Self-Regulatory Organizations; Philadelphia Stock Exchange, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to a System Change to the Phlx's Electronic Options Trading Platform, Phlx XL, 56116-56117 [E7-19398]

Download as PDF 56116 Federal Register / Vol. 72, No. 190 / Tuesday, October 2, 2007 / Notices SECURITIES AND EXCHANGE COMMISSION [Release No. 34–56535; File No. SR–Phlx– 2007–59] Self-Regulatory Organizations; Philadelphia Stock Exchange, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to a System Change to the Phlx’s Electronic Options Trading Platform, Phlx XL September 26, 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 August 10, 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, II, and III below, which Items have been prepared substantially by the Phlx. The Exchange filed the proposal pursuant to Section 19(b)(3)(A) of the Act 3 and Rule 19b–4(f)(5) thereunder,4 which renders 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 add a new feature to the Exchange’s electronic options trading platform, Phlx XL,5 that will automatically purge quotations submitted by specialists, Streaming Quote Traders (‘‘SQTs’’),6 and Remote Streaming Quote Traders (‘‘RSQTs’’) 7 with a bid price of $0.00 and an offering price of $99,999.00. The proposed rule change is available at the Phlx, in the Commission’s Public Reference Room, and on the Phlx’s Web site at https://www.phlx.com. 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)(5). 5 See Securities Exchange Act Release No. 50100 (July 27, 2004), 69 FR 46612 (August 3, 2004) (order approving File No. SR–Phlx–2003–59). 6 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 Phlx Rule 1014(b)(ii)(A). 7 An RSQT is a participant in 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 the RSQT has been assigned. rmajette on PROD1PC64 with NOTICES 2 17 VerDate Aug<31>2005 15:35 Oct 01, 2007 Jkt 214001 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 help Exchange members manage risk by adding a new mechanism to the Phlx XL system to purge certain electronic quotations. Members quoting and trading on Phlx XL currently have the ability to purge electronic quotations in specific options series under certain circumstances by sending the appropriate electronic message to Phlx XL. It has recently come to the Exchange’s attention, however, that certain members do not have the ability to send a formatted ‘‘purge’’ message. Instead, such members that wish to remove their electronic quotations in a series submit an artificially wide quotation of $0.00 bid, $99,999.00 offered with the expectation that the Exchange will purge their quotation for the series. Currently, the Exchange does not purge such quotations. The Phlx believes that this could result in trading errors of great magnitude, necessitating nullification of such trades based on the Phlx’s obvious error rule.8 The Phlx believes that member organizations could be inconvenienced during the time period needed to investigate and correct the error, and could miss trading opportunities while their accounts are corrected. To address this issue, the Exchange has built a feature of the Phlx XL system that will purge any electronic quotation received with a bid price of $0.00 and an offering price of $99,999.00. The Exchange believes that this will eliminate the substantial risk borne by the Exchange and its members in handling such quotations. 8 See PO 00000 Phlx Rule 1092. Frm 00076 Fmt 4703 Sfmt 4703 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 enabling members to better manage risk through the automated quote purge feature. B. Self-Regulatory Organization’s Statement on Burden on Competition The Phlx 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. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action The Phlx has filed the proposed rule change pursuant to Section 19(b)(3)(A) of the Act 11 and subparagraph (f)(5) of Rule 19b–4 thereunder.12 Because the Phlx has designated the foregoing proposed rule change as one that effects a change in an existing order entry or trading system that does not: (i) Significantly affect the protection of investors or the public interest; (ii) impose any significant burden on competition; or (iii) have the effect of limiting access to or availability of the system, it has become effective pursuant to Section 19(b)(3)(A) of the Act and Rule 19b–4(f)(5) thereunder. 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.13 IV. Solicitation of Comments Interested persons are invited to submit written data, views, and 9 15 U.S.C. 78f(b). U.S.C. 78f(b)(5). 11 15 U.S.C. 78s(b)(3)(A). 12 17 CFR 240.19b–4(f)(5). 13 See 15 U.S.C. 78s(b)(3)(C). 10 15 E:\FR\FM\02OCN1.SGM 02OCN1 Federal Register / Vol. 72, No. 190 / Tuesday, October 2, 2007 / Notices 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 For the Commission, by the Division of Market Regulation, pursuant to delegated authority.14 Florence E. Harmon, Deputy Secretary. [FR Doc. E7–19398 Filed 10–1–07; 8:45 am] BILLING CODE 8011–01–P • Use the Commission’s Internet comment form (https://www.sec.gov/ rules/sro.shtml); or • Send an e-mail to rulecomments@sec.gov. Please include File Number SR–Phlx–2007–59 on the subject line. Paper Comments rmajette on PROD1PC64 with NOTICES • Send paper comments in triplicate to Nancy M. Morris, Secretary, Securities and Exchange Commission, 100 F Street, NE., Washington, DC 20549–1090. SECURITIES AND EXCHANGE COMMISSION [Release No. 34–56526; File No. SR–Phlx– 2007–67] Self-Regulatory Organizations; Philadelphia Stock Exchange, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change as Modified by Amendment No. 1 Thereto Relating to XLE Fees September 25, 2007. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 All submissions should refer to File (‘‘Act’’),1 and Rule 19b–4 thereunder,2 Number SR–Phlx–2007–59. This file notice is hereby given that on August number should be included on the 31, 2007, the Philadelphia Stock subject line if e-mail is used. To help the Exchange, Inc. (‘‘Phlx’’ or the Commission process and review your ‘‘Exchange’’), filed with the Securities comments more efficiently, please use and Exchange Commission (the only one method. The Commission will ‘‘Commission’’) the proposed rule post all comments on the Commission’s change as described in Items I, II, and Internet Web site (https://www.sec.gov/ III below, which Items have been rules/sro.shtml). Copies of the substantially prepared by the Exchange. On September 20, 2007, Phlx filed submission, all subsequent Amendment No. 1 to the proposed rule amendments, all written statements change. The Exchange filed the with respect to the proposed rule proposed rule change pursuant to change that are filed with the Section 19(b)(3)(A) of the Act 3 and Rule Commission, and all written 19b–4(f)(2) thereunder,4 which renders communications relating to the it effective upon filing with the proposed rule change between the Commission and any person, other than Commission. The Commission is publishing this notice to solicit those that may be withheld from the comments on the proposed rule change public in accordance with the as amended from interested persons. provisions of 5 U.S.C. 552, will be available for inspection and copying in I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Commission’s Public Reference the Proposed Rule Change Room, 100 F Street, NE., Washington, DC 20549, on official business days Phlx proposes to amend the between the hours of 10 a.m. and 3 p.m. Exchange’s current XLE 5 Fee Schedule Copies of the filing also will be available to: (1) Adopt definitions for Net Makers for inspection and copying at the of liquidity (‘‘Net Makers’’) and Net principal office of the Phlx. All Takers of liquidity (‘‘Net Taker’’) on comments received will be posted XLE; (2) update the current volume tier structure by reducing the volume without change; the Commission does breakpoints to create two new volume not edit personal identifying information from submissions. You 14 17 CFR 200.30–3(a)(12). should submit only information that 1 15 U.S.C. 78s(b)(1). you wish to make available publicly. All 2 17 CFR 240.19b–4. submissions should refer to File 3 15 U.S.C. 78s(b)(3)(A). Number SR–Phlx–2007–59 and should 4 17 CFR 240.19b–4(f)(2). 5 XLE refers to the Exchange’s equity trading be submitted on or before October 23, system. XLE is designed to provide the opportunity 2007. for entirely automated executions to occur within a central matching system accessible by Exchange members and member organizations and their Sponsored Participants. See Securities Exchange Act Release No. 54538 (September 28, 2006), 71 FR 59184 (October 6, 2006) (SR–Phlx–2006–43). VerDate Aug<31>2005 15:35 Oct 01, 2007 Jkt 214001 PO 00000 Frm 00077 Fmt 4703 Sfmt 4703 56117 pricing tiers; (3) amend the amount of the credits or rebates to Net Makers and the fees for Net Takers; and (4) make two other minor changes to update the XLE Fee Schedule. The proposed fees will be assessed on Exchange members or member organizations, which may include Sponsoring Member Organizations 6 (collectively ‘‘member organizations’’). The changes set forth in this proposal are scheduled to become operative beginning with transactions settling on or after September 4, 2007. The text of the proposed rule change is available at Phlx, the Commission’s Public Reference Room, and 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, 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. 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 In an effort to enhance liquidity on XLE, the Exchange proposes to amend the XLE fee schedule to provide economic incentives to help attract additional order flow to the Exchange. The proposed amendments to the XLE Fee Schedule are discussed in detail below: i. Adopt Definitions for Net Makers and Net Takers An XLE Participant Organization 7 would qualify as a Net Maker if the total volume from providing liquidity for that XLE Participant Organization is at least one share greater than the total volume from removing liquidity during a single 6 See Exchange Rules 1(jj) and 1(kk) (defining ‘‘Sponsored Participant’’ and ‘‘Sponsoring Member Organization’’). 7 For purposes of this fee proposal, an XLE Participant Organization refers to Sponsored Participants, Sponsoring Member Organizations, and member organizations without Sponsored participants. See Exchange Rules 1(jj) and 1(kk). Sponsoring Member Organizations are responsible for the fees generated by their Sponsored Participant(s). E:\FR\FM\02OCN1.SGM 02OCN1

Agencies

SECURITIES AND EXCHANGE COMMISSION

[Federal Register Volume 72, Number 190 (Tuesday, October 2, 2007)]
[Notices]
[Pages 56116-56117]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E7-19398]



[[Page 56116]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-56535; File No. SR-Phlx-2007-59]


Self-Regulatory Organizations; Philadelphia Stock Exchange, Inc.; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change 
Relating to a System Change to the Phlx's Electronic Options Trading 
Platform, Phlx XL

September 26, 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 August 10, 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, II, 
and III below, which Items have been prepared substantially by the 
Phlx. The Exchange filed the proposal pursuant to Section 19(b)(3)(A) 
of the Act \3\ and Rule 19b-4(f)(5) thereunder,\4\ which renders 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)(5).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Phlx proposes to add a new feature to the Exchange's electronic 
options trading platform, Phlx XL,\5\ that will automatically purge 
quotations submitted by specialists, Streaming Quote Traders 
(``SQTs''),\6\ and Remote Streaming Quote Traders (``RSQTs'') \7\ with 
a bid price of $0.00 and an offering price of $99,999.00.
---------------------------------------------------------------------------

    \5\ See Securities Exchange Act Release No. 50100 (July 27, 
2004), 69 FR 46612 (August 3, 2004) (order approving File No. SR-
Phlx-2003-59).
    \6\ 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 Phlx 
Rule 1014(b)(ii)(A).
    \7\ An RSQT is a participant in 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 the RSQT has been assigned.
---------------------------------------------------------------------------

    The proposed rule change is available at the Phlx, in the 
Commission's Public Reference Room, and on the Phlx's Web site at 
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 help Exchange members 
manage risk by adding a new mechanism to the Phlx XL system to purge 
certain electronic quotations.
    Members quoting and trading on Phlx XL currently have the ability 
to purge electronic quotations in specific options series under certain 
circumstances by sending the appropriate electronic message to Phlx XL.
    It has recently come to the Exchange's attention, however, that 
certain members do not have the ability to send a formatted ``purge'' 
message. Instead, such members that wish to remove their electronic 
quotations in a series submit an artificially wide quotation of $0.00 
bid, $99,999.00 offered with the expectation that the Exchange will 
purge their quotation for the series. Currently, the Exchange does not 
purge such quotations. The Phlx believes that this could result in 
trading errors of great magnitude, necessitating nullification of such 
trades based on the Phlx's obvious error rule.\8\ The Phlx believes 
that member organizations could be inconvenienced during the time 
period needed to investigate and correct the error, and could miss 
trading opportunities while their accounts are corrected.
---------------------------------------------------------------------------

    \8\ See Phlx Rule 1092.
---------------------------------------------------------------------------

    To address this issue, the Exchange has built a feature of the Phlx 
XL system that will purge any electronic quotation received with a bid 
price of $0.00 and an offering price of $99,999.00. The Exchange 
believes that this will eliminate the substantial risk borne by the 
Exchange and its members in handling such quotations.
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 enabling members to better manage risk through the 
automated quote purge feature.
---------------------------------------------------------------------------

    \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 Phlx 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. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    The Phlx has filed the proposed rule change pursuant to Section 
19(b)(3)(A) of the Act \11\ and subparagraph (f)(5) of Rule 19b-4 
thereunder.\12\ Because the Phlx has designated the foregoing proposed 
rule change as one that effects a change in an existing order entry or 
trading system that does not: (i) Significantly affect the protection 
of investors or the public interest; (ii) impose any significant burden 
on competition; or (iii) have the effect of limiting access to or 
availability of the system, it has become effective pursuant to Section 
19(b)(3)(A) of the Act and Rule 19b-4(f)(5) thereunder.
---------------------------------------------------------------------------

    \11\ 15 U.S.C. 78s(b)(3)(A).
    \12\ 17 CFR 240.19b-4(f)(5).
---------------------------------------------------------------------------

    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.\13\
---------------------------------------------------------------------------

    \13\ See 15 U.S.C. 78s(b)(3)(C).
---------------------------------------------------------------------------

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and

[[Page 56117]]

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-2007-59 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-2007-59. 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, 100 F Street, NE., 
Washington, DC 20549, on official business days between the hours of 10 
a.m. and 3 p.m. 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-2007-59 and should be 
submitted on or before October 23, 2007.

    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. E7-19398 Filed 10-1-07; 8:45 am]
BILLING CODE 8011-01-P

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