhere: 6.000.
Other (Including Non-Profit OrgaHomeowners Without Credit
nizations) With Credit Available
Available Elsewhere: 3.000.
Elsewhere .................................
5.250
Businesses With Credit Available
Businesses And Non-Profit OrgaElsewhere: 8.000.
nizations Without Credit AvailBusinesses and Small Agricultural
able Elsewhere .........................
4.000
Cooperatives Without Credit Available
Elsewhere: 4.000.
The number assigned to this disaster
Other (Including Non-Profit
for physical damage is 10741 C and for
Organizations) With Credit Available
economic injury is 10742 0.
Elsewhere: 5.250.
The State which received an EIDL
Businesses And Non-Profit
Declaration # is Alabama.
Organizations Without Credit Available
(Catalog of Federal Domestic Assistance
Elsewhere: 4.000.
Numbers 59002 and 59008)
The number assigned to this disaster
Dated: November 29, 2006.
for physical damage is 10743 4 and for
Steven C. Preston,
economic injury is 10744 0.
The Commonwealth and State which
Administrator.
received an EIDL Declaration # are
[FR Doc. E6–20758 Filed 12–6–06; 8:45 am]
Massachusetts, New Hampshire.
BILLING CODE 8025–01–P
SMALL BUSINESS ADMINISTRATION
[Disaster Declaration #10743 and #10744]
Massachusetts Disaster #MA–00008
AGENCY: U.S. Small Business
Administration.
ACTION: Notice.
Frm 00070
Fmt 4703
Sfmt 4703
Dated: November 29, 2006.
Steven C. Preston,
Administrator.
[FR Doc. E6–20759 Filed 12–6–06; 8:45 am]
BILLING CODE 8025–01–P
SUMMARY: This is a notice of an
Administrative declaration of a disaster
for the Commonwealth of Massachusetts
dated 11/29/2006.
Incident: Explosion and Fires.
Incident Period: 11/22/2006.
Effective Date: 11/29/2006.
Physical Loan Application Deadline
Date: 01/29/2007.
Economic Injury (Eidl) Loan
Application Deadline Date: 08/29/2007.
ADDRESSES: Submit completed loan
applications to: U.S. Small Business
Administration, Processing and
Disbursement Center, 14925 Kingsport
Road, Fort Worth, TX 76155.
PO 00000
(Catalog of Federal Domestic Assistance
Numbers 59002 and 59008)
DEPARTMENT OF STATE
[Public Notice 5625]
Notice of Proposal to Extend the
Memorandum of Understanding
Between the Government of the United
States of America and the Government
of the Republic of Cyprus Concerning
the Imposition of Import Restrictions
on Pre-Classical and Classical
Archaeological Objects and Byzantine
Period Ecclesiastical and Ritual
Ethnological Materials
The Government of the Republic of
Cyprus has informed the Government of
the United States of its interest in an
E:\FR\FM\07DEN1.SGM
07DEN1
Agencies
[Federal Register Volume 71, Number 235 (Thursday, December 7, 2006)]
[Notices]
[Pages 71013-71015]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E6-20726]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-54834; File No. SR-Phlx-2006-69]
Self-Regulatory Organizations; Philadelphia Stock Exchange, Inc.;
Notice of Filing of Proposed Rule Change Relating to a Direct
Registration System
November 29, 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 October 31, 2006, the Philadelphia Stock Exchange, Inc. (``Phlx'')
filed with the Securities and Exchange Commission (``Commission'') and
on November 14, 2006, amended the proposed rule change described in
Items I, II, and III below, which items have been prepared primarily by
Phlx. The Commission is publishing this notice to solicit comments on
the proposed rule change from interested parties.
---------------------------------------------------------------------------
\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 adopt new Rule 868 to require certain listed
securities to be eligible for a Direct Registration System (``DRS'')
operated by a securities depository registered as a clearing agency
under Section 17A of the Act starting on January 1, 2007.
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 these
statements.\3\
---------------------------------------------------------------------------
\3\ The Commission has modified portions of the text of the
summaries prepared by the Phlx.
---------------------------------------------------------------------------
(A) Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
(1) Purpose
The purpose of proposed new Phlx Rule 868 \4\ is to reduce the
cots, risks, and delays associated with the physical delivery of
securities certificates by requiring that certain securities be
eligible for DRS.\5\ Proposed Rule 868 would require that on or after
January 1, 2007, all securities initially listing on Phlx must be
eligible for DRS operated by a securities depository that is a clearing
agency registered under Section 17A of the Act (``securities
depository''). This provision would not extend to (i) securities of
companies which already have securities listed on Phlx; (ii) securities
of companies which immediately prior to such listing had securities
listed on another national securities exchange; (iii) derivative
products,\6\ or (iv) securities (other than stocks) which are book-
entry-only.
---------------------------------------------------------------------------
\4\ The exact text of the Phlx proposed rule change is set forth
in its filing, which can be found at https://www.phlx.com/exchange/
rulefilngs/2006/S-2006-69.pdf.
\5\ The Commission has approved similar rule changes filed by
the New York Stock Exchange LLC, NASDAQ Stock Market LLC, the
American Stock Exchange LLC, and the NYSE Arca, Inc. that require
certain listed companies securities become DRS eligible. Securities
Exchange Act Release Nos. 54289 (August 8, 2006), 71 FR 47278
(August 16, 2006) [File No. SR-NYSE-2006-29]; 54288 (August 8,
2006), 71 FR 47276 (August 16, 2006) [File No. SR-NASDAQ-2006-008];
54290 (August 8, 2006), 71 FR 47262 (August 16, 2006) [File No. SR-
Amex-2006-40]; 54410 (September 7, 2006), 71 FR 54316 (September 14,
2006) [File No. SR-NYSE Arca-2006-31].
\6\ For purposes of proposed Rule 868, the term ``derivative
products'' means standardized options issued by The Options Clearing
Corporation (``OCC'') or other securities that are issued by OCC or
another limited purpose entity or trust and that are based solely on
the performance of an index or portfolio of other publicly traded
securities. The term ``derivative product'' does not include
warrants of any type or closed-end management investment companies.
---------------------------------------------------------------------------
[[Page 71014]]
Proposed Rule 868 would also require that on or after January 1,
2008, all securities listed on the Phlx must be eligible for DRS
operated by a securities depository. This provision would not extend to
derivative products or securities (other than stocks) that are book-
entry-only.
Securities certificates are used by issuers as a means to evidence
and transfer ownership. Because securities certificates require manual
processing, significant delays, expenses, and risks associated with
lost, stolen, and forged certificates are attendant in processing
securities transactions involving securities certificates. In Section
17A of the Act, Congress recognized these concerns by calling for the
establishment of a national system for the prompt and accurate
clearance and settlement of securities transactions, including the
transfer of record ownership and the safeguarding of securities.\7\
---------------------------------------------------------------------------
\7\ 15 U.S.C. 78q-1
---------------------------------------------------------------------------
DRS allows an investor to establish, either through an issuer's
transfer agent or through the investor's broker-dealer, a book-entry
position in a security and to electronically transfer that position
between the transfer agent and the investor's broker-dealer of the
investor's choice through a facility currently administered by The
Depository Trust Company (``DTC'').\8\ By using DRS, investors receive
a DRS statement as evidence of share ownership instead of a securities
certificate. Investors retain all the rights associated with securities
certificates, including such rights as control of ownership and voting
rights, without having the responsibility of holding and safeguarding
securities certificates. In addition, in corporate actions such as
reverse stock splits and mergers, cancellation of old securities
positions and issuance of new securities positions is handled
electronically with no securities certificates to be returned to or
received from transfer agents.
---------------------------------------------------------------------------
\8\ Currently, the only registered clearing agency operating a
DRS is DTC. For a description of DRS and the DRS facilities
administered by DTC, see Securities Exchange Act Release Nos. 37931
(November 7, 1996), 61 FR 58600 (November 15, 1996), [File No. SR-
DTC-96-15] (order granting approval to establish DRS) and 41862
(September 10, 1999), 64 FR 51162 (September 21, 1999), [File No.
SR-DTC-99-16] (order approving implementation of the Profile
Modification System).
---------------------------------------------------------------------------
Issuers and their transfer agents may incur initial costs when
making an issue DRS-eligible as required by this proposed rule change.
In order to make a security DRS-eligible, the issuer must have a
transfer agent which is a DRS Limited Participant at DTC.\9\ Transfer
agents will need to meet certain DTC criteria, such as insurance and
connectivity requirements, in order to become a DRS Limited
Participant. Further, issuers may need to amend their corporate
documents, such as their by-laws or charter, in order to permit the
issuance of book-entry shares. Phlx believes that the proposed
deadlines for DRS eligibility coupled with instructive communication by
Phlx to issuers, will allow issuers sufficient time to make the
necessary changes to comply with the proposed rule change.
---------------------------------------------------------------------------
\9\ DTC's rules require that a transfer agent (including an
issuer acting as its own transfer agent) acting for a company
issuing securities in DRS must be a DRS Limited Participant.
Securities Exchange Act Release No. 37931 (November 7, 1996), 61 FR
58600 (November 15, 1996), [File No. SR-DTC-96-15].
---------------------------------------------------------------------------
While the proposed rule change should significantly reduce the
number of transactions in securities for which settlement is effected
by the physical delivery of securities certificates, the propose rule
change will not eliminate the ability of investors to obtain securities
certificates provided the issuer chooses to issue or continue to issue
certificates.
(2) Statutory Basis
Phlx believes the proposed rule change is consistent with the
requirements of the Act and the rules and regulations thereunder that
are applicable to a national securities exchange. In particular, the
proposed rule change is consistent with Section 6(b)(5) of the Act
because it would promote just and equitable principles of trade, foster
cooperation and coordination with persons engaged in regulating,
clearing, settling, processing information with respect to, and
facilitating transactions in securities, to remove impediments to
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 confirming that certain Phlx's issuers would be required to make
their securities eligible for a DRS operated by a securities
depository.\10\
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\10\ 15 U.S.C. 78f(b)(5).
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(B) Self-Regulatory Organization's Statement on Burden on Competition
Phlx 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
Phlx has neither solicited nor received written comments on the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Within thirty-five 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 ninety days of such date if it finds
such longer period to be appropriate and publishes its reasons for so
finding or (ii) as to which the self-regulatory organization consents,
the Commission will:
(A) By order approve such proposed rule change or
(B) Institute proceedings to determine whether the proposed rule
change should be disapproved.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change 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-2006-69 in the subject line.
Paper Comments
Send paper comments in triplicate to Nancy M. Morris,
Secretary, Securities and Exchange Commission, 100 F Street, NE.,
Washington, DC 20549-1090.
All submissions should refer to File Number SR-Phlx-2006-69. 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
[[Page 71015]]
Commission and any person, other than those that may be withheld from
the public in accordance with the provisions of 5 U.S.C. 552, will be
available for inspection and copying in the Commission's Public
Reference Section, 100 F Street, NE., Washington, DC 20549. Copies of
such filings also will be available for inspection and copying at the
principal office of Phlx and on Phlx's Web site, https://www.phlx.com.
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-2006-69
and should be submitted on or before December 28, 2006.
For the Commission by the Division of Market Regulation,
pursuant to delegated authority.\11\
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\11\ 17 CFR 200.30-3(a)(12).
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Nancy M. Morris,
Secretary.
[FR Doc. E6-20726 Filed 12-6-06; 8:45 am]
BILLING CODE 8011-01-P