[Federal Register: July 25, 2007 (Volume 72, Number 142)]
[Notices]
[Page 40920-40921]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr25jy07-109]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-56101; File No. SR-Phlx-2007-50]
Self-Regulatory Organizations; Philadelphia Stock Exchange, Inc.;
Notice of Filing and Immediate Effectiveness of a Proposed Rule Change
Relating To Extending the Specialist Option Transaction Charge Credit
Pilot Program
July 19, 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 June 22, 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 substantially prepared by the
Exchange. Phlx has designated this proposal as one establishing or
changing a due, fee, or other charge imposed by the Exchange under
Section 19(b)(3)(A)(ii) of the Act \3\ and Rule 19b-4(f)(2)
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.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ 15 U.S.C. 78s(b)(3)(A)(ii).
\4\ 17 CFR 240.19b-4(f)(2).
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
Phlx proposes to extend for a one-year period, until July 31, 2008,
its current pilot program that provides for an option transaction
charge credit of $0.21 per contract for Exchange options specialist
units \5\ that incur Phlx option transaction charges when a customer
order is delivered to the limit order book via the Exchange's Options
Floor Broker Management System (``FBMS'') \6\ and is then sent to an
away market and executed via the Intermarket Option Linkage
(``Linkage'') under the Plan for the Purpose of Creating and Operating
an Intermarket Option Linkage (``Plan'') \7\ as a Principal Acting as
Agent Order (``P/A Order'').\8\ The pilot program in effect is
currently scheduled to expire on July 31, 2007.\9\ The text of the
proposed rule change is available at the Exchange, the Commission's
Public Reference Room, and http://www.phlx.com.
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\5\ The terms ``specialist'' and ``specialist unit'' are used
interchangeably herein.
\6\ The FBMS is designed to enable Floor Brokers and/or their
employeesto enter, route and report transactions stemming from
options orders received on the Exchange. The FBMS also is designed
to establish an electronic audit trail for options orders
represented and executed by Floor Brokers on the Exchange, such that
the audit trail provides an accurate, time-sequenced record of
electronic and other orders, quotations and transactions on the
Exchange, beginning with the receipt of an order by the Exchange,
and further documenting the life of the order through the process of
execution, partial execution, or cancellation of that order. See
Phlx Rule 1080, Commentary .06.
\7\ See Securities Exchange Act Release Nos. 43086 (July 28,
2000), 65 FR 48023 (August 4, 2000) and 43573 (November 16, 2000),
65 FR 70851 (November 28, 2000) (order approving Phlx as a
participant in the Plan).
\8\ A P/A order is an order for the principal account of a
specialist (orequivalent entity on another participant exchange that
is authorized to represent public customer orders), reflecting the
terms of a related unexecuted public customer order for which the
specialist is acting as agent. See Phlx Rule 1083(k)(i).
\9\ See Securities Exchange Act Release No. 54257 (August 1,
2006), 71 FR 45089 (August 8, 2006) (SR-Phlx-2006-46). This proposal
is scheduled to be in effect for the same time period as fees for
Linkage Principal Orders (``P Orders'') and P/A Orders. See
Securities Exchange Act Release No. 54233 (July 27, 2006), 71 FR
44070 (August 3, 2006) (SR-Phlx-2006-44). The Exchange intends to
file a separate proposed rule change to extend, for a one-year
period through July 31, 2008, the pilot relating to transaction fees
applicable to the execution of P/A Orders and P Orders sent to the
Exchange via Linkage under the Plan.
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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 IV below. The Exchange has substantially 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
Currently, the Exchange provides an option transaction charge
credit of $0.21 per contract for Exchange options specialist units that
incur Phlx option transaction charges when a customer order is
delivered to the limit order book via FBMS and is then sent to an away
market and executed via Linkage under the Plan as a P/A Order.
The purpose of this proposal is to continue to alleviate the
potential economic burden of multiple transaction charges imposed on
Exchange specialist units by establishing a credit for Exchange option
transaction charges incurred by an Exchange specialist unit when a
customer limit order placed on the limit order book by a Floor Broker
\10\ results in an execution of a P/A Order that is sent to another
exchange via Linkage. The Exchange believes that continuing to give an
options transaction charge credit of $0.21 per contract should
encourage the use of Linkage and should allow the Exchange to remain
competitive with other exchanges with respect to the assessment of
Linkage-related fees.\11\
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\10\ A Floor Broker who wishes to place a limit order on the
limit orderbook must submit such a limit order electronically
through the FBMS. See Exchange Rule 1063, Commentary .01. See also
Phlx Rule 1080, Commentary .02(b).
\11\ See Securities Exchange Act Release No. 53866 (May 25,
2006), 71 FR 31237 (June 1, 2006) (SR-CBOE-2006-44) (rebate of
certain transaction fees to Designated Primary Market Makers related
to the execution of outbound P Orders and P/A Orders). See also
Footnote 8 and Section 21 of the CBOE Fees Schedule.
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This proposal is to remain in effect as a pilot program until July
31, 2008.\12\
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\12\ This proposal is in connection with an existing pilot
program forLinkage P and P/A Orders and is scheduled to be in effect
for the same time period as the pilot program for Linkage P and P/A
Orders. See supra at note 9.
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2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with Section 6(b) of the Act \13\ in general, and Section 6(b)(4) of
the Act \14\ in
[[Page 40921]]
particular, in that it is an equitable allocation of reasonable dues,
fees, and other charges among Exchange members.
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\13\ 15 U.S.C. 78f(b).
\14\ 15 U.S.C. 78f(b)(4).
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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.
III. Date of Effectiveness of the Proposed Rule Change and Timing For
Commission Action
The foregoing proposed rule change has been designated as a fee
change pursuant to Section 19(b)(3)(A)(ii) of the Act \15\ and Rule
19b-4(f)(2) \16\ thereunder, because it establishes or changes a due,
fee, or other charge applicable only to a member. Accordingly, the
proposal became effective upon filing with the Commission. 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.
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\15\ 15 U.S.C. 78s(b)(3)(A)(ii).
\16\ 17 CFR 240.19b-4(f)(2).
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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 (http://www.sec.gov/rules/sro.shtml.
); or Send an e-mail to rule-comments@sec.gov. Please include
File Number SR-Phlx-2007-50 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-2007-50. 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, 100 F Street, NE.,
Washington, DC 20549, on official business days between the hours of 10
a.m. and 3 p.m. 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-2007-50 and should be
submitted on or before August 15, 2007.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\17\
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\17\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7-14357 Filed 7-24-07; 8:45 am]
BILLING CODE 8010-01-P