Self-Regulatory Organizations; Philadelphia Stock Exchange, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to Quoting Obligations in Long Term Options, 26192-26194 [E7-8736]
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26192
Federal Register / Vol. 72, No. 88 / Tuesday, May 8, 2007 / Notices
II. Description of the Proposal
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1. Interpretation and Policy .03
Prior to this rule change,
Interpretation and Policy .03 to Article
V, Section 1, of OCC’s By-Laws required
applicants for membership to employ
two key operations employees on a fulltime basis. This requirement was
intended to ensure that an applicant
maintains sufficient staff to fulfill its
obligations as a clearing member.
However, several recent applicants for
clearing membership have had difficulty
meeting this requirement because their
entire staff was employed by an affiliate
of the applicant (i.e., a parent or related
organization) rather than by the
applicant itself. While these applicants
entered into employee leasing
arrangements in order to comply with
OCC’s policy, OCC decided to
reevaluate the policy in light of the fact
that it had proved burdensome to a
number of applicants.
OCC understands that it is not
uncommon for some entities of an
affiliated corporate group to outsource
certain or all functions to another entity
of the corporate group and let the latter
be the sole employer of the people who
perform those functions. In situations of
that nature, OCC concluded that there is
not the same reason to be concerned
about whether the applicant will have
adequate staffing as in cases where the
applicant relies on an unaffiliated third
party for staffing. OCC therefore is
modifying its policy in order to provide
greater flexibility to recognize this
alternative employment structure by
amending Interpretation and Policy .03
to Article V, Section 1, to permit the
Membership/Risk Committee
(‘‘Committee’’) to waive the requirement
that an applicant employ two key
operations employees on a full-time
basis if the daily operations of the
applicant are conducted by staff
employed on a full-time basis by an
entity affiliated with such applicant.
OCC believes that the Committee’s
authority to waive such requirement is
consistent with its existing authority to
waive the requirement that an applicant
employ at least one full-time person
who is registered as a ‘‘Limited
Principal—Financial and Operations’’ or
comparable registration requirement, as
applicable.
2. Rule 309
OCC is also amending Rule 309 by
adding new paragraph (f) to clarify that
if an operationally capable clearing
member proposes to become a managed
clearing member (i.e., outsource certain
of its obligations as a clearing member
to another clearing member [‘‘managing
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15:36 May 07, 2007
Jkt 211001
clearing member’’]), the applicant must
obtain prior approval from the
Committee. Prior to this rule change,
Interpretation and Policy .04 to Rule 309
primarily contemplated the use of
facilities management agreements by
applicants for membership rather than
by existing clearing members.
Nonetheless, OCC has always
interpreted its By-Laws and Rules as
requiring prior Committee review and
approval of all facilities management
agreements, including those proposed to
be entered into by operationally capable
clearing members. The amendment to
Rule 309 makes this interpretation
explicit.
3. Rule 901
OCC is amending Rule 901 to provide
that a clearing member’s appointment of
another clearing member or CDS
Clearing and Depository Services Inc.
(‘‘CDS’’) 4 for purposes of effecting
settlements of exercised or matured
cleared securities may not be terminated
until after the 30th calendar day
following notice to OCC of such
termination.5 Prior to this rule change,
clearing members were required to
provide three business days notice of
terminating such appointments.
However, OCC concluded that three
business days was insufficient time for
OCC to determine whether or not the
clearing member has made appropriate
alternative settlement arrangements.
Accordingly, OCC is changing the notice
period to be consistent with the notice
period required to advise OCC of the
termination of a facilities management
agreement.6
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 registered clearing
agency. In particular, the Commission
believes the proposal is consistent with
the requirements of Section
17A(b)(3)(F),7 which, among other
things, requires the rules of a clearing
agency to assure the safeguarding of
securities and funds that are in the
4 CDS is the successor organization to Canadian
Depository for Securities Ltd. OCC’s By-Law
definition of CDS is being amended to reflect this
organizational change.
5 OCC surveyed appointed clearing members that
effect NSCC settlements for nonaffiliated clearing
members and CDS to ascertain their views regarding
the proposed change in the notice period for
terminating such appointments. There were no
objections to the proposed change.
6 Conforming changes have been made to the
related appointment forms, which are attached as
Exhibits 5A and 5B to the proposed rule filing.
7 15 U.S.C. 78q–1(b)(3)(F).
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custody or control of the clearing agency
or for which it is responsible. Although
OCC is giving the Membership/Risk
Committee the ability to waive the
requirement that an applicant employ
two key operations employees on a fulltime basis, the revised requirement that
allows an applicant to have full-time
operational staff employed by an
affiliate of the applicant should provide
OCC with the practical flexibility to
permit such arrangements and still have
reasonable assurance that its members
are operationally sound. Moreover,
specifying that a clearing member’s
appointment of another clearing entity
to effect settlement on its behalf can not
be terminated until after the 30th
calendar day following notice to OCC of
such termination should provide OCC
with an appropriate amount of time in
which to determine that the clearing
member has made alternative settlement
arrangements.
IV. Conclusion
On the basis of the foregoing, the
Commission finds that the proposal is
consistent with the requirements of the
Act and in particular with the
requirements of Section 17A of the Act 8
and the rules and regulations
thereunder.
It is therefore ordered, pursuant to
Section 19(b)(2) of the Act, that the
proposed rule change (File No. SR–
OCC–2006–21) be, and hereby is,
approved.9
For the Commission by the Division of
Market Regulation, pursuant to delegated
authority.10
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7–8735 Filed 5–7–07; 8:45 am]
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–55689; File No. SR–Phlx–
2007–36]
Self-Regulatory Organizations;
Philadelphia Stock Exchange, Inc.;
Notice of Filing and Immediate
Effectiveness of Proposed Rule
Change Relating to Quoting
Obligations in Long Term Options
May 1, 2007.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
8 15
U.S.C. 78q–1.
approving the proposed rule change, the
Commission considered the proposal’s impact on
efficiency, competition and capital formation. 15
U.S.C. 78c(f).
10 17 CFR 200.30–3(a)(12).
9 In
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Federal Register / Vol. 72, No. 88 / Tuesday, May 8, 2007 / Notices
(‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on April 24,
2007, 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 substantially prepared by the Phlx.
The Exchange filed the proposal as a
‘‘non-controversial’’ proposed 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 adopt, on a
permanent basis, Phlx Rule
1014(b)(ii)(D)(4), which currently states
that Streaming Quote Traders
(‘‘SQTs’’),5 Remote Streaming Quote
Traders (‘‘RSQTs’’),6 and SQTs and
RSQTs that receive Directed Orders 7
(‘‘DSQTs’’ and ‘‘DRSQTs’’ respectively)
are deemed not to be assigned in any
option series until the time to expiration
for such series is less than nine months.
Accordingly, the obligations to quote
continuous, two-sided markets
described in Phlx Rule 1014(b)(ii)(D)
currently do not apply to SQTs, RSQTs,
DSQTs and DRSQTs respecting series
with an expiration of nine months or
greater. The Exchange originally
adopted the rule on a six-month pilot
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 15 U.S.C. 78s(b)(3)(A).
4 17 CFR 240.19b–4(f)(6).
5 An SQT is an Exchange Registered Options
Trader (‘‘ROT’’) who has received permission from
the Exchange to generate and submit option
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).
6 An RSQT is an 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).
7 The term ‘‘Directed Order’’ means any customer
order (other than a stop or stop-limit order as
defined in Phlx Rule 1066) to buy or sell which has
been directed to a particular specialist, RSQT, or
SQT by an Order Flow Provider. See Phlx Rule
1080(l)(i)(A).
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2 17
VerDate Aug<31>2005
17:29 May 07, 2007
Jkt 211001
basis (the ‘‘pilot’’).8 The pilot was
scheduled to expire on April 24, 2007.
The text of the proposed rule change
is available at the Phlx, the
Commission’s Public Reference Room,
and https://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
The purpose of the proposed rule
change is to adopt Phlx Rule
1014(b)(ii)(D)(4) on a permanent basis in
order to continue to mitigate the
Exchange’s quote traffic by relaxing the
quoting obligations applicable to SQTs,
RSQTs, DSQTs and DRSQTs, thereby
reducing the number of quotations
required to be submitted on the
Exchange.
The pilot is part of an overall strategy
to mitigate options quote traffic on the
Exchange, under which SQTs, RSQTs,
DSQTs and DRSQTs are deemed not to
be assigned in any option series until
the time to expiration for such series is
less than nine months. The effect of this
is to relax these traders quoting
obligations, and ultimately the number
of quotes they are required to submit,
because the continuous quoting
obligations described in Phlx Rule
1014(b)(ii)(D)(1) apply only to those
options in which they are assigned.
2. Statutory Basis
The Exchange believes that its
proposal is consistent with Section 6(b)
of the Act 9 in general, and furthers the
objectives of Section 6(b)(5) of the Act 10
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
8 See Securities Exchange Act Release No. 54648
(October 24, 2006), 71 FR 63375 (October 30, 2006)
(SR–Phlx–2006–62).
9 15 U.S.C. 78f(b).
10 15 U.S.C. 78f(b)(5).
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26193
system, and, in general to protect
investors and the public interest by
relaxing the quoting requirements in
option series with an expiration greater
than nine months, thereby reducing the
number of options quotations required
to be submitted, which should enable
the Exchange to mitigate quote traffic.
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
The proposed rule change has become
effective pursuant to Section 19(b)(3)(A)
of the Act 11 and Rule 19b–4(f)(6)
thereunder,12 because the foregoing
proposed rule does not: (i) Significantly
affect the protection of investors or the
public interest; (ii) impose any
significant burden on competition; and
(iii) 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.
A proposed rule change filed under
Rule 19b–4(f)(6) normally may not
become operative prior to 30–days after
the date of filing.13 However, Rule 19b–
4(f)(6)(iii) permits the Commission to
designate a shorter time if such action
is consistent with the protection of
investors and the public interest.14 The
Exchange has requested that the
Commission waive the 30–day operative
delay. The Commission believes that
waiving the 30–day operative delay is
consistent with the protection of
investors and the public interest
because such waiver will ensure
continuity of the Exchange’s rules.
Furthermore, the proposed rule change
11 15
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(6).
13 17 CFR 240.19b–4(f)(6)(iii). In addition, Rule
19b–4(f)(6)(iii) requires the self-regulatory
organization to give the Commission notice of its
intent to file the proposed rule change, along with
a brief description and text of 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. Phlx
has satisfied the five-day pre-filing requirement.
14 17 CFR 240.19b–4(f)(6)(iii).
12 17
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26194
Federal Register / Vol. 72, No. 88 / Tuesday, May 8, 2007 / Notices
does not present any novel regulatory
issues. The Commission notes that this
proposal is consistent with the approach
in current Phlx Rule 1012, Commentary
.03, which states that strike price
interval, bid/ask differential and
continuity rules will not apply to such
long term option series until the time to
expiration is less than nine months.15
For these reasons, the Commission
designates the proposal to be operative
upon filing with the Commission.16
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.17
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–2007–36 on the
subject line.
cprice-sewell on PROD1PC66 with NOTICES
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–2007–36. 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
15 See Securities Exchange Act Release No. 29103
(April 18, 1991), 56 FR 19132 (April 25, 1991) (SR–
Phlx–91–18).
16 For purposes only of waiving the 30–day
operative delay, the Commission has considered the
proposed rule’s impact on efficiency, competition,
and capital formation. 15 U.S.C. 78c(f).
17 See 15 U.S.C. 78s(b)(3)(C).
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15:36 May 07, 2007
Jkt 211001
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–2007–36 and should
be submitted on or before May 29, 2007.
For the Commission, by the Division of
Market Regulation, pursuant to delegated
authority.18
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7–8736 Filed 5–7–07; 8:45 am]
BILLING CODE 8010–01–P
DEPARTMENT OF TRANSPORTATION
Federal Aviation Administration
Notice of Availability of a Final
Environment Assessment (Final EA)
and a Finding of No Significant Impact/
Record of Decision (FONSI/ROD) for
the Proposed Runway 22R/4L Offset
ILS at Detroit Metropolitan Wayne
County Airport (DTW) Located in
Romulus, Detroit
Federal Aviation
Administration (FAA), DOT.
ACTION: Notice of Availability of a Final
Environmental Assessment and a
Finding of No Significant Impact/
Record of Decision for the Proposed
Runway 22R/4L Offset ILS at Detroit
Metropolitan Wayne County Airport.
AGENCY:
SUMMARY: The Federal Aviation
Administration (FAA) is issuing this
notice to advise the public that it has
prepared a Final Environmental
Assessment (Final EA) for the Proposed
Runway 22R/4L Offset ILS at Detroit
Metropolitan Wayne County Airport
and on April 27, 2007, it has approved
a Finding of No Significant Impact/
Record of Decision (FONSI/ROD) based
on this Final EA. The Federal Aviation
Administration (FAA) prepared the
Final EA in accordance with the
National Environmental Policy Act and
the Federal Aviation Administration’s
regulations and guidelines for
18 17
PO 00000
CFR 200.30–3(a)(12).
Frm 00124
Fmt 4703
Sfmt 4703
environmental documents. The Final
EA was reviewed and evaluated by the
FAA, and was accepted on April 27,
2007 as a Federal document by the
FAA’s Responsible Federal Official.
FOR FURTHER INFORMATION CONTACT: Ms.
Virginia Marcks, Environmental
Engineer, Engineering Services, Central
Service Area, Federal Aviation
Administration, 2300 East Devon
Avenue, Des Plaines, Illinois 60018,
Telephone number: 847–294–7494.
SUPPLEMENTARY INFORMATION: The
Federal Aviation Administration (FAA)
has prepare and is making available the
Final Environmental Assessment (Final
EA) for the following proposed actions
at the Detroit Metropolitan Wayne
County Airport: The development and
use of the offset ILS approach
procedures for Runways 22R and 4L, the
installation of two (2) offset localizers,
the construction of localizer buildings
and associated equipment, the
construction of access roads, the
installation of mulitlateration
equipment including 32 precision
runway monitors (Precision Runway
Monitors), the installation of Airport
Surveillance Detection Equipment
(ASDE), the reissuance of aeronautical
charts with the 22R/4L offset ILS
approach information, the issuance of
National Airspace System (NAS) Change
Proposed (NCP) waivers associated with
design and installation of the preceding,
the development, issuance, and
implementation of Air Traffic
procedures, flight check and testing and
certification of proposed equipment,
and funding for development and
implementation of the proposed action.
The Final EA has been prepared in
accordance with the National
Environmental Policy Act (NEPA) of
1969, as amended, FAA Orders 1050.1E,
‘‘Environmental Impacts: Policies and
Procedures’’ and FAA Order 5050.4B,
‘‘NEPA Implementing Instructions for
Airport Actions.’’ The proposed
development action is consistent with
the National Airspace System Plan
prepared by the U.S. Department of
Transportation Federal Aviation
Administration (FAA).
A Final Environmental Assessment
and the Finding of No Significant
Impact/Record of Decision (FONSI/
ROD) will be available for public
viewing during normal business hours
at the following locations:
(1) Romulus Public Library, 11121
Wayne Rd., Romulus, MI 48174, (734)
942–7589.
(2) Wayne City Pubic Library, 3737 S.
Wayne Rd., Wayne, MI 48174 (734)
721–7832.
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]]>Agencies
[Federal Register Volume 72, Number 88 (Tuesday, May 8, 2007)]
[Notices]
[Pages 26192-26194]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E7-8736]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-55689; File No. SR-Phlx-2007-36]
Self-Regulatory Organizations; Philadelphia Stock Exchange, Inc.;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change
Relating to Quoting Obligations in Long Term Options
May 1, 2007.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
[[Page 26193]]
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on April 24, 2007, 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 substantially prepared by the Phlx. The
Exchange filed the proposal as a ``non-controversial'' proposed 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 adopt, on a permanent basis, Phlx Rule
1014(b)(ii)(D)(4), which currently states that Streaming Quote Traders
(``SQTs''),\5\ Remote Streaming Quote Traders (``RSQTs''),\6\ and SQTs
and RSQTs that receive Directed Orders \7\ (``DSQTs'' and ``DRSQTs''
respectively) are deemed not to be assigned in any option series until
the time to expiration for such series is less than nine months.
Accordingly, the obligations to quote continuous, two-sided markets
described in Phlx Rule 1014(b)(ii)(D) currently do not apply to SQTs,
RSQTs, DSQTs and DRSQTs respecting series with an expiration of nine
months or greater. The Exchange originally adopted the rule on a six-
month pilot basis (the ``pilot'').\8\ The pilot was scheduled to expire
on April 24, 2007.
---------------------------------------------------------------------------
\5\ An SQT is an Exchange Registered Options Trader (``ROT'')
who has received permission from the Exchange to generate and submit
option 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).
\6\ An RSQT is an 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).
\7\ The term ``Directed Order'' means any customer order (other
than a stop or stop-limit order as defined in Phlx Rule 1066) to buy
or sell which has been directed to a particular specialist, RSQT, or
SQT by an Order Flow Provider. See Phlx Rule 1080(l)(i)(A).
\8\ See Securities Exchange Act Release No. 54648 (October 24,
2006), 71 FR 63375 (October 30, 2006) (SR-Phlx-2006-62).
---------------------------------------------------------------------------
The text of the proposed rule change is available at the Phlx, the
Commission's Public Reference Room, and https://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
The purpose of the proposed rule change is to adopt Phlx Rule
1014(b)(ii)(D)(4) on a permanent basis in order to continue to mitigate
the Exchange's quote traffic by relaxing the quoting obligations
applicable to SQTs, RSQTs, DSQTs and DRSQTs, thereby reducing the
number of quotations required to be submitted on the Exchange.
The pilot is part of an overall strategy to mitigate options quote
traffic on the Exchange, under which SQTs, RSQTs, DSQTs and DRSQTs are
deemed not to be assigned in any option series until the time to
expiration for such series is less than nine months. The effect of this
is to relax these traders quoting obligations, and ultimately the
number of quotes they are required to submit, because the continuous
quoting obligations described in Phlx Rule 1014(b)(ii)(D)(1) apply only
to those options in which they are assigned.
2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act \9\ in general, and furthers the objectives of Section
6(b)(5) of the Act \10\ 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 relaxing the quoting requirements in option series with an
expiration greater than nine months, thereby reducing the number of
options quotations required to be submitted, which should enable the
Exchange to mitigate quote traffic.
---------------------------------------------------------------------------
\9\ 15 U.S.C. 78f(b).
\10\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
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
The proposed rule change has become effective pursuant to Section
19(b)(3)(A) of the Act \11\ and Rule 19b-4(f)(6) thereunder,\12\
because the foregoing proposed rule does not: (i) Significantly affect
the protection of investors or the public interest; (ii) impose any
significant burden on competition; and (iii) 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.
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\11\ 15 U.S.C. 78s(b)(3)(A).
\12\ 17 CFR 240.19b-4(f)(6).
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A proposed rule change filed under Rule 19b-4(f)(6) normally may
not become operative prior to 30-days after the date of filing.\13\
However, Rule 19b-4(f)(6)(iii) permits the Commission to designate a
shorter time if such action is consistent with the protection of
investors and the public interest.\14\ The Exchange has requested that
the Commission waive the 30-day operative delay. The Commission
believes that waiving the 30-day operative delay is consistent with the
protection of investors and the public interest because such waiver
will ensure continuity of the Exchange's rules. Furthermore, the
proposed rule change
[[Page 26194]]
does not present any novel regulatory issues. The Commission notes that
this proposal is consistent with the approach in current Phlx Rule
1012, Commentary .03, which states that strike price interval, bid/ask
differential and continuity rules will not apply to such long term
option series until the time to expiration is less than nine
months.\15\ For these reasons, the Commission designates the proposal
to be operative upon filing with the Commission.\16\
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\13\ 17 CFR 240.19b-4(f)(6)(iii). In addition, Rule 19b-
4(f)(6)(iii) requires the self-regulatory organization to give the
Commission notice of its intent to file the proposed rule change,
along with a brief description and text of 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. Phlx has satisfied the five-day pre-filing requirement.
\14\ 17 CFR 240.19b-4(f)(6)(iii).
\15\ See Securities Exchange Act Release No. 29103 (April 18,
1991), 56 FR 19132 (April 25, 1991) (SR-Phlx-91-18).
\16\ For purposes only of waiving the 30-day operative delay,
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.\17\
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\17\ 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-2007-36 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-2007-36. 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 should submit only information that you wish to
make available publicly. All submissions should refer to File Number
SR-Phlx-2007-36 and should be submitted on or before May 29, 2007.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\18\
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\18\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7-8736 Filed 5-7-07; 8:45 am]
BILLING CODE 8010-01-P
