Skip to Content

Notice

Self-Regulatory Organizations; Notice of Filing and Immediate Effectiveness of Proposed Rule Change by the NASDAQ OMX PHLX, Inc. Relating to Clarification Regarding Capitalization-Weighting of Indexes

Document Details

Information about this document as published in the Federal Register.

Published Document

This document has been published in the Federal Register. Use the PDF linked in the document sidebar for the official electronic format.

Start Preamble October 3, 2008.

Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”)[1] and Rule 19b-4 thereunder,[2] notice is hereby given that on September 29, 2008, the NASDAQ OMX PHLX, Inc. (“Phlx” or “Exchange”), filed with the Securities and Exchange Commission (“Commission”) the proposed rule change as described in Items I and II below, which Items have been prepared by the Exchange. Phlx filed the proposal pursuant to Section 19(b)(3)(A) of the Act[3] and Rule 19b-4(f)(6) thereunder,[4] 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, pursuant to Section 19(b)(1) of the Act[5] and Rule 19b-4 Start Printed Page 60376thereunder,[6] proposes to clarify the methodology used in calculating capitalization-weighted and modified capitalization-weighted indexes underlying options listed pursuant to Exchange Rule 1009A(b).

The text of the proposed rule change is available on the Exchange's Web site at http://www.phlx.com/​regulatory/​reg_​rulefilings.aspx, 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 Exchange currently lists a number of narrow-based stock index options pursuant to the listing standards established in section (b) of Phlx Rule 1009A, Designation of the Index (the “Generic Listing Rule”). The Generic Listing Rule includes capitalization-weighting (including modified capitalization-weighting) as a permissible component weighting methodology for indexes underlying options listed pursuant to the Generic Listing Rule. The Exchange would like to clarify that component last sale prices used to calculate index values under capitalization-weighting methodology can be either primary exchange regular-way last sale prices or the regular-way last sale prices reported on the consolidated tape. A primary exchange last sale price is generally the last sale price on a trade executed through the facilities of the exchange where the component maintains its listing. A consolidated tape last sale price is the last sale price reported under the appropriate national market system reporting plan, regardless of where the trade was executed.[7]

2. Statutory Basis

The Exchange believes that the proposal is consistent with Section 6(b) of the Act[8] in general, and furthers the objectives of Section 6(b)(5) of the Act[9] in particular, in that it is designed to promote just and equitable principles of trade, to remove impediments to and perfect the mechanisms of a free and open market and a national market system, and, in general, to protect investors and the public interest by clarifying that investors may have access to options listed pursuant to the Generic Listing Rule that underlie indexes other than those based exclusively on primary exchange last sale prices.

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

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

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

No written comments were solicited nor received.

III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action

Because the foregoing proposed rule change: (1) Does not significantly affect the protection of investors or the public interest; (2) does not impose any significant burden on competition; and (3) by its terms does not become operative for 30 days after the date of this filing, the proposed rule change has become effective pursuant to Section 19(b)(3)(A) of the Act [10] and Rule 19b-4(f)(6) thereunder.[11] In addition, Rule 19b-4(f)(6)(iii) [12] requires a self-regulatory organization to provide the Commission with written notice of its intent to file the proposed rule change, along with a brief description and text of the proposed rule change, at least five-business days prior to the date of filing of the proposed rule change. The Exchange has satisfied the five-business-day pre-filing requirement.

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

Paper Comments

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

All submissions should refer to File Number SR-Phlx-2008-67. 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, 100 F Street, NE., Washington, DC 20549, on official business days between the hours of 10 a.m. and 3 p.m. Copies of the 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 Start Printed Page 60377you wish to make available publicly. All submissions should refer to File Number SR-Phlx-2008-67 and should be submitted on or before October 31, 2008.

Start Signature

For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.[13]

Florence E. Harmon,

Acting Secretary.

End Signature End Preamble

Footnotes

7.  Language that was included in the “Purpose” section of the filing to add modified capitalization-weighting as a permissible weighting methodology for indexes underlying options listed pursuant to the Generic Listing Rule could be interpreted to permit only primary exchange last sale prices to be used. See Securities Exchange Act Release No. 46211 (July 16, 2002), 67 FR 47874 (July 22, 2002) (SR-Phlx-2002-42). This, of course, is not always the best approach in calculating indexes, since in some cases the consolidated tape may be a better source for current prices.

Back to Citation

12.  17 CFR 240.19b-4(f)(6)(iii).

Back to Citation

[FR Doc. E8-24119 Filed 10-9-08; 8:45 am]

BILLING CODE 8011-01-P