Self-Regulatory Organizations; Philadelphia Stock Exchange, Inc.; Notice of Filing and Order Granting Accelerated Approval of a Proposed Rule Change and Amendment No. 1 Thereto Relating to the Extension of a Pilot Concerning the Exchange's Directed Order Program, 30413-30415 [E7-10376]

Download as PDF Federal Register / Vol. 72, No. 104 / Thursday, May 31, 2007 / Notices Rules 600(b)(30)(ii) and 611(b)(6) of Reg. NMS,10 the ISO could violate Rule 92 by trading ahead of or along with open customer orders. The proposed exemption provides that when routing ISOs, the member organization must yield its principal executions to any open customer orders that are required to be protected by Rule 92 and capable of accepting the fill. As defined in Rule 92(a), customer orders that are required to be protected are those open customer orders that are known to the member organization before entry of the ISO. In addition, the proposed exemption would require that if a firm executes an ISO to facilitate a customer order at a price inferior to one or more protected quotations, that customer must consent to not receiving the better price obtained by the ISO(s) or the firm must yield its principal execution to that customer.11 For purposes of this amendment, the Exchange further proposes adopting the definitions of Reg. NMS in connection with the terms ‘‘protected quotation’’ and ‘‘intermarket sweep order.’’ 12 2. Statutory Basis The basis under the Act for this proposed rule change is the requirement under Section 6(b)(5) 13 that an Exchange have rules that are designed to promote just and equitable principles of trade, to remove impediments to and perfect the mechanism of a free and open market and national market system, and in general, to protect investors and the public interest. B. Self-Regulatory Organization’s Statement on Burden on Competition The Exchange does not believe that the proposed rule change will result in 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 sroberts on PROD1PC70 with NOTICES The Exchange has neither solicited nor received written comments on the proposed rule change. 10 17 CFR 242.600(b)(30)(ii) and 17 CFR 242.611(b)(6). 11 Telephone conversation between Clare F. Saperstein, Principal Rule Counsel, Market Surveillance, NYSE, and Theodore S. Venuti, Attorney, Division, Commission, on May 23, 2007. 12 See 17 CFR 242.600(b)(7) and (30). 13 15 U.S.C. 78f(b)(5). VerDate Aug<31>2005 16:01 May 30, 2007 Jkt 211001 30413 III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Within 35 days of the date of publication of this notice in the Federal Register or within such longer period (i) as the Commission may designate up to 90 days of such date if it finds such longer period to be appropriate and publishes its reasons for so finding, or (ii) as to which NYSE consents, the Commission will: (A) By order approve such proposed rule change; or (B) Institute proceedings to determine whether the proposed rule change should be disapproved. without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make publicly available. All submissions should refer to File Number SR–NYSE–2007–21 and should be submitted on or before June 21, 2007. 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: SECURITIES AND EXCHANGE COMMISSION Electronic Comments • Use the Commission’s Internet comment form (http://www.sec.gov/ rules/sro.shtml); or • Send an e-mail to rulecomments@sec.gov. Please include File Number SR–NYSE–2007–21 on the subject line. For the Commission, by the Division of Market Regulation, pursuant to delegated authority.14 Florence E. Harmon, Deputy Secretary. [FR Doc. E7–10404 Filed 5–30–07; 8:45 am] BILLING CODE 8010–01–P [Release No. 34–55803; File No. SR–Phlx– 2007–37] Self-Regulatory Organizations; Philadelphia Stock Exchange, Inc.; Notice of Filing and Order Granting Accelerated Approval of a Proposed Rule Change and Amendment No. 1 Thereto Relating to the Extension of a Pilot Concerning the Exchange’s Directed Order Program May 23, 2007. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’),1 and Rule 19b–4 thereunder,2 Paper Comments notice is hereby given that on May 8, • Send paper comments in triplicate 2007, the Philadelphia Stock Exchange, to Nancy M. Morris, Secretary, Inc. (‘‘Phlx’’ or ‘‘Exchange’’) filed with Securities and Exchange Commission, the Securities and Exchange Station Place, 100 F Street, NE., Commission (‘‘Commission’’) the Washington, DC 20549–1090. proposed rule change as described in All submissions should refer to File Items I and II below, which Items have Number SR–NYSE–2007–21. This file been substantially prepared by the number should be included on the Exchange. On May 10, 2007, the subject line if e-mail is used. To help the Exchange filed Amendment No. 1. The Commission process and review your Commission is publishing this notice to comments more efficiently, please use solicit comments on the proposed rule only one method. The Commission will change, as amended, from interested post all comments on the Commission’s persons and is approving the proposal Internet Web site (http://www.sec.gov/ as modified by Amendment No. 1 on an rules/sro.shtml). Copies of the accelerated basis, for a pilot period submission, all subsequent through May 27, 2008. amendments, all written statements I. Self-Regulatory Organization’s with respect to the proposed rule Statement of the Terms of Substance of change that are filed with the the Proposed Rule Change Commission, and all written The Phlx proposes to extend, for an communications relating to the additional one year period, a pilot proposed rule change between the Commission and any person, other than program concerning Exchange Rule 1080, Phlx Automated Options Market those that may be withheld from the (AUTOM) 3 and Automatic Execution public in accordance with the provisions of 5 U.S.C. 552, will be 14 17 CFR 200.30–3(a)(12). available for inspection and copying in 1 15 U.S.C. 78s(b)(1). the Commission’s Public Reference 2 17 CFR 240.19b–4. Room. Copies of such filing also will be 3 AUTOM is the Exchange’s electronic order available for inspection and copying at delivery, routing, execution and reporting system, the principal office of NYSE. All which provides for the automatic entry and routing Continued comments received will be posted PO 00000 Frm 00082 Fmt 4703 Sfmt 4703 E:\FR\FM\31MYN1.SGM 31MYN1 30414 Federal Register / Vol. 72, No. 104 / Thursday, May 31, 2007 / Notices System (AUTO–X), and Exchange Rule 1014, Obligations And Restrictions Applicable To Specialists And Registered Options Traders. Specifically, the pilot program covers: (1) Exchange Rule 1080(l), Directed Orders, under which Exchange specialists, Streaming Quote Traders (‘‘SQTs’’) 4 and Remote Streaming Quote Traders (‘‘RSQTs’’) 5 trading on the Exchange’s electronic options trading platform, Phlx XL,6 receive Directed Orders (as defined below); and (2) Exchange Rule 1014(g)(viii), which sets forth the trade allocation algorithm for electronically executed and allocated trades involving Directed Orders. This proposal is in connection with a pilot program that is currently scheduled to expire on May 27, 2006.7 The text of the proposed rule change is available on Phlx’s Web site at http://www.phlx.com, at the Exchange’s principal office, and at the Commission’s Public Reference Room. sroberts on PROD1PC70 with NOTICES 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 Exchange 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 III below. The of equity option and index option orders to the Exchange trading floor. Orders delivered through AUTOM may be executed manually, or certain orders are eligible for AUTOM’s automatic execution features, AUTO–X, Book Sweep and Book Match. Equity option and index option specialists are required by the Exchange to participate in AUTOM and its features and enhancements. Option orders entered by Exchange members into AUTOM are routed to the appropriate specialist unit on the Exchange trading floor. AUTOM is today more commonly referred to as Phlx XL. See Exchange Rule 1080. 4 An SQT is an Exchange Registered Options Trader (‘‘ROT’’) who has received permission from the Exchange to generate and submit option quotations electronically through an electronic interface with AUTOM via an Exchange approved proprietary electronic quoting device in eligible options to which such SQT is assigned. See Exchange Rule 1014(b)(ii)(A). 5 An RSQT is a participant in the Exchange’s electronic trading system, Phlx XL who has received permission from the Exchange to trade in options for his own account, and to generate and submit option quotations electronically from off the floor of the Exchange through AUTOM in eligible options to which such RSQT has been assigned. 6 See Securities Exchange Act Release No. 50100 (July 27, 2004), 69 FR 46612 (August 3, 2004) (SR– Phlx–2003–59). 7 See Securities Exchange Act Release No. 53870 (May 25, 2006), 71 FR 31251 (June 1, 2006) (SR– Phlx–2006–27). See also Securities Exchange Act Release No. 51759 (May 27, 2005), 70 FR 32860 (June 6, 2005) (SR–Phlx–2004–91) (‘‘May 2005 Approval Order’’). VerDate Aug<31>2005 16:01 May 30, 2007 Jkt 211001 A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change Directed Orders sent to the Exchange by such OFPs. The Exchange believes that the pilot program will result in additional order flow to the Exchange, thus adding depth and liquidity to the Exchange’s markets, and enabling the Exchange to continue to compete effectively with other options exchanges for order flow. 1. Purpose 2. Statutory Basis The purpose of the proposed rule change is to extend, for an additional one-year period, a pilot that allows specialists, SQTs, and RSQTs assigned in options that trade on Phlx XL to receive directed orders (‘‘Directed Orders’’) 8 from a member or member organization (‘‘Order Flow Provider’’ or ‘‘OFP’’) 9 that submits, as agent, the customer order to the Exchange through AUTOM, and establishes a trade allocation algorithm for Directed Orders that are electronically executed and allocated to reward such Directed Specialists, SQTs and RSQTs with a participation guarantee for attracting such order flow to the Exchange.10 The proposed rule is subject to a pilot program scheduled to expire on May 27, 2007. The extended pilot would expire May 27, 2008. Pursuant to Rule 1080(l), OFPs must transmit Directed Orders to a particular specialist, SQT or RSQT through AUTOM. If the Exchange’s disseminated best bid or offer is at the National Best Bid or Offer when the Directed Order is received, the Directed Order is automatically executed on Phlx XL and allocated to the orders and quotes represented in the Exchange’s quotation. A Directed Specialist, SQT or RSQT will receive a participation allocation pursuant to Rule 1014(g)(viii) if the Directed Specialist, SQT or RSQT was quoting at the NBBO at the time that the Directed Order was received.11 Otherwise, the automatic execution will be allocated to those quotations and orders at the NBBO pursuant to Rule 1014(g)(vii).12 The specialist will manually execute Directed Orders that are received when the Exchange is not quoting at the NBBO.13 The Exchange believes that the pilot program rewards specialists, SQTs and RSQTs for actively engaging in marketing activities and establishing relationships with OFPs that generate The Exchange believes that its proposal is consistent with Section 6(b) of the Act 14 in general, and furthers the objectives of Section 6(b)(5) of the Act 15 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 permitting specialists, SQTs and RSQTs trading options on Phlx XL to receive Directed Orders, and by encouraging the capture of order flow on the Exchange by rewarding Directed Order recipients with a participation guarantee in trades involving Directed Orders. Exchange has prepared summaries, set forth in Sections A, B, and C below, of the most significant aspects of such statements. 8 See Exchange Rule 1080(l)(i)(A). Exchange Rule 1080(1)(i)(B). 10 See Exchange Rule 1080(1). The word ‘‘Directed’’ modifies all three; that is, it is referring to a Directed Specialist, Directed SQT and Directed RSQT. 11 See Exchange Rule 1080(l)(ii). 12 See Exchange Rule 1080(l)(iii). 13 See Exchange Rule 1080(l)(iv). 9 See PO 00000 Frm 00083 Fmt 4703 Sfmt 4703 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 not necessary or appropriate in furtherance of the purposes of the Act. C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants or Others No written comments were either solicited or received. III. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission’s Internet comment form (http://www.sec.gov/ rules/sro.shtml); or • Send an e-mail to rulecomments@sec.gov. Please include File Number SR–Phlx–2007–37 on the subject line. Paper Comments • Send paper comments in triplicate to Nancy M. Morris, Secretary, 14 15 15 15 E:\FR\FM\31MYN1.SGM U.S.C. 78f(b). U.S.C. 78f(b)(5). 31MYN1 Federal Register / Vol. 72, No. 104 / Thursday, May 31, 2007 / Notices Securities and Exchange Commission, 100 F Street, NE, Washington, DC 20549–1090. All submissions should refer to File Number SR–Phlx–2007–37. This file number should be included on the subject line if e-mail is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission’s Internet Web site (http://www.sec.gov/ rules/sro.shtml). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for inspection and copying in the Commission’s Public Reference Room. Copies of such filing also will be available for inspection and copying at the principal office of the Exchange. 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–2007–37 and should be submitted on or before June 21, 2007. Directed Order Program was originally approved on a one-year basis and subsequently extended for an additional year, in order to give the Commission an opportunity to evaluate the impact of the pilot program on the options markets to determine whether it would be beneficial to customers and to the options markets as a whole before approving any request for permanent approval of the pilot program. The Exchange has asked the Commission to approve the proposed rule change on an accelerated basis for an additional year so that the pilot program may continue uninterrupted. The Commission is approving the one-year extension so that the Exchange can continue to evaluate the Exchange’s Directed Order Program. The Exchange has requested that the Commission find good cause for approving the proposed rule change prior to the thirtieth day after publication of notice thereof in the Federal Register. The Commission believes that granting accelerated approval of the proposed rule change would allow the pilot program to continue without disruption for an additional year in order for the Exchange to continue to evaluate its Directed Order Program. Accordingly, the Commission finds good cause, consistent with Section 19(b)(2) of the Act,19 for approving the proposed rule change prior to the thirtieth day after publication of notice thereof in the Federal Register. IV. Commission’s Findings and Order Granting Accelerated Approval of the Proposed Rule Change V. Conclusion sroberts on PROD1PC70 with NOTICES After careful consideration, the Commission finds that the proposed rule change is consistent with the requirements of Section 6 of the Act 16 and the rules and regulations thereunder applicable to a national securities exchange,17 and, in particular, the requirements of Section 6(b)(5) of the Act.18 Section 6(b)(5) requires, among other things, that the rules of a national securities exchange be designed to prevent fraudulent and manipulative acts and practices, 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 notes that the Exchange’s 16 15 U.S.C. 78f. 17 In approving this proposal, the Commission has considered the proposed rule’s impact on efficiency, competition, and capital formation. 15 U.S.C. 78c(f). 18 15 U.S.C. 78f(b)(5). VerDate Aug<31>2005 16:01 May 30, 2007 Jkt 211001 It is therefore ordered, pursuant to Section 19(b)(2) of the Act,20 that the proposed rule change (SR–Phlx–2007– 37), as modified by Amendment No. 1, which institutes the pilot program through May 27, 2008, is hereby approved on an accelerated basis. For the Commission, by the Division of Market Regulation, pursuant to delegated authority.21 Florence E. Harmon, Deputy Secretary. [FR Doc. E7–10376 Filed 5–30–07; 8:45 am] 30415 SUMMARY: In accordance with the Paperwork Reduction Act of 1995, this notice announces the Small Business Administration’s intentions to request approval on a new and/or currently approved information collection. DATES: Submit comments on or before July 30, 2007. ADDRESSES: Send all comments regarding whether this information collection is necessary for the proper performance of the function of the agency, whether the burden estimates are accurate, and if there are ways to minimize the estimated burden and enhance the quality of the collection, to Ann Bradbury, Deputy Director, Office of Women Business Ownership, Small Business Administration, 409 3rd Street SW., 6th Floor, Washington, DC 20416. FOR FURTHER INFORMATION CONTACT: Ann Bradbury, Deputy Director, Office of Women Business Ownership, 202–205– 7507, ann.bradbury@sba.gov; Curtis B. Rich, Management Analyst, 202–205– 7030, curtis.rich@sba.gov. SUPPLEMENTARY INFORMATION: Title: ‘‘Entrepreneurial Development Management Information System (EDMIS) Counseling Information Form & Management Training Report. Description of Respondents: New established and prospective small business owners using the services and program by the business. Form No: 641, 888. Annual Responses: 276,489. Annual Burden: 82,947. Curtis B. Rich, Acting Chief, Administrative Information Branch. [FR Doc. E7–10462 Filed 5–30–07; 8:45 am] BILLING CODE 8025–01–P SMALL BUSINESS ADMINISTRATION [License No. 09/79–0454] Emergence Capital Partners SBIC, L.P.; Notice Seeking Exemption Under Section 312 of the Small Business Investment Act, Conflicts of Interest BILLING CODE 8010–01–P SMALL BUSINESS ADMINISTRATION Data Collection Available for Public Comments and Recommendations Notice and request for comments. ACTION: 19 15 U.S.C. 78s(b)(2). U.S.C. 78s(b)(2). 21 17 CFR 200.30–3(a)(12). 20 15 PO 00000 Frm 00084 Fmt 4703 Sfmt 4703 Notice is hereby given that Emergence Capital Partners SBIC, L.P., 160 Bovet Road, Suite 300, San Mateo, CA 94402, a Federal Licensee under the Small Business Investment Act of 1958, as amended (‘‘the Act’’), in connection with the financing of a small concern, has sought an exemption under Section 312 of the Act and Section 107.730, Financings which Constitute Conflicts of Interest of the Small Business Administration (‘‘SBA’’) Rules and Regulations (13 CFR 107.730). Emergence Capital Partners SBIC, L.P., E:\FR\FM\31MYN1.SGM 31MYN1

Agencies

[Federal Register Volume 72, Number 104 (Thursday, May 31, 2007)]
[Notices]
[Pages 30413-30415]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E7-10376]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-55803; File No. SR-Phlx-2007-37]


Self-Regulatory Organizations; Philadelphia Stock Exchange, Inc.; 
Notice of Filing and Order Granting Accelerated Approval of a Proposed 
Rule Change and Amendment No. 1 Thereto Relating to the Extension of a 
Pilot Concerning the Exchange's Directed Order Program

May 23, 2007.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on May 8, 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 Exchange. 
On May 10, 2007, the Exchange filed Amendment No. 1. The Commission is 
publishing this notice to solicit comments on the proposed rule change, 
as amended, from interested persons and is approving the proposal as 
modified by Amendment No. 1 on an accelerated basis, for a pilot period 
through May 27, 2008.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Phlx proposes to extend, for an additional one year period, a 
pilot program concerning Exchange Rule 1080, Phlx Automated Options 
Market (AUTOM) \3\ and Automatic Execution

[[Page 30414]]

System (AUTO-X), and Exchange Rule 1014, Obligations And Restrictions 
Applicable To Specialists And Registered Options Traders. Specifically, 
the pilot program covers: (1) Exchange Rule 1080(l), Directed Orders, 
under which Exchange specialists, Streaming Quote Traders (``SQTs'') 
\4\ and Remote Streaming Quote Traders (``RSQTs'') \5\ trading on the 
Exchange's electronic options trading platform, Phlx XL,\6\ receive 
Directed Orders (as defined below); and (2) Exchange Rule 
1014(g)(viii), which sets forth the trade allocation algorithm for 
electronically executed and allocated trades involving Directed Orders. 
This proposal is in connection with a pilot program that is currently 
scheduled to expire on May 27, 2006.\7\
---------------------------------------------------------------------------

    \3\ AUTOM is the Exchange's electronic order delivery, routing, 
execution and reporting system, which provides for the automatic 
entry and routing of equity option and index option orders to the 
Exchange trading floor. Orders delivered through AUTOM may be 
executed manually, or certain orders are eligible for AUTOM's 
automatic execution features, AUTO-X, Book Sweep and Book Match. 
Equity option and index option specialists are required by the 
Exchange to participate in AUTOM and its features and enhancements. 
Option orders entered by Exchange members into AUTOM are routed to 
the appropriate specialist unit on the Exchange trading floor. AUTOM 
is today more commonly referred to as Phlx XL. See Exchange Rule 
1080.
    \4\ An SQT is an Exchange Registered Options Trader (``ROT'') 
who has received permission from the Exchange to generate and submit 
option quotations electronically through an electronic interface 
with AUTOM via an Exchange approved proprietary electronic quoting 
device in eligible options to which such SQT is assigned. See 
Exchange Rule 1014(b)(ii)(A).
    \5\ An RSQT is a participant in the Exchange's electronic 
trading system, Phlx XL who has received permission from the 
Exchange to trade in options for his own account, and to generate 
and submit option quotations electronically from off the floor of 
the Exchange through AUTOM in eligible options to which such RSQT 
has been assigned.
    \6\ See Securities Exchange Act Release No. 50100 (July 27, 
2004), 69 FR 46612 (August 3, 2004) (SR-Phlx-2003-59).
    \7\ See Securities Exchange Act Release No. 53870 (May 25, 
2006), 71 FR 31251 (June 1, 2006) (SR-Phlx-2006-27). See also 
Securities Exchange Act Release No. 51759 (May 27, 2005), 70 FR 
32860 (June 6, 2005) (SR-Phlx-2004-91) (``May 2005 Approval 
Order'').
---------------------------------------------------------------------------

    The text of the proposed rule change is available on Phlx's Web 
site at http://www.phlx.com, at the Exchange'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 Exchange 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 III below. The Exchange 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 extend, for an 
additional one-year period, a pilot that allows specialists, SQTs, and 
RSQTs assigned in options that trade on Phlx XL to receive directed 
orders (``Directed Orders'') \8\ from a member or member organization 
(``Order Flow Provider'' or ``OFP'') \9\ that submits, as agent, the 
customer order to the Exchange through AUTOM, and establishes a trade 
allocation algorithm for Directed Orders that are electronically 
executed and allocated to reward such Directed Specialists, SQTs and 
RSQTs with a participation guarantee for attracting such order flow to 
the Exchange.\10\ The proposed rule is subject to a pilot program 
scheduled to expire on May 27, 2007. The extended pilot would expire 
May 27, 2008.
---------------------------------------------------------------------------

    \8\ See Exchange Rule 1080(l)(i)(A).
    \9\ See Exchange Rule 1080(1)(i)(B).
    \10\ See Exchange Rule 1080(1). The word ``Directed'' modifies 
all three; that is, it is referring to a Directed Specialist, 
Directed SQT and Directed RSQT.
---------------------------------------------------------------------------

    Pursuant to Rule 1080(l), OFPs must transmit Directed Orders to a 
particular specialist, SQT or RSQT through AUTOM. If the Exchange's 
disseminated best bid or offer is at the National Best Bid or Offer 
when the Directed Order is received, the Directed Order is 
automatically executed on Phlx XL and allocated to the orders and 
quotes represented in the Exchange's quotation. A Directed Specialist, 
SQT or RSQT will receive a participation allocation pursuant to Rule 
1014(g)(viii) if the Directed Specialist, SQT or RSQT was quoting at 
the NBBO at the time that the Directed Order was received.\11\ 
Otherwise, the automatic execution will be allocated to those 
quotations and orders at the NBBO pursuant to Rule 1014(g)(vii).\12\ 
The specialist will manually execute Directed Orders that are received 
when the Exchange is not quoting at the NBBO.\13\
---------------------------------------------------------------------------

    \11\ See Exchange Rule 1080(l)(ii).
    \12\ See Exchange Rule 1080(l)(iii).
    \13\ See Exchange Rule 1080(l)(iv).
---------------------------------------------------------------------------

    The Exchange believes that the pilot program rewards specialists, 
SQTs and RSQTs for actively engaging in marketing activities and 
establishing relationships with OFPs that generate Directed Orders sent 
to the Exchange by such OFPs. The Exchange believes that the pilot 
program will result in additional order flow to the Exchange, thus 
adding depth and liquidity to the Exchange's markets, and enabling the 
Exchange to continue to compete effectively with other options 
exchanges for order flow.
2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act \14\ in general, and furthers the objectives of Section 
6(b)(5) of the Act \15\ 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 permitting specialists, SQTs and RSQTs trading options on 
Phlx XL to receive Directed Orders, and by encouraging the capture of 
order flow on the Exchange by rewarding Directed Order recipients with 
a participation guarantee in trades involving Directed Orders.
---------------------------------------------------------------------------

    \14\ 15 U.S.C. 78f(b).
    \15\ 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 not necessary or appropriate in 
furtherance of the purposes of the Act.

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

    No written comments were either solicited or received.

III. Solicitation of Comments

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

Electronic Comments

     Use the Commission's Internet comment form (http://
www.sec.gov/rules/sro.shtml); or
     Send an e-mail to rule-comments@sec.gov. Please include 
File Number SR-Phlx-2007-37 on the subject line.

Paper Comments

     Send paper comments in triplicate to Nancy M. Morris, 
Secretary,

[[Page 30415]]

Securities and Exchange Commission, 100 F Street, NE, Washington, DC 
20549-1090.

All submissions should refer to File Number SR-Phlx-2007-37. This file 
number should be included on the subject line if e-mail is used. To 
help the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's Internet Web site (http://www.sec.gov/rules/
sro.shtml). Copies of the submission, all subsequent amendments, all 
written statements with respect to the proposed rule change that are 
filed with the Commission, and all written communications relating to 
the proposed rule change between the Commission and any person, other 
than those that may be withheld from the public in accordance with the 
provisions of 5 U.S.C. 552, will be available for inspection and 
copying in the Commission's Public Reference Room. Copies of such 
filing also will be available for inspection and copying at the 
principal office of the Exchange. 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-2007-37 and should be submitted on or before June 
21, 2007.

IV. Commission's Findings and Order Granting Accelerated Approval of 
the Proposed Rule Change

    After careful consideration, the Commission finds that the proposed 
rule change is consistent with the requirements of Section 6 of the Act 
\16\ and the rules and regulations thereunder applicable to a national 
securities exchange,\17\ and, in particular, the requirements of 
Section 6(b)(5) of the Act.\18\ Section 6(b)(5) requires, among other 
things, that the rules of a national securities exchange be designed to 
prevent fraudulent and manipulative acts and practices, 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 notes that the Exchange's Directed Order Program was 
originally approved on a one-year basis and subsequently extended for 
an additional year, in order to give the Commission an opportunity to 
evaluate the impact of the pilot program on the options markets to 
determine whether it would be beneficial to customers and to the 
options markets as a whole before approving any request for permanent 
approval of the pilot program. The Exchange has asked the Commission to 
approve the proposed rule change on an accelerated basis for an 
additional year so that the pilot program may continue uninterrupted. 
The Commission is approving the one-year extension so that the Exchange 
can continue to evaluate the Exchange's Directed Order Program.
---------------------------------------------------------------------------

    \16\ 15 U.S.C. 78f.
    \17\ In approving this proposal, the Commission has considered 
the proposed rule's impact on efficiency, competition, and capital 
formation. 15 U.S.C. 78c(f).
    \18\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    The Exchange has requested that the Commission find good cause for 
approving the proposed rule change prior to the thirtieth day after 
publication of notice thereof in the Federal Register. The Commission 
believes that granting accelerated approval of the proposed rule change 
would allow the pilot program to continue without disruption for an 
additional year in order for the Exchange to continue to evaluate its 
Directed Order Program. Accordingly, the Commission finds good cause, 
consistent with Section 19(b)(2) of the Act,\19\ for approving the 
proposed rule change prior to the thirtieth day after publication of 
notice thereof in the Federal Register.
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    \19\ 15 U.S.C. 78s(b)(2).
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V. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\20\ that the proposed rule change (SR-Phlx-2007-37), as modified 
by Amendment No. 1, which institutes the pilot program through May 27, 
2008, is hereby approved on an accelerated basis.
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    \20\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\21\
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    \21\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7-10376 Filed 5-30-07; 8:45 am]
BILLING CODE 8010-01-P