Self-Regulatory Organizations; Philadelphia Stock Exchange, Inc.; Notice of Filing of Proposed Rule Change and Amendment No. 1 Thereto Relating to Deletion of Rule 702, Carrying Accounts, 7106-7107 [E7-2550]
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7106
Federal Register / Vol. 72, No. 30 / Wednesday, February 14, 2007 / Notices
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–2006–88 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.
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–55256; File No. SR–Phlx–
2005–68]
Self-Regulatory Organizations;
Philadelphia Stock Exchange, Inc.;
Notice of Filing of Proposed Rule
Change and Amendment No. 1 Thereto
Relating to Deletion of Rule 702,
Carrying Accounts
February 8, 2007.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’) 1, and Rule 19b–4 2 thereunder,
All submissions should refer to File
notice is hereby given that on November
Number SR–Phlx–2006–88. This file
9, 2005, the Philadelphia Stock
number should be included on the
Exchange, Inc. (‘‘Phlx’’ or ‘‘Exchange’’)
subject line if e-mail is used. To help the filed with the Securities and Exchange
Commission process and review your
Commission (‘‘SEC’’ or ‘‘Commission’’)
comments more efficiently, please use
the proposed rule change as described
only one method. The Commission will in Items I, II, and III, below, which Items
post all comments on the Commission’s have been substantially prepared by the
Internet Web site (https://www.sec.gov/
Phlx. The Phlx filed Amendment No. 1
rules/sro.shtml). Copies of the
to the proposed rule change on January
submission, all subsequent
18, 2007.3 The Commission is
amendments, all written statements
publishing this notice to solicit
with respect to the proposed rule
comments on the proposed rule change
change that are filed with the
from interested persons.
Commission, and all written
I. Self-Regulatory Organization’s
communications relating to the
Statement of the Terms of Substance of
proposed rule change between the
Commission and any person, other than the Proposed Rule Change
those that may be withheld from the
The Phlx proposes to delete Rule 702,
public in accordance with the
Carrying Accounts. The text of Rule 702,
provisions of 5 U.S.C. 552, will be
proposed to be deleted, is set forth
available for inspection and copying in
below. Brackets indicate deletion.
the Commission’s Public Reference
[Rule 702. Carrying Accounts
Room. Copies of the filing also will be
available for inspection and copying at
No member, doing business as an
the principal office of the Phlx. All
individual, shall carry accounts for
comments received will be posted
customers, except as provided in Rule
without change; the Commission does
903.]
not edit personal identifying
II. Self-Regulatory Organization’s
information from submissions. You
Statement of the Purpose of, and
should submit only information that
you wish to make available publicly. All Statutory Basis for, the Proposed Rule
Change
submissions should refer to File
Number SR–Phlx–2006–88 and should
In its filing with the Commission, the
be submitted on or before March 7,
Phlx included statements concerning
2007.
the purpose of and basis for the
For the Commission, by the Division of
Market Regulation, pursuant to delegated
authority.13
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7–2549 Filed 2–13–07; 8:45 am]
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BILLING CODE 8010–01–P
proposed rule change and discussed any
comments it received on the proposed
rule change. The text of these statements
may be examined at the places specified
in Item IV below. The Phlx has prepared
summaries, set forth in sections A, B,
and C below, of the most significant
aspects of such statements.
1 15
U.S.C. 78s(b)(1).
CFR 240.19b-4.
3 Amendment No. 1 replaces and supersedes the
original filing in its entirety.
2 17
13 17
CFR 200.30–3(a)(12).
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17:27 Feb 13, 2007
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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 to delete Rule 702, Carrying
Accounts, is to eliminate an
unnecessary and confusing Exchange
rule. Currently, Rule 702 provides that
‘‘[n]o member, doing business as an
individual, shall carry accounts for
customers, except as provided in Rule
903.’’ 4
The term ‘‘member’’ (as opposed to
‘‘member organization’’) is defined in
Exchange rules as a permit holder
which has not been terminated in
accordance with the by-laws and rules
of the Exchange.5 Currently, the only
issued and outstanding Exchange
permits are Series A–1 Permits, the
terms and conditions of which are
governed by Rule 908. Section (b) of
Rule 908, Series A–1 Permits, provides
in part that, with one narrow exception
not relevant here, a Series A–1 permit
shall only be issued to an individual.6
The Exchange believes that Rule 702
is unnecessary. Additionally, since
virtually all members are individuals,
Rule 702’s proscription against the
carrying of customer accounts by a
member ‘‘doing business as an
individual’’ is confusing. The Exchange
has in the past interpreted the rule as
prohibiting any individual member from
carrying customer accounts. Rule 908
4 The reference to Rule 903 is clearly an incorrect
reference which should be to Rule 904, Use of a
Partnership Name, which provides that ‘‘[n]o
member shall conduct business under a partnership
firm name unless he has at least one general
partner, provided, however, that if by death or
otherwise a member becomes the sole general
partner in a member organization that is a
partnership he may continue business under the
partnership name for such period as may be
allowed by the Committee.’’
5 See Exchange By-Law Article I, Section 1(t) and
Exchange Rule 1(n). Exchange By-Law Article XII,
Section 1(b) provides in part that ‘‘[e]xcept as
otherwise set forth in the rules of the Exchange or
any resolution of the Board of Governors
authorizing a specific class or series of permits, a
permit will confer upon and subject the holder
thereof to all the privileges and obligations of a
member pursuant to these By-Laws and the rules of
the Exchange, * * * and to conduct business on the
Exchange as provided in these By-Laws and such
rules.’’
6 Rule 908(b) provides that a Series A–1 Permit
may also be issued to ‘‘a corporation meeting the
requirements of Section 12–4 of the By-Laws.’’
Section 12–4 of the By-Laws, Admission of
Corporation, provides that ‘‘[a] corporation may be
issued a permit by the Exchange, provided such
corporation is incorporated under the laws of the
Commonwealth of Pennsylvania, and all of its
capital stock is owned by the Exchange.’’ This ByLaw provision was intended to permit Exchange
membership for the Exchange’s subsidiary, Stock
Clearing Corporation of Philadelphia.
E:\FR\FM\14FEN1.SGM
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Federal Register / Vol. 72, No. 30 / Wednesday, February 14, 2007 / Notices
requires any Series A–1 Permit Holder
to maintain a primary affiliation with an
eligible member organization at all
times that such holder holds a permit.
Member organizations, which do not
include individuals but which are
defined as ‘‘a corporation, partnership
(general or limited), limited liability
partnership, limited liability company,
business trust or similar organization’’
which meet certain criteria, are not
covered by the Rule 702 prohibition.
The Exchange is proposing the
deletion of Rule 702 not only because it
is confusing, but also because a
member’s ability to carry customer
accounts is in many ways dictated by
the member’s ability to comply with
relevant securities laws and regulations
including, but not limited to, Exchange
Act Rules 15c3–1 and 15c3–3,7 and
related rules, which do not make
distinctions on the basis of a member’s
organizational and corporate structure.8
The Exchange believes that Rule 702 is
therefore superfluous.
2. Statutory Basis
The Exchange believes that its
proposal is consistent with Section 6(b)
of the Act in general, and furthers the
objectives of Section 6(b)(5) of the Act
in particular, in that it is 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
eliminating a confusing and
unnecessary Exchange rule.
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.
7 17
CFR 240.15c3–1 and 240.15c3–3.
example, the customer protection provisions
of Rule 15c3–3 under the Act requires brokerdealers to maintain physical possession or control
of customer fully-paid and excess margin securities.
Further, Phlx member firms for which the Exchange
is the DEA generally do not carry public customer
accounts. If a Phlx member firm carries customer
accounts it is required to become a member of a
national securities association (e.g., the National
Association of Securities Dealers (‘‘NASD’’)). Under
agreements that the Phlx has entered into with
other self-regulatory organizations (‘‘SROs’’) in
accordance with Rule 17d–2 under the Act, any
Phlx member that is also a member of another SRO
(including the NASD) would be assigned to another
DEA.
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C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
No written comments were either
solicited or received.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
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 shall: (a) By order approve
such proposed rule change, or (b)
institute proceedings to determine
whether the proposed rule change
should be disapproved.
7107
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–2005–68 and should
be submitted on or before March 7,
2007.
For the Commission, by the Division of
Market Regulation, pursuant to delegated
authority.9
Nancy M. Morris,
Secretary.
[FR Doc. E7–2550 Filed 2–13–07; 8:45 am]
BILLING CODE 8010–01–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:
SOCIAL SECURITY ADMINISTRATION
Agency Information Collection
Activities: Proposed Request and
Comment Request
The Social Security Administration
(SSA) publishes a list of information
collection packages that will require
Electronic Comments
clearance by the Office of Management
• Use the Commission’s Internet
and Budget (OMB) in compliance with
comment form (https://www.sec.gov/
Pub.L. 104–13, the Paperwork
rules/sro.shtml); or
Reduction Act of 1995, effective October
• Send an e-mail to rule1, 1995. The information collection
comments@sec.gov. Please include File
packages that may be included in this
Number SR–Phlx–2005–68 on the
notice are for new information
subject line.
collections, approval of existing
information collections, revisions to
Paper Comments
OMB-approved information collections,
• Send paper comments in triplicate
and extensions (no change) of OMBto Nancy M. Morris, Secretary,
approved information collections.
Securities and Exchange Commission,
SSA is soliciting comments on the
100 F Street, NE., Washington, DC
accuracy of the agency’s burden
20549–1090.
estimate; the need for the information;
All submissions should refer to File
its practical utility; ways to enhance its
Number SR–Phlx–2005–68. This file
quality, utility, and clarity; and on ways
number should be included on the
to minimize burden on respondents,
subject line if e-mail is used. To help the including the use of automated
Commission process and review your
collection techniques or other forms of
comments more efficiently, please use
information technology. Written
only one method. The Commission will comments and recommendations
post all comments on the Commission’s regarding the information collection(s)
Internet Web site (https://www.sec.gov/
should be submitted to the OMB Desk
rules/sro.shtml). Copies of the
Officer and the SSA Reports Clearance
submission, all subsequent
Officer. The information can be mailed,
amendments, all written statements
faxed or e-mailed to the individuals at
with respect to the proposed rule
the addresses and fax numbers listed
below:
change that are filed with the
Commission, and all written
(OMB), Office of Management and
communications relating to the
Budget, Attn: Desk Officer for SSA,
proposed rule change between the
Fax: 202–395–6974, E-mail address:
Commission and any person, other than
OIRA_Submission@omb.eop.gov.
those that may be withheld from the
9 17 CFR 200.30–3(a)(12).
public in accordance with the
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]]>Agencies
[Federal Register Volume 72, Number 30 (Wednesday, February 14, 2007)]
[Notices]
[Pages 7106-7107]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E7-2550]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-55256; File No. SR-Phlx-2005-68]
Self-Regulatory Organizations; Philadelphia Stock Exchange, Inc.;
Notice of Filing of Proposed Rule Change and Amendment No. 1 Thereto
Relating to Deletion of Rule 702, Carrying Accounts
February 8, 2007.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act'') \1\, and Rule 19b-4 \2\ thereunder, notice is hereby given
that on November 9, 2005, the Philadelphia Stock Exchange, Inc.
(``Phlx'' or ``Exchange'') filed with the Securities and Exchange
Commission (``SEC'' or ``Commission'') the proposed rule change as
described in Items I, II, and III, below, which Items have been
substantially prepared by the Phlx. The Phlx filed Amendment No. 1 to
the proposed rule change on January 18, 2007.\3\ The Commission is
publishing this notice to solicit comments on the proposed rule change
from interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ Amendment No. 1 replaces and supersedes the original filing
in its entirety.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Phlx proposes to delete Rule 702, Carrying Accounts. The text
of Rule 702, proposed to be deleted, is set forth below. Brackets
indicate deletion.
[Rule 702. Carrying Accounts
No member, doing business as an individual, shall carry accounts
for customers, except as provided in Rule 903.]
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 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. The Phlx has prepared summaries, set forth in sections
A, B, and C below, of the most significant aspects of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The purpose of the proposed rule change to delete Rule 702,
Carrying Accounts, is to eliminate an unnecessary and confusing
Exchange rule. Currently, Rule 702 provides that ``[n]o member, doing
business as an individual, shall carry accounts for customers, except
as provided in Rule 903.'' \4\
---------------------------------------------------------------------------
\4\ The reference to Rule 903 is clearly an incorrect reference
which should be to Rule 904, Use of a Partnership Name, which
provides that ``[n]o member shall conduct business under a
partnership firm name unless he has at least one general partner,
provided, however, that if by death or otherwise a member becomes
the sole general partner in a member organization that is a
partnership he may continue business under the partnership name for
such period as may be allowed by the Committee.''
---------------------------------------------------------------------------
The term ``member'' (as opposed to ``member organization'') is
defined in Exchange rules as a permit holder which has not been
terminated in accordance with the by-laws and rules of the Exchange.\5\
Currently, the only issued and outstanding Exchange permits are Series
A-1 Permits, the terms and conditions of which are governed by Rule
908. Section (b) of Rule 908, Series A-1 Permits, provides in part
that, with one narrow exception not relevant here, a Series A-1 permit
shall only be issued to an individual.\6\
---------------------------------------------------------------------------
\5\ See Exchange By-Law Article I, Section 1(t) and Exchange
Rule 1(n). Exchange By-Law Article XII, Section 1(b) provides in
part that ``[e]xcept as otherwise set forth in the rules of the
Exchange or any resolution of the Board of Governors authorizing a
specific class or series of permits, a permit will confer upon and
subject the holder thereof to all the privileges and obligations of
a member pursuant to these By-Laws and the rules of the Exchange, *
* * and to conduct business on the Exchange as provided in these By-
Laws and such rules.''
\6\ Rule 908(b) provides that a Series A-1 Permit may also be
issued to ``a corporation meeting the requirements of Section 12-4
of the By-Laws.'' Section 12-4 of the By-Laws, Admission of
Corporation, provides that ``[a] corporation may be issued a permit
by the Exchange, provided such corporation is incorporated under the
laws of the Commonwealth of Pennsylvania, and all of its capital
stock is owned by the Exchange.'' This By-Law provision was intended
to permit Exchange membership for the Exchange's subsidiary, Stock
Clearing Corporation of Philadelphia.
---------------------------------------------------------------------------
The Exchange believes that Rule 702 is unnecessary. Additionally,
since virtually all members are individuals, Rule 702's proscription
against the carrying of customer accounts by a member ``doing business
as an individual'' is confusing. The Exchange has in the past
interpreted the rule as prohibiting any individual member from carrying
customer accounts. Rule 908
[[Page 7107]]
requires any Series A-1 Permit Holder to maintain a primary affiliation
with an eligible member organization at all times that such holder
holds a permit. Member organizations, which do not include individuals
but which are defined as ``a corporation, partnership (general or
limited), limited liability partnership, limited liability company,
business trust or similar organization'' which meet certain criteria,
are not covered by the Rule 702 prohibition.
The Exchange is proposing the deletion of Rule 702 not only because
it is confusing, but also because a member's ability to carry customer
accounts is in many ways dictated by the member's ability to comply
with relevant securities laws and regulations including, but not
limited to, Exchange Act Rules 15c3-1 and 15c3-3,\7\ and related rules,
which do not make distinctions on the basis of a member's
organizational and corporate structure.\8\ The Exchange believes that
Rule 702 is therefore superfluous.
---------------------------------------------------------------------------
\7\ 17 CFR 240.15c3-1 and 240.15c3-3.
\8\ For example, the customer protection provisions of Rule
15c3-3 under the Act requires broker-dealers to maintain physical
possession or control of customer fully-paid and excess margin
securities. Further, Phlx member firms for which the Exchange is the
DEA generally do not carry public customer accounts. If a Phlx
member firm carries customer accounts it is required to become a
member of a national securities association (e.g., the National
Association of Securities Dealers (``NASD'')). Under agreements that
the Phlx has entered into with other self-regulatory organizations
(``SROs'') in accordance with Rule 17d-2 under the Act, any Phlx
member that is also a member of another SRO (including the NASD)
would be assigned to another DEA.
---------------------------------------------------------------------------
2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act in general, and furthers the objectives of Section
6(b)(5) of the Act in particular, in that it is 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 eliminating a confusing and unnecessary Exchange rule.
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 either solicited or 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 shall: (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-2005-68 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-2005-68. 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 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-2005-68 and should be submitted on or before March 7, 2007.
---------------------------------------------------------------------------
\9\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\9\
Nancy M. Morris,
Secretary.
[FR Doc. E7-2550 Filed 2-13-07; 8:45 am]
BILLING CODE 8010-01-P
