[Federal Register: December 15, 2006 (Volume 71, Number 241)]
[Notices]
[Page 75604-75606]
[DOCID:fr15de06-124]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-54874; File No. SR-Phlx-2006-78]

Self-Regulatory Organizations; Philadelphia Stock Exchange, Inc.;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Eliminate Certain License Fees

December 5, 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 November 27, 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
Exchange. The Exchange has designated this proposal as one establishing
or changing a due, fee, or other charge imposed by a self-regulatory
organization pursuant to Section 19(b)(3)(A) of the Act, \3\ and Rule
19b-4(f)(2) 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.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 15 U.S.C. 78s(b)(3)(A).
    \4\ 17 CFR 240.19b-4(f)(2).
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change

    The Phlx proposes to modify its fee schedule to eliminate certain
licensing fees and to not charge or rebate, when applicable, those
license fees that were collected during the time period that the
license fees were deemed to be no longer in effect. The text of the
proposed rule change is available on the Phlx's Web site, http://www.phlx.com
, at the Phlx's Office of the Secretary, 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 proposal. 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 the
Statutory Basis for, the Proposed Rule Change

1. Purpose
    Currently, the Exchange imposes a license fee of $0.10 per contract
side for equity option and index option ``firm'' transactions on
certain licensed products after a cap of $60,000 per member
organization is reached. \5\ The Exchange also assesses a license fee
of $0.10 per contract side after a 14,000 cap is reached on Registered
Options Traders (``ROT'') comparison charges and ROT and specialist
transaction charges in connection with non-AUTOM delivered equity
option contracts on those products that carry a license fee.\6\
Additionally, the Exchange imposes a license fee of $0.05 per contract
side for dividend and short stock interest strategies in connection
with certain products that carry license fees, if applicable.\7\ The
list of product symbols that are assessed a license fee are listed on
the Exchange's $60,000 ``Firm-Related'' Equity Option and Index Option
Cap Fee Schedule.
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    \5\ The $60,000 cap applies to all ``firm-related'' equity
option and index option comparison and transaction charges combined.
``Firm-related'' charges include equity option firm/proprietary
comparison charges, equity option firm/proprietary transaction
charges, equity option firm/proprietary facilitation transaction
charges, index option firm/proprietary comparison charges, index
option firm/proprietary transaction charges, and index option firm/
proprietary facilitation transaction charges (collectively ``firm-
related'' charges). See e.g., Securities Exchange Act Release No.
53287 (February 14, 2006), 71 FR 9186 (February 22, 2006) (SR-Phlx-
2006-10).
    \6\ See Securities Exchange Act Release No. 54659 (October 27,
2006), 71 FR 64603 (November 2, 2006) (SR-Phlx-2006-67).
    \7\ See e.g., Securities Exchange Act Release No. 54424
(September 11, 2006), 71 FR 54699 (September 18, 2006) (SR-Phlx-
2006-55).
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    The Exchange is proposing to eliminate the $0.10 per contract side
and $0.05 per contract side license fees described above on the
following products: iShares Lehman 1-3 Year Treasury Bond Fund, traded
under the symbol SHY; iShares Lehman 7-10 Year Treasury Bond Fund,
traded under the symbol IEF; iShares Lehman 20+ Treasury Bond Fund,
traded under the symbol TLT; iShares Lehman Aggregate Bond Fund, traded
under the symbol AGG; iShares Lehman TIPS Bond Fund, traded under the
symbol TIP (collectively ``iShares Lehman products''); Standard &
Poor's Depositary Receipts[supreg], Trust Series 1, traded under the
symbol SPY; \8\ iShares S&P 100 Index, traded under the symbol OEF;
iShares S&P Europe 350, traded under the symbol IEV; iShares S&P Global
100 Index, traded under the symbol IOO; iShares S&P Global Energy
Sector Index, traded under the symbol IXC; iShares S&P Global Financial
Sector Index, traded under the symbol IXG; iShares S&P Global
Healthcare Sector Index, traded under the symbol IXJ; iShares S&P
Global Information Technology Sector Index, traded under the symbol
IXN; iShares S&P Global Telecom Sector Index, traded under the symbol
IXP; iShares S&P Latin America 40, traded under the symbol ILF ;
iShares S&P MidCap 400, traded under the symbol IJH; iShares S&P
SmallCap 600, traded under the symbol IJR; iShares S&P TOPIX 150,
traded under the symbol ITF; iShares S&P 500, traded under the symbol
IVV; S&P Industrial Select Sector SPDR, traded under the symbol XLI;
S&P Technology Select Sector SPDR, traded under the symbol XLK; S&P
Utilities Select Sector SPDR, traded under the symbol XLU; S&P Consumer
Staples Select Sector SPDR, traded under the symbol XLP; S&P

Energy Select Sector SPDR, traded under the symbol XLE; S&P Financial
Select Sector SPDR, traded under the symbol XLF; S&P Health Care Select
Sector SPDR, traded under the symbol XLV; S&P Materials Select Sector
SPDR, traded under the symbol XLB; S&P Consumer Discretionary Select
Sector SPDR, traded under the symbol XLY; MidCap SPDR, traded under the
symbol MDY (collectively ``S&P products''); State Street Global
Advisors', a division of State Street Bank and Trust Company
(``SSGA''), streetTracks based on the Dow Jones & Co., Inc. (``Dow
Jones'') Global Titans 50 IndexSM, traded under the symbol DGT; SSGA's
streetTracks based on the Dow Jones Wilshire 5000 IndexSM,
traded under the symbol TMW; BGI's iShares Dow Jones Select Dividend
IndexSM, traded under the symbol DVY; iShares Dow Jones U.S.
Total Market IndexSM, traded under the symbol IYY; iShares
Dow Jones U.S. Basic Materials IndexSM, traded under the
symbol IWY; iShares Dow Jones U.S. Consumer Services Sector
IndexSM, traded under the symbol IYC; iShares Dow Jones U.S.
Financial Sector IndexSM, traded under the symbol IYF;
iShares Dow Jones U.S. Financial Services Sector IndexSM,
traded under the symbol IYG; iShares Dow Jones U.S. Healthcare Sector
IndexSM, traded under the symbol IYH; iShares Dow Jones U.S.
Industrial Sector IndexSM, traded under the symbol IYJ;
iShares Dow Jones U.S. Consumer Goods Sector IndexSM, traded
under the symbol IYK; iShares Dow Jones U.S. Real Estate Sector
IndexSM, traded under the symbol IYR; iShares Dow Jones U.S.
Technology Sector IndexSM, traded under the symbol IYW;
iShares Dow Jones U.S. Telecommunications Sector IndexSM,
traded under the symbol IYZ; iShares Dow Jones U.S. Utilities Sector
IndexSM, traded under the symbol IDU; and First Trust's ETF
based on the Dow Jones Select Microcap IndexSM, traded under
the symbol FDM, (collectively ``Dow Jones products''); \9\ NYSE
Composite Index, traded under the symbol NYC; and NYSE U.S. 100 Index,
traded under the symbol NY, (collectively ``NYSE products''); and
Nasdaq-100 Index Tracking Stock, traded under the symbol QQQQ
(``QQQQ'')SM.\10\
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    \8\ Standard & Poor's[supreg],'' ``S&P[supreg],'' ``S&P
500[supreg],'' ``Standard & Poor's 500[supreg]'', ``Standard &
Poor's Depositary Receipts[supreg],'' and ``500'' are trademarks of
The McGraw-Hill Companies, Inc., and have been licensed for use by
the Philadelphia Stock Exchange, Inc., in connection with the
listing and trading of SPDRs, on the Phlx. These products are not
sponsored, sold or endorsed by S&P, a division of The McGraw-Hill
Companies, Inc., and S&P makes no representation regarding the
advisability of investing SPDRs.
    \9\ ``Dow Jones'' and ``SSGA's streetTracks based on the Dow
Jones Global Titans 50 IndexSM'', ``SSGA's streetTracks
based on the Dow Jones Wilshire 5000 IndexSM'', ``BGI's
iShares Dow Jones Select Dividend IndexSM'', ``iShares
Dow Jones U.S. Total Market IndexSM'', ``iShares Dow
Jones U.S. Basic Materials IndexSM'', ``iShares Dow Jones
U.S. Consumer Services Sector IndexSM'', ``iShares Dow
Jones U.S. Financial Sector IndexSM'', ``iShares Dow
Jones U.S. Financial Services Sector IndexSM'', ``iShares
Dow Jones U.S. Healthcare Sector IndexSM'', ``iShares Dow
Jones U.S. Industrial Sector IndexSM'', ``iShares Dow
Jones U.S. Consumer Goods Sector IndexSM'', ``iShares Dow
Jones U.S. Real Estate Sector IndexSM'', ``iShares Dow
Jones U.S. Technology Sector IndexSM'', ``iShares Dow
Jones U.S. Telecommunications Sector IndexSM'', ``iShares
Dow Jones U.S. Utilities Sector IndexSM'', and ``First
Trust's ETF based on the Dow Jones Select Microcap
IndexSM'', are service marks of Dow Jones & Company, Inc.
and have been licensed for use for certain purposes by the
Philadelphia Stock Exchange, Inc. The Dow Jones products are not
sponsored, endorsed, sold or promoted by Dow Jones, and Dow Jones
makes no representation regarding the advisability of investing in
such product(s).
    \10\ The Nasdaq-100[supreg], Nasdaq-100 Index[supreg],
Nasdaq[supreg], The Nasdaq Stock Market[supreg], Nasdaq-100
SharesSM, Nasdaq-100 TrustSM, Nasdaq-100 Index
Tracking StockSM, and QQQSM are trademarks or
service marks of The Nasdaq Stock Market, Inc. (Nasdaq) and have
been licensed for use for certain purposes by the Phlx pursuant to a
License Agreement with Nasdaq. The Nasdaq-100 Index[supreg] (the
Index) is determined, composed, and calculated by Nasdaq without
regard to the Licensee, the Nasdaq-100 TrustSM, or the
beneficial owners of Nasdaq-100 SharesSM. Nasdaq has
complete control and sole discretion in determining, comprising, or
calculating the Index or in modifying in any way its method for
determining, comprising, or calculating the Index in the future.
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    The proposed rule change would remove references to the product
symbols listed above from the Exchange's $60,000 ``Firm Related''
Equity Option and Index Option Cap because the Exchange no longer pays
a license fee in connection with the trading of these products.
Accordingly, there is no need to assess a license fee. Therefore, for
trades settling on or after November 28, 2006, the Exchange will
eliminate the $0.10 and $0.05 license fees for the above-referenced
products. In addition, the Exchange will either not charge any license
fees, or rebate any license fees that were collected, for iShares
Lehman products, S&P products, Dow Jones products and NYSE products for
trades settling on or after June 16, 2006 through November 27, 2006.
Additionally, the Exchange will either not charge any license fees, or
rebate any license fees that were collected, on QQQQ for trades
settling on or after October 13, 2006 through November 27, 2006.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent
with Section 6(b) of the Act \11\ in general, and furthers the
objectives of Section 6(b)(4) of the Act \12\ in particular, in that it
is an equitable allocation of reasonable fees and other charges among
Exchange members.
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    \11\ 15 U.S.C. 78f(b).
    \12\ 15 U.S.C. 78f(b)(4).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Phlx believes that the proposed rule change would impose no
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

    The Exchange did not solicit or receive any written comments with
respect to the proposal.

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

    The foregoing proposed rule change has been designated as a fee
change pursuant to Section 19(b)(3)(A)(ii) of the Act \13\ and Rule
19b-4(f)(2) \14\ thereunder. Accordingly, the proposal is effective
upon filing with the Commission. 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.
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    \13\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \14\ 17 CFR 240.19b-4(f)(2).
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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<EMAIL_ADDRESS>Please include

File Number SR-Phlx-2006-78 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-2006-78. 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 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 available publicly. All
submissions should refer to File Number SR-Phlx-2006-78 and should be
submitted on or before January 5, 2007.

    For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\15\
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    \15\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E6-21338 Filed 12-14-06; 8:45 am]

BILLING CODE 8011-01-P