Self-Regulatory Organizations; Notice of Filing and Order Granting Accelerated Approval of Proposed Rule Change and Amendments No. 1 and 2 Thereto by the Philadelphia Stock Exchange, Inc. Relating To Adopting Phlx Rule 1017, Openings in Options, on a Permanent Basis, 3417-3420 [E5-217]
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Federal Register / Vol. 70, No. 14 / Monday, January 24, 2005 / Notices
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–51038; File No. SR–PCX–
2004–96]
Self-Regulatory Organizations; Pacific
Exchange, Inc.; Order Granting
Approval to Proposed Rule Change To
Amend PCXE Rule 4.5 To Require All
Financial/Operations Principals of
PCXE ETP Firms to Successfully
Complete the Series 27 Examination
and To Add PCXE Rule 6.18(d) To
Require All Compliance Supervisors of
PCXE ETP Firms To Successfully
Complete the Series 24 Examination
January 14, 2005.
On October 20, 2004, the Pacific
Exchange, Inc. (‘‘PCX’’ or ‘‘Exchange’’),
through its subsidiary, PCX Equities,
Inc. (‘‘PCXE’’), filed with the Securities
and Exchange Commission
(‘‘Commission’’), pursuant to Section
19(b)(1) of the Securities Exchange Act
of 1934 (‘‘Act’’) 1 and Rule 19b–4
thereunder,2 a proposed rule change to
amend PCXE Rule 4.5 to require all
financial/operations principals of PCXE
ETP Firms to successfully complete the
National Association of Securities
Dealers, Inc.’s (‘‘NASD’’) Financial and
Operations Principal Examination
(‘‘Series 27 Examination’’), and to add
PCXE Rule 6.18(d) to require all
compliance supervisors of PCXE ETP
Firms to successfully complete NASD’s
General Securities Principal
Examination (‘‘Series 24 Examination’’).
The proposed rule change was
published for comment in the Federal
Register on December 14, 2004.3 The
Commission received no comments on
the proposal. This order approves the
proposed rule change.
Among other things the proposed rule
change establishes a requirement that
each Electronic Trading Permit (‘‘ETP’’)
holder subject to Securities Exchange
Act Rule 15c3–1 4 designate a Financial/
Operations Principal (‘‘FINOP’’) and
that the FINOP pass the Series 27
Examination. It also requires
supervisory personnel to pass the Series
24 Examination and if the person
subject to the Series 24 requirement also
does business with the public that
person must pass the General Securities
Sales Supervisor Qualification
Examination (‘‘Series 9/10’’).
The Commission finds that the
proposed rule change is consistent with
the requirements of the Act and the
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 See Securities Exchange Act Release No. 50818
(December 7, 2004), 69 FR 74558.
4 17 CFR 240.15c3–1.
2 17
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18:04 Jan 21, 2005
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rules and regulations thereunder
applicable to a national securities
exchange 5 and, in particular, the
requirements of Section 6 of the Act 6
and the rules and regulations
thereunder. The Commission finds
specifically that the proposed rule
change is consistent with Section 6(b) of
the Act 7 in general, and furthers the
objectives of Section 6(b)(5) of the Act 8
in particular, because it is designed to
prevent fraudulent and manipulative
acts and practices, to promote just and
equitable principals of trade, to foster
cooperation and coordination with
persons engaged in facilitating
transactions in securities, and to remove
impediments to and perfect the
mechanism of a free and open market
and a national market system. The
Commission believes that requiring all
financial/operations principals of PCXE
ETP Firms to successfully complete the
Series 27 Examination ensures that
individuals who prepare the financial
statements of PCXE ETP Firms will meet
uniform qualifications to prepare such
statements. The Commission also finds
that requiring all compliance
supervisors of PCXE ETP Firms to
successfully complete the Series 24
Examination ensures that those who are
supervising equities trading be
uniformly qualified. The Commission
notes that the proposed rule change
gives PCXE the authority to waive all or
a portion of the Series 24 Examination
requirements pursuant to PCXE Rule
6.18(d). In evaluating whether to grant
a full or partial waiver from the
examination requirements, PCXE
represents that it will review a number
of factors including but not limited to
the individual’s industry experience,
education, previous registration history
with the Exchange and other
examinations taken by the individual
that may be acceptable substitutes in
conjunction with securities industry
experience. The Commission expects
that PCXE will carefully evaluate the
criteria when determining whether to
grant a full or partial waiver, and will
do so only for those candidates whose
qualifications have been satisfactorily
demonstrated, and for whom granting a
waiver is consistent with protecting
investors and the public interest.
It is therefore ordered, pursuant to
Section 19(b)(2) of the Act,9 that the
5 In approving this proposed rule change, the
Commission has considered the proposed rule’s
impact on efficiency, competition, and capital
formation. 15 U.S.C. 78c(f).
6 15 U.S.C. 78f.
7 15 U.S.C. 78f(b).
8 15 U.S.C. 78f(b)(5).
9 15 U.S.C. 78s(b)(2).
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3417
proposed rule change (SR–PCX–2004–
96) be, and it hereby is, approved.
For the Commission, by the Division of
Market Regulation, pursuant to delegated
authority.10
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. E5–254 Filed 1–21–05; 8:45 am]
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–51036; File No. SR–Phlx–
2004–92]
Self-Regulatory Organizations; Notice
of Filing and Order Granting
Accelerated Approval of Proposed
Rule Change and Amendments No. 1
and 2 Thereto by the Philadelphia
Stock Exchange, Inc. Relating To
Adopting Phlx Rule 1017, Openings in
Options, on a Permanent Basis
January 13, 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 December
15, 2004, 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 Phlx. On December
28, 2004, Phlx filed Amendment No. 1
to the proposed rule change.3 On
January 12, 2005, Phlx filed
Amendment No. 2 to the proposed rule
change.4 The Commission is publishing
this notice to solicit comments on the
proposed rule change, as amended, from
interested persons and is approving the
10 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b-4.
3 Amendment No. 1 replaced the original
proposed rule change in its entirety.
4 In Amendment No. 2, Phlx proposes to clarify
the specialist’s requirement to give precedence to
orders entrusted to him as an agent in any option
in which he is registered. Specifically, Phlx
represents that the specialist is required to give
precedence to orders entrusted to him as an agent
in any option in which he is registered before
executing at: (i) The same price; (ii) a lower bid; or
(iii) a higher offer, any purchase or sale in the same
option for an account in which he has an interest.
The Exchange’s Market Surveillance Department
conducts surveillance for violations of this
requirement. Therefore, if a specialist intends to
trade for his own account on the opening, the
specialist must first be sure that he does not trade
ahead of any orders (as agent). Otherwise, he would
be subject to possible disciplinary action, regardless
of when such an order is received (i.e., in this
circumstance, after the underlying security opens
but prior to the opening in the underlying security).
See, e.g., Phlx Rule 1019.
1 15
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3418
Federal Register / Vol. 70, No. 14 / Monday, January 24, 2005 / Notices
proposed rule change, as amended, on
an accelerated basis.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
Phlx proposes to adopt, on a
permanent basis, Phlx Rule 1017,
Openings in Options, which is currently
subject to a 180-day pilot scheduled to
expire January 28, 2005. The text of the
proposed rule change is available at 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,
Phlx included statements concerning
the purpose of, and basis for, the
proposed rule change, as amended, and
discussed any comments it received.
The text of these statements may be
examined at the places specified in Item
III below. 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
In July 2004, the Commission
approved the Exchange’s proposal to
adopt rules applicable to the Exchange’s
electronic trading platform for options,
Phlx XL.5 Among the rules approved
was Phlx Rule 1017, which describes in
detail the process for openings in
options on the Exchange. Phlx Rule
1017, which was approved on pilot
basis, addresses the opening process in
three main parts: the pre-opening, the
opening rotation, and the specialist’s
calculation of the price of the opening
trade of the session in a given series.
The purpose of this proposed rule
change, as amended, is to assure the
continuity of the Exchange’s rules
relating to openings by adopting Phlx
Rule 1017 on a permanent basis.
Phlx Rule 1017 is intended to provide
for an orderly and efficient process for
the opening of an option and for reopening following a trading halt. First,
the sections of Phlx Rule 1017
concerning pre-openings are intended to
describe which orders and quotes the
specialist in a particular option is
required to accept and consider prior to
5 See Securities Exchange Act Release No. 50100
(July 27, 2004), 69 FR 46612 (August 3, 2004) (SR–
Phlx–2003–59).
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18:04 Jan 21, 2005
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the opening in a given series and when
the specialist must accept and include
market orders in the opening.
Specifically, prior to the opening, the
specialist determines from Floor
Brokers, and from orders resting on the
limit order book, the size and prices of
orders which are near the previous
closing prices of those options in which
the specialist is assigned. Also, in
addition to establishing the specialist’s
own quote in the series, the specialist
considers markets from Registered
Options Traders (‘‘ROTs’’) in the crowd
and, respecting Streaming Quote
Options traded on Phlx XL, considers
electronic quotations submitted by
Streaming Quote Traders (‘‘SQTs’’). This
enables the specialist to ascertain orders
and quotes on both sides of the market
for a series to determine the opening
price for that series.
Because openings on the Exchange are
not currently automated, there is no
‘‘broadcast’’ of opening limit orders and
quotes on the Phlx XL. The participants,
however, have access to market
information necessary to ascertain bids
and offers in the pre-opening phase.
Specialists are able to view the entire
limit order book, including orders
resting on the book from the previous
trading session and any orders
submitted before the opening, on their
on-floor screens (known as the XStation). Specialists are also able to
view all electronically submitted quotes
in Phlx XL options. SQTs have the same
view of the limit order book and their
own quotes but not those of other SQTs.
Non-SQT ROTs are able to view the
current on-floor displayed market,
whether generated by a pre-opening
quote or by limit orders at the then-best
bid or offer. All in-crowd SQTs and the
specialist, together with non-SQT ROTs
in the crowd, are able to ascertain all incrowd verbal bids and offers. Following
the pre-opening phase, the specialist
conducts an opening rotation.6
Phlx Rule 1017 provides that the
opening price is the price at which the
specialist determines that the greatest
number of contracts will trade, as long
as such opening price falls within an
acceptable range to be determined by
the Exchange’s Options Committee.7 An
6 A trading rotation is a series of very brief time
periods during each of which bids, offers, and
transactions in only a single, specified option
contract can be made. See Phlx Rule 1047,
Commentary .01.
7 The Options Committee has general supervision
of the dealings of members on the equity and index
options trading floor, and of the premises of the
Exchange immediately adjacent thereto, and has
supervision of the activities on the equity and index
options trading floor of specialists, assistant
specialists, registered option traders, floor brokers,
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acceptable range is determined as a
percentage of the lowest bid as the
lower boundary of the acceptable range
and as a percentage of the highest offer
as the upper boundary of the acceptable
range. For example, such an acceptable
range may be established as 75% of the
lowest bid and 125% of the highest
offer. Once determined by the
Exchange’s Options Committee, such an
acceptable range would be announced
to the Exchange’s membership via
regulatory circular.8 The Exchange
believes that the establishment of such
bright-line parameters defining an
acceptable opening price range provides
specialists with clear guidance on the
amount by which the opening price may
differ from the lowest bid and highest
offer. In the interest of a fair and orderly
market, a Floor Official may provide a
specific exemption from the established
acceptable range in a particular series.
Commentary .03(b) to Phlx Rule 1017
includes further limitations on the
opening price to be determined by the
specialist. First, if two or more prices
would satisfy the criteria for
determining the opening price, the price
which would leave the fewest number
of contracts resting on the limit order
book is selected as the opening price. If
there are still two or more prices that
would satisfy such criteria, the price
which is closest to the previous
session’s closing price is selected as the
opening price. Complex orders and
contingency orders do not participate in
opening rotations or in the
determination of an opening price.
Once the specialist determines the
opening price, the Exchange
disseminates the opening trade price to
the Option Price Reporting Authority
(‘‘OPRA’’). At this point, the series is
open for trading. Once the opening trade
price in a series has been disseminated
to OPRA, the specialist, ROTs, and
SQTs trading such series are required to
fulfill their respective quoting
obligations under Phlx Rule 1014.
The rule also includes circumstances
in which a specialist would not open a
series. Specifically, the specialist would
not open a series if it is not within an
acceptable range, as described above,
unless a specific exemption is given by
a Floor Official in the interest of a fair
and orderly market, or the opening trade
would leave a market order imbalance
(i.e., there are more market orders to buy
or to sell for the particular series than
can be satisfied by the market orders,
or other types of market-makers. See Phlx By-Law
Article X, Section 10–20.
8 This provision in the proposed rule is based on
Chicago Board Options Exchange, Inc. (‘‘CBOE’’)
Rule 6.2B(e)(ii).
E:\FR\FM\24JAN1.SGM
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Federal Register / Vol. 70, No. 14 / Monday, January 24, 2005 / Notices
limit orders, and specialist or SQT
quotations on the opposite side). For
purposes of this provision, ‘‘market
orders’’ include those limit orders that
are treated as market orders in
accordance with Phlx Rule 1017(b) (i.e.,
orders at a limited price order to buy
which is at a higher price than the price
at which the option is to be opened and
a limited price order to sell which is at
a lower price than the price at which the
option is to be opened) and market-onopening orders. In such a circumstance,
the specialist requests bids and offers
from ROTs in the crowd and, in the case
of Streaming Quote Options, from SQTs
that are assigned in the option. Such
ROTs and/or SQTs are required to
respond to such a request immediately.
The series could not open until
responses to the specialist’s request
have been received and the consequent
opening price is deemed by a Floor
Official to be compatible with a fair and
orderly market.
Finally, Phlx Rule 1017 addresses the
situation in which there are no orders in
a particular series when the underlying
security opens. In such a situation the
Exchange would disseminate quotations
in such series via the Exchange’s AutoQuote or Specialized Quote Feed upon
the opening in the underlying security.
Phlx Rule 1017 was adopted as a 180day pilot, which is scheduled to expire
on January 28, 2005.9 The proposal
would adopt Phlx Rule 1017 on a
permanent basis by deleting Phlx Rule
1017(f), which describes the pilot. The
Exchange represents that it has received
no negative comments or complaints
since the Commission’s approval of the
pilot.
2. Statutory Basis
The Exchange believes that its
proposal, as amended, is consistent with
Section 6(b) of the Act 10 in general and
furthers the objectives of Section 6(b)(5)
of the Act 11 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
establishing permanent rules relating to
openings on the Exchange that provide
for an orderly and efficient process for
the opening of an option, and for reopening following a trading halt.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposed rule change, as amended,
9 See
supra, note 5.
U.S.C. 78f(b).
11 15 U.S.C. 78f(b)(5).
10 15
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18:04 Jan 21, 2005
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3419
will impose any inappropriate burden
on competition.
be submitted on or before February 14,
2005.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
IV. Commission’s Findings and Order
Granting Accelerated Approval of
Proposed Rule Change
After careful consideration, the
Commission finds that the proposed
rule change, as amended, is consistent
with the requirements of the Act and the
III. Solicitation of Comments
rules and regulations thereunder,
applicable to a national securities
Interested persons are invited to
exchange,12 and, in particular, with the
submit written data, views, and
requirements of Section 6(b) of the
arguments concerning the foregoing,
Act 13 and the rules and regulations
including whether the amended
proposed rule change is consistent with thereunder. The Commission finds that
the Act. Comments may be submitted by the proposed rule change, as amended,
is consistent with Section 6(b)(5) of the
any of the following methods:
Act 14 in that it is designed to perfect the
Electronic Comments
mechanisms of a free and open market
and the national market system, protect
• Use the Commission’s Internet
investors and the public interest and
comment form (https://www.sec.gov/
promote just and equitable principles of
rules/sro.shtml); or
trade.
• Send an e-mail to ruleSpecifically, the Commission believes
comments@sec.gov. Please include File
that the proposed rule change
Number SR–Phlx–2004–92 on the
establishes permanent rules governing
subject line.
the opening procedures on options that
Paper Comments
should provide a reasonable process by
which Phlx participants would access
• Send paper comments in triplicate
and participate in the opening rotations
to Jonathan G. Katz, Secretary,
and re-opening following a trading halt.
Securities and Exchange Commission,
The Commission also believes that the
450 Fifth Street, NW., Washington, DC
proposed rules governing the opening
20549–0609.
procedures on options should provide
All submissions should refer to File
transparency to all market participants
Number SR–Phlx–2004–92. This file
with respect to the manner in which an
number should be included on the
subject line if e-mail is used. To help the opening price is determined on the
Exchange.
Commission process and review your
The Commission finds good cause,
comments more efficiently, please use
only one method. The Commission will pursuant to Section 19(b)(2) of the
15
post all comments on the Commission’s Act, for approving the proposed rule
change prior to the thirtieth day after
Internet Web site (https://www.sec.gov/
the date of publication of the notice of
rules/sro.shtml). Copies of the
the filing thereof in the Federal
submission, all subsequent
Register. The Commission notes that the
amendments, all written statements
Exchange represents that it has received
with respect to the proposed rule
no negative comments or complaints
change that are filed with the
since the Commission approved the
Commission, and all written
Phlx XL opening procedures on a pilot
communications relating to the
basis. Further, accelerating approval of
proposed rule change between the
Commission and any person, other than the instant proposed rule change will
ensure that the Phlx XL opening
those that may be withheld from the
procedures will continue to operate
public in accordance with the
without any undue interruption when
provisions of 5 U.S.C. 552, will be
the pilot period ends on January 28,
available for inspection and copying in
2005.
the Commission’s Public Reference
Room. Copies of the filing also will be
V. Conclusion
available for inspection and copying at
It is therefore ordered, pursuant to
the principal office of the Phlx. All
Section 19(b)(2) of the Act,16 that the
comments received will be posted
without change; the Commission does
12 In approving this rule, the Commission notes
not edit personal identifying
that it has considered its impact on efficiency,
information from submissions. You
competition and capital formation. 15 U.S.C. 78c(f).
should submit only information that
13 15 U.S.C. 78f(b).
you wish to make available publicly. All
14 15 U.S.C. 78f(b)(5).
15 15 U.S.C. 78s(b)(2).
submissions should refer to File
16 15 U.S.C. 78s(b)(2).
Number SR–Phlx–2004–92 and should
No written comments were either
solicited or received.
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3420
Federal Register / Vol. 70, No. 14 / Monday, January 24, 2005 / Notices
proposed rule change and Amendments
No. 1 and 2 thereto (SR–Phlx–2004–92)
are hereby approved on an accelerated
basis.
For the Commission, by the Division of
Market Regulation, pursuant to delegated
authority.17
J. Lynn Taylor,
Assistant Secretary.
[FR Doc. E5–217 Filed 1–21–05; 8:45 am]
BILLING CODE 8010–01–P
SMALL BUSINESS ADMINSTRATION
Senior Executive Service: Performance
Review Board Members
Small Business Administration.
Notice of members for the FY 04
Performance Review Board.
AGENCY:
ACTION:
SUMMARY: Section 4314(c)(4) of Title 5,
U.S.C.; requires each agency to publish
notification of the appointment of
individuals who may serve as members
of that Agency’s Performance Review
Board (PRB). The following individuals
have been designated to serve on the FY
04 Performance Review Board for the
U.S. Small Business Administration:
1. Lewis D. Andrews, Jr., Associate
Deputy Administrator for Management
and Administration;
2. Anthony Bedell, Associate
Administrator for Congressional and
Legislative Affairs;
3. Delorice Ford, Assistant
Administrator for the Office of Hearings
and Appeals;
4. Janet Tasker, Associate
Administrator for the Office of Lender
Oversight;
5. Jose Sifontes, Office of the District
Director—New York District Office;
6. Jerry E. Williams, Deputy Chief
Information Officer; and,
7. Herbert Mitchell, Associate
Administrator for the Office of Disaster
Assistance.
Dated: January 14, 2005.
Hector V. Barreto,
Administrator.
[FR Doc. 05–1188 Filed 1–21–05; 8:45 am]
BILLING CODE 8025–01–P
DEPARTMENT OF STATE
[Public Notice 4959]
Bureau of Educational and Cultural
Affairs (ECA) Request for Grant
Proposals: Partnerships for Learning
(P4L) Afghanistan Global Connections
and Exchange Program
Announcement Type: New Grant.
17 17
CFR 200.30–3(a)(12).
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18:04 Jan 21, 2005
Jkt 205001
Funding Opportunity Number: ECA/
PE/C/PY–05–27.
Catalog of Federal Domestic
Assistance Number: 00.000.
Key Dates: Application Deadline:
March 17, 2005.
Executive Summary: The Youth
Programs Division, Office of Citizen
Exchanges of the Bureau of Educational
and Cultural Affairs announces an open
competition for the P4L Afghanistan
Global Connections and Exchange
program. The Bureau will award one
grant. Public and private non-profit
organizations meeting the provisions
described in Internal Revenue Code
section 26 U.S.C. 501(c)(3) and public
institutions may submit proposals to
select Afghanistan schools and provide
them with access to the Internet and
related training to develop collaborative
school partnerships with U.S. schools.
Thematic online projects will enhance
learning, research and cross-border
communication among participating
schools. Organizations with less than
four years of experience in conducting
international exchange programs are not
eligible for this competition.
I. Funding Opportunity Description
Authority: Overall grant making
authority for this program is contained
in the Mutual Educational and Cultural
Exchange Act of 1961, Public Law 87–
256, as amended, also known as the
Fulbright-Hays Act. The purpose of the
Act is ‘‘to enable the Government of the
United States to increase mutual
understanding between the people of
the United States and the people of
other countries * * *; to strengthen the
ties which unite us with other nations
by demonstrating the educational and
cultural interests, developments, and
achievements of the people of the
United States and other nations * * *
and thus to assist in the development of
friendly, sympathetic and peaceful
relations between the United States and
the other countries of the world.’’ The
funding authority for the program above
is provided through legislation.
Purpose: The P4L Afghanistan Global
Connections and Exchange program is
designed to introduce youth and
communities to a broad range of ideas
and resources while enhancing the use
of information technology in schools.
Through this program, Afghanistan
secondary schools and communities
will expand computer literacy skills,
improve general education, and gain a
deeper understanding of U.S. society,
culture and values. They will also
increase their capacity to generate
change through programs that foster
tolerance and mutual respect, and
enhance grassroots community
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participation. American students will in
turn gain a greater understanding of
Afghanistan culture and society. The
goals of the program are:
• Enhance general education by
providing access to information via the
Internet;
• Increase and improve education
tools, resources and learning through
the application of information
technology, complementary teacher
training, online resource development,
school partnerships, and student
collaboration;
• Increase the number of students
who qualify for exchange and academic
study opportunities in the U.S. by
providing them with the necessary
skills;
• Enhance community capacity and
youth activism via Internet access and
related training;
• Generate personal and institutional
ties across borders among students,
educators, and their schools;
• Ensure the sustainability of
information technology and Internet
access in schools partnered under this
grant.
Guidelines: Applicants should
identify specific objectives and
measurable outcomes based on program
goals and project specifications
provided in the solicitation.
II. Award Information
Type of Award: Grant Agreement.
Fiscal Year Funds: FY 2005.
Approximate Total Funding:
$300,000.
Approximate Number of Awards: One
grant will be awarded.
Anticipated Award Date: Pending
availability of funds, April 2005.
Anticipated Project Completion Date:
April 2007.
Additional Information: The Bureau
reserves the right to reduce, revise, or
increase proposal budgets in accordance
with the needs of the program and the
availability of funds. Pending successful
implementation of this program and the
availability of funds in subsequent fiscal
years, it is ECA’s intent to renew this
grant for two additional years before
openly competing it again.
III. Eligibility Information
III.1. Eligible Applicants
Applications may be submitted by
public and private non-profit
organizations meeting the provisions
described in Internal Revenue Code
section 26 U.S.C. 501(c)(3).
III.2. Cost Sharing or Matching Funds
There is no minimum or maximum
percentage required for this
E:\FR\FM\24JAN1.SGM
24JAN1
]]>Agencies
[Federal Register Volume 70, Number 14 (Monday, January 24, 2005)]
[Notices]
[Pages 3417-3420]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E5-217]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-51036; File No. SR-Phlx-2004-92]
Self-Regulatory Organizations; Notice of Filing and Order
Granting Accelerated Approval of Proposed Rule Change and Amendments
No. 1 and 2 Thereto by the Philadelphia Stock Exchange, Inc. Relating
To Adopting Phlx Rule 1017, Openings in Options, on a Permanent Basis
January 13, 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 December 15, 2004, 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 Phlx. On
December 28, 2004, Phlx filed Amendment No. 1 to the proposed rule
change.\3\ On January 12, 2005, Phlx filed Amendment No. 2 to the
proposed rule change.\4\ The Commission is publishing this notice to
solicit comments on the proposed rule change, as amended, from
interested persons and is approving the
[[Page 3418]]
proposed rule change, as amended, on an accelerated basis.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ Amendment No. 1 replaced the original proposed rule change
in its entirety.
\4\ In Amendment No. 2, Phlx proposes to clarify the
specialist's requirement to give precedence to orders entrusted to
him as an agent in any option in which he is registered.
Specifically, Phlx represents that the specialist is required to
give precedence to orders entrusted to him as an agent in any option
in which he is registered before executing at: (i) The same price;
(ii) a lower bid; or (iii) a higher offer, any purchase or sale in
the same option for an account in which he has an interest. The
Exchange's Market Surveillance Department conducts surveillance for
violations of this requirement. Therefore, if a specialist intends
to trade for his own account on the opening, the specialist must
first be sure that he does not trade ahead of any orders (as agent).
Otherwise, he would be subject to possible disciplinary action,
regardless of when such an order is received (i.e., in this
circumstance, after the underlying security opens but prior to the
opening in the underlying security). See, e.g., Phlx Rule 1019.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
Phlx proposes to adopt, on a permanent basis, Phlx Rule 1017,
Openings in Options, which is currently subject to a 180-day pilot
scheduled to expire January 28, 2005. The text of the proposed rule
change is available at 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, Phlx included statements
concerning the purpose of, and basis for, the proposed rule change, as
amended, and discussed any comments it received. The text of these
statements may be examined at the places specified in Item III below.
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
In July 2004, the Commission approved the Exchange's proposal to
adopt rules applicable to the Exchange's electronic trading platform
for options, Phlx XL.\5\ Among the rules approved was Phlx Rule 1017,
which describes in detail the process for openings in options on the
Exchange. Phlx Rule 1017, which was approved on pilot basis, addresses
the opening process in three main parts: the pre-opening, the opening
rotation, and the specialist's calculation of the price of the opening
trade of the session in a given series. The purpose of this proposed
rule change, as amended, is to assure the continuity of the Exchange's
rules relating to openings by adopting Phlx Rule 1017 on a permanent
basis.
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\5\ See Securities Exchange Act Release No. 50100 (July 27,
2004), 69 FR 46612 (August 3, 2004) (SR-Phlx-2003-59).
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Phlx Rule 1017 is intended to provide for an orderly and efficient
process for the opening of an option and for re-opening following a
trading halt. First, the sections of Phlx Rule 1017 concerning pre-
openings are intended to describe which orders and quotes the
specialist in a particular option is required to accept and consider
prior to the opening in a given series and when the specialist must
accept and include market orders in the opening. Specifically, prior to
the opening, the specialist determines from Floor Brokers, and from
orders resting on the limit order book, the size and prices of orders
which are near the previous closing prices of those options in which
the specialist is assigned. Also, in addition to establishing the
specialist's own quote in the series, the specialist considers markets
from Registered Options Traders (``ROTs'') in the crowd and, respecting
Streaming Quote Options traded on Phlx XL, considers electronic
quotations submitted by Streaming Quote Traders (``SQTs''). This
enables the specialist to ascertain orders and quotes on both sides of
the market for a series to determine the opening price for that series.
Because openings on the Exchange are not currently automated, there
is no ``broadcast'' of opening limit orders and quotes on the Phlx XL.
The participants, however, have access to market information necessary
to ascertain bids and offers in the pre-opening phase. Specialists are
able to view the entire limit order book, including orders resting on
the book from the previous trading session and any orders submitted
before the opening, on their on-floor screens (known as the X-Station).
Specialists are also able to view all electronically submitted quotes
in Phlx XL options. SQTs have the same view of the limit order book and
their own quotes but not those of other SQTs. Non-SQT ROTs are able to
view the current on-floor displayed market, whether generated by a pre-
opening quote or by limit orders at the then-best bid or offer. All in-
crowd SQTs and the specialist, together with non-SQT ROTs in the crowd,
are able to ascertain all in-crowd verbal bids and offers. Following
the pre-opening phase, the specialist conducts an opening rotation.\6\
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\6\ A trading rotation is a series of very brief time periods
during each of which bids, offers, and transactions in only a
single, specified option contract can be made. See Phlx Rule 1047,
Commentary .01.
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Phlx Rule 1017 provides that the opening price is the price at
which the specialist determines that the greatest number of contracts
will trade, as long as such opening price falls within an acceptable
range to be determined by the Exchange's Options Committee.\7\ An
acceptable range is determined as a percentage of the lowest bid as the
lower boundary of the acceptable range and as a percentage of the
highest offer as the upper boundary of the acceptable range. For
example, such an acceptable range may be established as 75% of the
lowest bid and 125% of the highest offer. Once determined by the
Exchange's Options Committee, such an acceptable range would be
announced to the Exchange's membership via regulatory circular.\8\ The
Exchange believes that the establishment of such bright-line parameters
defining an acceptable opening price range provides specialists with
clear guidance on the amount by which the opening price may differ from
the lowest bid and highest offer. In the interest of a fair and orderly
market, a Floor Official may provide a specific exemption from the
established acceptable range in a particular series.
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\7\ The Options Committee has general supervision of the
dealings of members on the equity and index options trading floor,
and of the premises of the Exchange immediately adjacent thereto,
and has supervision of the activities on the equity and index
options trading floor of specialists, assistant specialists,
registered option traders, floor brokers, or other types of market-
makers. See Phlx By-Law Article X, Section 10-20.
\8\ This provision in the proposed rule is based on Chicago
Board Options Exchange, Inc. (``CBOE'') Rule 6.2B(e)(ii).
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Commentary .03(b) to Phlx Rule 1017 includes further limitations on
the opening price to be determined by the specialist. First, if two or
more prices would satisfy the criteria for determining the opening
price, the price which would leave the fewest number of contracts
resting on the limit order book is selected as the opening price. If
there are still two or more prices that would satisfy such criteria,
the price which is closest to the previous session's closing price is
selected as the opening price. Complex orders and contingency orders do
not participate in opening rotations or in the determination of an
opening price.
Once the specialist determines the opening price, the Exchange
disseminates the opening trade price to the Option Price Reporting
Authority (``OPRA''). At this point, the series is open for trading.
Once the opening trade price in a series has been disseminated to OPRA,
the specialist, ROTs, and SQTs trading such series are required to
fulfill their respective quoting obligations under Phlx Rule 1014.
The rule also includes circumstances in which a specialist would
not open a series. Specifically, the specialist would not open a series
if it is not within an acceptable range, as described above, unless a
specific exemption is given by a Floor Official in the interest of a
fair and orderly market, or the opening trade would leave a market
order imbalance (i.e., there are more market orders to buy or to sell
for the particular series than can be satisfied by the market orders,
[[Page 3419]]
limit orders, and specialist or SQT quotations on the opposite side).
For purposes of this provision, ``market orders'' include those limit
orders that are treated as market orders in accordance with Phlx Rule
1017(b) (i.e., orders at a limited price order to buy which is at a
higher price than the price at which the option is to be opened and a
limited price order to sell which is at a lower price than the price at
which the option is to be opened) and market-on-opening orders. In such
a circumstance, the specialist requests bids and offers from ROTs in
the crowd and, in the case of Streaming Quote Options, from SQTs that
are assigned in the option. Such ROTs and/or SQTs are required to
respond to such a request immediately. The series could not open until
responses to the specialist's request have been received and the
consequent opening price is deemed by a Floor Official to be compatible
with a fair and orderly market.
Finally, Phlx Rule 1017 addresses the situation in which there are
no orders in a particular series when the underlying security opens. In
such a situation the Exchange would disseminate quotations in such
series via the Exchange's Auto-Quote or Specialized Quote Feed upon the
opening in the underlying security.
Phlx Rule 1017 was adopted as a 180-day pilot, which is scheduled
to expire on January 28, 2005.\9\ The proposal would adopt Phlx Rule
1017 on a permanent basis by deleting Phlx Rule 1017(f), which
describes the pilot. The Exchange represents that it has received no
negative comments or complaints since the Commission's approval of the
pilot.
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\9\ See supra, note 5.
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2. Statutory Basis
The Exchange believes that its proposal, as amended, is consistent
with Section 6(b) of the Act \10\ in general and furthers the
objectives of Section 6(b)(5) of the Act \11\ 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 establishing
permanent rules relating to openings on the Exchange that provide for
an orderly and efficient process for the opening of an option, and for
re-opening following a trading halt.
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\10\ 15 U.S.C. 78f(b).
\11\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change, as
amended, will impose any inappropriate burden on competition.
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. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the amended
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-2004-92 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-2004-92. 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 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-2004-92 and should be submitted on or before
February 14, 2005.
IV. Commission's Findings and Order Granting Accelerated Approval of
Proposed Rule Change
After careful consideration, the Commission finds that the proposed
rule change, as amended, is consistent with the requirements of the Act
and the rules and regulations thereunder, applicable to a national
securities exchange,\12\ and, in particular, with the requirements of
Section 6(b) of the Act \13\ and the rules and regulations thereunder.
The Commission finds that the proposed rule change, as amended, is
consistent with Section 6(b)(5) of the Act \14\ 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.
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\12\ In approving this rule, the Commission notes that it has
considered its impact on efficiency, competition and capital
formation. 15 U.S.C. 78c(f).
\13\ 15 U.S.C. 78f(b).
\14\ 15 U.S.C. 78f(b)(5).
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Specifically, the Commission believes that the proposed rule change
establishes permanent rules governing the opening procedures on options
that should provide a reasonable process by which Phlx participants
would access and participate in the opening rotations and re-opening
following a trading halt. The Commission also believes that the
proposed rules governing the opening procedures on options should
provide transparency to all market participants with respect to the
manner in which an opening price is determined on the Exchange.
The Commission finds good cause, pursuant to Section 19(b)(2) of
the Act,\15\ for approving the proposed rule change prior to the
thirtieth day after the date of publication of the notice of the filing
thereof in the Federal Register. The Commission notes that the Exchange
represents that it has received no negative comments or complaints
since the Commission approved the Phlx XL opening procedures on a pilot
basis. Further, accelerating approval of the instant proposed rule
change will ensure that the Phlx XL opening procedures will continue to
operate without any undue interruption when the pilot period ends on
January 28, 2005.
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\15\ 15 U.S.C. 78s(b)(2).
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V. Conclusion
It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\16\ that the
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proposed rule change and Amendments No. 1 and 2 thereto (SR-Phlx-2004-
92) are hereby approved on an accelerated basis.
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\16\ 15 U.S.C. 78s(b)(2).
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\17\
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\17\ 17 CFR 200.30-3(a)(12).
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J. Lynn Taylor,
Assistant Secretary.
[FR Doc. E5-217 Filed 1-21-05; 8:45 am]
BILLING CODE 8010-01-P
