Self-Regulatory Organizations; Philadelphia Stock Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Relating to its Payment for Order Flow Pilot Program, 30461-30462 [E6-8097]

Download as PDF Federal Register / Vol. 71, No. 102 / Friday, May 26, 2006 / Notices Securities and Exchange Commission, 100 F Street, NE., Washington, DC 20549–9303. All submissions should refer to File Number SR–NYSE–2005–58. This file number should be included on the subject line if e-mail is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission’s Internet Web site (http://www.sec.gov/ rules/sro/shtml). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for inspection and copying in the Commission’s Public Reference Room, 100 F Street, NE., Washington, DC 20549. Copies of such filing will also be available for inspection and copying at the principal office of the NYSE. 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 the File Number SR–NYSE–2005–58 and should be submitted on or before June 16, 2006. For the Commission, by the Division of Market Regulation, pursuant to delegated authority.13 Nancy M. Morris, Secretary. [FR Doc. E6–8096 Filed 5–25–06; 8:45 am] BILLING CODE 8010–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–53841, File No. SR–Phlx– 2006–33] Self-Regulatory Organizations; Philadelphia Stock Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Relating to its Payment for Order Flow Pilot Program jlentini on PROD1PC65 with NOTICES May 19, 2006. Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’)1, and Rule 19b–4 thereunder,2 13 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 1 15 VerDate Aug<31>2005 16:12 May 25, 2006 Jkt 208001 notice is hereby given that on May 12, 2006, the Philadelphia Stock Exchange, Inc. (‘‘Phlx’’ or ‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘SEC’’ or ‘‘Commission’’) the proposed rule change as described in Items I, II, and III, below, which Items have been prepared by the Phlx. The Phlx has designated this proposal as one changing a fee imposed by the Phlx under section 19(b)(3)(A)(ii) of the Act 3 and Rule 19b–4(f)(2) thereunder,4 which renders the proposal effective upon filing with the Commission. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Phlx proposes to extend its payment for order flow pilot program, which is currently in effect until May 27, 2006,5 for an additional one-year period until May 27, 2007. This proposal is scheduled to expire on the same date as the one-year pilot program in effect in connection with the provisions of Exchange Rule 1080(l) relating to directed orders. 6 The text of the applicable section of the Exchange’s Summary of Equity Option Charges is available at the Commission’s Public Reference Room, at the Phlx, and on the Exchange’s Web site at http://www.phlx.com. II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the Phlx included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. 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. 3 15 U.S.C. 78s(b)(3)(A)(ii). CFR 240.19b–4(f)(2). 5 See, e.g., Securities Exchange Act Release Nos. 53754 (May 3, 2006), 71 FR 27301 (May 10, 2006) (SR–Phlx–2006–25); 53078 (January 9, 2006), 71 FR 2289 (January 13, 2006) (SR–Phlx–2005–88); 52568 (October 6, 2005), 70 FR 60120 (October 14, 2005) (SR–Phlx–2005–58); and 51759 (May 27, 2005), 70 FR 32860 (June 6, 2005) (SR–Phlx–2004–91). 6 The provisions of Rule 1080(l) are in effect for a one-year pilot period currently scheduled to expire on May 27, 2006. The Exchange has filed a proposed rule change to extend the one-year pilot program for an additional year until May 27, 2007. See SR–Phlx–2006–27. 4 17 PO 00000 Frm 00097 Fmt 4703 Sfmt 4703 30461 A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose Currently, the following payment for order flow rates are in effect at the Exchange: (1) Equity options other than QQQQ 7 and FXI Options are assessed $0.60 per contract; (2) options on QQQQ are assessed $0.75 per contract; and (3) no payment for order flow fees are assessed on FXI Options.8 Trades resulting from either Directed or nonDirected Orders that are delivered electronically over AUTOM 9 and executed on the Exchange are assessed a payment for order flow fee, while nonelectronically-delivered orders (i.e., represented by a floor broker) are not assessed a payment for order flow fee.10 The Exchange recently amended its equity options payment for order flow program to rebate, on a quarterly basis, any excess payment for order flow funds that were collected but not requested for rebate by a specialist or Directed ROT.11 The Exchange states that, other than extending the date of the pilot program for an additional year until May 27, 2007, no other changes to its current payment for order flow program are being proposed at this time. 7 The Nasdaq-100, Nasdaq-100 Index, Nasdaq, The Nasdaq Stock Market, Nasdaq-100 SharesSM, Nasdaq-100 TrustSM, Nasdaq-100 Index Tracking StockSM, and QQQSM are trademarks or service marks of The Nasdaq Stock Market, Inc. (‘‘Nasdaq’’) and have been licensed for use for certain purposes by the Philadelphia Stock Exchange pursuant to a License Agreement with Nasdaq. The Nasdaq-100 Index (‘‘Index’’) is determined, composed, and calculated by Nasdaq without regard to the Licensee, the Nasdaq-100 TrustSM, or the beneficial owners of Nasdaq-100 SharesSM. The Exchange states that Nasdaq has complete control and sole discretion in determining, comprising, or calculating the Index or in modifying in any way its method for determining, comprising, or calculating the Index in the future. 8 The Exchange states that specialists and Directed Registered Options Traders (‘‘Directed ROTs’’) who participate in the Exchange’s payment for order flow program are assessed a payment for order flow fee, in addition to ROTs. Therefore, the payment for order flow fee is assessed, in effect, on equity option transactions between a customer and a ROT, a customer and a Directed ROT, or a customer and a specialist when a customer order is directed to a specialist or Directed ROT who participates in the Exchange’s payment for order flow program. 9 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. See Exchange Rules 1014(b)(ii) and 1080. 10 Electronically-delivered orders do not include orders delivered through the Floor Broker Management System pursuant to Exchange Rule 1063. 11 See Securities Exchange Act Release No. 53754 (May 3, 2006), 71 FR 27301 (May 10, 2006) (SR– Phlx–2006–25). E:\FR\FM\26MYN1.SGM 26MYN1 30462 Federal Register / Vol. 71, No. 102 / Friday, May 26, 2006 / Notices The Exchange states that the purpose of extending the Exchange’s payment for order flow program for an additional year is to remain competitive with other options exchanges that administer payment for order flow programs. The proposal, consistent with the Exchange’s current payment for order flow program, will remain in effect as a pilot program that is scheduled to expire on May 27, 2007, the same date as the one-year pilot program in effect in connection with the provisions of Exchange Rule 1080(l) relating to Directed Orders.12 2. Statutory Basis The Exchange believes that its proposal to amend its schedule of fees is consistent with section 6(b) of the Act 13 in general, and furthers the objectives of section 6(b)(4) of the Act 14 in particular, in that it is an equitable allocation of reasonable, dues, fees and other charges among Exchange members. 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 that is not necessary or appropriate in furtherance of the purposes of the Act. C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received from Members, Participants, or Others No written comments were either solicited or received. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action jlentini on PROD1PC65 with NOTICES The foregoing proposed rule change has been designated as a fee change pursuant to section 19(b)(3)(A)(ii) of the Act 15 and Rule 19b–4(f)(2) 16 thereunder, because it establishes or changes a due, fee, or other charge imposed by the Exchange. Accordingly, the proposal will take effect upon filing with the Commission. 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. 12 See supra note 6. U.S.C. 78f(b). 14 15 U.S.C. 78f(b)(4). 15 15 U.S.C. 78s(b)(3)(A)(ii). 16 17 CFR 240.19b–4(f)(2). 16:12 May 25, 2006 Electronic Comments • Use the Commission’s Internet comment form (http://www.sec.gov/ rules/sro.shtml); or • Send an e-mail to rulecomments@sec.gov. Please include File Number SR–Phlx–2006–33 on the subject line. SECURITIES AND EXCHANGE COMMISSION [Release No. 34–53846; File No. SR–Phlx– 2005–65] Self-Regulatory Organizations; Philadelphia Stock Exchange, Inc.; Notice of Filing of Proposed Rule Change and Amendment No. 1 Thereto Relating to the Exchange’s Business Conduct Committee and Disciplinary Rules May 19, 2006. Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 Paper Comments (‘‘Act’’),1 and Rule 19b–4 thereunder,2 notice is hereby given that on November • Send paper comments in triplicate 2, 2005, the Philadelphia Stock to Nancy M. Morris, Secretary, Exchange, Inc. (‘‘Phlx’’ or ‘‘Exchange’’) Securities and Exchange Commission, filed with the Securities and Exchange 100 F Street, NE., Washington, DC 20549–1090. Commission (‘‘SEC’’ or ‘‘Commission’’) All submissions should refer to File the proposed rule change as described Number SR–Phlx–2006–33. This file in Items I, II, and III below, which Items number should be included on the have been prepared by the Phlx. On subject line if e-mail is used. To help the May 16, 2006, the Phlx filed Commission process and review your Amendment No. 1 to the proposed rule comments more efficiently, please use change.3 The Commission is publishing only one method. The Commission will this notice to solicit comments on the post all comments on the Commission’s proposed rule change, as amended, from Internet Web site (http://www.sec.gov/ interested persons. rules/sro.shtml). Copies of the I. Self-Regulatory Organization’s submission, all subsequent amendments, all written statements Statement of the Terms of Substance of with respect to the proposed rule the Proposed Rule Change change that are filed with the The Phlx proposes to amend Commission, and all written Exchange By-Law Article X, Section 10– communications relating to the 11, Business Conduct Committee and proposed rule change between the Commission and any person, other than Exchange Rules 960 and 970 to: (1) Establish a Hearing Officer position; (2) those that may be withheld from the amend certain provisions relating to the public in accordance with the retention and compensation of Hearing provisions of 5 U.S.C. 552, will be Panelists; (3) amend the hearing process available for inspection and copying in the Commission’s Public Reference as it relates to decisions issued by the Room. Copies of the filing also will be Hearing Panel; and (4) make other available for inspection and copying at minor, non-substantive changes to the principal office of the Phlx. All Exchange By-Law Article X, Section 10– comments received will be posted 11, Business Conduct Committee and without change; the Commission does Rules 960 and 970. Specifically, the not edit personal identifying proposal discussed below would create information from submissions. You the new staff position of a ‘‘Hearing should submit only information that Officer,’’ who, along with two other you wish to make available publicly. All Hearing Panelists, would hear contested submissions should refer to File disciplinary matters that previously Number SR–Phlx–2006–33 and should were heard by the Business Conduct be submitted on or before June 16, 2006. Committee (‘‘BCC’’ or ‘‘Committee’’). For the Commission, by the Division of The text of the proposed rule change is Market Regulation, pursuant to delegated available on the Phlx’s Web site authority.17 (http://www.phlx.com), at the Phlx’s Nancy M. Morris, Office of the Secretary, and at the Secretary. Commission’s Public Reference Room. [FR Doc. E6–8097 Filed 5–25–06; 8:45 am] 13 15 VerDate Aug<31>2005 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: BILLING CODE 8010–01–P 1 15 U.S.C. 78s(b)(1). CFR 240.19b–4. 3 SEE Amendment No. 1. 2 17 17 17 Jkt 208001 PO 00000 CFR 200.30–3(a)(12). Frm 00098 Fmt 4703 Sfmt 4703 E:\FR\FM\26MYN1.SGM 26MYN1

Agencies

[Federal Register Volume 71, Number 102 (Friday, May 26, 2006)]
[Notices]
[Pages 30461-30462]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E6-8097]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-53841, File No. SR-Phlx-2006-33]


Self-Regulatory Organizations; Philadelphia Stock Exchange, Inc.; 
Notice of Filing and Immediate Effectiveness of a Proposed Rule Change 
Relating to its Payment for Order Flow Pilot Program

May 19, 2006.
    Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act'')\1\, and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on May 12, 2006, the Philadelphia Stock Exchange, Inc. (``Phlx'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``SEC'' or ``Commission'') the proposed rule change as described in 
Items I, II, and III, below, which Items have been prepared by the 
Phlx. The Phlx has designated this proposal as one changing a fee 
imposed by the Phlx under section 19(b)(3)(A)(ii) of the Act \3\ and 
Rule 19b-4(f)(2) thereunder,\4\ which renders the proposal effective 
upon filing with the Commission. The Commission is publishing this 
notice to solicit comments on the proposed rule change from interested 
persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \4\ 17 CFR 240.19b-4(f)(2).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Phlx proposes to extend its payment for order flow pilot 
program, which is currently in effect until May 27, 2006,\5\ for an 
additional one-year period until May 27, 2007. This proposal is 
scheduled to expire on the same date as the one-year pilot program in 
effect in connection with the provisions of Exchange Rule 1080(l) 
relating to directed orders. \6\
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    \5\ See, e.g., Securities Exchange Act Release Nos. 53754 (May 
3, 2006), 71 FR 27301 (May 10, 2006) (SR-Phlx-2006-25); 53078 
(January 9, 2006), 71 FR 2289 (January 13, 2006) (SR-Phlx-2005-88); 
52568 (October 6, 2005), 70 FR 60120 (October 14, 2005) (SR-Phlx-
2005-58); and 51759 (May 27, 2005), 70 FR 32860 (June 6, 2005) (SR-
Phlx-2004-91).
    \6\ The provisions of Rule 1080(l) are in effect for a one-year 
pilot period currently scheduled to expire on May 27, 2006. The 
Exchange has filed a proposed rule change to extend the one-year 
pilot program for an additional year until May 27, 2007. See SR-
Phlx-2006-27.
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    The text of the applicable section of the Exchange's Summary of 
Equity Option Charges is available at the Commission's Public Reference 
Room, at the Phlx, and on the Exchange's Web site at http://
www.phlx.com.

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

    In its filing with the Commission, the Phlx included statements 
concerning the purpose of and basis for the proposed rule change and 
discussed any comments it received on the proposed rule change. 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.

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

1. Purpose
    Currently, the following payment for order flow rates are in effect 
at the Exchange: (1) Equity options other than QQQQ \7\ and FXI Options 
are assessed $0.60 per contract; (2) options on QQQQ are assessed $0.75 
per contract; and (3) no payment for order flow fees are assessed on 
FXI Options.\8\ Trades resulting from either Directed or non-Directed 
Orders that are delivered electronically over AUTOM \9\ and executed on 
the Exchange are assessed a payment for order flow fee, while non-
electronically-delivered orders (i.e., represented by a floor broker) 
are not assessed a payment for order flow fee.\10\
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    \7\ The Nasdaq-100[supreg], Nasdaq-100 Index[supreg], 
Nasdaq[supreg], The Nasdaq Stock Market[reg], Nasdaq-100 Shares\SM\, 
Nasdaq-100 Trust\SM\, Nasdaq-100 Index Tracking Stock\SM\, and 
QQQ\SM\ are trademarks or service marks of The Nasdaq Stock Market, 
Inc. (``Nasdaq'') and have been licensed for use for certain 
purposes by the Philadelphia Stock Exchange pursuant to a License 
Agreement with Nasdaq. The Nasdaq-100 Index[supreg] (``Index'') is 
determined, composed, and calculated by Nasdaq without regard to the 
Licensee, the Nasdaq-100 Trust\SM\, or the beneficial owners of 
Nasdaq-100 Shares\SM\. The Exchange states that Nasdaq has complete 
control and sole discretion in determining, comprising, or 
calculating the Index or in modifying in any way its method for 
determining, comprising, or calculating the Index in the future.
    \8\ The Exchange states that specialists and Directed Registered 
Options Traders (``Directed ROTs'') who participate in the 
Exchange's payment for order flow program are assessed a payment for 
order flow fee, in addition to ROTs. Therefore, the payment for 
order flow fee is assessed, in effect, on equity option transactions 
between a customer and a ROT, a customer and a Directed ROT, or a 
customer and a specialist when a customer order is directed to a 
specialist or Directed ROT who participates in the Exchange's 
payment for order flow program.
    \9\ 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. See Exchange Rules 1014(b)(ii) and 1080.
    \10\ Electronically-delivered orders do not include orders 
delivered through the Floor Broker Management System pursuant to 
Exchange Rule 1063.
---------------------------------------------------------------------------

    The Exchange recently amended its equity options payment for order 
flow program to rebate, on a quarterly basis, any excess payment for 
order flow funds that were collected but not requested for rebate by a 
specialist or Directed ROT.\11\
---------------------------------------------------------------------------

    \11\ See Securities Exchange Act Release No. 53754 (May 3, 
2006), 71 FR 27301 (May 10, 2006) (SR-Phlx-2006-25).
---------------------------------------------------------------------------

    The Exchange states that, other than extending the date of the 
pilot program for an additional year until May 27, 2007, no other 
changes to its current payment for order flow program are being 
proposed at this time.

[[Page 30462]]

    The Exchange states that the purpose of extending the Exchange's 
payment for order flow program for an additional year is to remain 
competitive with other options exchanges that administer payment for 
order flow programs.
    The proposal, consistent with the Exchange's current payment for 
order flow program, will remain in effect as a pilot program that is 
scheduled to expire on May 27, 2007, the same date as the one-year 
pilot program in effect in connection with the provisions of Exchange 
Rule 1080(l) relating to Directed Orders.\12\
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    \12\ See supra note 6.
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2. Statutory Basis
    The Exchange believes that its proposal to amend its schedule of 
fees is consistent with section 6(b) of the Act \13\ in general, and 
furthers the objectives of section 6(b)(4) of the Act \14\ in 
particular, in that it is an equitable allocation of reasonable, dues, 
fees and other charges among Exchange members.
---------------------------------------------------------------------------

    \13\ 15 U.S.C. 78f(b).
    \14\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------

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 that is not necessary or appropriate 
in furtherance of the purposes of the Act.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received from Members, Participants, or Others

    No written comments were either solicited or received.

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

    The foregoing proposed rule change has been designated as a fee 
change pursuant to section 19(b)(3)(A)(ii) of the Act \15\ and Rule 
19b-4(f)(2) \16\ thereunder, because it establishes or changes a due, 
fee, or other charge imposed by the Exchange. Accordingly, the proposal 
will take effect upon filing with the Commission. 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.
---------------------------------------------------------------------------

    \15\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \16\ 17 CFR 240.19b-4(f)(2).
---------------------------------------------------------------------------

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://
www.sec.gov/rules/sro.shtml); or
     Send an e-mail to rule-comments@sec.gov. Please include 
File Number SR-Phlx-2006-33 on the subject line.

Paper Comments

     Send paper comments in triplicate to Nancy M. Morris, 
Secretary, Securities and Exchange Commission, 100 F Street, NE., 
Washington, DC 20549-1090.
    All submissions should refer to File Number SR-Phlx-2006-33. This 
file number should be included on the subject line if e-mail is used. 
To help the Commission process and review your comments more 
efficiently, please use only one method. The Commission will post all 
comments on the Commission's Internet Web site (http://www.sec.gov/
rules/sro.shtml). Copies of the submission, all subsequent amendments, 
all written statements with respect to the proposed rule change that 
are filed with the Commission, and all written communications relating 
to the proposed rule change between the Commission and any person, 
other than those that may be withheld from the public in accordance 
with the provisions of 5 U.S.C. 552, will be available for inspection 
and copying in the Commission's Public Reference Room. Copies of 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-2006-33 and should be submitted on or before June 
16, 2006.
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    \17\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\17\
Nancy M. Morris,
Secretary.
[FR Doc. E6-8097 Filed 5-25-06; 8:45 am]
BILLING CODE 8010-01-P