Self-Regulatory Organizations; Philadelphia Stock Exchange, Inc.; Order Approving Proposed Rule Change Relating To Access to XLE on Phlx's Options Floor, 31528-31529 [E8-12195]

Download as PDF 31528 Federal Register / Vol. 73, No. 106 / Monday, June 2, 2008 / Notices 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 solicited or received with respect to the proposed rule change. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Because the foregoing rule change does not: (1) Significantly affect the protection of investors or the public interest; (2) impose any significant burden on competition; and (3) become operative for 30 days after the date of this filing, or such shorter time as the Commission may designate, it has become effective pursuant to Section 19(b)(3)(A) of the Act 20 and Rule 19b– 4(f)(6) thereunder.21 A proposed rule change filed under 19b–4(f)(6) normally may not become operative prior to 30 days after the date of filing.22 However, Rule 19b– 4(f)(6)(iii) 23 permits the Commission to designate a shorter time if such action is consistent with the protection of investors and the public interest. 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 immediately provide a mechanism for the Exchange to divert order flow from one Routing Broker to another in the event of a system malfunction or failure. In addition, the Commission notes that the proposed Exchange rules applicable to a non-affiliated Routing Broker are substantially similar to the rules of other national securities exchanges applicable to non-affiliated outbound routing brokers.24 For these reasons, the Commission designates the proposed 20 15 U.S.C. 78s(b)(3)(A). CFR 240.19b–4(f)(6). 22 17 CFR 240.19b–4(f)(6)(iii). In addition, Rule 19b–4(f)(6)(iii) requires that a self-regulatory organization submit to the Commission written 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. The Exchange has satisfied this notice requirement. 23 Id. 24 See, e.g., the National Stock Exchange, Inc. Rule 2.12, the Philadelphia Stock Exchange, Inc. Rule 185(g), and the International Securities Exchange, LLC Rule 2108. jlentini on PROD1PC65 with NOTICES 21 17 VerDate Aug<31>2005 19:06 May 30, 2008 Jkt 214001 rule change to be operative upon filing with the Commission.25 At any time within 60 days of the filing of such 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. 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: 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–NYSE– 2008–37 and should be submitted on or before June 23, 2008. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.26 Florence E. Harmon, Acting Secretary. [FR Doc. E8–12205 Filed 5–30–08; 8:45 am] BILLING CODE 8010–01–P SECURITIES AND EXCHANGE COMMISSION Electronic Comments [Release No. 34–57872; File No. SR–Phlx– 2008–27] • 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–NYSE–2008–37 on the subject line. Self-Regulatory Organizations; Philadelphia Stock Exchange, Inc.; Order Approving Proposed Rule Change Relating To Access to XLE on Phlx’s Options Floor May 27, 2008. On April 11, 2008, the Philadelphia Stock Exchange, Inc. (‘‘Phlx’’ or • Send paper comments in triplicate ‘‘Exchange’’) filed with the Securities to Secretary, Securities and Exchange and Exchange Commission Commission, 100 F Street, NE., (‘‘Commission’’), pursuant to Section Washington, DC 20549–1090. 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’),1 and Rule 19b–4 All submissions should refer to File thereunder,2 a proposed rule change to: Number SR–NYSE–2008–37. This file (1) Delete Phlx Rule 1014(e)(iii), which number should be included on the subject line if e-mail is used. To help the limits the actions of Registered Options Traders (‘‘ROTs’’) related to trading in Commission process and review your Phlx’s equity market in certain comments more efficiently, please use only one method. The Commission will situations, and (2) add new Phlx Rule post all comments on the Commission’s 175 to prohibit integrated market making by Phlx market makers. The Internet Web site (https://www.sec.gov/ proposed rule change was published for rules/sro.shtml). Copies of the comment in the Federal Register on submission, all subsequent April 24, 2008.3 The Commission amendments, all written statements received no comments on the proposal. with respect to the proposed rule This order approves the proposed rule change that are filed with the change. Commission, and all written The Exchange proposes to delete Phlx communications relating to the Rule 1014(e)(iii), which limits the proposed rule change between the Commission and any person, other than actions of ROTs related to trading in Phlx’s equity market in certain those that may be withheld from the situations, in order to permit members public in accordance with the and member organizations on the Phlx provisions of 5 U.S.C. 552, will be options floor to have connectivity to available for inspection and copying in XLE, the Phlx’s electronic equity trading the Commission’s Public Reference Room, on official business days between system. The Exchange also proposes new Phlx Rule 175 to prohibit the hours of 10 a.m. and 3 p.m. Copies integrated market making by Phlx of the filing also will be available for market makers. Specifically, Phlx Rule inspection and copying at the principal 175 prohibits Phlx Market Makers on office of the Exchange. All comments received will be posted without change; Paper Comments 26 17 25 For the purposes only of waiving the 30-day operative delay, the Commission has considered the proposed rule’s impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). PO 00000 Frm 00104 Fmt 4703 Sfmt 4703 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 3 See Securities Exchange Act Release No. 57683 (April 18, 2008), 73 FR 22199. 1 15 E:\FR\FM\02JNN1.SGM 02JNN1 Federal Register / Vol. 73, No. 106 / Monday, June 2, 2008 / Notices jlentini on PROD1PC65 with NOTICES XLE, or any member, limited partner, officer, or associated person thereof, from acting as an options Specialist or ROT or functioning in any capacity involving market making responsibilities, in any option overlying a security in which the Market Maker on XLE is registered as such. After careful review, the Commission finds that the proposed rule change is consistent with the requirements of the Act and the rules and regulations thereunder applicable to a national securities exchange.4 In particular, the Commission finds that the proposed rule change is consistent with Section 6(b)(5) of the Act,5 which requires, among other things, that the rules of a national securities exchange be designed to promote just and equitable principles of trade, to remove impediments to and perfect the mechanism of a free and open market and a national market system, and, in general to protect investors and the public interest. The Commission finds that the deletion of Phlx Rule 1014(e)(iii) is consistent with the Act. Phlx Rule 1014(e)(iii) was designed to mitigate the ‘‘time and place’’ advantages available to a ROT with access to the Phlx equities trading floor. The Commission notes that the Phlx no longer operates a physical equities trading floor. The Commission also notes that possession of XLE order entry technology by Phlx options floor participants does not offer any special information advantage that could be used on the Phlx options floor because access to XLE information is made available simultaneously to anyone. Likewise, physical presence on the Phlx options floor does not provide an advantage in priority for orders entered into XLE from the Phlx options floor because XLE executes orders in price-time priority based on a pre-set algorithm that may not be altered by the XLE participant entering the order and does not take into account the location where an order is entered. In addition, the Commission notes that options floor participants currently have access to other execution venues and order routing mechanisms for the underlying securities. The Commission also finds that the prohibition on integrated market making is consistent with the Act. It is therefore ordered, pursuant to Section 19(b)(2) of the Act,6 that the 4 In approving this rule change, the Commission notes that it has considered the proposed rule’s impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). 5 15 U.S.C. 78f(b)(5). 6 15 U.S.C. 78s(b)(2). VerDate Aug<31>2005 19:06 May 30, 2008 Jkt 214001 proposed rule change (SR–Phlx–2008– 27) be, and hereby is, approved. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.7 Florence E. Harmon, Acting Secretary. [FR Doc. E8–12195 Filed 5–30–08; 8:45 am] BILLING CODE 8010–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–57871; File No. SR–Phlx– 2008–37] Self-Regulatory Organizations; Philadelphia Stock Exchange, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to the Definition of Exchange-Traded Fund Share May 27, 2008. Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’) 1, and Rule 19b–4 2 thereunder, notice is hereby given that on May 19, 2008, the Philadelphia Stock Exchange, Inc. (‘‘Phlx’’ or ‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘Commission’’) the proposed rule change as described in Items I and II, below, which Items have been prepared by the Phlx. The Exchange filed the proposal as a noncontroversial proposed rule change pursuant to section 19(b)(3)(A) of the Act 3 and Rule 19b–4(f)(6) 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 modify Phlx Rule 1000(b)(42), the definition of Exchange-Traded Fund Share, to conform it to the definition of that term used in Phlx Rule 1009, Commentary .06. The proposed rule change is available at the Phlx, the Commission’s Public Reference Room, and https:// www.phlx.com. 7 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 3 15 U.S.C. 78s(b)(3)(A). 4 17 CFR 240.19b–4(f)(6). 1 15 PO 00000 Frm 00105 Fmt 4703 31529 II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the Phlx included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Phlx has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The purpose of the proposed rule change is to update and clarify what may appear to be inconsistent language between Phlx Rule 1000(b)(42) and Phlx Rule 1009, Commentary .06. Phlx Rule 1000(b)(42) defines the term ExchangeTraded Fund Share. Phlx Rule 1009, Commentary .06 states what options are appropriate for options trading on Phlx. Phlx currently utilizes the definition of Exchange-Traded Fund Share as stated in Phlx Rule 1009, Commentary .06 for purposes of determining what options are appropriate for options trading. This proposed rule change is meant to clarify Phlx’s rules by correlating the definition of Exchange-Traded Fund Share in Phlx Rule 1000(b)(42) with the meaning of Exchange-Traded Fund Share in Phlx Rule 1009, Commentary .06. It is not intended to change which securities are deemed appropriate for options trading on Phlx. Phlx Rule 1000(b)(42) was adopted in 2001.5 The current language in Phlx Rule 1009, Commentary .06 was adopted in 2007.6 Phlx should have modified Phlx Rule 1000(b)(42) at that time to correlate it to the meaning of Exchange-Traded Fund Share in Phlx Rule 1009, Commentary .06, but inadvertently did not. Therefore, Phlx proposes to amend Phlx Rule 1000(b)(42) to state that the definition of Exchange-Traded Fund Share shall have the meaning assigned to it in Phlx Rule 1009, Commentary .06. 2. Statutory Basis The Exchange believes that its proposal is consistent with section 6(b) 5 See Securities Exchange Act Release No. 43921 (February 2, 2001), 66 FR 9739 (February 9, 2001). 6 See Securities Exchange Act Release No. 55951 (June 25, 2007), 72 FR 37298 (July 9, 2007). Sfmt 4703 E:\FR\FM\02JNN1.SGM 02JNN1

Agencies

[Federal Register Volume 73, Number 106 (Monday, June 2, 2008)]
[Notices]
[Pages 31528-31529]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E8-12195]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-57872; File No. SR-Phlx-2008-27]


Self-Regulatory Organizations; Philadelphia Stock Exchange, Inc.; 
Order Approving Proposed Rule Change Relating To Access to XLE on 
Phlx's Options Floor

May 27, 2008.
    On April 11, 2008, the Philadelphia Stock Exchange, Inc. (``Phlx'' 
or ``Exchange'') filed with the Securities and Exchange Commission 
(``Commission''), pursuant to Section 19(b)(1) of the Securities 
Exchange Act of 1934 (``Act''),\1\ and Rule 19b-4 thereunder,\2\ a 
proposed rule change to: (1) Delete Phlx Rule 1014(e)(iii), which 
limits the actions of Registered Options Traders (``ROTs'') related to 
trading in Phlx's equity market in certain situations, and (2) add new 
Phlx Rule 175 to prohibit integrated market making by Phlx market 
makers. The proposed rule change was published for comment in the 
Federal Register on April 24, 2008.\3\ The Commission received no 
comments on the proposal. This order approves the proposed rule change.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 57683 (April 18, 
2008), 73 FR 22199.
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    The Exchange proposes to delete Phlx Rule 1014(e)(iii), which 
limits the actions of ROTs related to trading in Phlx's equity market 
in certain situations, in order to permit members and member 
organizations on the Phlx options floor to have connectivity to XLE, 
the Phlx's electronic equity trading system. The Exchange also proposes 
new Phlx Rule 175 to prohibit integrated market making by Phlx market 
makers. Specifically, Phlx Rule 175 prohibits Phlx Market Makers on

[[Page 31529]]

XLE, or any member, limited partner, officer, or associated person 
thereof, from acting as an options Specialist or ROT or functioning in 
any capacity involving market making responsibilities, in any option 
overlying a security in which the Market Maker on XLE is registered as 
such.
    After careful review, the Commission finds that the proposed rule 
change is consistent with the requirements of the Act and the rules and 
regulations thereunder applicable to a national securities exchange.\4\ 
In particular, the Commission finds that the proposed rule change is 
consistent with Section 6(b)(5) of the Act,\5\ which requires, among 
other things, that the rules of a national securities exchange be 
designed to promote just and equitable principles of trade, to remove 
impediments to and perfect the mechanism of a free and open market and 
a national market system, and, in general to protect investors and the 
public interest.
---------------------------------------------------------------------------

    \4\ In approving this rule change, the Commission notes that it 
has considered the proposed rule's impact on efficiency, 
competition, and capital formation. See 15 U.S.C. 78c(f).
    \5\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    The Commission finds that the deletion of Phlx Rule 1014(e)(iii) is 
consistent with the Act. Phlx Rule 1014(e)(iii) was designed to 
mitigate the ``time and place'' advantages available to a ROT with 
access to the Phlx equities trading floor. The Commission notes that 
the Phlx no longer operates a physical equities trading floor. The 
Commission also notes that possession of XLE order entry technology by 
Phlx options floor participants does not offer any special information 
advantage that could be used on the Phlx options floor because access 
to XLE information is made available simultaneously to anyone. 
Likewise, physical presence on the Phlx options floor does not provide 
an advantage in priority for orders entered into XLE from the Phlx 
options floor because XLE executes orders in price-time priority based 
on a pre-set algorithm that may not be altered by the XLE participant 
entering the order and does not take into account the location where an 
order is entered. In addition, the Commission notes that options floor 
participants currently have access to other execution venues and order 
routing mechanisms for the underlying securities.
    The Commission also finds that the prohibition on integrated market 
making is consistent with the Act.
    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\6\ that the proposed rule change (SR-Phlx-2008-27) be, and hereby 
is, approved.
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    \6\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\7\
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    \7\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Acting Secretary.
 [FR Doc. E8-12195 Filed 5-30-08; 8:45 am]
BILLING CODE 8010-01-P
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