Self-Regulatory Organizations; Philadelphia Stock Exchange, Inc.; Order Granting Approval of a Proposed Rule Change and Amendment Nos. 1 and 2 Thereto Relating to the Exchange's Obvious Error Rule, 38441-38442 [E6-10532]
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Federal Register / Vol. 71, No. 129 / Thursday, July 6, 2006 / Notices
Securities and Exchange Commission,
100 F Street, NE., Washington, DC
20549–1090.
All submissions should refer to File
Number SR–NASD–2006–073. 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 provision
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 NASD. 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
submission should refer to File Number
SR–NASD–2006–073 and should be
submitted on or before July 27, 2006.
For the Commission, by the Division of
Market Regulation, pursuant to delegated
authority.8
J. Lynn Taylor,
Assistant Secretary.
[FR Doc. E6–10531 Filed 7–5–06; 8:45 am]
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–54070; File No. SR–Phlx–
2005–73)]
Self-Regulatory Organizations;
Philadelphia Stock Exchange, Inc.;
Order Granting Approval of a
Proposed Rule Change and
Amendment Nos. 1 and 2 Thereto
Relating to the Exchange’s Obvious
Error Rule
jlentini on PROD1PC65 with NOTICES
On November 14, 2005, the
Philadelphia Stock Exchange, Inc.
(‘‘Phlx’’ or ‘‘Exchange’’) filed with the
VerDate Aug<31>2005
17:01 Jul 05, 2006
Jkt 208001
The Phlx proposes to amend its
Obvious Error Rule, Phlx Rule 1092.
Currently, Phlx Rule 1092(a) defines
‘‘obvious error’’ as the execution price
of a transaction that is higher or lower
than the Theoretical Price (if the
Theoretical Price is less than $3.00) for
the series by an amount of 35 cents or
more, or, during unusual market
conditions (i.e., the Exchange has
declared an unusual market condition
status for the option in question), by an
amount of 50 cents or more. Where the
Theoretical Price is $3.00 or more,
‘‘obvious error’’ is defined as the
execution price of a transaction that is
higher or lower than the Theoretical
Price for the series by an amount equal
to at least two times the allowable
maximum bid/ask spread for the series,
so long as the amount is 50 cents or
more, and three times the allowable bid/
ask spread during unusual market
conditions.
The proposed rule change would
revise the definition of ‘‘obvious error’’
by deeming an ‘‘obvious error’’ to have
occurred when the execution price of a
transaction is higher or lower than the
Theoretical Price for a series by an
amount equal to at least the amount
shown below:
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 Amendment No. 1 corrected technical errors in
the proposed rule text.
4 Amendment No. 2 deleted the proposed
revisions to Phlx Rule 1092(c) that related to an
erroneous print disseminated by the underlying
market that is later cancelled or corrected by the
underlying market and an erroneous quote in the
underlying market. Thus, the Exchange does not
propose to make any changes to Phlx Rule 1092(c).
5 Securities Exchange Act Release No. 53776 (May
9, 2006).
2 17
I. Introduction
CFR 200.30–3(a)(12).
II. Description of the Proposed Rule
Change
1 15
June 29, 2006.
8 17
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 Phlx Rule 1092 with respect to:
(1) the definition of ‘‘obvious error’’ and
(2) the definition of ‘‘Theoretical Price.’’
On November 18, 2005, the Phlx
submitted Amendment No. 1 to the
proposed rule change.3 On April 6,
2006, the Phlx submitted Amendment
No. 2 to the proposed rule change.4 The
proposed rule change and Amendment
Nos. 1 and 2 were published for
comment in the Federal Register on
May 15, 2006.5 The Commission
received no comments on the proposal.
This order approves the proposed rule
change, as amended.
PO 00000
Frm 00086
Fmt 4703
Sfmt 4703
Theoretical price
Below $2 .......................................
$2 to $5 ........................................
Above $5 to $10 ...........................
Above $10 to $20 .........................
Above $20 ....................................
38441
Minimum
amount
$.25
.40
.50
.80
1.00
The Exchange believes that the
proposed new definition of ‘‘obvious
error’’ would facilitate the efficient
determination by Floor Officials
regarding whether a trade resulted from
an obvious error by setting minimum
amounts by which the transaction price
differs from the Theoretical Price
without requiring such Floor Officials to
conduct an inquiry into the volume of
all exchanges each time they review a
transaction under the rule. The
proposed definition of ‘‘obvious error’’
would apply during both normal and
unusual market conditions, which in
the Exchange’s view would further
streamline the Floor Officials’ process of
determining whether an obvious error
exists.6
Phlx Rule 1092(b) defines
‘‘Theoretical Price’’ as the last bid or
offer, just prior to the transaction, on the
exchange that has the most total volume
in that option over the most recent 60
calendar days; or, if there are no quotes
for comparison purposes, as determined
by two Floor Officials and designated
personnel in the Exchange’s Market
Surveillance Department. The proposed
rule change would revise the definition
of ‘‘Theoretical Price’’ as, respecting
series traded on at least one other
options exchange, the mid-point of the
National Best Bid and Offer (‘‘NBBO’’)
just prior to the transaction.
According to the Exchange, currently
all options exchanges, including the
Phlx, have rules permitting specialists
and market makers to disseminate
electronic quotations with a bid/ask
differential of up to $5.00, regardless of
the price of the bid.7 For the most part,
the Phlx believes that such quotations
do not reflect the NBBO. Under current
Phlx Rule 1092, the Theoretical Price,
defined as the last bid or offer just prior
to the transaction on the market with
the highest volume, could differ from
the NBBO by a significant amount if the
bid/ask differential on such market in
the series is $5.00 wide. To account for
this potential discrepancy between the
Theoretical Price as established by rule
6 The Commission recently approved the
Exchange’s proposal to establish the position of
neutral Referee who, among other things, would
review Floor Officials’ obvious error rulings. See
Securities Exchange Act Release No. 53548 (March
24, 2006), 71 FR 16389 (March 31, 2006) (SR–Phlx–
2005–42).
7 See, e.g., Exchange Rule 1014(c)(i)(A)(2).
E:\FR\FM\06JYN1.SGM
06JYN1
38442
Federal Register / Vol. 71, No. 129 / Thursday, July 6, 2006 / Notices
and the actual NBBO, the proposal
would revise the definition of the term
‘‘Theoretical Price’’ to mean the midpoint of the NBBO just prior to the
transaction. The Exchange believes that
this new definition should provide
Exchange Floor Officials with a more
accurate measure of the price on which
to base their determination that a
transaction resulted from an obvious
error. The Exchange also proposes to
delete Commentary .02 to Phlx Rule
1092 from the Rule.8 This Commentary
sets forth how Theoretical Price would
be determined under current Phlx Rule
1092(c).
jlentini on PROD1PC65 with NOTICES
III. Discussion
The Commission finds that the
proposed rule change is consistent with
the requirements of the Act and the
rules and regulations thereunder
applicable to a national securities
exchange 9 and, in particular, the
requirements of Section 6(b) of the
Act 10 and the rules and regulations
thereunder. Specifically, the
Commission finds that the proposal is
consistent with Section 6(b)(5) of the
Act,11 in that the proposal promotes just
and equitable principles of trade,
removes impediments to and perfects
the mechanism of a free and open
market and a national market system,
and protects investors and the public
interest.
The Commission considers that in
most circumstances trades that are
executed between parties should be
honored. On rare occasions, the price of
the executed trade indicates an
‘‘obvious error’’ may exist, suggesting
that it is unrealistic to expect that the
parties to the trade had come to a
meeting of the minds regarding the
terms of the transaction. In the
Commission’s view, the determination
of whether an ‘‘obvious error’’ has
occurred should be based on specific
and objective criteria and subject to
specific and objective procedures. The
Phlx’s proposal would provide specific
and objective numerical criteria to be
used by Floor Officials to determine
whether a particular transaction
involved an obvious error. In addition,
the Exchange’s proposal to base the
definition of Theoretical Price on the
midpoint of the NBBO would ensure
8 Phlx Rule 1092(b) would retain the provision
that if there are no quotes for comparison purposes,
two Floor Officials and designated personnel in the
Exchange’s Market Surveillance Department would
determine Theoretical Price.
9 In approving this proposal, the Commission has
considered the proposed rule’s impact on
efficiency, competition, and capital formation. 15
U.S.C. 78c(f).
10 15 U.S.C. 78f(b).
11 15 U.S.C. 78f(b)(5).
VerDate Aug<31>2005
17:01 Jul 05, 2006
Jkt 208001
that the Phlx’s obvious error rule is
consistent with the Options Intermarket
Linkage Plan, which requires exchanges
to avoid trade-throughs. Accordingly,
the Commission finds that the
Exchange’s proposal is consistent with
the Act.
IV. Conclusion
It is therefore ordered, pursuant to
Section 19(b)(2) of the Act,12 that the
proposed rule change (SR–Phlx–2005–
73), as amended, is approved.
For the Commission, by the Division of
Market Regulation, pursuant to delegated
authority.13
Nancy M. Morris,
Secretary.
[FR Doc. E6–10532 Filed 7–5–06; 8:45 am]
BILLING CODE 8010–01–P
DEPARTMENT OF STATE
[Public Notice: 5462]
Memorandum of Agreement Between
the U.S. Department of State and the
Colorado Department of Human
Services Regarding Performance of
Duties as an Accrediting Entity Under
the Intercountry Adoption Act of 2000
Department of State.
Notice.
AGENCY:
ACTION:
SUMMARY: The Department of State (the
Department) is the lead Federal agency
for implementation of the 1993 Hague
Convention on Protection of Children
and Co-operation in Respect of
Intercountry Adoption (the Convention)
and the Intercountry Adoption Act of
2000 (IAA). Among other things, the
IAA gives the Secretary of State
responsibility for the accreditation of
agencies and approval of persons to
provide adoption services under the
Convention. The IAA requires the
Department to enter into agreements
with one or more qualified entities
under which such entities will perform
the tasks of accrediting agencies and
approving persons, monitoring
compliance of such agencies and
persons with applicable requirements,
and other related duties set forth in
section 202(b) of the IAA. This notice is
to inform the public that on June 29,
2006, the Department exercised its
authority under the IAA and entered
into an agreement with the Colorado
Department of Human Services under
which the Department designated the
Colorado Department of Human
Services as an accrediting entity. In its
PO 00000
12 15
13 17
U.S.C. 78f(b)(2).
CFR 200.30–3(a)(12).
Frm 00087
Fmt 4703
Sfmt 4703
role as an accrediting entity, the
Colorado Department of Human
Services will be accrediting or
approving qualified adoption service
providers located in and licensed by the
State of Colorado to enable them to
provide adoption services in cases
subject to the Convention once the
Convention enters into force for the
United States. As the U.S. Central
Authority for the Convention, the
Department will monitor the
performance of the Colorado
Department of Human Services and
approve fees charged by it as an
accrediting entity. The text of the
Memorandum of Agreement, signed on
June 29, 2006 by Maura Harty, Assistant
Secretary for Consular Affairs, U.S.
Department of State and signed on June
13, 2006 by Marva Livingston
Hammons, Executive Director,
Department of Human Services, State of
Colorado, is included at the end of this
Notice. Also included at the end of the
Memorandum of Agreement is its
Attachment 1, Colorado Revised
Statutes § 26–6–104(6.5).
FOR FURTHER INFORMATION CONTACT:
Mikiko Stebbing at 202–736–9086.
Hearing or speech-impaired persons
may use the Telecommunications
Devices for the Deaf (TDD) by contacting
the Federal Information Relay Service at
1–800–877–8339.
The
Department, pursuant to section 202(a)
of the IAA, must enter into an
agreement with at least one qualified
entity and designate it as an accrediting
entity. Accrediting entities may be (1)
nonprofit private entities with expertise
in developing and administering
standards for entities providing child
welfare services; or (2) State adoption
licensing bodies that have expertise in
developing and administering standards
for entities providing child welfare
services and that accredit only agencies
located in that State. Colorado’s
Department of Human Services is a
State adoption licensing body with
expertise in developing and
administering standards for entities
providing child welfare services and
only accredits agencies located in the
State of Colorado. The final rule on
accreditation of agencies and approval
of persons (22 CFR Part 96) was
published in the Federal Register (71
FR 8064–8066, February 15, 2006) and
became effective on March 17, 2006.
The final rule establishes the regulatory
framework for the accreditation and
approval function and provides the
standards that the designated
accrediting entities will follow in
SUPPLEMENTARY INFORMATION:
E:\FR\FM\06JYN1.SGM
06JYN1
]]>Agencies
[Federal Register Volume 71, Number 129 (Thursday, July 6, 2006)]
[Notices]
[Pages 38441-38442]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E6-10532]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-54070; File No. SR-Phlx-2005-73)]
Self-Regulatory Organizations; Philadelphia Stock Exchange, Inc.;
Order Granting Approval of a Proposed Rule Change and Amendment Nos. 1
and 2 Thereto Relating to the Exchange's Obvious Error Rule
June 29, 2006.
I. Introduction
On November 14, 2005, the Philadelphia Stock Exchange, Inc.
(``Phlx'' or ``Exchange'') 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 Phlx Rule 1092 with
respect to: (1) the definition of ``obvious error'' and (2) the
definition of ``Theoretical Price.'' On November 18, 2005, the Phlx
submitted Amendment No. 1 to the proposed rule change.\3\ On April 6,
2006, the Phlx submitted Amendment No. 2 to the proposed rule
change.\4\ The proposed rule change and Amendment Nos. 1 and 2 were
published for comment in the Federal Register on May 15, 2006.\5\ The
Commission received no comments on the proposal. This order approves
the proposed rule change, as amended.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ Amendment No. 1 corrected technical errors in the proposed
rule text.
\4\ Amendment No. 2 deleted the proposed revisions to Phlx Rule
1092(c) that related to an erroneous print disseminated by the
underlying market that is later cancelled or corrected by the
underlying market and an erroneous quote in the underlying market.
Thus, the Exchange does not propose to make any changes to Phlx Rule
1092(c).
\5\ Securities Exchange Act Release No. 53776 (May 9, 2006).
---------------------------------------------------------------------------
II. Description of the Proposed Rule Change
The Phlx proposes to amend its Obvious Error Rule, Phlx Rule 1092.
Currently, Phlx Rule 1092(a) defines ``obvious error'' as the execution
price of a transaction that is higher or lower than the Theoretical
Price (if the Theoretical Price is less than $3.00) for the series by
an amount of 35 cents or more, or, during unusual market conditions
(i.e., the Exchange has declared an unusual market condition status for
the option in question), by an amount of 50 cents or more. Where the
Theoretical Price is $3.00 or more, ``obvious error'' is defined as the
execution price of a transaction that is higher or lower than the
Theoretical Price for the series by an amount equal to at least two
times the allowable maximum bid/ask spread for the series, so long as
the amount is 50 cents or more, and three times the allowable bid/ask
spread during unusual market conditions.
The proposed rule change would revise the definition of ``obvious
error'' by deeming an ``obvious error'' to have occurred when the
execution price of a transaction is higher or lower than the
Theoretical Price for a series by an amount equal to at least the
amount shown below:
------------------------------------------------------------------------
Minimum
Theoretical price amount
------------------------------------------------------------------------
Below $2..................................................... $.25
$2 to $5..................................................... .40
Above $5 to $10.............................................. .50
Above $10 to $20............................................. .80
Above $20.................................................... 1.00
------------------------------------------------------------------------
The Exchange believes that the proposed new definition of ``obvious
error'' would facilitate the efficient determination by Floor Officials
regarding whether a trade resulted from an obvious error by setting
minimum amounts by which the transaction price differs from the
Theoretical Price without requiring such Floor Officials to conduct an
inquiry into the volume of all exchanges each time they review a
transaction under the rule. The proposed definition of ``obvious
error'' would apply during both normal and unusual market conditions,
which in the Exchange's view would further streamline the Floor
Officials' process of determining whether an obvious error exists.\6\
---------------------------------------------------------------------------
\6\ The Commission recently approved the Exchange's proposal to
establish the position of neutral Referee who, among other things,
would review Floor Officials' obvious error rulings. See Securities
Exchange Act Release No. 53548 (March 24, 2006), 71 FR 16389 (March
31, 2006) (SR-Phlx-2005-42).
---------------------------------------------------------------------------
Phlx Rule 1092(b) defines ``Theoretical Price'' as the last bid or
offer, just prior to the transaction, on the exchange that has the most
total volume in that option over the most recent 60 calendar days; or,
if there are no quotes for comparison purposes, as determined by two
Floor Officials and designated personnel in the Exchange's Market
Surveillance Department. The proposed rule change would revise the
definition of ``Theoretical Price'' as, respecting series traded on at
least one other options exchange, the mid-point of the National Best
Bid and Offer (``NBBO'') just prior to the transaction.
According to the Exchange, currently all options exchanges,
including the Phlx, have rules permitting specialists and market makers
to disseminate electronic quotations with a bid/ask differential of up
to $5.00, regardless of the price of the bid.\7\ For the most part, the
Phlx believes that such quotations do not reflect the NBBO. Under
current Phlx Rule 1092, the Theoretical Price, defined as the last bid
or offer just prior to the transaction on the market with the highest
volume, could differ from the NBBO by a significant amount if the bid/
ask differential on such market in the series is $5.00 wide. To account
for this potential discrepancy between the Theoretical Price as
established by rule
[[Page 38442]]
and the actual NBBO, the proposal would revise the definition of the
term ``Theoretical Price'' to mean the mid-point of the NBBO just prior
to the transaction. The Exchange believes that this new definition
should provide Exchange Floor Officials with a more accurate measure of
the price on which to base their determination that a transaction
resulted from an obvious error. The Exchange also proposes to delete
Commentary .02 to Phlx Rule 1092 from the Rule.\8\ This Commentary sets
forth how Theoretical Price would be determined under current Phlx Rule
1092(c).
---------------------------------------------------------------------------
\7\ See, e.g., Exchange Rule 1014(c)(i)(A)(2).
\8\ Phlx Rule 1092(b) would retain the provision that if there
are no quotes for comparison purposes, two Floor Officials and
designated personnel in the Exchange's Market Surveillance
Department would determine Theoretical Price.
---------------------------------------------------------------------------
III. Discussion
The Commission finds that the proposed rule change is consistent
with the requirements of the Act and the rules and regulations
thereunder applicable to a national securities exchange \9\ and, in
particular, the requirements of Section 6(b) of the Act \10\ and the
rules and regulations thereunder. Specifically, the Commission finds
that the proposal is consistent with Section 6(b)(5) of the Act,\11\ in
that the proposal promotes just and equitable principles of trade,
removes impediments to and perfects the mechanism of a free and open
market and a national market system, and protects investors and the
public interest.
---------------------------------------------------------------------------
\9\ In approving this proposal, the Commission has considered
the proposed rule's impact on efficiency, competition, and capital
formation. 15 U.S.C. 78c(f).
\10\ 15 U.S.C. 78f(b).
\11\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
The Commission considers that in most circumstances trades that are
executed between parties should be honored. On rare occasions, the
price of the executed trade indicates an ``obvious error'' may exist,
suggesting that it is unrealistic to expect that the parties to the
trade had come to a meeting of the minds regarding the terms of the
transaction. In the Commission's view, the determination of whether an
``obvious error'' has occurred should be based on specific and
objective criteria and subject to specific and objective procedures.
The Phlx's proposal would provide specific and objective numerical
criteria to be used by Floor Officials to determine whether a
particular transaction involved an obvious error. In addition, the
Exchange's proposal to base the definition of Theoretical Price on the
midpoint of the NBBO would ensure that the Phlx's obvious error rule is
consistent with the Options Intermarket Linkage Plan, which requires
exchanges to avoid trade-throughs. Accordingly, the Commission finds
that the Exchange's proposal is consistent with the Act.
IV. Conclusion
It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\12\ that the proposed rule change (SR-Phlx-2005-73), as amended,
is approved.
---------------------------------------------------------------------------
\12\ 15 U.S.C. 78f(b)(2).
\13\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\13\
Nancy M. Morris,
Secretary.
[FR Doc. E6-10532 Filed 7-5-06; 8:45 am]
BILLING CODE 8010-01-P
