Self-Regulatory Organizations; Notice of Filing of Proposed Rule Change, and Amendment No. 1 Thereto, by the Philadelphia Stock Exchange, Inc. Relating to the Elimination of the Prohibition Against the Entry of Multiple Orders in an Option Within Any 15-Second Period for an Account or Accounts of the Same Beneficial Owner, 24156-24158 [E5-2200]
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24156
Federal Register / Vol. 70, No. 87 / Friday, May 6, 2005 / Notices
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 rulecomments@sec.gov. Please include File
Number SR–PCX–2005–49 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.
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–51640; File No. SR–Phlx–
2005–20]
Self-Regulatory Organizations; Notice
of Filing of Proposed Rule Change,
and Amendment No. 1 Thereto, by the
Philadelphia Stock Exchange, Inc.
Relating to the Elimination of the
Prohibition Against the Entry of
Multiple Orders in an Option Within
Any 15-Second Period for an Account
or Accounts of the Same Beneficial
Owner
April 29, 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 March 24,
2005, the Philadelphia Stock Exchange,
Inc. (‘‘Phlx’’ or the ‘‘Exchange’’) filed
All submissions should refer to File
with the Securities and Exchange
Number SR–PCX–2005–49. This file
Commission (‘‘Commission’’) the
number should be included on the
subject line if e-mail is used. To help the proposed rule change as described in
Items I, II, and III below, which Items
Commission process and review your
have been prepared by the Phlx. On
comments more efficiently, please use
only one method. The Commission will April 11, 2005, the Phlx filed
Amendment No. 1 to the proposed rule
post all comments on the Commission’s
change.3 The Commission is publishing
Internet Web site (https://www.sec.gov/
this notice to solicit comments on the
rules/sro.shtml). Copies of the
proposed rule change, as amended, from
submission, all subsequent
interested persons.
amendments, all written statements
I. Self-Regulatory Organization’s
with respect to the proposed rule
Statement of the Terms of Substance of
change that are filed with the
the Proposed Rule Change
Commission, and all written
communications relating to the
The Phlx proposes to amend
Exchange Rule 1080, Philadelphia Stock
proposed rule change between the
Commission and any person, other than Exchange Automated Options Market
(‘‘AUTOM’’) System,4 to eliminate the
those that may be withheld from the
limitation contained in the rule
public in accordance with the
providing that Order Entry Firms (as
provisions of 5 U.S.C. 552, will be
defined below) may neither enter nor
available for inspection and copying in
permit the entry of multiple orders in an
the Commission’s Public Reference
option within any 15-second period for
Room. Copies of the filing also will be
an account or accounts of the same
available for inspection and copying at
beneficial owner, and to remove a
the principal office of the PCX. All
similar provision relating to orders
comments received will be posted
submitted by off-floor broker-dealers (as
without change; the Commission does
defined below). The text of the proposed
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–PCX–2005–49 and should
be submitted on or before May 27, 2005.
For the Commission, by the Division of
Market Regulation, pursuant to delegated
authority.11
Jill M. Peterson,
Assistant Secretary.
[FR Doc. E5–2211 Filed 5–5–05; 8:45 am]
BILLING CODE 8010–01–P
11 17
CFR 200.30–3(a)(12).
VerDate jul<14>2003
18:03 May 05, 2005
Jkt 205001
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 In Amendment No. 1, the Exchange revised the
statutory section under which the proposed rule
change was filed from Section 19(b)(3)(A) of the
Act, 15 U.S.C. 78s(b)(3)(A), to Section 19(b)(2) of
the Act, 15 U.S.C. 78s(b)(2).
4 AUTOM is the Exchange’s electronic order
delivery, routing, execution and reporting system,
which provides for the automatic entry and routing
of equity option and index option orders to the
Exchange trading floor. Orders delivered through
AUTOM may be executed manually, or certain
orders are eligible for AUTOM’s automatic
execution features, Book Sweep and Book Match.
Equity option and index option specialists are
required by the Exchange to participate in AUTOM
and its features and enhancements. See Exchange
Rule 1080.
PO 00000
1 15
2 17
Frm 00196
Fmt 4703
Sfmt 4703
rule change is available on the Phlx’s
Web site (https://www.phlx.com), at the
principal office of the Phlx, and at the
Commission’s Public Reference Room.
The text of the proposed rule change
also appears below. Deletions are
[bracketed].
*
*
*
*
*
Philadelphia Stock Exchange
Automated Options Market (AUTOM)
and Automatic Execution System
(AUTO–X)
Rule 1080. (a)–(b) No change.
(c) * * *
(i) No change.
(ii) Order Entry Firms and Users.
(A) No change.
(B) Obligations of Order Entry Firms.
Order Entry Firms shall:
(1)–(2) No change.
[(3) Neither enter nor permit the entry
of multiple orders in call options and/
or put options in the same option issue
within any 15-second period for an
account or accounts of the same
beneficial owner.]
(iii)–(iv) No change.
(d)–(k) No change.
Commentary:
.01–.04 No change.
.05 Off-floor broker-dealer limit
orders delivered through AUTOM must
be represented on the Exchange Floor by
a floor member. Off-floor broker-dealer
orders delivered via AUTOM shall be
for a minimum size of one (1) contract.
Off-floor broker-dealer limit orders are
subject to the following other
provisions:
(i)–(ii) No change.
[(iii) Off-floor broker-dealer limit
orders that are eligible for automatic
execution entered via AUTOM for the
account(s) of the same beneficial owner
may not be entered in options on the
same underlying security more
frequently than every 15 seconds.]
.06–.07 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, the
Phlx included statements concerning
the purpose of and basis for the
proposal and discussed any comments it
received on the proposed rule change,
as amended. The text of these
statements may be examined at the
places specified in Item IV below. The
Phlx has prepared summaries, set forth
in Sections A, B, and C below, of the
most significant aspects of such
statements.
E:\FR\FM\06MYN1.SGM
06MYN1
Federal Register / Vol. 70, No. 87 / Friday, May 6, 2005 / Notices
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 increase the number of
orders handled electronically on the
Exchange by eliminating the Exchange’s
current prohibition against the entry via
AUTOM of multiple orders for an
account or accounts of the same
beneficial owner in the same option
within any 15-second period.
In August, 2001, the Exchange
adopted Rule 1080(c)(ii)(B)(3) providing
that an Order Entry Firm 5 may neither
enter nor permit the entry of multiple
orders in an option into the AUTOM
System within any 15-second period for
an account or accounts of the same
beneficial owner.6 In April, 2002, the
Exchange adopted, on a six-month pilot
basis, rules allowing the entry via
AUTOM of off-floor broker-dealer 7 limit
orders (including Commentary .05(iii) to
Rule 1080—a similar 15-second rule
applicable to such off-floor brokerdealer limit orders).8 The Commission
approved the pilot rules on a permanent
basis in October, 2002.9
The original purpose of the rules was
to assist Exchange specialists and
Registered Options Traders (‘‘ROTs’’) in
managing their risk, and to protect
investors and other market participants
from the potential negative
consequences that might result from
Order Entry Firms or off-floor brokerdealers engaging in prohibited conduct.
Since the time of the adoption of the
rules, the Exchange’s electronic trading
systems have been substantially
enhanced such that the risk associated
with multiple orders in the same option
delivered for the account of the same or
an affiliated beneficial account holder
has become more manageable through
5 The
Exchange defines an ‘‘Order Entry Firm’’ as
a member organization of the Exchange that is able
to route orders to AUTOM. See Exchange Rule
1080(c)(ii)(A)(1).
6 See Securities Exchange Act Release No. 44687
(August 13, 2001), 66 FR 43287 (August 17, 2001)
(SR–Phlx–2001–58).
7 The term ‘‘off-floor broker-dealer’’ means a
broker-dealer that delivers orders from off the floor
of the Exchange for the proprietary account(s) of
such broker-dealer, including a market maker
located on an exchange or trading floor other than
the Exchange’s trading floor who elects to deliver
orders via AUTOM for the proprietary account(s) of
such market maker. See Exchange Rule
1080(b)(i)(C).
8 See Securities Exchange Act Release No. 45758
(April 15, 2002), 67 FR 19610 (April 22, 2002) (SR–
Phlx–2001–40).
9 See Securities Exchange Act Release No. 46660
(October 15, 2002), 67 FR 64951 (October 22, 2002)
(SR–Phlx–2002–50).
VerDate jul<14>2003
18:03 May 05, 2005
Jkt 205001
electronic means.10 For example, the
Exchange has developed its fully
electronic trading system, Phlx XL,
which has been deployed for all equity
and index options trading on the
Exchange. Phlx XL and its automatic
execution features, Book Match and
Book Sweep, provide fully electronic
executions and trade reports, and
specialists and Streaming Quote Traders
(‘‘SQTs’’) 11 submitting proprietary
electronic quotations through Phlx XL
are able to revise their quotations
electronically, which the Exchange
believes substantially reduces the risk of
multiple executions of orders delivered
in rapid succession before the specialist
or SQT is able to revise their quotation.
The Exchange believes that the advent
of Phlx XL and the substantial increase
in automated option order handling
obviate the need for the 15-second
prohibition currently included in
Exchange Rule 1080(c)(ii)(B)(3), and the
similar prohibition concerning the
delivery of proprietary orders by offfloor broker-dealers contained in
Commentary .05(iii) to Exchange Rule
1080. The Exchange further believes
that the removal of the 15-second
prohibition should increase the number
of orders handled electronically on the
Exchange. Accordingly, the Exchange
has determined to eliminate both of
these rules.
2. Statutory Basis
The Exchange believes that its
proposal is consistent with Section 6(b)
of the Act 12 in general, and furthers the
objectives of Section 6(b)(5) of the Act 13
in particular, in that it is designed to
promote just and equitable principles of
trade, remove impediments to and
perfect the mechanism of a free and
open market and a national market
system, and to protect investors and the
public interest by increasing the number
of orders handled electronically on the
Exchange through the elimination of the
prohibition against the entry into
AUTOM of multiple orders by the same
beneficial account owner within a 15second period.
10 The 15-second restriction is strictly rule based,
and the Exchange’s systems do not include an
electronic ‘‘governor.’’
11 An SQT is an ROT who has received
permission from the Exchange to generate and
submit option quotations electronically through an
electronic interface with the AUTOM System via an
Exchange approved proprietary electronic quoting
device in eligible options to which the SQT is
assigned. See Exchange Rule 1014(b)(ii)(A).
12 15 U.S.C. 78s(b).
13 15 U.S.C. 78s(b)(5).
PO 00000
Frm 00197
Fmt 4703
Sfmt 4703
24157
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Phlx 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 solicited
or received.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Within 35 days of the date of
publication of this notice in the Federal
Register or within such longer period (i)
as the Commission may designate up to
90 days of such date if it finds such
longer period to be appropriate and
publishes its reasons for so finding or
(ii) as to which the Exchange consents,
the Commission shall:
(a) By order approve such proposed
rule change; or
(b) Institute proceedings to determine
whether the proposed rule change, as
amended, should be disapproved.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed rule
change, as amended, 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 rulecomments@sec.gov. Please include File
Number SR–Phlx–2005–20 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–2005–20. 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
E:\FR\FM\06MYN1.SGM
06MYN1
24158
Federal Register / Vol. 70, No. 87 / Friday, May 6, 2005 / Notices
change, as amended, that are filed with
the Commission, and all written
communications relating to the
proposed rule change, as amended,
between the Commission and any
person, other than those that may be
withheld from the public in accordance
with the provisions of 5 U.S.C. 552, will
be available for inspection and copying
in the Commission’s Public Reference
Room. Copies of such filing also will be
available for inspection and copying at
the principal office of the 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–2005–20 and should
be submitted on or before May 27, 2005.
or fax at 202–395–7285, Office of
Management and Budget, Office of
Information and Regulatory Affairs.
FOR FURTHER INFORMATION CONTACT:
Jacqueline White, Agency Clearance
Officer, at: Jacqueline.white@sba.gov
(202) 205–7044.
SUPPLEMENTARY INFORMATION:
Title: Application for Section 504
Loan.
Form No: SBA Form 1244.
Frequency: On occasion.
Description of Respondents: Loan
applicants.
Responses: 10,000.
Annual Burden: 10,000.
For the Commission, by the Division of
Market Regulation, pursuant to delegated
authority.14
Jill M. Peterson,
Assistant Secretary.
[FR Doc. E5–2200 Filed 5–5–05; 8:45 am]
DEPARTMENT OF TRANSPORTATION
Jacqueline K. White,
Chief, Administrative Information Branch.
[FR Doc. 05–9055 Filed 5–5–05; 8:45 am]
DEPARTMENT OF TRANSPORTATION
Reporting and Recordkeeping
Requirements Under OMB Review
Small Business Administration.
Notice of reporting requirements
submitted for OMB review.
AGENCY:
ACTION:
SUMMARY: Under the provisions of the
Paperwork Reduction Act (44 U.S.C.
Chapter 35), agencies are required to
submit proposed reporting and
recordkeeping requirements to OMB for
review and approval, and to publish a
notice in the Federal Register notifying
the public that the agency has made
such a submission.
DATES: Submit comments on or before
June 6, 2005. If you intend to comment
but cannot prepare comments promptly,
please advise the OMB Reviewer and
the Agency Clearance Officer before the
deadline.
Copies: Request for clearance (OMB
83–1), supporting statement, and other
documents submitted to OMB for
review may be obtained from the
Agency Clearance Officer.
ADDRESSES: Address all comments
concerning this notice to: Agency
Clearance Officer, Jacqueline White,
Small Business Administration, 409 3rd
Street, SW., 5th Floor, Washington, DC
20416; and David_Rostker@omb.eop.gov
18:03 May 05, 2005
Jkt 205001
Federal Aviation Administration
[Summary Notice No. PE–2005–26]
Petitions for Exemption; Dispositions
of Petitions Issued
Federal Aviation
Administration, DOT.
ACTION: Notice of issuance of advisory
circular.
AGENCY:
VerDate jul<14>2003
BILLING CODE 4910–13–P
BILLING CODE 8025–01–P
Advisory Circular (AC) 23–17B,
Systems and Equipment Guide for
Certification of Part 23 Airplanes and
Airships
SMALL BUSINESS ADMINISTRATION
CFR 200.30–3(a)(12).
Issued in Kansas City, Missouri on April
12, 2005.
Nancy C. Lane,
Acting Assistant Manager, Aircraft
Certification Service.
[FR Doc. 05–9042 Filed 5–5–05; 8:45 am]
Federal Aviation Administration
BILLING CODE 8010–01–P
14 17
How to Obtain Copies: A paper copy
of AC 23–17B may be obtained by
writing to the U.S. Department of
Transportation, Subsequent Distribution
Office, DOT Warehouse, SVC–121.23,
Ardmore East Business Center, 3341Q
75th Avenue, Landover, MD 20785,
telephone 301–322–5377, or by faxing
your request to the warehouse at 301–
386–5394. The AC will also be available
on the Internet at https://
www.airweb.faa.gov/AC.
This advisory circular (AC)
sets forth an acceptable means, but not
the only means, of showing compliance
with Title 14 Code of Federal
Regulations (14 CFR), part 23, for the
certification of systems and equipment
in normal, utility, acrobatic, and
commuter category airplanes and
airships. The policy in this AC is
considered applicable for airship
projects; however, the certifying office
should only use specific applicability
and requirements if they are determined
to be reasonable, applicable and
relevant to the airship project. This AC
applies to Subpart D from § 23.671 and
Subpart F. This AC both consolidates
existing policy documents, and certain
ACs that cover specific paragraphs of
the regulations, into a single document
and adds new guidance. This revision
has added preamble material, in italics,
under the applicable rule and
amendment level. Material in this AC is
neither mandatory nor regulatory in
nature and does not constitute a
regulation.
The draft AC was issued for Public
Comment on September 29, 2004 (69 FR
58213). No comments were received.
DATES: Advisory Circular (AC) 23–22
was issued by the Manager, Small
Airplane Directorate on April 12, 2005.
SUMMARY:
PO 00000
Frm 00198
Fmt 4703
Sfmt 4703
Federal Aviation
Administration (FAA), DOT.
ACTION: Notice of disposition of prior
petition.
AGENCY:
SUMMARY: Pursuant to FAA’s rulemaking
provisions governing the application,
processing, and disposition of petitions
for exemption, part 11 of Title 14, Code
of Federal Regulations (14 CFR), this
notice contains the disposition of
certain petitions previously received.
The purpose of this notice is to improve
the public’s awareness of, and
participation in, this aspect of FAA’s
regulatory activities. Neither publication
of this notice nor the inclusion or
omission of information in the summary
is intended to affect the legal status of
any petition or its final disposition.
FOR FURTHER INFORMATION CONTACT:
Kenna Sinclair (425–227–1556),
Transport Airplane Directorate (ANM–
113), Federal Aviation Administration,
1601 Lind Ave SW., Renton, WA
98055–4056; or John Linsenmeyer (202–
267–5174), Office of Rulemaking (ARM–
1), Federal Aviation Administration,
800 Independence Avenue, SW.,
Washington, DC 20591. This notice is
published pursuant to 14 CFR 11.85 and
11.91.
Issued in Washington, DC, on May 2, 2005.
Anthony F. Fazio,
Director, Office of Rulemaking.
Disposition of Petitions
Docket No.: FAA–2004–17629.
Petitioner: Gulfstream Aerospace.
E:\FR\FM\06MYN1.SGM
06MYN1
]]>Agencies
[Federal Register Volume 70, Number 87 (Friday, May 6, 2005)]
[Notices]
[Pages 24156-24158]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E5-2200]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-51640; File No. SR-Phlx-2005-20]
Self-Regulatory Organizations; Notice of Filing of Proposed Rule
Change, and Amendment No. 1 Thereto, by the Philadelphia Stock
Exchange, Inc. Relating to the Elimination of the Prohibition Against
the Entry of Multiple Orders in an Option Within Any 15-Second Period
for an Account or Accounts of the Same Beneficial Owner
April 29, 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 March 24, 2005, the Philadelphia Stock Exchange, Inc. (``Phlx'' or
the ``Exchange'') filed with the Securities and Exchange Commission
(``Commission'') the proposed rule change as described in Items I, II,
and III below, which Items have been prepared by the Phlx. On April 11,
2005, the Phlx filed Amendment No. 1 to the proposed rule change.\3\
The Commission is publishing this notice to solicit comments on the
proposed rule change, as amended, from interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ In Amendment No. 1, the Exchange revised the statutory
section under which the proposed rule change was filed from Section
19(b)(3)(A) of the Act, 15 U.S.C. 78s(b)(3)(A), to Section 19(b)(2)
of the Act, 15 U.S.C. 78s(b)(2).
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Phlx proposes to amend Exchange Rule 1080, Philadelphia Stock
Exchange Automated Options Market (``AUTOM'') System,\4\ to eliminate
the limitation contained in the rule providing that Order Entry Firms
(as defined below) may neither enter nor permit the entry of multiple
orders in an option within any 15-second period for an account or
accounts of the same beneficial owner, and to remove a similar
provision relating to orders submitted by off-floor broker-dealers (as
defined below). The text of the proposed rule change is available on
the Phlx's Web site (https://www.phlx.com), at the principal office of
the Phlx, and at the Commission's Public Reference Room. The text of
the proposed rule change also appears below. Deletions are [bracketed].
---------------------------------------------------------------------------
\4\ AUTOM is the Exchange's electronic order delivery, routing,
execution and reporting system, which provides for the automatic
entry and routing of equity option and index option orders to the
Exchange trading floor. Orders delivered through AUTOM may be
executed manually, or certain orders are eligible for AUTOM's
automatic execution features, Book Sweep and Book Match. Equity
option and index option specialists are required by the Exchange to
participate in AUTOM and its features and enhancements. See Exchange
Rule 1080.
---------------------------------------------------------------------------
* * * * *
Philadelphia Stock Exchange Automated Options Market (AUTOM) and
Automatic Execution System (AUTO-X)
Rule 1080. (a)-(b) No change.
(c) * * *
(i) No change.
(ii) Order Entry Firms and Users.
(A) No change.
(B) Obligations of Order Entry Firms. Order Entry Firms shall:
(1)-(2) No change.
[(3) Neither enter nor permit the entry of multiple orders in call
options and/or put options in the same option issue within any 15-
second period for an account or accounts of the same beneficial owner.]
(iii)-(iv) No change.
(d)-(k) No change.
Commentary:
.01-.04 No change.
.05 Off-floor broker-dealer limit orders delivered through AUTOM
must be represented on the Exchange Floor by a floor member. Off-floor
broker-dealer orders delivered via AUTOM shall be for a minimum size of
one (1) contract. Off-floor broker-dealer limit orders are subject to
the following other provisions:
(i)-(ii) No change.
[(iii) Off-floor broker-dealer limit orders that are eligible for
automatic execution entered via AUTOM for the account(s) of the same
beneficial owner may not be entered in options on the same underlying
security more frequently than every 15 seconds.]
.06-.07 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, the Phlx included statements
concerning the purpose of and basis for the proposal and discussed any
comments it received on the proposed rule change, as amended. The text
of these statements may be examined at the places specified in Item IV
below. The Phlx has prepared summaries, set forth in Sections A, B, and
C below, of the most significant aspects of such statements.
[[Page 24157]]
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 increase the number
of orders handled electronically on the Exchange by eliminating the
Exchange's current prohibition against the entry via AUTOM of multiple
orders for an account or accounts of the same beneficial owner in the
same option within any 15-second period.
In August, 2001, the Exchange adopted Rule 1080(c)(ii)(B)(3)
providing that an Order Entry Firm \5\ may neither enter nor permit the
entry of multiple orders in an option into the AUTOM System within any
15-second period for an account or accounts of the same beneficial
owner.\6\ In April, 2002, the Exchange adopted, on a six-month pilot
basis, rules allowing the entry via AUTOM of off-floor broker-dealer
\7\ limit orders (including Commentary .05(iii) to Rule 1080--a similar
15-second rule applicable to such off-floor broker-dealer limit
orders).\8\ The Commission approved the pilot rules on a permanent
basis in October, 2002.\9\
---------------------------------------------------------------------------
\5\ The Exchange defines an ``Order Entry Firm'' as a member
organization of the Exchange that is able to route orders to AUTOM.
See Exchange Rule 1080(c)(ii)(A)(1).
\6\ See Securities Exchange Act Release No. 44687 (August 13,
2001), 66 FR 43287 (August 17, 2001) (SR-Phlx-2001-58).
\7\ The term ``off-floor broker-dealer'' means a broker-dealer
that delivers orders from off the floor of the Exchange for the
proprietary account(s) of such broker-dealer, including a market
maker located on an exchange or trading floor other than the
Exchange's trading floor who elects to deliver orders via AUTOM for
the proprietary account(s) of such market maker. See Exchange Rule
1080(b)(i)(C).
\8\ See Securities Exchange Act Release No. 45758 (April 15,
2002), 67 FR 19610 (April 22, 2002) (SR-Phlx-2001-40).
\9\ See Securities Exchange Act Release No. 46660 (October 15,
2002), 67 FR 64951 (October 22, 2002) (SR-Phlx-2002-50).
---------------------------------------------------------------------------
The original purpose of the rules was to assist Exchange
specialists and Registered Options Traders (``ROTs'') in managing their
risk, and to protect investors and other market participants from the
potential negative consequences that might result from Order Entry
Firms or off-floor broker-dealers engaging in prohibited conduct.
Since the time of the adoption of the rules, the Exchange's
electronic trading systems have been substantially enhanced such that
the risk associated with multiple orders in the same option delivered
for the account of the same or an affiliated beneficial account holder
has become more manageable through electronic means.\10\ For example,
the Exchange has developed its fully electronic trading system, Phlx
XL, which has been deployed for all equity and index options trading on
the Exchange. Phlx XL and its automatic execution features, Book Match
and Book Sweep, provide fully electronic executions and trade reports,
and specialists and Streaming Quote Traders (``SQTs'') \11\ submitting
proprietary electronic quotations through Phlx XL are able to revise
their quotations electronically, which the Exchange believes
substantially reduces the risk of multiple executions of orders
delivered in rapid succession before the specialist or SQT is able to
revise their quotation.
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\10\ The 15-second restriction is strictly rule based, and the
Exchange's systems do not include an electronic ``governor.''
\11\ An SQT is an ROT who has received permission from the
Exchange to generate and submit option quotations electronically
through an electronic interface with the AUTOM System via an
Exchange approved proprietary electronic quoting device in eligible
options to which the SQT is assigned. See Exchange Rule
1014(b)(ii)(A).
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The Exchange believes that the advent of Phlx XL and the
substantial increase in automated option order handling obviate the
need for the 15-second prohibition currently included in Exchange Rule
1080(c)(ii)(B)(3), and the similar prohibition concerning the delivery
of proprietary orders by off-floor broker-dealers contained in
Commentary .05(iii) to Exchange Rule 1080. The Exchange further
believes that the removal of the 15-second prohibition should increase
the number of orders handled electronically on the Exchange.
Accordingly, the Exchange has determined to eliminate both of these
rules.
2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act \12\ in general, and furthers the objectives of Section
6(b)(5) of the Act \13\ in particular, in that it is designed to
promote just and equitable principles of trade, remove impediments to
and perfect the mechanism of a free and open market and a national
market system, and to protect investors and the public interest by
increasing the number of orders handled electronically on the Exchange
through the elimination of the prohibition against the entry into AUTOM
of multiple orders by the same beneficial account owner within a 15-
second period.
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\12\ 15 U.S.C. 78s(b).
\13\ 15 U.S.C. 78s(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition
The Phlx 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 solicited or received.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Within 35 days of the date of publication of this notice in the
Federal Register or within such longer period (i) as the Commission may
designate up to 90 days of such date if it finds such longer period to
be appropriate and publishes its reasons for so finding or (ii) as to
which the Exchange consents, the Commission shall:
(a) By order approve such proposed rule change; or
(b) Institute proceedings to determine whether the proposed rule
change, as amended, should be disapproved.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change, as amended, 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-2005-20 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-2005-20. 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
[[Page 24158]]
change, as amended, that are filed with the Commission, and all written
communications relating to the proposed rule change, as amended,
between the Commission and any person, other than those that may be
withheld from the public in accordance with the provisions of 5 U.S.C.
552, will be available for inspection and copying in the Commission's
Public Reference Room. Copies of such filing also will be available for
inspection and copying at the principal office of the 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-2005-20 and should be
submitted on or before May 27, 2005.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\14\
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\14\ 17 CFR 200.30-3(a)(12).
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Jill M. Peterson,
Assistant Secretary.
[FR Doc. E5-2200 Filed 5-5-05; 8:45 am]
BILLING CODE 8010-01-P
