Self-Regulatory Organizations; Philadelphia Stock Exchange, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to the Assignment of Options Trading Privileges to Streaming Quote Traders and Remote Streaming Quote Traders, 74977-74979 [E6-21159]
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Federal Register / Vol. 71, No. 239 / Wednesday, December 13, 2006 / Notices
should submit only information that
you wish to make available publicly. All
submissions should refer to File
Number SR–Phlx–2006–59 and should
be submitted on or before January 3,
2007.
For the Commission, by the Division of
Market Regulation, pursuant to delegated
authority.14
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E6–21157 Filed 12–12–06; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–54889; File No. SR–Phlx–
2006–80]
Self-Regulatory Organizations;
Philadelphia Stock Exchange, Inc.;
Notice of Filing and Immediate
Effectiveness of Proposed Rule
Change Relating to the Assignment of
Options Trading Privileges to
Streaming Quote Traders and Remote
Streaming Quote Traders
December 6, 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 December
5, 2006, the Philadelphia Stock
Exchange, Inc. (‘‘Phlx’’ or ‘‘Exchange’’)
filed with the Securities and Exchange
Commission (‘‘Commission’’) the
proposed rule change as described in
Items I and II, below, which Items have
been prepared by the Phlx. The
Exchange filed the proposal as a ‘‘noncontroversial’’ rule change pursuant to
Section 19(b)(3)(A) of the Act 3 and Rule
19b–4(f)(6) thereunder,4 which rendered
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 amend Phlx
Rule 507,5 which governs the
assignment of options to Streaming
Quote Traders (‘‘SQTs’’) 6 and Remote
14 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 15 U.S.C. 78s(b)(3)(A).
4 17 CFR 240.19b–4(f)(6).
5 Phlx Rule 507 sets forth the process by which
the Committee assigns or reassigns equity options
to eligible Streaming Quote Traders and Remote
Streaming Quote Traders. See Phlx Rule 507.
6 An SQT is an Exchange Registered Options
Trader (‘‘ROT’’) who has received permission from
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1 15
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21:31 Dec 12, 2006
Jkt 211001
Streaming Quote Traders (‘‘RSQTs’’),7
by: (i) Clarifying that all options traded
on the Exchange are Streaming Quote
Options; 8 (ii) deleting outdated
requirements contained in paragraph (f)
under Phlx Rule 507 regarding the
assignment of options during the first
six months of the roll-out of streaming
quote technology; (iii) moving the
existing text of Phlx Rule 507(a) to the
first paragraph of (b) and naming
paragraph (b) ‘‘Assignment in Options;’’
(iv) moving the language in 507(b)(iii) to
paragraph (a) and renaming it
‘‘Approval as an SQT and RSQT;’’ and
(v) applying some of the current criteria
for RSQT applicants (formerly in Phlx
Rule 507(b)(iii)) to SQT applicants as
well.
The text of the proposed rule change
is available on the Phlx’s Web site,
https://www.phlx.com, at the Phlx’s
principal office, 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, 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
The purpose of the proposed rule
change is to update Phlx Rule 507 to
reflect the current status of options
trading on the Exchange.
the Exchange to generate and submit options
quotations electronically through AUTOM in
eligible options to which such SQT is assigned. An
SQT may only submit such quotations while such
SQT is physically present on the floor of the
Exchange. See Phlx Rule 1014(b)(ii)(A).
7 An RSQT is a ROT that is a member or member
organization with no physical trading floor
presence who has received permission from the
Exchange to generate and submit option quotations
electronically through AUTOM in eligible options
to which such RSQT has been assigned. An RSQT
may only submit such quotations electronically
from off the floor of the Exchange. See Phlx Rule
1014(b)(ii)(B).
8 A Streaming Quote Option is an option for
which the Options Committee determines the SQTs
may generate and submit options quotations from
the Exchange floor and that RSQTs may generate
and submit options quotations from off of the
Exchange floor, electronically. See Phlx Rule
1080(k).
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74977
First, the proposed amendments
modify outdated concepts and
requirements contained in Phlx Rule
507 by: (i) Clarifying that all options
traded on the Exchange are ‘‘Streaming
Quote Options,’’ and (ii) deleting
obsolete requirements for the
assignment of options contained in
paragraph (f) of Phlx Rule 507. The
Exchange’s introduction of the Phlx XL
technology allowed, among other things,
SQTs and RSQTs to generate and submit
electronic quotations. Initially, RSQTs
and SQTs could only stream electronic
quotations in designated options until
such technology was fully rolled-out to
all options, which occurred in February
2005. The Exchange is proposing to
amend Phlx Rule 507 to clarify the fact
that all options listed for trading on the
Exchange are now ‘‘Streaming Quote
Options.’’
For the same reason, the Exchange is
also proposing to delete the
requirements contained in paragraph (f)
under Phlx Rule 507 that were
applicable to member firms seeking
option assignments as an RSQT or SQT
during the first six months of the
streaming quote roll-out. This
amendment will update the Exchange’s
rules and remove rule text that may
cause confusion.
Second, the Exchange is proposing to
reorganize Phlx Rule 507(a) and (b) so
that paragraph (a) covers the approval of
SQTs and RSQTs as such, and
paragraph (b) covers the assignment of
options to SQTs and RSQTs. In order to
clarify that paragraph (b) covers the
assignment of specific options to SQTs
and RSQTs, paragraph (b)(i) would be
titled ‘‘Assignment in Options,’’ and the
introductory phrase, ‘‘When an option is
to be assigned or reassigned by the
Committee, the Committee will solicit
applications from all eligible SQTs and
RSQTs, as defined in Phlx Rule
1014(b)(ii)’’ is proposed to be deleted
from current paragraph (a) and inserted
into paragraph (b). The Exchange
believes that this should distinguish
paragraph (a), which covers applications
for approval of an applicant’s status as
an SQT or RSQT on the Exchange, from
paragraph (b), which covers an SQT or
RSQT’s application for assignment in a
particular option. Currently, the two
concepts are intermingled in these
paragraphs, which may be hard to
follow.
Third, the Exchange proposes to
extend some of the requirements
applicable to RSQT applicants to SQT
applicants. These requirements include
significant market-making and/or
specialist experience in a broad array of
securities; superior resources, including
capital, technology and personnel;
E:\FR\FM\13DEN1.SGM
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74978
Federal Register / Vol. 71, No. 239 / Wednesday, December 13, 2006 / Notices
demonstrated history of stability,
superior electronic capacity, and
superior operational capacity; proven
ability to interact with order flow in all
types of markets; and willingness and
ability to make competitive markets on
the Phlx and otherwise to promote the
Phlx in a manner that is likely to
enhance the ability of the Phlx to
compete successfully for order flow in
the options it trades. The purpose of this
proposal is to enable the Exchange’s
Option Allocation, Evaluation and
Securities Committee (‘‘OAESC’’) 9 to
make a more informed and efficient
decision as to whether a particular SQT
applicant should be assigned in an
option.
SQT applicants would not be required
to be willing to accept assignments as an
SQT in options overlying 400 or more
securities, and would not be required to
show the existence of order flow
commitments in order to become an
SQT. RSQT applicants would continue
to have such a requirement.
The Exchange believes that it is
appropriate to apply these requirements
to SQTs because SQT status, similar to
RSQT status, entails a commitment to
provide liquidity on the Exchange.
2. Statutory Basis
The Exchange believes that its
proposal 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
promote just and equitable principles of
trade, to remove impediments to and
perfect the mechanism of a free and
open market and a national market
system, and, in general to protect
investors and the public interest by
removing outdated concepts from the
Exchange’s rules as well as by adopting
requirements to promote the objective,
efficient, and beneficial assignment of
options to SQTs and RSQTs.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
hsrobinson on PROD1PC76 with NOTICES
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.
9 See Phlx By-Law Article X, Section 10–7. The
OAESC has jurisdiction over, among other things:
The appointment of specialists on the options and
foreign currency options trading floors; allocation,
retention and transfer of privileges to deal in
options on the trading floors; and administration of
the 500 series of Phlx rules.
10 15 U.S.C. 78f(b).
11 15 U.S.C. 78f(b)(5).
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21:31 Dec 12, 2006
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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 by the Exchange.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Because the foregoing rule (i) does not
significantly affect the protection of
investors or the public interest; (ii) does
not impose any significant burden on
competition; and (iii) by its terms, does
not become operative for 30 days from
the date on which it was filed, or such
shorter time as the Commission may
designate if consistent with the
protection of investors and the public
interest, provided that the Exchange has
given the Commission written notice of
its intent to file the proposed rule
change at least five business days prior
to the date of filing of the proposed rule
change or such shorter time as
designated by the Commission, the
proposed rule change has become
effective pursuant to Section 19(b)(3)(A)
of the Act 12 and Rule 19b–4(f)(6)
thereunder.13 As required under Rule
19b–4(f)(6)(iii) under the Act,14 Phlx
provided the Commission with written
notice of its intent to file the proposed
rule change, along with a brief
description and text of the proposed
rule change, prior to the date of the
filing of the proposed rule change.
A proposed rule change filed under
Rule 19b–4(f)(6) under the Act 15
normally may not become operative
prior to 30 days after the date of filing.
However, Rule 19b–4(f)(6)(iii) under the
Act permits the Commission to
designate a shorter time if such action
is consistent with the protection of
investors and the public interest.16 The
Exchange has requested that the
Commission waive the 30-day operative
delay, which would make the rule
change effective and operative upon
filing. The Commission believes that
waiver of the 30-day operative delay is
consistent with the protection of
investors and the public interest
because the proposed rule change
clarifies the operation of Phlx Rule 507.
Accordingly, the Commission
designates the proposal to be effective
and operative upon filing with the
Commission.17
12 15
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(6).
14 17 CFR 240.19b–4(f)(6)(iii).
15 17 CFR 240.19b–4(f)(6).
16 17 CFR 240.19b–4(f)(6)(iii).
17 For the purposes only of accelerating the
operative date of this proposal, the Commission has
13 17
PO 00000
Frm 00083
Fmt 4703
Sfmt 4703
At any time within 60 days of the
filing of the 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.18
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
Electronic Comments
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an e-mail to rulecomments@sec.gov. Please include File
Number SR–Phlx–2006–80 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–2006–80. 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
considered the proposed rule’s impact on
efficiency, competition, and capital formation. 15
U.S.C. 78c(f).
18 See 15 U.S.C. 78s(b)(3)(C).
E:\FR\FM\13DEN1.SGM
13DEN1
Federal Register / Vol. 71, No. 239 / Wednesday, December 13, 2006 / Notices
should submit only information that
you wish to make available publicly. All
submissions should refer to File
Number SR–Phlx–2006–80 and should
be submitted on or before January 3,
2007.
For the Commission, by the Division of
Market Regulation, pursuant to delegated
authority.19
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E6–21159 Filed 12–12–06; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
Release No. 34–54886; File No.
SR–Phlx–2006–74]
Self-Regulatory Organizations;
Philadelphia Stock Exchange, Inc.;
Notice of Filing of Proposed Rule
Change, and Amendment Nos. 1 and 2
Thereto, Relating To a Pilot Program to
Quote and Trade Options in Penny
Increments
December 6, 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 November
13, 2006, 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, II, and III below, which Items
have been substantially prepared by the
Phlx. On November 22, 2006, the
Exchange filed Amendment No. 1 to the
proposed rule change.3 The Exchange
filed Amendment No. 2 to the proposed
rule change on December 5, 2006.4 The
Commission is publishing this notice to
solicit comments on the proposed rule
change, as amended, from interested
persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Phlx, pursuant to Section 19(b)(1)
of the Act 5 and Rule 19b–4 thereunder,6
proposes to amend various Exchange
rules in order to establish a six-month
pilot period, beginning on January 26,
2007 (the ‘‘pilot’’), during which certain
hsrobinson on PROD1PC76 with NOTICES
19 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 filing in
its entirety.
4 Amendment No. 2 replaced the previous filing
in its entirety.
5 15 U.S.C. 78s(b)(1).
6 17 CFR 240.19b–4.
1 15
VerDate Aug<31>2005
21:31 Dec 12, 2006
Jkt 211001
74979
options would be quoted and traded on
the Exchange in minimum increments
of $0.01 for all series in such options
with a price of less than $3.00, and in
minimum increments of $0.05 for all
series in such options with a price of
$3.00 or higher, except that options
overlying the Nasdaq-100 Index
Tracking Stock (‘‘QQQQ’’) 7 would be
quoted and traded in minimum
increments of $0.01 for all series
regardless of the price. A list of all such
options would be communicated to
Phlx’s membership via Exchange
circular.
The text of the proposed rule change,
including Exhibit 2 (a draft Exchange
circular which includes a list of all
options to be included in the pilot), is
available on the Phlx’s Web site at
https://www.phlx.com, at the Phlx’s
Office of the Secretary, and at the
Commission’s Public Reference Room.
January 26, 2007, and would extend for
a six-month period. There will be 13
options included in the pilot as
determined by the Commission, subject
to a rollout schedule to be determined.
The rollout would begin on January 26,
2007. The options included in the pilot
are:
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 Exchange has
prepared summaries, set forth in
Sections A, B, and C below, of the most
significant aspects of such statements.
Changes to Minimum Increments
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 establish a six-month pilot
program during which certain options
would be quoted and traded in
increments of $0.01.
Scope of the Pilot
Proposed Phlx Rule 1034(a)(i)(B)
states that the pilot would begin on
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 (the 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. 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.
PO 00000
Frm 00084
Fmt 4703
Sfmt 4703
Symbol
IWM ................
QQQQ ............
SMH ...............
GE ..................
AMD ...............
MSFT .............
INTC ...............
CAT ................
WFMI .............
TXN ................
A .....................
FLEX ..............
SUNW ............
Underlying security
Ishares Russell 2000
QQQQ
SemiConductor Holders
General Electric
Advanced Micro Devices
Microsoft
Intel
Caterpillar
Whole Foods
Texas Instruments
Agilent Tech Inc.
Flextronics International
Sun Micro
The Exchange proposes to adopt Phlx
Rule 1034(a)(i)(B), which would provide
that the options included in the pilot
would be quoted in minimum
increments of $0.01 for all series in such
options with a price of less than $3.00,
and in minimum increments of $0.05 for
all series in such options with a price
of $3.00 or higher, except that options
overlying the QQQQ would be quoted
and traded in minimum increments of
$0.01 for all series regardless of the
price. A list of all such options would
be communicated to Phlx’s membership
via Exchange circular.
Automatic Executions During Crossed
Markets
The Exchange anticipates that the
instance of crossed markets (where the
bid price is greater than the offer price)
will increase in options traded in penny
increments. Accordingly, the Exchange
proposes to amend its rules concerning
automatic executions during crossed
markets, and its exemption from TradeThrough 8 liability when a TradeThrough occurs due to an automatic
execution when the Exchange’s
disseminated market is crossed, or
crosses the disseminated market of
another options exchange, and the
Exchange’s disseminated price on the
opposite side of the market for the
8 ‘‘Trade-Through’’ means a transaction in an
options series at a price that is inferior to the
National Best Bid or Offer (‘‘NBBO’’), but shall not
include a transaction that occurs at a price that is
one minimum quoting increment inferior to the
NBBO provided a Linkage Order is
contemporaneously sent to each Participant
Exchange disseminating the NBBO for the full size
of the Participant Exchange’s bid (offer) that
represents the NBBO. See Phlx Rule 1083(t).
E:\FR\FM\13DEN1.SGM
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]]>Agencies
[Federal Register Volume 71, Number 239 (Wednesday, December 13, 2006)]
[Notices]
[Pages 74977-74979]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E6-21159]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-54889; File No. SR-Phlx-2006-80]
Self-Regulatory Organizations; Philadelphia Stock Exchange, Inc.;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change
Relating to the Assignment of Options Trading Privileges to Streaming
Quote Traders and Remote Streaming Quote Traders
December 6, 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 December 5, 2006, the Philadelphia Stock Exchange, Inc.
(``Phlx'' or ``Exchange'') filed with the Securities and Exchange
Commission (``Commission'') the proposed rule change as described in
Items I and II, below, which Items have been prepared by the Phlx. The
Exchange filed the proposal as a ``non-controversial'' rule change
pursuant to Section 19(b)(3)(A) of the Act \3\ and Rule 19b-4(f)(6)
thereunder,\4\ which rendered 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).
\4\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Phlx proposes to amend Phlx Rule 507,\5\ which governs the
assignment of options to Streaming Quote Traders (``SQTs'') \6\ and
Remote Streaming Quote Traders (``RSQTs''),\7\ by: (i) Clarifying that
all options traded on the Exchange are Streaming Quote Options; \8\
(ii) deleting outdated requirements contained in paragraph (f) under
Phlx Rule 507 regarding the assignment of options during the first six
months of the roll-out of streaming quote technology; (iii) moving the
existing text of Phlx Rule 507(a) to the first paragraph of (b) and
naming paragraph (b) ``Assignment in Options;'' (iv) moving the
language in 507(b)(iii) to paragraph (a) and renaming it ``Approval as
an SQT and RSQT;'' and (v) applying some of the current criteria for
RSQT applicants (formerly in Phlx Rule 507(b)(iii)) to SQT applicants
as well.
---------------------------------------------------------------------------
\5\ Phlx Rule 507 sets forth the process by which the Committee
assigns or reassigns equity options to eligible Streaming Quote
Traders and Remote Streaming Quote Traders. See Phlx Rule 507.
\6\ An SQT is an Exchange Registered Options Trader (``ROT'')
who has received permission from the Exchange to generate and submit
options quotations electronically through AUTOM in eligible options
to which such SQT is assigned. An SQT may only submit such
quotations while such SQT is physically present on the floor of the
Exchange. See Phlx Rule 1014(b)(ii)(A).
\7\ An RSQT is a ROT that is a member or member organization
with no physical trading floor presence who has received permission
from the Exchange to generate and submit option quotations
electronically through AUTOM in eligible options to which such RSQT
has been assigned. An RSQT may only submit such quotations
electronically from off the floor of the Exchange. See Phlx Rule
1014(b)(ii)(B).
\8\ A Streaming Quote Option is an option for which the Options
Committee determines the SQTs may generate and submit options
quotations from the Exchange floor and that RSQTs may generate and
submit options quotations from off of the Exchange floor,
electronically. See Phlx Rule 1080(k).
---------------------------------------------------------------------------
The text of the proposed rule change is available on the Phlx's Web
site, https://www.phlx.com, at the Phlx's principal office, 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, 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
The purpose of the proposed rule change is to update Phlx Rule 507
to reflect the current status of options trading on the Exchange.
First, the proposed amendments modify outdated concepts and
requirements contained in Phlx Rule 507 by: (i) Clarifying that all
options traded on the Exchange are ``Streaming Quote Options,'' and
(ii) deleting obsolete requirements for the assignment of options
contained in paragraph (f) of Phlx Rule 507. The Exchange's
introduction of the Phlx XL technology allowed, among other things,
SQTs and RSQTs to generate and submit electronic quotations. Initially,
RSQTs and SQTs could only stream electronic quotations in designated
options until such technology was fully rolled-out to all options,
which occurred in February 2005. The Exchange is proposing to amend
Phlx Rule 507 to clarify the fact that all options listed for trading
on the Exchange are now ``Streaming Quote Options.''
For the same reason, the Exchange is also proposing to delete the
requirements contained in paragraph (f) under Phlx Rule 507 that were
applicable to member firms seeking option assignments as an RSQT or SQT
during the first six months of the streaming quote roll-out. This
amendment will update the Exchange's rules and remove rule text that
may cause confusion.
Second, the Exchange is proposing to reorganize Phlx Rule 507(a)
and (b) so that paragraph (a) covers the approval of SQTs and RSQTs as
such, and paragraph (b) covers the assignment of options to SQTs and
RSQTs. In order to clarify that paragraph (b) covers the assignment of
specific options to SQTs and RSQTs, paragraph (b)(i) would be titled
``Assignment in Options,'' and the introductory phrase, ``When an
option is to be assigned or reassigned by the Committee, the Committee
will solicit applications from all eligible SQTs and RSQTs, as defined
in Phlx Rule 1014(b)(ii)'' is proposed to be deleted from current
paragraph (a) and inserted into paragraph (b). The Exchange believes
that this should distinguish paragraph (a), which covers applications
for approval of an applicant's status as an SQT or RSQT on the
Exchange, from paragraph (b), which covers an SQT or RSQT's application
for assignment in a particular option. Currently, the two concepts are
intermingled in these paragraphs, which may be hard to follow.
Third, the Exchange proposes to extend some of the requirements
applicable to RSQT applicants to SQT applicants. These requirements
include significant market-making and/or specialist experience in a
broad array of securities; superior resources, including capital,
technology and personnel;
[[Page 74978]]
demonstrated history of stability, superior electronic capacity, and
superior operational capacity; proven ability to interact with order
flow in all types of markets; and willingness and ability to make
competitive markets on the Phlx and otherwise to promote the Phlx in a
manner that is likely to enhance the ability of the Phlx to compete
successfully for order flow in the options it trades. The purpose of
this proposal is to enable the Exchange's Option Allocation, Evaluation
and Securities Committee (``OAESC'') \9\ to make a more informed and
efficient decision as to whether a particular SQT applicant should be
assigned in an option.
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\9\ See Phlx By-Law Article X, Section 10-7. The OAESC has
jurisdiction over, among other things: The appointment of
specialists on the options and foreign currency options trading
floors; allocation, retention and transfer of privileges to deal in
options on the trading floors; and administration of the 500 series
of Phlx rules.
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SQT applicants would not be required to be willing to accept
assignments as an SQT in options overlying 400 or more securities, and
would not be required to show the existence of order flow commitments
in order to become an SQT. RSQT applicants would continue to have such
a requirement.
The Exchange believes that it is appropriate to apply these
requirements to SQTs because SQT status, similar to RSQT status,
entails a commitment to provide liquidity on the Exchange.
2. Statutory Basis
The Exchange believes that its proposal 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
promote just and equitable principles of trade, to remove impediments
to and perfect the mechanism of a free and open market and a national
market system, and, in general to protect investors and the public
interest by removing outdated concepts from the Exchange's rules as
well as by adopting requirements to promote the objective, efficient,
and beneficial assignment of options to SQTs and RSQTs.
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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 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 by the
Exchange.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Because the foregoing rule (i) does not significantly affect the
protection of investors or the public interest; (ii) does not impose
any significant burden on competition; and (iii) by its terms, does not
become operative for 30 days from the date on which it was filed, or
such shorter time as the Commission may designate if consistent with
the protection of investors and the public interest, provided that the
Exchange has given the Commission written notice of its intent to file
the proposed rule change at least five business days prior to the date
of filing of the proposed rule change or such shorter time as
designated by the Commission, the proposed rule change has become
effective pursuant to Section 19(b)(3)(A) of the Act \12\ and Rule 19b-
4(f)(6) thereunder.\13\ As required under Rule 19b-4(f)(6)(iii) under
the Act,\14\ Phlx provided the Commission with written notice of its
intent to file the proposed rule change, along with a brief description
and text of the proposed rule change, prior to the date of the filing
of the proposed rule change.
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\12\ 15 U.S.C. 78s(b)(3)(A).
\13\ 17 CFR 240.19b-4(f)(6).
\14\ 17 CFR 240.19b-4(f)(6)(iii).
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A proposed rule change filed under Rule 19b-4(f)(6) under the Act
\15\ normally may not become operative prior to 30 days after the date
of filing. However, Rule 19b-4(f)(6)(iii) under the Act permits the
Commission to designate a shorter time if such action is consistent
with the protection of investors and the public interest.\16\ The
Exchange has requested that the Commission waive the 30-day operative
delay, which would make the rule change effective and operative upon
filing. The Commission believes that waiver of the 30-day operative
delay is consistent with the protection of investors and the public
interest because the proposed rule change clarifies the operation of
Phlx Rule 507. Accordingly, the Commission designates the proposal to
be effective and operative upon filing with the Commission.\17\
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\15\ 17 CFR 240.19b-4(f)(6).
\16\ 17 CFR 240.19b-4(f)(6)(iii).
\17\ For the purposes only of accelerating the operative date of
this proposal, the Commission has considered the proposed rule's
impact on efficiency, competition, and capital formation. 15 U.S.C.
78c(f).
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At any time within 60 days of the filing of the 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.\18\
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\18\ See 15 U.S.C. 78s(b)(3)(C).
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IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's Internet comment form (https://
www.sec.gov/rules/sro.shtml); or
Send an e-mail to rule-comments@sec.gov. Please include
File Number SR-Phlx-2006-80 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-2006-80. 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
[[Page 74979]]
should submit only information that you wish to make available
publicly. All submissions should refer to File Number SR-Phlx-2006-80
and should be submitted on or before January 3, 2007.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\19\
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\19\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E6-21159 Filed 12-12-06; 8:45 am]
BILLING CODE 8011-01-P
