Self-Regulatory Organizations; NASDAQ OMX PHLX, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Relating to Automatic Allocations of Options on Related Securities, 40857-40859 [E9-19374]

Download as PDF Federal Register / Vol. 74, No. 155 / Thursday, August 13, 2009 / Notices Plans.’’ If you do not have access to ADAMS or if there are problems in accessing the documents located in ADAMS, contact the NRC Public Document Room (PDR) Reference staff at 1–800–397–4209, 301–415–4737 or by e-mail to pdr.resource@nrc.gov These documents may also be viewed electronically on the public computers located at the NRC’s Public Document Room (PDR), O 1 F21, One White Flint North, 11555 Rockville Pike, Rockville, MD 20852. The PDR reproduction contractor will copy documents for a fee. Dated at Rockville, Maryland, this 5th day of August, 2009. For the Nuclear Regulatory Commission. Keith McConnell, Deputy Director, Decommissioning and Uranium Recovery, Licensing Directorate, Division of Waste Management and Environmental Protection, Office of Federal and State Materials and Environmental Management Programs. [FR Doc. E9–19449 Filed 8–12–09; 8:45 am] BILLING CODE 7590–01–P SECURITIES AND EXCHANGE COMMISSION [File No. 500–1] In the Matter of V–Twin Holdings, Inc. (n/k/a Tobacco One, Inc.), Valley Media, Inc., Venturequest Group, Inc. (n/k/a Dex-Ray Resources, Inc.), Verex Laboratories, Inc., Vibro-Tech Industries, Inc., Video City, Inc., and Vidikron Technologies Group, Inc.; Order of Suspension of Trading erowe on DSK5CLS3C1PROD with NOTICES August 11, 2009. It appears to the Securities and Exchange Commission that there is a lack of current and accurate information concerning the securities of V–Twin Holdings, Inc. (n/k/a Tobacco One, Inc.) because it has not filed any periodic reports since the period ended March 31, 2001. It appears to the Securities and Exchange Commission that there is a lack of current and accurate information concerning the securities of Valley Media, Inc. because it has not filed any periodic reports since the period ended September 29, 2001. It appears to the Securities and Exchange Commission that there is a lack of current and accurate information concerning the securities of Venturequest Group, Inc. (n/k/a DexRay Resources, Inc.), because it has not filed any periodic reports since the period ended September 30, 2001. It appears to the Securities and Exchange Commission that there is a VerDate Nov<24>2008 15:29 Aug 12, 2009 Jkt 217001 lack of current and accurate information concerning the securities of Verex Laboratories, Inc. because it has not filed any periodic reports since the period ended March 31, 2002. It appears to the Securities and Exchange Commission that there is a lack of current and accurate information concerning the securities of Vibro-Tech Industries, Inc. because it has not filed any periodic reports since it filed a Form 10–SB on January 5, 2000. It appears to the Securities and Exchange Commission that there is a lack of current and accurate information concerning the securities of Video City, Inc. because it has not filed any periodic reports since the period ended July 31, 2003. It appears to the Securities and Exchange Commission that there is a lack of current and accurate information concerning the securities of Vidikron Technologies Group, Inc. because it has not filed any periodic reports since the period ended March 31, 1999. The Commission is of the opinion that the public interest and the protection of investors require a suspension of trading in the securities of the above-listed companies. Therefore, it is ordered, pursuant to Section 12(k) of the Securities Exchange Act of 1934, that trading in the securities of the above-listed companies is suspended for the period from 9:30 a.m. EDT on August 11, 2009, through 11:59 p.m. EDT on August 24, 2009. By the Commission. Jill M. Peterson, Assistant Secretary. [FR Doc. E9–19486 Filed 8–11–09; 8:45 am] BILLING CODE 8010–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–60455; File No. SR–Phlx– 2009–62] Self-Regulatory Organizations; NASDAQ OMX PHLX, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Relating to Automatic Allocations of Options on Related Securities August 6, 2009. 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 July 31, 2009, NASDAQ OMX PHLX, Inc. (‘‘Phlx’’ or ‘‘Exchange’’) filed with the Securities and Exchange Commission 1 15 2 17 PO 00000 U.S.C. 78s(b)(1). CFR 240.19b–4. Frm 00051 Fmt 4703 Sfmt 4703 40857 (‘‘SEC’’ or ‘‘Commission’’) the proposed rule change as described in Items I and II below, which Items have been prepared by the Exchange. Phlx has designated the proposed rule change as constituting a non-controversial rule change under Rule 19b–4(f)(6) under the Act,3 which renders the proposal effective upon filing with the Commission. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to amend Phlx Rule 506 (Allocation Application) regarding automatic allocation of options on related securities. The text of the proposed rule change is available on the Exchange’s Web site at https:// nasdaqomxphlx.cchwallstreet.com/ NASDAQOMXPHLX/Filings/, at the principal office of the Exchange, 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 IV 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 amendments proposed to Phlx Rule 506 are based on and similar to Commentary .05 to AMEX Rule 27.4 The purpose of the proposed rule change is to amend Rule 506 to indicate 3 17 CFR 240.19b–4(f)(6). Securities Exchange Act Release No. 45260 (January 9, 2002), 67 FR 2255 (January 16, 2002) (SR–AMEX–2001–19) (approval order regarding AMEX Rules 26 and 27). See also Securities Exchange Act Release No. 44972 (October 23, 2001), 66 FR 55031 (October 31, 2001)(SR–AMEX–2001– 19) (notice of filing regarding, among other things, Commentary .05 to AMEX Rule 27). The American Stock Exchange LLC was purchased in 2008 by NYSE Euronext and is now known as NYSE Amex LLC (AMEX). 4 See E:\FR\FM\13AUN1.SGM 13AUN1 40858 Federal Register / Vol. 74, No. 155 / Thursday, August 13, 2009 / Notices erowe on DSK5CLS3C1PROD with NOTICES that new options that are related to currently allocated options (‘‘Related Options’’) shall be automatically allocated to the specialist unit that is already the current specialist in option(s) on the underlying security(ies) (‘‘Current Specialist’’).5 If the Related Options are not automatically allocated, the Exchange may, nonetheless, allocate the Related Options to the Current Specialist if the Exchange determines that the trading characteristics of the Related Options to be allocated are similar to the options already allocated to the Current Specialist. 6 The allocation and re-allocation process for classes of options to specialist units and individual specialists on the Exchange is found in Rules 500–599 (the ‘‘Allocation Rules’’), which rules are administered by the exchange.7 The Allocation Rules also deal with, among other things: application for becoming and appointment of specialists; application for becoming and approval of Streaming Quote Traders (‘‘SQTs’’) 8 and Remote Streaming Quote Traders (‘‘RSQTs’’) 9 and assignment of options to them; and specialist, SQT, and RSQT performance evaluations. The Allocation Rules also indicate under what circumstances new allocations may not be made. Supplementary Material .01 to Rule 506, as an example, states that a specialist may not apply for a new allocation for a period of six months after an option allocation was taken away from the specialist in a disciplinary proceeding or an involuntary reallocation 5 Exchange specialists are allocated classes of options by the Exchange in relation to assisting in the maintenance, insofar as reasonably practicable, of a fair and orderly market in such options. See Rule 1020. 6 Related Options, Related Securities, and Current Specialist are defined in proposed Supplementary Material .02 to Rule 506. 7 See Rule 500. See also Securities Exchange Act Release No. 59924 (May 14, 2009), 74 FR 23759 (May 20, 2009)(SR–Phlx–2009–23). 8 An SQT is an Exchange Registered Options Trader (‘‘ROT’’) who has received permission from the Exchange to generate and submit option quotations electronically in eligible options to which such SQT is assigned. An SQT may only submit such quotations while such SQT is physically present on the floor of the Exchange. See Rule 1014(b)(ii)(A). See also Securities Exchange Act Release No. 59995 (May 28, 2009), 74 FR 26750 (June 3, 2009)(approval order regarding enhancements to opening, linkage and routing, quoting, and order management processes in the Exchange’s electronic options order entry, trading, and execution system PHLX XL II.) [sic] 9 An RSQT is an ROT that is a member or member organization with no physical trading floor presence who has received permission from the Exchange to generate and submit option quotations electronically in eligible options to which such RSQT has been assigned. An RSQT may only submit such quotations electronically from off the floor of the Exchange. See Exchange Rule 1014(b)(ii)(B). VerDate Nov<24>2008 15:29 Aug 12, 2009 Jkt 217001 proceeding (‘‘Allocation Preclusion’’).10 The current Allocation Rules do not contain guidelines regarding allocation of Related Options. This filing would amend Rule 506 to clarify that Related Options will be automatically allocated, under conditions set forth in new Supplementary Material .02, to the Current Specialist that is already allocated options overlying securities that are related to securities that the new options overly. In particular, Supplementary Material .02 in subsection (a) defines the term ‘‘Related Securities’’ 11 underlying options to mean, but not be limited to: • Securities of a partially or wholly owned subsidiary; • Securities that are convertible into the securities of the issuer; • Warrants on securities of the issuer; • Securities issued in connection with a name change; • Securities issued in a reverse stock split; • Contingent value rights; • ‘‘Tracking’’ securities designed to track the performance of the underlying security or corporate affiliate thereof; • Securities created in connection with the merger or acquisition of one or more companies; • Securities created in connection with a ‘‘spin-off’’ transaction; • Convertible on non-convertible senior securities; and • Securities into which a listed security is convertible. Where such Related Securities emanate from or are related to securities underlying options that are currently allocated to a specialist on the Exchange (‘‘Currently Allocated Options’’). Subsection (b) to Supplementary Material .02 goes on to state that while unallocated new Related Options shall be automatically allocated to the Current Specialist, no automatic allocation can occur if the Current Specialist is subject, pursuant to Supplementary Material .01, to an Allocation Preclusion because of a disciplinary proceeding or involuntary reallocation proceeding.12 Where there is no automatic allocation the Exchange may decide to allocate Related Options to the Current Specialist that is already trading allocated related options if the Exchange determines that the trading characteristics of the Related Options to be allocated are similar to the already allocated options.13 The following example illustrates how the proposed allocation process would work. In 2008, Wachovia Corporation (WB) was acquired by Wells Fargo & Company (WFC), with WFC being the surviving company (the ‘‘merger’’). At the time of the merger, which was effective December 31, 2008, options on the surviving company WFC were already listed and being traded by one specialist (the ‘‘WFC Specialist’’) and options on WB were listed and being traded on the Exchange by another specialist (the ‘‘WB Specialist’’). Under the current allocation structure, the WB Specialist would have to continue to act as a specialist vis a vis WB options for the purpose of trading the adjusted WB option series until all open interest traded out or expired. The WFC Specialist would, at the same time, trade the WFC options. Under the automatic allocation process proposed in this filing, in that WFC and WB would be Related Securities, WFC options would be Currently Allocated Options, the WFC Specialist would be the Current Specialist, and the adjusted WB options series would be new Related Options, by operation of Supplementary Material .02, the Related Options would be automatically allocated to the Current Specialist. As such, the WFC Specialist would assume specialist privileges in the WFC options and the adjusted WB option series, therefore becoming the specialist for all options related to the merger of WFC and WB.14 The Exchange believes that the automatic allocation of Related Options to Current Specialists as proposed herein should increase the efficiency and speed of the allocation of options that are logically related to each other, to the benefit of Exchange members and traders and the public.15 10 See Rule 960 et seq. for disciplinary procedures and Allocation Rules for reallocation procedures. 11 For purposes of Supplementary Material .02, Related Securities does not mean Exchange Traded Funds. 12 Although automatic allocation of New Options pursuant to Supplementary Material .02 will not require the Exchange to make an allocation determination as it would with regular option allocations, the Exchange will continue to perform other allocation-related duties such as, for example, written notification. See Rule 506. 13 An ETF (only) specialist will not be eligible to receive automatic allocations for the duration of the Allocation Preclusion applicable to him or her. 14 It is assumed, for purposes of this example, that the Current Specialist is not subject to an Allocation Preclusion as defined in Supplementary Material .01. 15 The Exchange has made conforming, technical changes to proposed Rule 506 to integrate the proposed language into its current rules and to correct a typographical error. 16 15 U.S.C. 78f(b). PO 00000 Frm 00052 Fmt 4703 Sfmt 4703 2. Statutory Basis The Exchange believes that its proposal is consistent with Section 6(b) of the Act 16 in general, and furthers the E:\FR\FM\13AUN1.SGM 13AUN1 Federal Register / Vol. 74, No. 155 / Thursday, August 13, 2009 / Notices objectives of Section 6(b)(5) of the Act 17 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 providing for automatic allocation to an Exchange specialist of options that are related to each other. Electronic Comments B. Self-Regulatory Organization’s Statement on Burden on Competition • Send paper comments in triplicate to Elizabeth M. Murphy, Secretary, Securities and Exchange Commission, 100 F Street, NE., Washington, DC 20549–1090. The Exchange does not believe that the proposed rule change will impose any burden on competition 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 Because the foregoing proposed rule change does not: (i) Significantly affect the protection of investors or the public interest; (ii) impose any significant burden on competition; and (iii) become operative for 30 days from the date on which it was filed, or such shorter time as the Commission may designate, it has become effective pursuant to Section 19(b)(3)(A) of the Act 18 and Rule 19b– 4(f)(6) thereunder.19 At any time within 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 erowe on DSK5CLS3C1PROD with NOTICES 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: 17 15 U.S.C. 78f(b)(5). U.S.C. 78s(b)(3)(A). 19 17 CFR 240.19b–4(f)(6). In addition, Rule 19b– 4(f)(6) requires a self-regulatory organization to give the Commission written notice of its intent to file the proposed rule change at least five business days prior to the date of filing of the proposed rule change, or such shorter time as designated by the Commission. Phlx has satisfied this requirement. 18 15 VerDate Nov<24>2008 15:29 Aug 12, 2009 Jkt 217001 • 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–2009–62 on the subject line. Paper Comments 40859 SECURITIES AND EXCHANGE COMMISSION [Release No. 34–60454; File No. SR–CBOE– 2009–054] Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend the Marketing Fee Program August 6, 2009. 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 July 31, 2009, the Chicago Board Options All submissions should refer to File Exchange, Incorporated (‘‘CBOE’’ or the Number SR–Phlx–2009–62. This file ‘‘Exchange’’) filed with the Securities number should be included on the and Exchange Commission subject line if e-mail is used. To help the (‘‘Commission’’) the proposed rule Commission process and review your change as described in Items I, II, and comments more efficiently, please use III below, which Items have been only one method. The Commission will prepared by the CBOE. CBOE has post all comments on the Commission’s designated this proposal as one Internet Web site (https://www.sec.gov/ establishing or changing a due, fee, or rules/sro.shtml). Copies of the other charge applicable only to a submission, all subsequent member under Section 19(b)(3)(A)(ii) of amendments, all written statements the Act 3 and Rule 19b–4(f)(2) with respect to the proposed rule thereunder,4 which renders the proposal change that are filed with the effective upon filing with the Commission, and all written Commission. The Commission is communications relating to the publishing this notice to solicit proposed rule change between the comments on the proposed rule change Commission and any person, other than from interested parties. those that may be withheld from the I. Self-Regulatory Organization’s public in accordance with the Statement of the Terms of Substance of provisions of 5 U.S.C. 552, will be the Proposed Rule Change available for inspection and copying in CBOE proposes to amend its the Commission’s Public Reference Marketing Fee Program. The text of the Room, 100 F Street, NE., Washington, proposed rule change is available on the DC 20549, on official business days Exchange’s Web site (https:// between the hours of 10 a.m. and 3 p.m. www.cboe.org/Legal/), at the Exchange’s Copies of such filing also will be Office of the Secretary, and at the available for inspection and copying at Commission. the principal office of the Exchange. All II. Self-Regulatory Organization’s comments received will be posted Statement of the Purpose of, and without change; the Commission does Statutory Basis for, the Proposed Rule not edit personal identifying Change information from submissions. You should submit only information that In its filing with the Commission, you wish to make publicly available. All CBOE included statements concerning the purpose of and basis for the submissions should refer to File proposed rule change and discussed any Number SR–Phlx–2009–62 and should comments it received on the proposed be submitted on or before September 3, rule change. The text of these statements 2009. may be examined at the places specified For the Commission, by the Division of in Item IV below. The CBOE has Trading and Markets, pursuant to delegated prepared summaries, set forth in authority.20 sections (A), (B), and (C) below, of the Florence E. Harmon, most significant aspects of such Deputy Secretary. statements. [FR Doc. E9–19374 Filed 8–12–09; 8:45 am] 1 15 BILLING CODE 8010–01–P U.S.C. 78s(b)(1). CFR 240.19b–4. 3 15 U.S.C. 78s(b)(3)(A)(ii). 4 17 CFR 240.19b–4(f)(2). 2 17 20 17 PO 00000 CFR 200.30–3(a)(12). Frm 00053 Fmt 4703 Sfmt 4703 E:\FR\FM\13AUN1.SGM 13AUN1

Agencies

[Federal Register Volume 74, Number 155 (Thursday, August 13, 2009)]
[Notices]
[Pages 40857-40859]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E9-19374]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-60455; File No. SR-Phlx-2009-62]


Self-Regulatory Organizations; NASDAQ OMX PHLX, Inc.; Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change Relating 
to Automatic Allocations of Options on Related Securities

August 6, 2009.
    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 July 31, 2009, NASDAQ OMX PHLX, Inc. (``Phlx'' or ``Exchange'') 
filed with the Securities and Exchange Commission (``SEC'' or 
``Commission'') the proposed rule change as described in Items I and II 
below, which Items have been prepared by the Exchange. Phlx has 
designated the proposed rule change as constituting a non-controversial 
rule change under Rule 19b-4(f)(6) under the Act,\3\ which renders the 
proposal effective upon filing with the Commission. 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\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------



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

    The Exchange proposes to amend Phlx Rule 506 (Allocation 
Application) regarding automatic allocation of options on related 
securities.
    The text of the proposed rule change is available on the Exchange's 
Web site at https://nasdaqomxphlx.cchwallstreet.com/NASDAQOMXPHLX/Filings/, at the principal office of the Exchange, 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 IV 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 amendments proposed to Phlx Rule 506 are based on and similar 
to Commentary .05 to AMEX Rule 27.\4\
---------------------------------------------------------------------------

    \4\ See Securities Exchange Act Release No. 45260 (January 9, 
2002), 67 FR 2255 (January 16, 2002) (SR-AMEX-2001-19) (approval 
order regarding AMEX Rules 26 and 27). See also Securities Exchange 
Act Release No. 44972 (October 23, 2001), 66 FR 55031 (October 31, 
2001)(SR-AMEX-2001-19) (notice of filing regarding, among other 
things, Commentary .05 to AMEX Rule 27). The American Stock Exchange 
LLC was purchased in 2008 by NYSE Euronext and is now known as NYSE 
Amex LLC (AMEX).
---------------------------------------------------------------------------

    The purpose of the proposed rule change is to amend Rule 506 to 
indicate

[[Page 40858]]

that new options that are related to currently allocated options 
(``Related Options'') shall be automatically allocated to the 
specialist unit that is already the current specialist in option(s) on 
the underlying security(ies) (``Current Specialist'').\5\ If the 
Related Options are not automatically allocated, the Exchange may, 
nonetheless, allocate the Related Options to the Current Specialist if 
the Exchange determines that the trading characteristics of the Related 
Options to be allocated are similar to the options already allocated to 
the Current Specialist. \6\
---------------------------------------------------------------------------

    \5\ Exchange specialists are allocated classes of options by the 
Exchange in relation to assisting in the maintenance, insofar as 
reasonably practicable, of a fair and orderly market in such 
options. See Rule 1020.
    \6\ Related Options, Related Securities, and Current Specialist 
are defined in proposed Supplementary Material .02 to Rule 506.
---------------------------------------------------------------------------

    The allocation and re-allocation process for classes of options to 
specialist units and individual specialists on the Exchange is found in 
Rules 500-599 (the ``Allocation Rules''), which rules are administered 
by the exchange.\7\ The Allocation Rules also deal with, among other 
things: application for becoming and appointment of specialists; 
application for becoming and approval of Streaming Quote Traders 
(``SQTs'') \8\ and Remote Streaming Quote Traders (``RSQTs'') \9\ and 
assignment of options to them; and specialist, SQT, and RSQT 
performance evaluations. The Allocation Rules also indicate under what 
circumstances new allocations may not be made. Supplementary Material 
.01 to Rule 506, as an example, states that a specialist may not apply 
for a new allocation for a period of six months after an option 
allocation was taken away from the specialist in a disciplinary 
proceeding or an involuntary reallocation proceeding (``Allocation 
Preclusion'').\10\ The current Allocation Rules do not contain 
guidelines regarding allocation of Related Options.
---------------------------------------------------------------------------

    \7\ See Rule 500. See also Securities Exchange Act Release No. 
59924 (May 14, 2009), 74 FR 23759 (May 20, 2009)(SR-Phlx-2009-23).
    \8\ An SQT is an Exchange Registered Options Trader (``ROT'') 
who has received permission from the Exchange to generate and submit 
option quotations electronically in eligible options to which such 
SQT is assigned. An SQT may only submit such quotations while such 
SQT is physically present on the floor of the Exchange. See Rule 
1014(b)(ii)(A). See also Securities Exchange Act Release No. 59995 
(May 28, 2009), 74 FR 26750 (June 3, 2009)(approval order regarding 
enhancements to opening, linkage and routing, quoting, and order 
management processes in the Exchange's electronic options order 
entry, trading, and execution system PHLX XL II.) [sic]
    \9\ An RSQT is an ROT that is a member or member organization 
with no physical trading floor presence who has received permission 
from the Exchange to generate and submit option quotations 
electronically in eligible options to which such RSQT has been 
assigned. An RSQT may only submit such quotations electronically 
from off the floor of the Exchange. See Exchange Rule 
1014(b)(ii)(B).
    \10\ See Rule 960 et seq. for disciplinary procedures and 
Allocation Rules for reallocation procedures.
---------------------------------------------------------------------------

    This filing would amend Rule 506 to clarify that Related Options 
will be automatically allocated, under conditions set forth in new 
Supplementary Material .02, to the Current Specialist that is already 
allocated options overlying securities that are related to securities 
that the new options overly.
    In particular, Supplementary Material .02 in subsection (a) defines 
the term ``Related Securities'' \11\ underlying options to mean, but 
not be limited to:
---------------------------------------------------------------------------

    \11\ For purposes of Supplementary Material .02, Related 
Securities does not mean Exchange Traded Funds.
---------------------------------------------------------------------------

     Securities of a partially or wholly owned subsidiary;
     Securities that are convertible into the securities of the 
issuer;
     Warrants on securities of the issuer;
     Securities issued in connection with a name change;
     Securities issued in a reverse stock split;
     Contingent value rights;
     ``Tracking'' securities designed to track the performance 
of the underlying security or corporate affiliate thereof;
     Securities created in connection with the merger or 
acquisition of one or more companies;
     Securities created in connection with a ``spin-off'' 
transaction;
     Convertible on non-convertible senior securities; and
     Securities into which a listed security is convertible.

Where such Related Securities emanate from or are related to securities 
underlying options that are currently allocated to a specialist on the 
Exchange (``Currently Allocated Options'').
    Subsection (b) to Supplementary Material .02 goes on to state that 
while unallocated new Related Options shall be automatically allocated 
to the Current Specialist, no automatic allocation can occur if the 
Current Specialist is subject, pursuant to Supplementary Material .01, 
to an Allocation Preclusion because of a disciplinary proceeding or 
involuntary reallocation proceeding.\12\ Where there is no automatic 
allocation the Exchange may decide to allocate Related Options to the 
Current Specialist that is already trading allocated related options if 
the Exchange determines that the trading characteristics of the Related 
Options to be allocated are similar to the already allocated 
options.\13\
---------------------------------------------------------------------------

    \12\ Although automatic allocation of New Options pursuant to 
Supplementary Material .02 will not require the Exchange to make an 
allocation determination as it would with regular option 
allocations, the Exchange will continue to perform other allocation-
related duties such as, for example, written notification. See Rule 
506.
    \13\ An ETF (only) specialist will not be eligible to receive 
automatic allocations for the duration of the Allocation Preclusion 
applicable to him or her.
---------------------------------------------------------------------------

    The following example illustrates how the proposed allocation 
process would work. In 2008, Wachovia Corporation (WB) was acquired by 
Wells Fargo & Company (WFC), with WFC being the surviving company (the 
``merger''). At the time of the merger, which was effective December 
31, 2008, options on the surviving company WFC were already listed and 
being traded by one specialist (the ``WFC Specialist'') and options on 
WB were listed and being traded on the Exchange by another specialist 
(the ``WB Specialist''). Under the current allocation structure, the WB 
Specialist would have to continue to act as a specialist vis a vis WB 
options for the purpose of trading the adjusted WB option series until 
all open interest traded out or expired. The WFC Specialist would, at 
the same time, trade the WFC options. Under the automatic allocation 
process proposed in this filing, in that WFC and WB would be Related 
Securities, WFC options would be Currently Allocated Options, the WFC 
Specialist would be the Current Specialist, and the adjusted WB options 
series would be new Related Options, by operation of Supplementary 
Material .02, the Related Options would be automatically allocated to 
the Current Specialist. As such, the WFC Specialist would assume 
specialist privileges in the WFC options and the adjusted WB option 
series, therefore becoming the specialist for all options related to 
the merger of WFC and WB.\14\
---------------------------------------------------------------------------

    \14\ It is assumed, for purposes of this example, that the 
Current Specialist is not subject to an Allocation Preclusion as 
defined in Supplementary Material .01.
---------------------------------------------------------------------------

    The Exchange believes that the automatic allocation of Related 
Options to Current Specialists as proposed herein should increase the 
efficiency and speed of the allocation of options that are logically 
related to each other, to the benefit of Exchange members and traders 
and the public.\15\
---------------------------------------------------------------------------

    \15\ The Exchange has made conforming, technical changes to 
proposed Rule 506 to integrate the proposed language into its 
current rules and to correct a typographical error.
---------------------------------------------------------------------------

2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act \16\ in general, and furthers the

[[Page 40859]]

objectives of Section 6(b)(5) of the Act \17\ 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 providing for automatic 
allocation to an Exchange specialist of options that are related to 
each other.
---------------------------------------------------------------------------

    \16\ 15 U.S.C. 78f(b).
    \17\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

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

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition 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

    Because the foregoing proposed rule change does not: (i) 
Significantly affect the protection of investors or the public 
interest; (ii) impose any significant burden on competition; and (iii) 
become operative for 30 days from the date on which it was filed, or 
such shorter time as the Commission may designate, it has become 
effective pursuant to Section 19(b)(3)(A) of the Act \18\ and Rule 19b-
4(f)(6) thereunder.\19\
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    \18\ 15 U.S.C. 78s(b)(3)(A).
    \19\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6) 
requires a self-regulatory organization to give the Commission 
written notice of its intent to file the proposed rule change at 
least five business days prior to the date of filing of the proposed 
rule change, or such shorter time as designated by the Commission. 
Phlx has satisfied this requirement.
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    At any time within 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:

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-2009-62 on the subject line.

Paper Comments

     Send paper comments in triplicate to Elizabeth M. Murphy, 
Secretary, Securities and Exchange Commission, 100 F Street, NE., 
Washington, DC 20549-1090.

All submissions should refer to File Number SR-Phlx-2009-62. 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, 100 F Street, NE., 
Washington, DC 20549, on official business days between the hours of 10 
a.m. and 3 p.m. 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 publicly available. All 
submissions should refer to File Number SR-Phlx-2009-62 and should be 
submitted on or before September 3, 2009.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\20\
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    \20\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9-19374 Filed 8-12-09; 8:45 am]
BILLING CODE 8010-01-P
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