[Federal Register: January 31, 2007 (Volume 72, Number 20)]
[Notices]
[Page 4552-4553]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr31ja07-111]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-55173; File No. SR-Phlx-2006-85]
Self-Regulatory Organizations; Philadelphia Stock Exchange, Inc.;
Notice of Filing of Proposed Rule Change Relating to Listing Standards
for Basket Linked Notes
January 25, 2007.
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 December 12, 2006, the Philadelphia Stock Exchange, Inc. (``Phlx''
or ``Exchange'') filed with the Securities and Exchange Commission
(``Commission'') the proposed rule change as described in Items I, II,
and III below, which Items have been prepared by the Phlx. 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.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Phlx proposes to amend Phlx Rule 803--Criteria for Listing--
Tier 1, regarding listing standards for Basket Linked Notes (``BLNs'').
The text of the proposed rule change is available on Phlx's Web site at
http://www.phlx.com, at Phlx's principal office, and at the
Commission's Public Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the 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 is to conform Phlx's
listing standards for Basket Linked Notes, specifically Phlx Rule
803(k), to that of other exchanges. Phlx Rule 803 provides listing
standards for Basket Linked Notes, which are income instruments whose
values are linked to the performance of highly capitalized, actively
traded common stock. Specifically, BLNs are non-convertible debt of an
issuer, whose value is based, at least in part, on the value of another
issuer's common stock or non-convertible preferred stock.
Phlx Rule 803(k) details Phlx's listing standards for BLNs.
Specifically, Phlx Rule 803(k)(3) currently requires, among other
things, that securities linked to BLNs either: (i) Have a minimum
market capitalization of $3 billion and during the 12 months preceding
listing are shown to have traded at least 2.5 million shares; (ii) have
a minimum market capitalization of $1.5 billion and during the 12
months preceding listing are shown to have traded at least 10 million
shares; or (iii) have a minimum market capitalization of $500 million
and during the 12 months preceding listing are shown to have traded at
least 15 million shares.
On December 7, 2000, the Commission granted authority to the Phlx
to list and trade notes linked to more than one equity security.\3\
Each of the underlying securities of a BLN is required to meet the
standards for linked securities set forth in Phlx Rule 803(k). However,
the 2000 Order limited the basket of underlying securities that may to
be linked to a BLN to no more than twenty. At this time, Phlx proposes
to increase the number of underlying securities that may be linked to a
BLN from no more than 20 to no more than thirty.\4\
---------------------------------------------------------------------------
\3\ See Securities Exchange Act Release No. 43690 (December 7,
2000), 65 FR 78523 (December 15, 2000) (SR-Phlx-2000-90) (``2000
Order'').
\4\ This is identical to the listing standard of the American
Stock Exchange (Amex Company Guide Section 107B); see Securities
Exchange Act Release No. 47055 (December 19, 2002), 67 FR 79669
(December 30, 2002) (SR-Amex-2002-110).
---------------------------------------------------------------------------
The Phlx believes that expanding the basket of equity securities
that may be linked to a BLN will enhance competition and benefit
investors and the marketplace through additional product choices and
alternatives. The Phlx also believes that there would be no investor
protection concerns with expanding the number of equity securities that
may be linked to a BLN from more than one common stock to up to thirty
common stocks.
2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act \5\ in general, and furthers the objectives of Section
6(b)(5) of the Act \6\
[[Page 4553]]
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, and is not designed to
permit unfair discrimination between customers, issuers, brokers, or
dealers.
---------------------------------------------------------------------------
\5\ 15 U.S.C. 78f(b).
\6\ 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 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 the Exchange 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.
The Commission is considering granting accelerated approval of the
proposed rule change at the end of a 15-day comment period.\7\
---------------------------------------------------------------------------
\7\ Phlx has requested accelerated approval of this proposed
rule change prior to the 30th day after the date of publication of
the notice of the filing thereof.
---------------------------------------------------------------------------
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 (http://www.sec.gov/rules/sro.shtml.
); or Send an e-mail to rule-comments@sec.gov. Please include
File No. SR-Phlx-2006-85 on the subject line.
Paper Comments
Send paper comments in triplicate to Nancy M. Morris,
Secretary, Securities and Exchange Commission, Station Place, 100 F
Street, NE., Washington, DC 20549-1090.
All submissions should refer to File Number SR-Phlx-2006-85. 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 (http://www.sec.gov/rules/sro.shtml
). Copies of the submission, all subsequent amendments, all
written statements with respect to the proposed rule change that are
filed with the Commission, and all written communications relating to
the proposed rule change between the Commission and any person, other
than those that may be withheld from the public in accordance with the
provisions of 5 U.S.C. 552, will be available for inspection and
copying in the Commission's Public Reference Room. Copies of such
filing also will be available for inspection and copying at the
principal office of the 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-2006-85 and should be submitted on or before
February 15, 2007.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\8\
---------------------------------------------------------------------------
\8\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7-1506 Filed 1-30-07; 8:45 am]
BILLING CODE 8011-01-P