Self-Regulatory Organizations; Philadelphia Stock Exchange, Inc.; Order Granting Approval to Proposed Rule Change Relating to Performance Evaluations for Streaming Quote Traders and Remote Streaming Quote Traders, 2324-2325 [E7-586]
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Federal Register / Vol. 72, No. 11 / Thursday, January 18, 2007 / Notices
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another exchange.13 The Commission
notes that it previously approved the
listing and trading of the Shares on
Amex.14 The Commission also finds that
the proposal is consistent with Rule
12f–5 under the Act,15 which provides
that an exchange shall not extend UTP
to a security unless the exchange has in
effect a rule or rules providing for
transactions in the class or type of
security to which the exchange extends
UTP. The Exchange has represented that
it meets this requirement because it
deems the Shares to be equity securities,
thus rendering trading in the Shares
subject to the Exchange’s existing rules
governing the trading of equity
securities.
The Commission further believes that
the proposal is consistent with Section
11A(a)(1)(C)(iii) of the Act,16 which sets
forth Congress’ finding that it is in the
public interest and appropriate for the
protection of investors and the
maintenance of fair and orderly markets
to assure the availability to brokers,
dealers, and investors of information
with respect to quotations for and
transactions in securities. Quotations for
and last sale information regarding the
Shares are disseminated through the
Consolidated Quotation System.
Furthermore, the IOPV calculator
updates the applicable IOPV every 15
seconds to reflect price changes in the
principal foreign markets, and converts
such prices into U.S. dollars based on
the currency exchange rate. When the
foreign market or markets are closed but
Amex is open for trading, the IOPV is
updated every 15 seconds to reflect
changes in currency exchange rates.
NYSE Arca Equities Rule 7.34 describes
the situations when the Exchange would
halt trading when the IOPV or the value
of the Index underlying one of the
Funds is not calculated or widely
available.
The Commission notes that, if the
Shares should be delisted by Amex, the
original listing exchange, the Exchange
would no longer have authority to trade
the Shares pursuant to this order.
In support of this proposal, the
Exchange has made the following
representations:
13 Section 12(a) of the Act, 15 U.S.C. 78l(a),
generally prohibits a broker-dealer from trading a
security on a national securities exchange unless
the security is registered on that exchange pursuant
to Section 12 of the Act. Section 12(f) of the Act
excludes from this restriction trading in any
security to which an exchange ‘‘extends UTP.’’
When an exchange extends UTP to a security, it
allows its members to trade the security as if it were
listed and registered on the exchange even though
it is not so listed and registered.
14 See supra note 3.
15 17 CFR 240.12f–5.
16 15 U.S.C. 78k–1(a)(1)(C)(iii).
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17:52 Jan 17, 2007
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1. The Exchange’s surveillance
procedures are adequate to monitor the
trading of the Shares.
2. In connection with the trading of
the Shares, the Exchange would inform
ETP Holders in an Information Circular
of the special characteristics and risks
associated with trading the Shares.
3. The Information Circular would
inform participants of the prospectus or
product delivery requirements
applicable to the Shares.
This approval order is conditioned on
the Exchange’s adherence to these
representations.
The Commission finds good cause for
approving this proposal before the
thirtieth day after the publication of
notice thereof in the Federal Register.
As noted previously, the Commission
previously found that the listing and
trading of the Shares on Amex is
consistent with the Act.17 The
Commission presently is not aware of
any regulatory issue that should cause it
to revisit that earlier finding or preclude
the trading of Shares on the Exchange
pursuant to UTP. Therefore, accelerating
approval of this proposal should benefit
investors by creating, without undue
delay, additional competition in the
market for the Shares.
V. Conclusion
It is therefore ordered, pursuant to
Section 19(b)(2) of the Act,18 that the
proposed rule change (SR–NYSEArca–
2006–39) is approved on an accelerated
basis.
For the Commission, by the Division of
Market Regulation, pursuant to delegated
authority.19
Nancy M. Morris,
Secretary.
[FR Doc. E7–614 Filed 1–17–07; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–55080; File No. SR–Phlx–
2006–51]
Self-Regulatory Organizations;
Philadelphia Stock Exchange, Inc.;
Order Granting Approval to Proposed
Rule Change Relating to Performance
Evaluations for Streaming Quote
Traders and Remote Streaming Quote
Traders
January 10, 2007.
I. Introduction
On November 22, 2006, 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
adopt Phlx Rule 510, SQT and RSQT
Performance Evaluation, to establish
performance requirements for Streaming
Quote Traders (‘‘SQTs’’) 3 and Remote
Streaming Quote Traders (‘‘RSQTs’’).4
The proposed rule change was
published for comment in the Federal
Register on December 11, 2006.5 The
Commission received no comments
regarding the proposal. This order
approves the proposed rule change.
II. Description of the Proposal
The purpose of the proposed rule
change is to adopt new Phlx Rule 510
to: (1) Establish performance
requirements for SQTs and RSQTs; (2)
authorize the Exchange to conduct
performance evaluations periodically;
and (3) authorize the Exchange’s
Options Allocation, Evaluation and
Securities Committee (‘‘OAESC’’) 6 to
take corrective action where minimum
requirements are not met.
Proposed Phlx Rule 510 would
provide for monthly performance
evaluations of SQTs and RSQTs to
determine whether they have fulfilled
performance standards relating to,
among other things, quality of markets,
efficient quote submission to the
Exchange (including quotes submitted
through a third party vendor),
competition, observance of ethical
standards, and administrative factors.
The proposal would permit the
Exchange to consider requests for relief
from established quote spread
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 See Phlx Rule 1014(b)(ii)(A).
4 See Phlx Rule 1014(b)(ii)(B).
5 See Securities Exchange Act Release No. 54859
(December 1, 2006), 71 FR 71605.
6 See Phlx By-Law Article X, Section 10–7.
2 17
17 See
supra note 3.
U.S.C. 78s(b)(2).
19 17 CFR 200.30–3(a)(12).
18 15
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18JAN1
Federal Register / Vol. 72, No. 11 / Thursday, January 18, 2007 / Notices
parameters on the Exchange 7 and
efficiency of quote submission through
the Specialized Quote Feed (‘‘SQF’’), as
defined in Phlx Rule 1080, Commentary
.01. Failure to meet established
minimum performance requirements
could result in restriction by the OAESC
of additional options assignments;
suspension, termination, or restriction
of an existing assignment on one or
more options; or suspension,
termination, or restriction of an SQT’s
or RSQT’s status as such.
Phlx Rule 510 would establish
specific criteria for each option assigned
to an SQT or RSQT that would be
regularly evaluated by the Exchange.
First, the Exchange would evaluate the
percentage of total quotes submitted by
the SQT or RSQT that represent the
NBBO. If the percentage of the total
quotes that represent the NBBO is in the
lowest quartile of all SQTs or RSQTs for
two or more consecutive months, this
may be considered sub-standard
performance. Second, the Exchange
would evaluate the SQT or RSQT’s
adherence to the Exchange’s established
quoting requirements pursuant to Phlx
Rule 1014.8 If an SQT or RSQT fails to
meet the quoting requirements as
prescribed by the rule, this may be
considered sub-standard performance.
Third, the Exchange would consider the
number of requests for quote spread
parameter 9 relief for the purposes of
evaluating performance standards.
Finally, to evaluate efficient quote
submission to the Exchange, the
Exchange would consider how an SQT
or RSQT optimizes the submission of
quotes through the SQF, as defined in
Phlx Rule 1080, by evaluating the
number of individual quotes per quote
‘‘block’’ received by the Exchange.10 An
SQT or RSQT is assigned a number of
7 See
Phlx Rule 1014(c)(i)(A).
Rule 1014(b)(ii)(D)(1) provides that an SQT
and an RSQT shall be responsible to quote
continuous, two-sided markets in not less than 60%
of the series in each option in which such SQT or
RSQT is assigned, provided that, on any given day,
a Directed SQT (‘‘DSQT’’) or a Directed RSQT
(‘‘DRSQT’’) (as defined in Phlx Rule 1080(l)(i)(C))
shall be responsible to quote continuous, two-sided
markets in not less than 99% of the series listed on
the Exchange in at least 60% of the options in
which such DSQT or DRSQT is assigned. Whenever
a DSQT or DRSQT enters a quotation in an option
in which such DSQT or DRSQT is assigned, such
DSQT or DRSQT must maintain continuous
quotations for not less than 99% of the series of the
option listed on the Exchange until the close of that
trading day.
9 Phlx Rule 1034 establishes maximum allowable
bid/ask differentials on the Exchange.
10 A quote ‘‘block’’ is a component of the
Exhange’s SQF application that allows for delivery
of a set of multiple quotations from the SQT or
RSQT to the Exchange. Within a single ‘‘block,’’ the
SQT or RSQT can deliver quotes for any number
of option series ranging from 1 to 99.
pwalker on PROD1PC71 with NOTICES
8 Phlx
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17:52 Jan 17, 2007
Jkt 211001
ports or lines on which they can send
quote blocks. The number of lines
assigned dictates the number of blocks
that may be sent simultaneously by the
SQT or RSQT. The number of lines
assigned to an SQT or RSQT is generally
a function of the number of products
being quoted, taking into account the
throughput required to minimize quote
latency risk. The Exchange intends to
evaluate the average number of quotes
(1–99) submitted within the SQT or
RSQT’s quote blocks. The number of
quotes delivered in each block would
generally be a measure of the SQT or
RSQT’s quoting efficiency. For example,
a firm sending an average of 1 quote in
each block may be considered
inefficient while a firm sending an
average of 99 quotes in each block
would be considered very efficient.
The Exchange explained that, in
general, the expenditure of systemic
resources required to process an
inefficient block is nearly equal to the
expenditure of systemic resources
required to process an efficient block.
Therefore, an efficient SQT or RSQT can
achieve a much higher level of quote
submission than an inefficient SQT or
RSQT using nearly the same amount of
exchange system resources. The
Exchange believes that the regular
monitoring of quoting efficiency in this
fashion will result in more efficient
quoting on the Exchange (i.e., more
quotes submitted per block), thus
preserving and maximizing Exchange
system capacity for handling quote
traffic.
III. Discussion
After careful review of the proposal,
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.11 In
particular, the Commission finds that
the proposal is consistent with Section
6(b)(5) of the Act,12 which requires,
among other things, that the rules of an
exchange be 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.
The Commission believes that the
Exchange’s proposal to establish
performance requirements for SQTs and
RSQTs should, among other things,
encourage Exchange traders to enhance
11 In approving this proposed rule change, the
Commission notes that it has considered the
proposed rule’s impact on efficiency, competition,
and capital formation. See 15 U.S.C. 78c(f).
12 15 U.S.C. 78f(b)(5).
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2325
quoting efficiency, preserve system
capacity, and minimize requests for
relief from quote spread parameters.
Consequently, the proposal should
encourage Phlx SQTs and RSQTs to
strive to improve their performance as
market makers on the Exchange, as well
as help to mitigate the Exchange’s quote
message traffic.
IV. Conclusion
It is therefore ordered, pursuant to
Section 19(b)(2) of the Act,13 that the
proposed rule change (SR–Phlx–2006–
51), be, and hereby is, approved.
For the Commission, by the Division of
Market Regulation, pursuant to delegated
authority.14
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7–586 Filed 1–17–07; 8:45 am]
BILLING CODE 8011–01–P
SMALL BUSINESS ADMINISTRATION
Advisory Committee on Veterans
Business Affairs; Public Meeting
The U.S. Small Business
Administration (SBA), pursuant to the
Veterans Entrepreneurship and Small
Business Development Act of 1999 (Pub.
L. 106–50), Advisory Committee on
Veterans Business Affairs will host a
public meeting on Friday, January 26,
2007, starting at 9 a.m. until 5 p.m. EST.
The meeting will take place at SBA, 409
3rd Street, SW., Eisenhower Conference
Room, Side B, 2nd Floor, Washington,
DC 20416.
The purpose of the meeting is to
select the Committee’s Chairman and
Vice-Chairman and outline the agenda
for 2007.
Anyone wishing to attend must
contact Cheryl Clark, Program Liaison,
Office of Veterans Business
Development at (202) 205–6773, or send
e-mail to cheryl.clark@sba.gov.
Matthew Teague,
Committee Management Officer.
[FR Doc. E7–613 Filed 1–17–07; 8:45 am]
BILLING CODE 8025–01–P
13 15
14 17
E:\FR\FM\18JAN1.SGM
U.S.C. 78s(b)(2).
CFR 200.30–3(a)(12).
18JAN1
]]>Agencies
[Federal Register Volume 72, Number 11 (Thursday, January 18, 2007)]
[Notices]
[Pages 2324-2325]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E7-586]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-55080; File No. SR-Phlx-2006-51]
Self-Regulatory Organizations; Philadelphia Stock Exchange, Inc.;
Order Granting Approval to Proposed Rule Change Relating to Performance
Evaluations for Streaming Quote Traders and Remote Streaming Quote
Traders
January 10, 2007.
I. Introduction
On November 22, 2006, 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 adopt Phlx Rule 510, SQT and
RSQT Performance Evaluation, to establish performance requirements for
Streaming Quote Traders (``SQTs'') \3\ and Remote Streaming Quote
Traders (``RSQTs'').\4\ The proposed rule change was published for
comment in the Federal Register on December 11, 2006.\5\ The Commission
received no comments regarding the proposal. This order approves the
proposed rule change.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ See Phlx Rule 1014(b)(ii)(A).
\4\ See Phlx Rule 1014(b)(ii)(B).
\5\ See Securities Exchange Act Release No. 54859 (December 1,
2006), 71 FR 71605.
---------------------------------------------------------------------------
II. Description of the Proposal
The purpose of the proposed rule change is to adopt new Phlx Rule
510 to: (1) Establish performance requirements for SQTs and RSQTs; (2)
authorize the Exchange to conduct performance evaluations periodically;
and (3) authorize the Exchange's Options Allocation, Evaluation and
Securities Committee (``OAESC'') \6\ to take corrective action where
minimum requirements are not met.
---------------------------------------------------------------------------
\6\ See Phlx By-Law Article X, Section 10-7.
---------------------------------------------------------------------------
Proposed Phlx Rule 510 would provide for monthly performance
evaluations of SQTs and RSQTs to determine whether they have fulfilled
performance standards relating to, among other things, quality of
markets, efficient quote submission to the Exchange (including quotes
submitted through a third party vendor), competition, observance of
ethical standards, and administrative factors.
The proposal would permit the Exchange to consider requests for
relief from established quote spread
[[Page 2325]]
parameters on the Exchange \7\ and efficiency of quote submission
through the Specialized Quote Feed (``SQF''), as defined in Phlx Rule
1080, Commentary .01. Failure to meet established minimum performance
requirements could result in restriction by the OAESC of additional
options assignments; suspension, termination, or restriction of an
existing assignment on one or more options; or suspension, termination,
or restriction of an SQT's or RSQT's status as such.
---------------------------------------------------------------------------
\7\ See Phlx Rule 1014(c)(i)(A).
---------------------------------------------------------------------------
Phlx Rule 510 would establish specific criteria for each option
assigned to an SQT or RSQT that would be regularly evaluated by the
Exchange. First, the Exchange would evaluate the percentage of total
quotes submitted by the SQT or RSQT that represent the NBBO. If the
percentage of the total quotes that represent the NBBO is in the lowest
quartile of all SQTs or RSQTs for two or more consecutive months, this
may be considered sub-standard performance. Second, the Exchange would
evaluate the SQT or RSQT's adherence to the Exchange's established
quoting requirements pursuant to Phlx Rule 1014.\8\ If an SQT or RSQT
fails to meet the quoting requirements as prescribed by the rule, this
may be considered sub-standard performance. Third, the Exchange would
consider the number of requests for quote spread parameter \9\ relief
for the purposes of evaluating performance standards.
---------------------------------------------------------------------------
\8\ Phlx Rule 1014(b)(ii)(D)(1) provides that an SQT and an RSQT
shall be responsible to quote continuous, two-sided markets in not
less than 60% of the series in each option in which such SQT or RSQT
is assigned, provided that, on any given day, a Directed SQT
(``DSQT'') or a Directed RSQT (``DRSQT'') (as defined in Phlx Rule
1080(l)(i)(C)) shall be responsible to quote continuous, two-sided
markets in not less than 99% of the series listed on the Exchange in
at least 60% of the options in which such DSQT or DRSQT is assigned.
Whenever a DSQT or DRSQT enters a quotation in an option in which
such DSQT or DRSQT is assigned, such DSQT or DRSQT must maintain
continuous quotations for not less than 99% of the series of the
option listed on the Exchange until the close of that trading day.
\9\ Phlx Rule 1034 establishes maximum allowable bid/ask
differentials on the Exchange.
---------------------------------------------------------------------------
Finally, to evaluate efficient quote submission to the Exchange,
the Exchange would consider how an SQT or RSQT optimizes the submission
of quotes through the SQF, as defined in Phlx Rule 1080, by evaluating
the number of individual quotes per quote ``block'' received by the
Exchange.\10\ An SQT or RSQT is assigned a number of ports or lines on
which they can send quote blocks. The number of lines assigned dictates
the number of blocks that may be sent simultaneously by the SQT or
RSQT. The number of lines assigned to an SQT or RSQT is generally a
function of the number of products being quoted, taking into account
the throughput required to minimize quote latency risk. The Exchange
intends to evaluate the average number of quotes (1-99) submitted
within the SQT or RSQT's quote blocks. The number of quotes delivered
in each block would generally be a measure of the SQT or RSQT's quoting
efficiency. For example, a firm sending an average of 1 quote in each
block may be considered inefficient while a firm sending an average of
99 quotes in each block would be considered very efficient.
---------------------------------------------------------------------------
\10\ A quote ``block'' is a component of the Exhange's SQF
application that allows for delivery of a set of multiple quotations
from the SQT or RSQT to the Exchange. Within a single ``block,'' the
SQT or RSQT can deliver quotes for any number of option series
ranging from 1 to 99.
---------------------------------------------------------------------------
The Exchange explained that, in general, the expenditure of
systemic resources required to process an inefficient block is nearly
equal to the expenditure of systemic resources required to process an
efficient block. Therefore, an efficient SQT or RSQT can achieve a much
higher level of quote submission than an inefficient SQT or RSQT using
nearly the same amount of exchange system resources. The Exchange
believes that the regular monitoring of quoting efficiency in this
fashion will result in more efficient quoting on the Exchange (i.e.,
more quotes submitted per block), thus preserving and maximizing
Exchange system capacity for handling quote traffic.
III. Discussion
After careful review of the proposal, 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.\11\ In particular, the Commission finds that the
proposal is consistent with Section 6(b)(5) of the Act,\12\ which
requires, among other things, that the rules of an exchange be 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.
---------------------------------------------------------------------------
\11\ In approving this proposed rule change, the Commission
notes that it has considered the proposed rule's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
\12\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
The Commission believes that the Exchange's proposal to establish
performance requirements for SQTs and RSQTs should, among other things,
encourage Exchange traders to enhance quoting efficiency, preserve
system capacity, and minimize requests for relief from quote spread
parameters. Consequently, the proposal should encourage Phlx SQTs and
RSQTs to strive to improve their performance as market makers on the
Exchange, as well as help to mitigate the Exchange's quote message
traffic.
IV. Conclusion
It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\13\ that the proposed rule change (SR-Phlx-2006-51), be, and
hereby is, approved.
---------------------------------------------------------------------------
\13\ 15 U.S.C. 78s(b)(2).
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\14\
---------------------------------------------------------------------------
\14\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7-586 Filed 1-17-07; 8:45 am]
BILLING CODE 8011-01-P
