Self-Regulatory Organizations; Philadelphia Stock Exchange, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to an Electronic Audit Trail for Orders in Options Overlying the Standard and Poor's Depositary Receipts, 3089-3091 [E5-194]

Download as PDF Federal Register / Vol. 70, No. 12 / Wednesday, January 19, 2005 / Notices appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. IV. Solicitation of Comments For the Commission, by the Division of Market Regulation, pursuant to delegated authority.12 Jill M. Peterson, Assistant Secretary. [FR Doc. E5–176 Filed 1–18–05; 8:45 am] 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: BILLING CODE 8010–01–P Electronic Comments Self-Regulatory Organizations; Philadelphia Stock Exchange, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to an Electronic Audit Trail for Orders in Options Overlying the Standard and Poor’s Depositary Receipts • 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-2004-94 on the subject line. SECURITIES AND EXCHANGE COMMISSION [Release No. 34–51028; File No. SR-Phlx2005-04] January 12, 2005. Paper Comments Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 • Send paper comments in triplicate (‘‘Act’’),1 and Rule 19b–4 thereunder,2 to Jonathan G. Katz, Secretary, notice is hereby given that on January Securities and Exchange Commission, 11, 2005, the Philadelphia Stock 450 Fifth Street, NW., Washington, DC Exchange, Inc. (‘‘Phlx’’ or ‘‘Exchange’’) 20549–0609. filed with the Securities and Exchange Commission (‘‘Commission’’) the All submissions should refer to File proposed rule change as described in Number SR-Phlx-2004-94. This file Items I and II below, which Items have number should be included on the subject line if e-mail is used. To help the been prepared by the Phlx. The Exchange has filed the proposal as a Commission process and review your ‘‘non-controversial’’ rule change comments more efficiently, please use only one method. The Commission will pursuant to Section 19(b)(3)(A) of the 4 3 post all comments on the Commission’s Act, and Rule 19b–4(f)(6) thereunder, which renders the proposal effective Internet Web site (https://www.sec.gov/ upon filing with the Commission.5 The rules/sro.shtml). Copies of the Commission is publishing this notice to submission, all subsequent solicit comments on the proposed rule amendments, all written statements change from interested persons. with respect to the proposed rule I. Self-Regulatory Organization’s change that are filed with the Statement of the Terms of Substance of Commission, and all written the Proposed Rule Change communications relating to the proposed rule change between the The Phlx proposes to amend Phlx Commission and any person, other than Rule 1063, Responsibilities of Floor those that may be withheld from the Brokers, and Option Floor Procedure Advice (‘‘OFPA’’) C–2, Options Floor public in accordance with the Broker Management System (‘‘FBMS’’), provisions of 5 U.S.C. 552, will be to extend the date on which Floor available for inspection and copying in Brokers would be required to create an the Commission’s Public Reference Room. Copies of such filing also will be electronic audit trail for non-electronic orders in options overlying the Standard available for inspection and copying at and Poor’s Depositary Receipts the principal office of the Phlx. All (‘‘SPDRs’’) until March 28, 2005. The comments received will be posted text of the proposed rule change is without change; the Commission does not edit personal identifying 12 17 CFR 200.30–3(a)(12). information from submissions. You 1 15 U.S.C. 78s(b)(1). should submit only information that 2 17 CFR 240.19b–4. you wish to make available publicly. All 3 15 U.S.C. 78s(b)(3)(A). 4 17 CFR 240.19b–4(f)(6). submissions should refer to File 5 The Phlx asked the Commission to waive the 30Number SR-Phlx-2004-94 and should be submitted on or before February 9, 2005. day operative delay. See Rule 19b–4(f)(6)(iii). 17 CFR 240.19b–4(f)(6)(iii). VerDate jul<14>2003 15:11 Jan 18, 2005 Jkt 205001 PO 00000 Frm 00095 Fmt 4703 Sfmt 4703 3089 below. Proposed new language is in italics. Responsibilities of Floor Brokers Rule 1063. (a)–(d)—No change. (e)(i) Options Floor Broker Management System. In order to create an electronic audit trail for options orders represented by Floor Brokers on the Exchange’s Options Floor, a Floor Broker or such Floor Broker’s employees shall, contemporaneously upon receipt of an order and prior to the representation of such an order in the trading crowd, record all options orders represented by such Floor Broker onto the electronic Options Floor Broker Management System (as described in Rule 1080, Commentary .06). The following specific information with respect to orders represented by a Floor Broker shall be recorded by such Floor Broker or such Floor Broker’s employees: (i) the order type (i.e., customer, firm, broker-dealer); (ii) the option symbol; (iii) buy, sell, or cancel; (iv) call, put, complex (i.e., spread, straddle), or contingency order as described in Rule 1066; (v) number of contracts; (vi) limit price or market order or, in the case of a complex order, net debit or credit, if applicable; (vii) whether the transaction is to open or close a position; and (viii) The Options Clearing Corporation (‘‘OCC’’) clearing number of the broker-dealer that submitted the order (collectively, the ‘‘required information’’). Upon the execution of such an order, the Floor Broker shall enter the time of execution of the trade. Floor Brokers or their employees shall enter clearing information onto the Options Floor Broker Management System no later than five minutes after the execution of a trade. In the event of a malfunction in the Options Floor Broker Management System, Floor Brokers shall record the required information on trade tickets, and shall not represent an order for execution which has not been time stamped with the time of entry on the trading floor. Such trade tickets shall be time stamped upon the execution of such an order. Floor Brokers or their employees shall enter the required information that is recorded on such trade tickets into AUTOM for inclusion in the electronic audit trail. (ii) Orders in Options Overlying Standard and Poor’s Depositary Receipts (‘‘SPDRs’’). The requirements of sub-paragraph (e)(i) above shall apply to options overlying SPDRs beginning on March 28, 2005. (f) No change. E:\FR\FM\19JAN1.SGM 19JAN1 3090 Federal Register / Vol. 70, No. 12 / Wednesday, January 19, 2005 / Notices C–2 Options Floor Broker Management System Options Floor Broker Management System. In order to create an electronic audit trail for options orders represented by Floor Brokers on the Exchange’s Options Floor, a Floor Broker or such Floor Broker’s employees shall, contemporaneously upon receipt of an order and prior to the representation of such an order in the trading crowd, record all options orders represented by such Floor Broker onto the electronic Options Floor Broker Management System (as described in Rule 1080, Commentary .06). The following specific information with respect to orders represented by a Floor Broker shall be recorded by such Floor Broker or such Floor Broker’s employees: (i) the order type (i.e., customer, firm, brokerdealer); (ii) the option symbol; (iii) buy, sell, or cancel; (iv) call, put, complex (i.e., spread, straddle), or contingency order as described in Rule 1066; (v) number of contracts; (vi) limit price or market order or, in the case of a complex order, net debit or credit, if applicable; (vii) whether the transaction is to open or close a position; and (viii) The Options Clearing Corporation (‘‘OCC’’) clearing number of the brokerdealer that submitted the order (collectively, the ‘‘required information’’). Upon the execution of such an order, the Floor Broker shall enter the time of execution of the trade. Floor Brokers or their employees shall enter clearing information onto the Options Floor Broker Management System no later than five minutes after the execution of a trade. In the event of a malfunction in the Options Floor Broker Management System, Floor Brokers shall record the required information on trade tickets, and shall not represent an order for execution which has not been time stamped with the time of entry on the trading floor. Such trade tickets shall be time stamped upon the execution of such an order. Floor Brokers or their employees shall enter the required information that is recorded on such trade tickets into AUTOM for inclusion in the electronic audit trail. Floor Brokers or their employees shall enter the required information (as described above) for FLEX and foreign currency options, including customized foreign currency options, or ensure that such information is entered, into the Exchange’s electronic audit trail in the same electronic format as the required information for equity and index options. Floor Brokers or their employees shall enter the required information for FLEX and foreign VerDate jul<14>2003 15:11 Jan 18, 2005 Jkt 205001 currency options, including customized foreign currency options, into the electronic audit trail on the same business day that a specific event surrounding the lifecycle of an order in FLEX and foreign currency options, including customized foreign currency options (including, without limitation, orders, price or size changes, execution or cancellation) occurs. Orders in Options Overlying Standard and Poor’s Depositary Receipts (‘‘SPDRs’’). The requirements of this Advice shall apply to options overlying SPDRs beginning on March 28, 2005. FINE SCHEDULE No change. II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, 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 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 purpose of the proposed rule change is to amend Phlx Rule 1063(e) and OFPA C–2 to reflect that the requirement that Floor Brokers create an electronic audit trail for non-electronic orders in options overlying SPDRs will commence on March 28, 2005. The Commission recently approved, on a permanent basis, amendments to Phlx Rule 1063 and OFPA C–2 to require that, contemporaneously upon receipt of an order and prior to the representation of such an order in the trading crowd, Floor Brokers must record all options orders represented by such Floor Broker onto the electronic Options Floor Broker Management System.6 6 See Securities Exchange Act Release No. 50997 (January 7, 2005) (SR-Phlx-2003-40). The Options Floor Broker Management System is a component of AUTOM designed to enable Floor Brokers and/ or their employees to enter, route and report transactions stemming from options orders received on the Exchange. The Options Floor Broker Management System also is designed to establish an electronic audit trail for options orders represented and executed by Floor Brokers on the Exchange, such that the audit trail provides an accurate, timesequenced record of electronic and other orders, quotations and transactions on the Exchange, beginning with the receipt of an order by the PO 00000 Frm 00096 Fmt 4703 Sfmt 4703 The requirements of Phlx Rule 1063(e) and OFPA C–2 that Floor Brokers record the ‘‘required information’’ as defined therein commenced on January 10, 2005. Options overlying SPDRs began trading on the Exchange on January 10, 2005. The Exchange believes that the extension of the date for compliance with the electronic audit trail requirements for non-electronic orders in options overlying SPDRs until March 28, 2005 is reasonable and appropriate, because the manner in which these options trade, and the trading environment that exists in these options, is significantly different than that of equity options, and since options overlying SPDRs only very recently began trading on the Exchange, as described above. 2. Statutory Basis The Exchange believes that its proposal is consistent with Section 6(b) of the Act 7 in general, and furthers the objectives of Section 6(b)(5) 8 of the Act in particular, in that it is designed to perfect the mechanisms of a free and open market and the national market system, protect investors and the public interest and promote just and equitable principles of trade, by requiring Exchange Floor Brokers to incorporate non-electronic orders in options overlying SPDRs while reasonably extending such requirement until March 28, 2005 respecting options overlying SPDRs. 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 The Exchange has neither solicited nor received comments on the proposed rule change. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Because the foregoing rule change: (1) Does not significantly affect the protection of investors or the public interest; (2) does not impose any Exchange, and further documenting the life of the order through the process of execution, partial execution, or cancellation of that order. See Exchange Rule 1080, Commentary .06. 7 15 U.S.C. 78f(b). 8 15 U.S.C. 78f(b)(5). E:\FR\FM\19JAN1.SGM 19JAN1 Federal Register / Vol. 70, No. 12 / Wednesday, January 19, 2005 / Notices significant burden on competition; and (3) does not become operative for 30 days from the date on which it was filed, or such shorter time as the Commission may designate if consistent with the protection of investors and the public interest, the proposed rule change has become effective pursuant to Section 19(b)(3)(A) of the Act 9 and Rule 19b–4(f)(6) thereunder.10 A proposed rule change filed under Rule 19b–4(f)(6)11 normally does not become operative prior to 30 days after the date of filing. However, Rule 19b– 4(f)(6)(iii) permits the Commission to designate a shorter time if such action is consistent with the protection of investors and the public interest. The Exchange requests that the Commission waive the 5-day pre-filing requirement and the 30-day operative delay, as specified in Rule 19b–4(f)(6)(iii), and designate the proposed rule change immediately operative. The Commission notes that by waiving the operative period, the Exchange has stated that it will be able to implement trading in options on SPDRs expeditiously. For these reasons, consistent with the protection of investors and the public interest, the Commission designates that the proposed rule change has become effective and operative immediately. At any time within 60 days of the filing of such 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 450 Fifth Street, NW., Washington, DC 20549–0609. All submissions should refer to File Number SR-Phlx-2005-04. 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. Copies of the filing also will be available for inspection and copying at the principal offices 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-2005-04 and should be submitted on or before February 9, 2005. For the Commission, by the Division of Market Regulation, pursuant to delegated authority.12 J. Lynn Taylor, Assistant Secretary. [FR Doc. E5–194 Filed 1–18–05; 8:45 am] 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: BILLING CODE 8010–01–P Electronic Comments ACTION: • 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-2005-04 on the subject line. Paper Comments • Send paper comments in triplicate to Jonathan G. Katz, Secretary, Securities and Exchange Commission, 9 15 U.S.C. 78s(b)(3)(A) CFR 240.19b–4(f)(6). 11 17 CFR 240.19b–4(f)(6). Data Collection Available for Public Comments and Recommendations Notice and request for comments. SUMMARY: In accordance with the Paperwork Reduction Act of 1995, this notice announces the Small Business Administration’s intentions to request approval on a new and/or currently approved information collection. DATES: Submit comments on or before March 21, 2005. ADDRESSES: Send all comments regarding whether these information collections are necessary for the proper performance of the function of the 10 17 VerDate jul<14>2003 15:11 Jan 18, 2005 12 17 Jkt 205001 agency, whether the burden estimates are accurate, and if there are ways to minimize the estimated burden and enhance the quality of the collections, to Sandra Johnston, Program Analyst, Office of Financial Assistance, Small Business Administration, 409 3rd Street SW., Suite 8300, Washington, DC 20416 FOR FURTHER INFORMATION CONTACT: Sandra Johnston, Program Analyst, 202– 205–7528, sandra.johnston@sba.gov or Curtis B. Rich, Management Analyst, 202–205–7030, curtis.rich@sba.gov. SUPPLEMENTARY INFORMATION: Title: ‘‘U.S. Small Business Administration Application for Section 504 Loan.’’ Description of Respondents: Certified Development Companies regulated by SBA. Form No: 1244. Annual Responses: 5,200. Annual Burden: 11,700. Title: ‘‘7(a) Loan Closing Forms.’’ Description of Respondents: 7(a) Participants. Form No’s: 159, 160, 160A. Annual Responses: 115,000. Annual Burden: 9,584. Title: ‘‘Request for Borrowers (Financial Statement).’’ Description of Respondents: SBA Borrowers or guarantor’s who request compromise. Form No: 770. Annual Responses: 5,000. Annual Burden: 5,000. Title: ‘‘Servicing Agent Agreement.’’ Description of Respondents: Certified Development Companies and SBA Borrowers. Form No: 1506. Annual Responses: 4,200. Annual Burden: 4,200. Send all comments regarding whether this information collection is necessary for the proper performance of the function of the agency, whether the burden estimates are accurate, and if there are ways to minimize the estimated burden and enhance the quality of the collection, to Carol Walker, Director, Civil Rights Compliance, Small Business Administration, 409 3rd Street SW., Suite 5000, Washington, DC 20416. FOR FURTHER INFORMATION CONTACT: Carol Walker, Program Analyst, 205– 7149, carol.walker@sba.gov or Curtis B. Rich, Management Analyst, 202–205– 7030, curtis.rich@sba.gov. SUPPLEMENTARY INFORMATION: Title: ‘‘Notice to New SBA Borrowers.’’ Description of Respondents: New SBA Borrowers. Form No: 793. ADDRESSES: SMALL BUSINESS ADMINISTRATION PO 00000 CFR 200.30–3(a)(12). Frm 00097 Fmt 4703 Sfmt 4703 3091 E:\FR\FM\19JAN1.SGM 19JAN1

Agencies

[Federal Register Volume 70, Number 12 (Wednesday, January 19, 2005)]
[Notices]
[Pages 3089-3091]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E5-194]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-51028; File No. SR-Phlx-2005-04]


Self-Regulatory Organizations; Philadelphia Stock Exchange, Inc.; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change 
Relating to an Electronic Audit Trail for Orders in Options Overlying 
the Standard and Poor's Depositary Receipts

January 12, 2005.
    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 January 11, 2005, 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 and 
II below, which Items have been prepared by the Phlx. The Exchange has 
filed the proposal as a ``non-controversial'' rule change 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.\5\ 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\ 15 U.S.C. 78s(b)(3)(A).
    \4\ 17 CFR 240.19b-4(f)(6).
    \5\ The Phlx asked the Commission to waive the 30-day operative 
delay. See Rule 19b-4(f)(6)(iii). 17 CFR 240.19b-4(f)(6)(iii).
---------------------------------------------------------------------------

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

    The Phlx proposes to amend Phlx Rule 1063, Responsibilities of 
Floor Brokers, and Option Floor Procedure Advice (``OFPA'') C-2, 
Options Floor Broker Management System (``FBMS''), to extend the date 
on which Floor Brokers would be required to create an electronic audit 
trail for non-electronic orders in options overlying the Standard and 
Poor's Depositary Receipts (``SPDRs'') until March 28, 2005. The text 
of the proposed rule change is below. Proposed new language is in 
italics.

Responsibilities of Floor Brokers

    Rule 1063. (a)-(d)--No change.
    (e)(i) Options Floor Broker Management System. In order to create 
an electronic audit trail for options orders represented by Floor 
Brokers on the Exchange's Options Floor, a Floor Broker or such Floor 
Broker's employees shall, contemporaneously upon receipt of an order 
and prior to the representation of such an order in the trading crowd, 
record all options orders represented by such Floor Broker onto the 
electronic Options Floor Broker Management System (as described in Rule 
1080, Commentary .06). The following specific information with respect 
to orders represented by a Floor Broker shall be recorded by such Floor 
Broker or such Floor Broker's employees: (i) the order type (i.e., 
customer, firm, broker-dealer); (ii) the option symbol; (iii) buy, 
sell, or cancel; (iv) call, put, complex (i.e., spread, straddle), or 
contingency order as described in Rule 1066; (v) number of contracts; 
(vi) limit price or market order or, in the case of a complex order, 
net debit or credit, if applicable; (vii) whether the transaction is to 
open or close a position; and (viii) The Options Clearing Corporation 
(``OCC'') clearing number of the broker-dealer that submitted the order 
(collectively, the ``required information''). Upon the execution of 
such an order, the Floor Broker shall enter the time of execution of 
the trade. Floor Brokers or their employees shall enter clearing 
information onto the Options Floor Broker Management System no later 
than five minutes after the execution of a trade. In the event of a 
malfunction in the Options Floor Broker Management System, Floor 
Brokers shall record the required information on trade tickets, and 
shall not represent an order for execution which has not been time 
stamped with the time of entry on the trading floor. Such trade tickets 
shall be time stamped upon the execution of such an order. Floor 
Brokers or their employees shall enter the required information that is 
recorded on such trade tickets into AUTOM for inclusion in the 
electronic audit trail.
    (ii) Orders in Options Overlying Standard and Poor's Depositary 
Receipts (``SPDRs''). The requirements of sub-paragraph (e)(i) above 
shall apply to options overlying SPDRs beginning on March 28, 2005.
    (f) No change.

[[Page 3090]]

C-2 Options Floor Broker Management System

    Options Floor Broker Management System. In order to create an 
electronic audit trail for options orders represented by Floor Brokers 
on the Exchange's Options Floor, a Floor Broker or such Floor Broker's 
employees shall, contemporaneously upon receipt of an order and prior 
to the representation of such an order in the trading crowd, record all 
options orders represented by such Floor Broker onto the electronic 
Options Floor Broker Management System (as described in Rule 1080, 
Commentary .06). The following specific information with respect to 
orders represented by a Floor Broker shall be recorded by such Floor 
Broker or such Floor Broker's employees: (i) the order type (i.e., 
customer, firm, broker-dealer); (ii) the option symbol; (iii) buy, 
sell, or cancel; (iv) call, put, complex (i.e., spread, straddle), or 
contingency order as described in Rule 1066; (v) number of contracts; 
(vi) limit price or market order or, in the case of a complex order, 
net debit or credit, if applicable; (vii) whether the transaction is to 
open or close a position; and (viii) The Options Clearing Corporation 
(``OCC'') clearing number of the broker-dealer that submitted the order 
(collectively, the ``required information''). Upon the execution of 
such an order, the Floor Broker shall enter the time of execution of 
the trade. Floor Brokers or their employees shall enter clearing 
information onto the Options Floor Broker Management System no later 
than five minutes after the execution of a trade. In the event of a 
malfunction in the Options Floor Broker Management System, Floor 
Brokers shall record the required information on trade tickets, and 
shall not represent an order for execution which has not been time 
stamped with the time of entry on the trading floor. Such trade tickets 
shall be time stamped upon the execution of such an order. Floor 
Brokers or their employees shall enter the required information that is 
recorded on such trade tickets into AUTOM for inclusion in the 
electronic audit trail.
    Floor Brokers or their employees shall enter the required 
information (as described above) for FLEX and foreign currency options, 
including customized foreign currency options, or ensure that such 
information is entered, into the Exchange's electronic audit trail in 
the same electronic format as the required information for equity and 
index options. Floor Brokers or their employees shall enter the 
required information for FLEX and foreign currency options, including 
customized foreign currency options, into the electronic audit trail on 
the same business day that a specific event surrounding the lifecycle 
of an order in FLEX and foreign currency options, including customized 
foreign currency options (including, without limitation, orders, price 
or size changes, execution or cancellation) occurs.
    Orders in Options Overlying Standard and Poor's Depositary Receipts 
(``SPDRs''). The requirements of this Advice shall apply to options 
overlying SPDRs beginning on March 28, 2005.
    FINE SCHEDULE No change.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, 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 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 purpose of the proposed rule change is to amend Phlx Rule 
1063(e) and OFPA C-2 to reflect that the requirement that Floor Brokers 
create an electronic audit trail for non-electronic orders in options 
overlying SPDRs will commence on March 28, 2005.
    The Commission recently approved, on a permanent basis, amendments 
to Phlx Rule 1063 and OFPA C-2 to require that, contemporaneously upon 
receipt of an order and prior to the representation of such an order in 
the trading crowd, Floor Brokers must record all options orders 
represented by such Floor Broker onto the electronic Options Floor 
Broker Management System.\6\
---------------------------------------------------------------------------

    \6\ See Securities Exchange Act Release No. 50997 (January 7, 
2005) (SR-Phlx-2003-40). The Options Floor Broker Management System 
is a component of AUTOM designed to enable Floor Brokers and/or 
their employees to enter, route and report transactions stemming 
from options orders received on the Exchange. The Options Floor 
Broker Management System also is designed to establish an electronic 
audit trail for options orders represented and executed by Floor 
Brokers on the Exchange, such that the audit trail provides an 
accurate, time-sequenced record of electronic and other orders, 
quotations and transactions on the Exchange, beginning with the 
receipt of an order by the Exchange, and further documenting the 
life of the order through the process of execution, partial 
execution, or cancellation of that order. See Exchange Rule 1080, 
Commentary .06.
---------------------------------------------------------------------------

    The requirements of Phlx Rule 1063(e) and OFPA C-2 that Floor 
Brokers record the ``required information'' as defined therein 
commenced on January 10, 2005. Options overlying SPDRs began trading on 
the Exchange on January 10, 2005. The Exchange believes that the 
extension of the date for compliance with the electronic audit trail 
requirements for non-electronic orders in options overlying SPDRs until 
March 28, 2005 is reasonable and appropriate, because the manner in 
which these options trade, and the trading environment that exists in 
these options, is significantly different than that of equity options, 
and since options overlying SPDRs only very recently began trading on 
the Exchange, as described above.
2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act \7\ in general, and furthers the objectives of Section 
6(b)(5) \8\ of the Act in particular, in that it is designed to perfect 
the mechanisms of a free and open market and the national market 
system, protect investors and the public interest and promote just and 
equitable principles of trade, by requiring Exchange Floor Brokers to 
incorporate non-electronic orders in options overlying SPDRs while 
reasonably extending such requirement until March 28, 2005 respecting 
options overlying SPDRs.
---------------------------------------------------------------------------

    \7\ 15 U.S.C. 78f(b).
    \8\ 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

    The Exchange has neither solicited nor received comments on the 
proposed rule change.

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

    Because the foregoing rule change: (1) Does not significantly 
affect the protection of investors or the public interest; (2) does not 
impose any

[[Page 3091]]

significant burden on competition; and (3) does not become operative 
for 30 days from the date on which it was filed, or such shorter time 
as the Commission may designate if consistent with the protection of 
investors and the public interest, the proposed rule change has become 
effective pursuant to Section 19(b)(3)(A) of the Act \9\ and Rule 19b-
4(f)(6) thereunder.\10\
---------------------------------------------------------------------------

    \9\ 15 U.S.C. 78s(b)(3)(A)
    \10\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------

    A proposed rule change filed under Rule 19b-4(f)(6)\11\ normally 
does not become operative prior to 30 days after the date of filing. 
However, Rule 19b-4(f)(6)(iii) permits the Commission to designate a 
shorter time if such action is consistent with the protection of 
investors and the public interest. The Exchange requests that the 
Commission waive the 5-day pre-filing requirement and the 30-day 
operative delay, as specified in Rule 19b-4(f)(6)(iii), and designate 
the proposed rule change immediately operative. The Commission notes 
that by waiving the operative period, the Exchange has stated that it 
will be able to implement trading in options on SPDRs expeditiously. 
For these reasons, consistent with the protection of investors and the 
public interest, the Commission designates that the proposed rule 
change has become effective and operative immediately.
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    \11\ 17 CFR 240.19b-4(f)(6).
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    At any time within 60 days of the filing of such 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-2005-04 on the subject line.

Paper Comments

     Send paper comments in triplicate to Jonathan G. Katz, 
Secretary, Securities and Exchange Commission, 450 Fifth Street, NW., 
Washington, DC 20549-0609.
    All submissions should refer to File Number SR-Phlx-2005-04. 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. Copies of the 
filing also will be available for inspection and copying at the 
principal offices 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-2005-04 and should be submitted on or before 
February 9, 2005.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\12\
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    \12\ 17 CFR 200.30-3(a)(12).
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J. Lynn Taylor,
Assistant Secretary.
[FR Doc. E5-194 Filed 1-18-05; 8:45 am]
BILLING CODE 8010-01-P
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