[Federal Register: December 31, 2007 (Volume 72, Number 249)]
[Notices]
[Page 74398-74400]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr31de07-109]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-57034; File No. SR-Phlx-2007-91]
Self-Regulatory Organizations; Notice of Filing of Proposed Rule
Change by the Philadelphia Stock Exchange, Inc. To Require a Non-
Streaming Quote Trader Registered Option Traders (``non-SQT ROT'') To
Submit a List of Options for Intended Assignment
December 21, 2007.
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 December 12, 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 by the
Phlx. 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 amend Exchange Rule 1014(b)(ii)(C) to require
Exchange ``non-SQT ROTs'' (as defined below) to submit to the Exchange
a list
[[Page 74399]]
of the options in which such non-SQT ROT intends to be assigned to make
markets.
The text of the proposed rule change is available at the Phlx's
principal office, the Commission's Public Reference Room, and http://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 enable the Exchange
to better track the activities of non-SQT ROTs on the Exchange.
Currently there are a number of categories of Exchange Registered
Options Traders that make markets in various options on the Exchange.
These categories include Exchange Streaming Quote Traders (``SQTs'')
\3\ and Remote Streaming Quote Traders (``RSQTs'') \4\ that submit
continuous electronic option quotations to the Exchange's electronic
trading platform for options, Phlx XL.\5\
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ An SQT is a 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).
\4\ 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 Exchange Rule
1014(b)(ii)(B).
\5\ See Securities Exchange Act Release No. 50100 (July 27,
2004), 69 FR 44612 (August 3, 2004) (SR-Phlx-2003-59).
---------------------------------------------------------------------------
Currently, there are a number of ROTs on the Exchange's options
floor that do not stream electronic quotations into the Phlx XL system,
known as ``non-SQT ROTs.'' Instead, non-SQT ROTs make verbal markets
when called upon to do so, and also have the ability to send limit
orders to the limit order book via electronic interface with Phlx XL.
There are several rules that include certain requirements for non-
SQT ROTs, such as minimum quarterly in-person trading requirements \6\
and the obligation of a non-SQT ROT who transacts more than 20% of his/
her contract volume electronically (i.e., by way of placing limit
orders on the limit order book that are executed electronically and
allocated automatically in accordance with Exchange Rule 1014(g)(vii))
versus in open outcry during any calendar quarter, to submit electronic
quotations in a designated percentage of series in such option during
the following calendar quarter, depending on the Exchange's total
contract volume traded electronically during the affected calendar
quarter.\7\
---------------------------------------------------------------------------
\6\ See Exchange Rule 1014, Commentary .01.
\7\ See Exchange Rule 1014(b)(ii)(E)(2).
---------------------------------------------------------------------------
In order to enable the Exchange to better track the above-mentioned
non-SQT ROT activity, non-SQT ROTs would be required to notify the
Exchange of each option, on an issue-by-issue basis, in which such non-
SQT ROT intends to be assigned to make markets. Such notification would
be in writing on a form prescribed by the Exchange (an ``ROT Assignment
Form''). Any change to such ROT Assignment Form must be made in writing
by such non-SQT ROT prior to the end of the trading session in which
such change is to take place. The purpose of the ``end of the trading
session'' requirement is to permit non-SQT ROTs to provide additional
liquidity to issues not listed on the ROT Assignment Form (especially
during periods of peak market activity) without the burden and delay of
seeking out a new ROT Assignment Form and appropriate Exchange staff,
which could cause the non-SQT ROT to miss out on a trading opportunity.
Receipt of the properly completed ROT Assignment Form from a duly
qualified non-SQT ROT applicant would constitute acceptance by the
Exchange of such non-SQT ROT's assignment in, or termination of
assignment in (as indicated on the ROT Assignment Form), the options
listed on such ROT Assignment Form. All such assignments would not be
effective, and would be terminated, in the event that such non-SQT ROT
applicant fails to qualify as an ROT on the Exchange.
2. Statutory Basis
The Exchange believes that its proposal is consistent with section
6(b) of the Act \8\ in general, and furthers the objectives of section
6(b)(5) of the Act \9\ 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.
The Exchange believes that the foregoing proposal should enable it to
better monitor the activities of non-SQT ROTs, which should enhance the
fair and orderly market of the Exchange, which would benefit investors
in general.
---------------------------------------------------------------------------
\8\ 15 U.S.C. 78f(b).
\9\ 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. 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 Phlx consents, the Commission shall: (a) By order approve such
proposed rule change, or (b) institute proceedings to determine whether
the proposed rule change should be disapproved.
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 No. SR-Phlx-2007-91 on the subject line.
[[Page 74400]]
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 No. SR-Phlx-2007-91. 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 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 No. SR-Phlx-2007-91 and should be
submitted on or before January 22, 2008.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\10\
---------------------------------------------------------------------------
\10\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Nancy M. Morris,
Secretary.
[FR Doc. E7-25375 Filed 12-28-07; 8:45 am]
BILLING CODE 8011-01-P