9672 Federal Register / Vol. 69, No. 40 / Monday, March 1, 2004 / Notices

For the Commission, by the Division of II. Self-Regulatory Organization’s In addition, the position and exercise Market Regulation, pursuant to delegated Statement of the Purpose of, and limits applicable to BKX will be 20 authority. Statutory Basis for, the Proposed Rule increased from 24,000 contracts to Margaret H. McFarland, Change 44,000 contracts in order to Deputy Secretary. accommodate the increased number of In its filing with the Commission, [FR Doc. 04–4431 Filed 2–27–04; 8:45 am] contracts outstanding. With the Amex included statements concerning BILLING CODE 8010–01–P exception of the position limit change, the purpose of and basis for the this procedure is similar to the one proposed rule change and discussed any comments it received on the proposed employed respecting equity options SECURITIES AND EXCHANGE where the underlying security is subject COMMISSION rule change. The text of these statements 7 may be examined at the places specified to a ten-for-one stock split. The trading [Release No. 34–49312; File No. SR–Phlx– in Item IV below. The Exchange has symbol will remain BKX. 2004–13] prepared summaries, set forth in In conjunction with the proposed Self-Regulatory Organizations; Notice Sections A, B, and C below, of the most split, the Exchange will list strike prices of Filing and Immediate Effectiveness significant aspects of such statements. surrounding the new lower Index value, pursuant to Phlx Rule 1101A. The of Proposed Rule Change by the A. Self-Regulatory Organization’s Exchange will announce the effective Philadelphia Stock Exchange, Inc. Statement of the Purpose of, and the date by way of an Exchange Relating to the Phlx/KBW Bank Index Statutory Basis for, the Proposed Rule memorandum to the membership, 10-for-1 Split Change which will also serve as notice of the February 24, 2004. 1. Purpose strike price and position limit changes. Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 The purpose of the proposed rule 2. Statutory Basis (‘‘Exchange Act’’),1 and Rule 19b–4 change is to attract additional liquidity The Exchange believes that its thereunder,2 notice is hereby given that to the BKX. A ten-for-one split, which proposal is consistent with Section 6(b) on February 17, 2004, the Philadelphia reduces the value of the Index, should have a positive effect on overall of the Act 8 in general, and furthers the Stock Exchange, Inc. (‘‘Phlx’’ or 9 ‘‘Exchange’’) filed with the Securities transaction volumes by making the objectives of Section 6(b)(5) in and Exchange Commission option premiums more attractive for particular, in that it is designed to (‘‘Commission’’) the proposed rule retail investors. By reducing the value of promote just and equitable principles of change as described in Items I, II, and the Index, investors will be able to trade, to remove impediments to and III below, which Items have been utilize the BKX as a trading vehicle perfect the mechanism of a free and prepared by the Exchange. The Phlx has while extending a smaller outlay of open market and a national market submitted the proposed rule change capital. This should attract additional system, and to protect investors and the under section 19(b)(3)(A) of the investors and, in turn, create a more public interest by establishing a lower Exchange Act 3 and Rule 19b–4(f)(6) active and liquid trading environment. Index value, which should, in turn, thereunder,4 which renders the proposal The Exchange began trading the BKX facilitate trading in BKX, creating a effective upon filing with the in 1992.6 As of January 30, 2004, the more liquid trading environment. The Commission. The Commission is Index value was 992.69 and the near- Exchange believes that reducing the publishing this notice to solicit month at-the-money call premium was value of the Index should not raise comments on the proposed rule change $16.25 per contract. The Exchange manipulation concerns and should not from interested persons. proposes to conduct a ‘‘ten-for-one cause adverse market impact because the Exchange will continue to employ I. Self-Regulatory Organization’s split’’ of the Index, such that the Index value would be reduced to one-tenth of its surveillance procedures and has Statement of the Terms of Substance of proposed an orderly procedure to the Proposed Rule Change its current value, or 99.27. In order to maintain economic equivalence, the achieve the Index split, including The Phlx proposes to reduce the value number of BKX contracts will be adequate prior notice to market of its Phlx/KBW Bank Index (‘‘Index’’) increased ten-fold, such that for each participants. option (‘‘BKX’’) to one-tenth its present BKX contract currently held, the holder value by multiplying by ten the base B. Self-Regulatory Organization’s would receive ten contracts at the Statement on Burden on Competition market divisor used to calculate the reduced value, each with a strike price Index. In addition, the position and equal to one-tenth of the original strike The Exchange does not believe that exercise limits applicable to the BKX price. For example, the holder of one the proposed rule change will impose (currently 24,000 contracts) will be BKX 990 call with a premium of $16.25 any inappropriate burden on increased to 44,000 contracts. The Index will receive ten BKX 99 calls with a competition. is a cash-settled, capitalization- premium of $1.63. weighted, narrow-based, A.M. settled 7 index composed of 24 geographically Customarily, the position and exercise limits Corp., Wells Fargo and Co., JP Morgan Chase & Co., would also be increased ten-fold in a ten-for-one diverse stocks representing national Wachovia Corp., Bank One Corporation, U.S. split until the expiration of the then-furthest-out money center banks and leading Bancorp, Washington Mutual, Fifth Third Bancorp, expiration month, after which time the position and regional institutions.5 FleetBoston Financial Corp., MBNA Corp., National exercise limits would revert back to their pre-split City Corp., Bank of New York Company, SunTrust levels. See, e.g., Securities Exchange Act Release Banks, Inc., BB&T Corp., PNC Financial Services, No. 42814 (May 23, 2000), 65 FR 35152 (June 1, 20 17 CFR 200.30–3(a)(12). Golden West Financial Corp., State Street Corp., 2000) (File No. SR–Phlx–00–11) (two-for-one split 1 15 U.S.C. 78s(b)(1). Keycorp, Mellon Financial Corporation, SouthTrust of index value resulted in a doubling of the 2 17 CFR 240.19b–4. Corp., Northern Trust Corp., Comerica, Inc., and applicable position and exercise limits). In the 3 15 U.S.C. 78s(b)(3)(A). Zion Bancorporation. present case, the position and exercise limits will 4 17 CFR 240.19b–4(f)(6). 6 See Securities Exchange Act Release No. 31145 not revert back to pre-split levels. 5 The Index is currently composed of the (September 3, 1992), 57 FR 41531 (September 10, 8 15 U.S.C. 78f(b). following stocks: Citigroup, Inc., Bank of America 1992) (File No. SR–Phlx–91–27). 9 15 U.S.C. 78f(b)(5).

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C. Self-Regulatory Organization’s in an orderly manner. Accordingly, the Securities and Exchange Commission Statement on Comments on the Commission designates the proposal to [Release No. 34–49311; File No. SR–Phlx– Proposed Rule Change Received From be operative immediately. 2003–72] Members, Participants or Others At any time within 60 days of the No written comments were either filing of such proposed rule change, the Self-Regulatory Organizations; solicited or received. Commission may summarily abrogate Philadelphia Stock Exchange, Inc.; Order Granting Approval of Proposed III. Date of Effectiveness of the such rule change if it appears to the Commission that such action is Rule Change To Reduce Strike Prices Proposed Rule Change and Timing for for Index Options Commission Action necessary or appropriate in the public interest, for the protection of investors, The Phlx has filed the proposed rule February 24, 2004. or otherwise in furtherance of the change pursuant to section 19(b)(3)(A) On December 4, 2003, the purposes of the Act.13 of the Act 10 and subparagraph (f)(6) of Philadelphia Stock Exchange, Inc. Rule 19b–4 thereunder.11 Because the IV. Solicitation of Comments (‘‘Phlx’’ or ‘‘Exchange’’) filed with the foregoing proposed rule change: (1) Securities and Exchange Commission Does not significantly affect the Interested persons are invited to (‘‘Commission’’), pursuant to Section protection of investors or the public submit written data, views, and 19(b)(1) of the Securities Exchange Act 1 interest; (2) does not impose any arguments concerning the foregoing, of 1934 (‘‘Act’’) and Rule 19b–4 2 significant burden on competition; and including whether the proposal is thereunder, a proposed rule change to (3) is not proposed to become operative consistent with the Act. Persons making amend Phlx Rule 1101A (‘‘Terms of for 30 days, or such shorter time as the written submissions should file six Option Contracts’’) to provide that strike 3 Commission may designate, and the copies thereof with the Secretary, price intervals for index options shall Phlx provided the Commission with Securities and Exchange Commission, be $2.50 for the three consecutive near- term months, $5 for the fourth month, written notice of its intent to file the 450 Fifth Street, NW., Washington, DC and $10 for the fifth month. The proposed rule change at least five 20549–0609. Comments may also be proposed rule change was published for business days prior to the filing date, submitted electronically at the following the proposed rule change has become comment in the Federal Register on e-mail address: [email protected]. January 21, 2004.4 The Commission effective pursuant to Section 19(b)(3)(A) All comment letters should refer to File of the Act and Rule 19b–4(f)(6) received no comments on the proposal. No. SR–Phlx–2004–13. The file number This order approves the proposed rule thereunder. should be included on the subject line A proposed rule change filed under change. if e-mail is used. To help the Rule 19b–4(f)(6) normally does not The Commission finds that the become operative prior to 30 days after Commission process and review your proposed rule change is consistent with the date of filing. However, Rule 19b– comments more efficiently, comments the requirements of the Act and the 4(f)(6)(iii) permits the Commission to should be sent in hardcopy or by e-mail rules and regulations thereunder designate a shorter time if such action but not by both methods. applicable to a national securities 5 is consistent with the protection of Copies of the submission, all exchange. In particular, the investors and the public interest. The subsequent amendments, all written Commission believes the proposal is Phlx has requested that the Commission statements with respect to the proposed consistent with Section 6(b)(5) of the 6 waive the 30-day operative delay to rule change that are filed with the Act which requires, among other things, that the Exchange’s rules be allow the proposed Index split and Commission, and all written designed to promote just and equitable corresponding increases in the position communications relating to the principles of trade, to remove and exercise limits applicable to BKX proposed rule change between the impediments to and perfect the options to occur without delay. Commission and any person, other than The Commission finds that waiving mechanism of a free and open market those that may be withheld from the and a national market system, and, in the 30-day operative delay is consistent public in accordance with the with the protection of investors and the general, to protect investors and the provisions of 5 U.S.C. 552, will be public interest.12 Specifically, the public interest. available for inspection and copying in Commission believes that allowing the The Commission believes that by the Commission’s Public Reference Phlx to implement the proposed ten-for- reducing strike price intervals to $2.50 one split of the Phlx/KBW Bank Index Room. Copies of such filing will also be strikes for three consecutive near-term will facilitate a more liquid trading available for inspection and copying at months, $5 for the fourth month, and environment and make the BKX product the principal office of the Exchange. All $10 for the fifth month, the proposed more accessible to investors. Waiving submissions should refer to the File No. rule change should increase the ability the 30-day operative delay will permit SR–Phlx–2004–13 and should be to trade an options series that is likely the Exchange community (specialists, submitted by March 22, 2004. to expire in-the-money. In addition, the Commission notes that the Exchange broker-dealers, and retail customers) a For the Commission, by the Division of has represented that there is sufficient full expiration month’s notice before the Market Regulation, pursuant to delegated changes specified in the proposal take authority.14 effect following the March 2004 1 15 U.S.C. 78s(b)(1). Margaret H. McFarland, 2 expiration date, and will assist Phlx in 17 CFR 240.19b–4. Deputy Secretary. 3 Index options traded on the Exchange are also implementing the proposed Index split [FR Doc. 04–4507 Filed 2–27–04; 8:45 am] known as sector index options. 4 See Securities Exchange Act Release No. 49074 10 15 U.S.C. 78s(b)(3)(A). BILLING CODE 8010–01–P (January 14, 2004), 69 FR 2959. 11 17 CFR 240.19b–4(f)(6). 5 In approving this proposed rule change, the 12 For purposes only of waiving the operative date Commission notes that it has considered the of this proposal, the Commission has considered proposed rule’s impact on efficiency, competition, the proposed rule’s impact on efficiency, 13 15 U.S.C. 78s(b)(3)(C). and capital formation. 15 U.S.C. 78c(f). competition, and capital formation. 15 U.S.C. 78c(f). 14 17 CFR.200.30–3(a)(12). 6 15 U.S.C. 78f(b)(5).

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