Federal Register / Vol. 69, No. 245 / Wednesday, December 22, 2004 / Notices 76817

9 15 U.S.C. 78s(b)(2).

10 17 CFR 200.30–3(a)(12).

1 15 U.S.C. 78s(b)(1).

2 17 CFR 240.19b–4.

3AUTOM 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 March. 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. See

Phlx Rule 1080.

4An 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).

5An 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.

6See Securities Exchange Act Release No. 50100 

(July 27, 2004), 69 FR 46612 (August 3, 2004) (SR–

Phlx–2003–59).

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 will: 

A. By order approve such proposed 

rule change, or 

B. Institute proceedings to determine 

whether the proposed rule change 

should be disapproved.9

IV. Solicitation of Comments 

Interested persons are invited to 

submit written data, views, and 

arguments concerning the foregoing, 

including whether the proposed rule 

change, as amended, 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–2004–51 on the 

subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Jonathan G. Katz, Secretary, 

Securities and Exchange Commission, 

450 Fifth Street, NW., Washington, DC 

20549–0609. 

All submissions should refer to File 

Number SR–Phlx–2004–51. 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 

Section, 450 Fifth Street, NW., 

Washington, DC 20549. Copies of this 

filing also will be available for 

inspection and copying at the principal 

office of the Phlx. All comments 

received will be posed 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–

2004–51 and should be submitted on or 

before January 17, 2005.

For the Commission, by the Division of 

Market Regulation, pursuant to delegated 

authority.10

J. Lynn Taylor, 

Assistant Secretary.

[FR Doc. 04–27938 Filed 12–21–04; 8:45 am] 

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–50856; File No. SR–Phlx–

2004–91] 

Self-Regulatory Organizations; 

Philadelphia Stock Exchange, Inc.; 

Notice of Filing of Proposed Rule 

Change To Establish a Directed Order 

Process for Orders Delivered to the 

Exchange Via AUTOM 

December 14, 2004. 

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 December 

9, 2004, 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 Phlx 

Rule 1080, Philadelphia Stock Exchange 

Automated Options Market (AUTOM) 3

and Automatic Execution System 

(AUTO–X), and Phlx Rule 1014, 

Obligations And Restrictions Applicable 

to Specialists And Registered Options 

Traders, by adopting: (1) New Phlx Rule 

1080(l), Directed Orders, under which 

Exchange specialists, Streaming Quote 

Traders (‘‘SQTs’’) 4 and Remove 

Streaming Quote Traders (‘‘RSQTs’’) 5

trading on the Exchange’s electronic 

options trading platform, Phlx XL,6

would receive Directed Orders (as 

defined below); and (2) Phlx Rule 

1014(g)(viii), which would set forth the 

trade allocation algorithm for 

electronically executed and allocated 

trades involving Directed Orders. Below 

is the text of the proposed rule change. 

Proposed new language is in italics.

Philadephia Stock Exchange 

Automated Options Market (AUTOM) 

and Automatic Execution System 

(AUTO–X) 

Rule 1080. (a)–(k) No change. 

(l) Directed Orders. For a one-year 

pilot period, beginning on the date of 

approval of this Rule by the Securities 

and Exchange Commission, respecting 

Streaming Quote Options traded on 

Phlx XL, specialists, RSQTs and SQTs 

may receive Directed orders (as defined 

in this Rule) in accordance with the 

provisions of this Rule 1080(l).

(i)(A) The term ‘‘Directed Order’’

means any customer order to buy or sell 

which has been directed to a particular 

specialist, RSQT, or SQT by an Order 

Flow Provider, as defined below. To 

quality as a Directed Order, an order 

must be delivered to the Exchange via 

AUTOM.

76818 Federal Register / Vol. 69, No. 245 / Wednesday, December 22, 2004 / Notices 

(B) The term ‘‘Order Flow Provider’’

(‘‘OFP’’) means any member or member 

organization that submits, as agent, 

customer orders to the Exchange.

(C) The term ‘‘Directed Specialist, 

RSQT, or SQT’’ means a specialist, 

RSQT, or SQT that receives a Directed 

Order.

(ii) When the Exchange’s 

disseminated price is the NBBO at the 

time of receipt of the Directed Order, 

and the Directed Specialist, SQT or 

RSQT is quoting at the Exchange’s 

disseminated price, the Directed Order 

shall be automatically executed and 

allocated in accordance with Rule 

1014(g)(viii).

(iii) When the Exchange’s 

disseminated price is the NBBO, and the 

quotation disseminated by the Directed 

Specialist, RSQT, or SQT on the 

opposite side of the market from the 

Directed Order is inferior to the NBBO 

at the time of receipt of the Directed 

Order, the Directed Order shall be 

automatically executed and allocated to 

those quotations and orders at the 

NBBO in accordance with Exchange 

Rule 1014(g)(vii).

(iv) If the Exchange’s disseminated 

price is not the NBBO at the time of 

receipt of the Directed Order, the 

Directed Order shall be handled by the 

specialist in accordance with Exchange 

rules.

Commentary: No change. 

Obligations and Restrictions Applicable 

to Specialists and Registered Options 

Traders 

Rule 1014.(a)–(f) No change. 

(g)(i)–(vii) No change. 

(viii) For a one year pilot period, 

beginning on the date of approval of this 

Rule by the Securities and Exchange 

Commission, Directed Orders (as 

defined in Rule 1080(l)(i)(A)) that are 

executed electronically shall be 

automatically allocated as follows:

(A) First, to customer limit orders 

resting on the limit order book at the 

execution price.

(B) Thereafter, contracts remaining in 

the Directed Order, if any, shall be 

allocated automatically as follows:

(1) The Directed Specialist (where 

applicable), shall be allocated a number 

of contracts that is the greater of:

(a) The proportion of the aggregate 

size at the NBBO associated with such 

Directed Specialist’s quote, SQT and 

RSQT quotes, and non-SQT ROT limit 

orders entered on the book via 

electronic interface at the disseminated 

price represented by the size of the 

Directed Specialist’s quote;

(b) The Enhanced Specialist 

Participation as described in Rules 

1014(g)(ii)–(iv); or

(c) 40% of the remaining contracts.

(d) Thereafter, SQTs and RSQTs 

quoting at the disseminated price, and 

non-SQT ROTs that have placed limit 

orders on the limit order book via 

electronic interface at the Exchange’s 

disseminated price shall be allocated 

contracts according to the following 

formula;

Equal percentage based on 

the Number of SQTs, 

RSQTs and Non-SQT 

ROTs quoting or with 

limit orders at BBO 

(Component A) 

+ Pro rata percentage based on size of SQT, 

RSQT and non-SQT quotes and limit orders 

(Component B) 

× Remaining Order Size 

Where:

Component A: The percentage to be 

used for Component A shall be an equal 

percentage, derived by dividing 100 by 

the number of SQTs, RSQTs and nonSQTs quoting or with limit orders at the 

BBO.

Component B: Size Pro Rata 

Allocation. The percentage to be used 

for Component B of the allocation 

algorithm formula is that percentage 

that the size of each SQT, RSQT or nonSQT ROT’s quote or limit order at the 

best price represents relative to the total 

number of contracts in the disseminated 

quote.

Final Weighting: The final weighting 

formula shall be determined by a threemember special committee of the Board 

of Governors, chaired by the Chairman 

of the Board, and including the 

Chairman of the Options Committee 

and one on-floor Governor (the ‘‘Special 

Committee’’), and shall be a weighted 

average of the percentages derived for 

Components A and B multiplied by the 

size of the incoming order.

(2)(a) A Directed RSQRT or SQT 

(where applicable) shall be allocated a 

number of contracts that is the greater 

of the proportion of the aggregate size at 

the NBBO associated with such Directed 

SQT or RSQT’s quote, the specialist’s 

quote, other SQT and RSQT quotes, and 

non-SQT ROT limit orders entered on 

the book via electronic interface at the 

disseminated price represented by the 

size of the Directed RSQT or SQT’s 

quote at the NBBO, or

(b) 40% of the remaining contracts.

(c) Thereafter, the specialist, SQTs 

and RSQTs (excluding the Directed SQT 

or RSQT) quoting at the disseminated 

price, and non-SQT ROTs that have 

placed limit orders on the limit order 

book via electronic interface at the 

Exchange’s disseminated price, shall be 

allocated a number of contracts 

according to the following formula:

Equal percentage based on 

the number of SQTs, 

RSQTs, specialist and 

Non-SQT ROTs quoting 

or with limit orders at 

BBO (Component A) 

+ Pro rata percentage based on size of SQT, 

RSQT, specialist and non-SQT quotes and 

limit orders (Component B) 

× Remaining Order Size 

Where:

Component A: The percentage to be 

used for Component A shall be an equal 

percentage, derived by dividing 100 by 

the number of SQTs, RSQTs (other than 

the Directed SQT or RSQT) specialist 

and non-SQTs quoting or with limit 

orders at the BBO.

Component B: Size Pro Rata 

Allocation. The percentage to be used 

for Component B of the allocation 

algorithm formula is that percentage 

that the size of each SQT, RSQT RSQTs 

(other than the Directed SQT or RSQT), 

specialist or non-SQT ROT’s quote or 

limit order at the best price represents 

relative to the total number of contracts 

in the disseminated quote.

Final Weighting: The final weighting 

formula shall be determined by a threemember special committee of the Board 

of Governors, chaired by the Chairman 

of the Board, and including the 

Chairman of the Options Committee 

Federal Register / Vol. 69, No. 245 / Wednesday, December 22, 2004 / Notices 76819

7See id.

8See SR–Phlx–2004–90.

9The word ‘‘Directed’’ modifies all three; that is, 

it is referring to a Directed Specialist, Directed SQT 

and Directed RSQT.

10The Exchange’s automatic execution features 

under Phlx XL, Book Sweep and Book Match, 

respectively, are designed to execute trades 

automatically only when the Exchange’s 

disseminated bid or offer is at or equal to the NBBO. 

See Phlx Rules 1080(c)(iii) and 1080(g)(ii).

11Phlx Rule 1014(g)(vii) sets forth the allocation 

algorithm applicable to orders that are 

automatically executed on Phlx XL. Phlx Rule 

1014(g)(vii) would continue to apply to orders other 

than Directed orders that are automatically 

executed on Phlx XL. Proposed Phlx Rule 

1014(g)(viii) would apply to Directed Orders that 

are executed automatically of Phlx XL.

and one on-floor Governor (the ‘‘Special 

Committee’’), and shall be a weighted 

average of the percentages derived for 

Components A and B multiplied by the 

size of the incoming order.

(3) If any contracts remain to be 

allocated after the specialist, SQTs, 

RSQTs and non-SQT ROTs with limit 

orders on the limit order book have 

received their respective allocations, offfloor broker-dealers (as defined in Rule 

1080(b)(i)(C)) that have placed limit 

orders on the limit order book which 

represent the Exchange’s disseminated 

price shall be entitled to receive a 

number of contracts that is the 

proportion of the aggregate size 

associated with off-floor broker-dealer 

limit orders on the limit order book at 

the disseminated price represented by 

the size of the limit order they have 

placed on the limit order book.

(C) If the Directed Order is for a size 

that is greater than the Exchange’s 

disseminated size, remaining contracts 

shall be allocated manually accordance 

with Exchange Rule 1014(g)(v).

(D) A Directed Specialist, RSQT, or 

SQT shall not be entitled to receive a 

number of contracts that is greater than 

the size associated with their quotation. 

Non-SQT ROTs and off-floor brokerdealers shall not be entitled to receive 

a number of contracts that is greater 

than the size associated with their limit 

order.

(h) No change. 

Commentary: No change.

* * * * *

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 had 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 

I. Purpose 

The purpose of the proposed rule 

change is to expand the appeal of Phlx 

XL by establishing rules that permit 

specialists, SQTs and RSQTs assigned 

in options trading on the Phlx XL 

system (‘‘Streaming Quote Options’’) to 

receive Directed Orders, and to establish 

a trade allocation algorithm for 

electronically executed and allocated 

trades involving Directed Orders that 

rewards Directed Specialists, SQTs and 

RSQTs for attracting such order flow to 

the Exchange. 

On July 27, 2004, the Commission 

approved the Exchange’s proposed rule 

relating to Phlx Xl, and electronic 

options trading platform in which a new 

category of Exchange ROT, known as an 

SQT, is permitted to stream proprietary 

electronic options quotations into the 

AUTOM System in options designated 

as ‘‘Streaming Quote Options’’ (i.e.,

traded on Phlx XL).7 Recently, the 

Exchange filed a proposed rule change 

to expand the scope of Phlx XL by 

creating a new category of Phlx XL 

market making participant, known as an 

RSQT, who would be permitted to 

stream quotations in Streaming Quote 

Options from off the floor of the 

Exchange.8 Together with that proposed 

rule change, the Exchange herein 

proposes to provide a participation 

guarantee to a Phlx XL participant (i.e.,

a specialist, SQT or RSQT) that receives 

a Directed Order from an Order Flow 

Provider.

Definitions. Proposed Phlx Rule 

1080(1)(A) would define the term 

‘‘Directed Order’’ to mean any customer 

order to buy or sell which has been 

directed to a particular specialist, RSQT, 

or SQT by an Order Flow Providers, as 

defined below. To qualify as a Directed 

Order, an order must be delivered to the 

Exchange via AUTOM. The term ‘‘Order 

Flow Provider’’ (‘‘OFP‘) under proposed 

Phlx Rule 1080(1)(i)(B) would mean any 

member or member organization that 

submits, as agent, customer orders to the 

Exchange. Proposed Phlx Rule 

1080(1)(i)(C) defines the term ‘‘Directed 

Specialist, RSQT, or SQT’’ as a 

specialist, RSQT, or SQT that receives a 

Directed Order.9

NBBO Requirement. The Exchange’s 

AUTOM System currently functions to 

provide automatic executions in 

Streaming Quote Options only when the 

Exchange’s disseminated bid or offer is 

the National Best Bid or Offer 

(‘‘NBBO’’).10 Therefore, in order to 

participate in automatic executions of 

Directed Orders, a Directed Specialist, 

SQT or RSQT would be required to be 

quoting the NBBO at the time the 

Directed Order is received. The 

proposed rule change addresses various 

situations where, at the time of receipt 

of the Directed Order, the Exchange’s 

disseminated price is at the NBBO, is 

not the NBBO, and where the 

Exchange’s disseminated price is the 

NBBO but the Directed Specialist, SQT 

or RSQT is not quoting at the 

Exchange’s disseminated price.

First, proposed Phlx Rule 1080(l)(ii) 

would provide that, when the 

Exchange’s disseminated price is the 

NBBO at the time of receipt of the 

Directed Order, and the Directed 

Specialist, SQT or RSQT is quoting at 

the Exchange’s disseminated price, the 

Directed Order would be automatically 

executed and allocated in accordance 

with Phlx Rule 1014(g)(viii), which 

contains the allocation algorithm for 

Directed Orders described more fully 

below. 

Second, proposed Phlx Rule 

1080(l)(iii) would provide that, when 

the Exchange’s disseminated price is the 

NBBO, and the quotation disseminated 

by the Directed Specialist, RSQT, or 

SQT on the opposite side of the market 

from the Directed Order is inferior to the 

NBBO at the time of receipt of the 

Directed Order, the Directed Order 

would be automatically executed and 

allocated in those quotations and orders 

at the NBBO in accordance with Phlx 

Rule 1014(g)(vii), which is the trade 

allocation rule applicable to contracts 

executed on Phlx XL that are not 

Directed Orders.11

Finally, proposed Phlx Rule 1080 

(l)(iv) would provide that, when the 

Exchange’s disseminated price is not the 

NBBO at the time of receipt of the 

Directed Order, the Directed Order 

would be handled manually by the 

specialist in accordance with Exchange 

rules. In this situation, the Directed 

Specialist, SQT or RSQT would not be 

entitled to receive the participation 

guarantee contemplated in proposed 

Phlx Rule 1014(g)(viii), discussed more 

fully below, because that allocation 

algorithm applies only to Directed 

Orders that are executed electronically. 

As stated above, one primary purpose 

of the proposal is to reward Directed 

Specialists, SQTs and RSQTs for 

establishing relationships with OFPs 

76820 Federal Register / Vol. 69, No. 245 / Wednesday, December 22, 2004 / Notices 

12See Phlx Rule 1014(b)(ii)(B). 13Phlx Rules 1014(g)(ii)–(iv) govern the 

Enhanced Specialist Participation, under which the 

specialist is entitled to receive a guaranteed number 

of contracts in situations where the specialist is on 

parity (i.e., simultaneously bidding or offering at the 

same price) with one or more ‘‘controlled 

accounts,’’ defined in Phlx Rule 1014(g)(i)(A) to 

include any account controlled by or under 

common control with a broker-dealer. If three or 

more controlled accounts are on parity with the 

specialist, the specialist is entitled to receive 30% 

of the contracts to be allocated. If two controlled 

accounts are on parity with the specialist, the 

specialist is entitled to receive 40%, and if only one 

controlled account is on parity with the specialist, 

the specialist is entitled to receive 60%. 

Another Enhanced Specialist Participation 

program on the Phlx, originally adopted in May 

1994 and embodied in current Phlx Rule 

1014(g)(iii), is designed to encourage the 

establishment of new specialist units to trade 

options classes that have never been listed on the 

Exchange. See Securities Exchange Act Release No. 

34109 (May 25, 1994), 59 FR 28570 (June 2, 1994) 

(SR–PHLX–93–29). For a period of six months 

following the commencement of trading in such a 

new options class, the new specialist unit is 

entitled to 50% of an order when one controlled 

account is on parity with the specialist, and 40% 

when two or more controlled accounts are on parity 

with the specialist. 

Under Phlx Rule 1014(g)(iv), a specialist who 

develops and trades a new product is entitled to 

receive an enhanced Special Participation of 40% 

when three or more controlled accounts are on 

parity , and 60% if fewer than three controlled 

accounts are on parity. Currently, in either of these 

situations, if a customer is on parity, the customer 

may not receive a smaller participation than any 

other crowd participant, including the specialist.

14See Securities Exchange Act Release No. 50788 

(December 3, 2004), 69 FR 71860 (December 10, 

2004) (SR–Phlx–2004–57).

that result in a greater number of orders 

sent to, and executed on, the Exchange. 

The Exchange believes that the 

requirement that a Directed Order be 

executed automatically at the NBBO, 

and that the Directed Specialist, SQT or 

RSQT must be quoting the NBBO at the 

time of receipt of the Directed Order, 

ensures that the customer order sent by 

the OFP will receive the best price 

available. 

Trade Allocation. Because one of the 

main purposes of the proposed rule 

change is to provide incentives and 

rewards for specialists, SQTs and 

RSQTs who enter into relationships 

with OFPs that result in the delivery of 

Directed Orders to the Exchange, 

proposed Phlx Rule 1080(g)(viii) would 

provide a participation guarantee to 

Directed Specialists, SQTs and RSQTs 

who establish such relationships and 

receive Directed Orders in options in 

which they are assigned. 

Quoting Requirement. In order to be 

entitled to receive the participation 

guarantee, Directed Specialists, SQTs 

and RSQTs would have to fulfill the 

quoting requirements contained in Phlx 

Rule 1014(b)(ii)(B). Currently, SQTs and 

RSQTs (as proposed) are responsible to 

quote continuous, two-sided markets in 

not less than 60% of the series in each 

Streaming quote Option traded on Phlx 

XL in which such SQT is assigned, 

while the specialists is required to quote 

continuous, two-sided markets in not 

less than 100% of the series in each 

Streaming Quote Option in which such 

specialist is assigned.12 Like the 

specialist, however, a directed SQT or 

RSQT would be responsible to quote 

continuous, two-sided markets in not 

less than 100% of the series in each 

Streaming quote Option in which they 

receive Directed Orders.

Directed Specialist. Under the 

proposal, a directed Specialist, where 

applicable, would be allocated a number 

of contracts that is the greater of: (1) The 

proportion of the aggregate size at the 

NBBO associated with such Directed 

Specialist’s quote, SQT and RSQT 

quotes, and non-SQT ROT limit orders 

entered on the book via electronic 

interface at the disseminated price 

represented by the size of the directed 

Specialist’s quote (i.e., their size pro rata 

share); (2) the Enhanced Specialist 

Participation as described in Phlx Rules 

1014(g)(ii)–(iv); 13 or (3) 40% of the 

contracts to be allocated.

Directed SQT or RSQT. A Directed 

RSQT or SQT, where applicable, would 

be allocated a number of contracts that 

is the greater of: (1) Their size pro rata 

share; or (2) 40% of the contracts to be 

allocated. 

Allocation of Remaining Contracts.

Remaining contracts (after the Directed 

Specialist, SQT or RSQT has received 

their respective allocation) would be 

allocated in accordance with a formula 

contained in the rule that substantially 

tracks the trade allocation formula for 

contracts executed and allocated 

automatically in Streaming Quote 

Options that do not involve Directed 

Orders. Specifically, part of the 

contracts remaining after customer 

orders are filled and after the Directed 

Specialist, SQT or RSQT has received 

their guaranteed participation would be 

allocated on an equal basis among 

remaining participants on parity, and 

part of the contracts allocated on a size 

pro rata basis, and on a weighted basis 

to be determined by the special ad hoc 

subcommittee appointed by the Board.14

In the case of a trade allocation 

involving a Directed Specialist, 

contracts remaining after customer 

orders at the execution price are 

executed, and after the Directed 

Specialist is allocated their guaranteed 

number of contracts (the ‘‘Remaining 

Order Size’’) would be allocated 

according to the following formula:

Equal percentage based on 

the Number of SQTs, 

RSQTs and Non-SQT 

ROTs quoting or with 

limit orders at BBO 

(Component A) 

+ Pro rata percentage based on size of SQT, 

RSQT and non-SQT quotes and limit orders 

(Component B) 

× Remaining Order Size 

The percentage to be used for 

Component A would be an equal 

percentage, derived by dividing 100 by 

the number of SQTs, RSQTs or nonSQTs quoting or with limit orders at the 

BBO. The percentage to be used for 

Component B of the allocation 

algorithm formula is the percentage that 

the size of each SQT, RSQT or non-SQT 

ROT’s quote or limit order at the best 

price represents relative to the total 

number of contracts in the disseminated 

quote. 

In the case of a trade allocation 

involving a Directed SQT or RSQT, 

contracts remaining after customer 

orders at the execution price are 

executed, and after the Directed SQT or 

RSQT is allocated their guaranteed 

number of contracts (the Remaining 

Order Size), would be allocated among 

the specialist, SQTs or RSQTs 

(excluding the Directed SQT or RSQT) 

quoting at the disseminated price, and 

non-SQT ROTs that have placed limit 

orders on the limit order book via 

electronic interface at the Exchange’s 

disseminated price according to the 

following formula:

Federal Register / Vol. 69, No. 245 / Wednesday, December 22, 2004 / Notices 76821

15Phlx Rule 1014(g)(v) sets forth the rules and 

contract allocation algorithm for trades that are 

executed in the trading crowd.

16The Exchange notes that another options 

exchange has filed a proposed rule change to 

establish a ‘‘preferred’’ market maker order type, 

which would afford participation grantees to such 

‘‘preferred’’ market maker, on a one-year pilot basis. 

See Securities Exchange Act Release No. 50732 

(November 23, 2004), 69 FR 69967 (December 1, 

2004) (SR–CBOE–2004–71).

17 15 U.S.C. 78f(b).

18 15 U.S.C. 78f(b)(5).

Equal percentage based on 

the number of SQTs, 

RSQTs, specialist and 

Non-SQT ROTs quoting 

or with limit orders at 

BBO (Component A) 

+ Pro rata percentage based on size of SQT, 

RSQT, specialist and non-SQT quotes and 

limit orders (Component B) 

× Remaining Order Size 

The percentage to be used for 

Component A would be an equal 

percentage, derived by dividing 100 by 

the number of SQTs, RSQTs (other than 

the Directed SQT or RSQT), specialist 

and non-SQTs quoting or with limit 

orders at the BBO. The percentage to be 

used for Component B of the allocation 

algorithm formula is the percentage that 

the size of each SQT, RSQT (other than 

the Directed SQT or RSQT), specialist or 

non-SQT ROT’s quote or limit order at 

the best price represents relative to the 

total number of contracts in the 

disseminated quote. 

In each situation, the final weighting 

formula as among Component A and 

Component B would be determined by 

a three-member special committee of the 

Board of Governors, chaired by the 

Chairman of the Board, and including 

the Chairman of the Options Committee 

and one on-floor Governor, and shall be 

a weighted average of the percentages 

derived for Components A and B 

multiplied by the size of the incoming 

order. 

Off-Floor Broker-Dealers. If any 

contracts remain to be allocated after the 

specialist, SQTs, RSQTs or non-SQT 

ROTs with limit orders on the limit 

order book have received their 

respective allocations, off-floor brokerdealer (as defined in Phlx Rule 

1080(b)(i)(C)) that have placed limit 

orders on the limit order book at the 

disseminated price would be allocated 

contracts on a size pro rata basis. 

Orders for a size greater than the 

Exchange’s disseminated size. Proposed 

Phlx Rule 1014(g)(viii)(C) would 

establish that, if the Directed Order is 

for a size that is greater than the 

Exchange’s disseminated size, 

remaining contracts would be allocated 

in accordance with Phlx Rule 

1014(g)(v).15

Quotation and limit order size.

Proposed Phlx Rule 1014(g)(viii)(D) 

would provide that a Directed 

Specialist, RSQT, or SQT would not be 

entitled to receive a number of contracts 

that is greater than the size associated 

with their quotation. Non-SQT ROTs 

and off-floor broker-dealers shall not be 

entitled to receive a number of contracts 

that is greater than the size associated 

with their limit order. 

One-Year Pilot Basis. The proposal 

would be effective on a one-year pilot 

basis, beginning on the date of 

Commission approval of proposed Phlx 

Rules 1080(1) and 1014(g)(viii).16

The Exchange believes that the 

participation guarantees included in 

proposed Phlx Rule 1014(g)(viii) should 

reward specialist, SQTs and RSQTs that 

actively engage in marketing activities 

and establish relationships with OFPs 

that generate Directed Orders sent to the 

Exchange by such OFPs. The Exchange 

expects such marketing activities and 

relationships would 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 17 in general, and furthers the 

objectives of Section 6(b)(5) of the Act18

in particular, in that it is designed to 

perfect the mechanism of a free and 

open market and the national market 

system, protect investors and the public 

interest and promote just and equitable 

principles of trade, by permitting 

specialists, SQTs and RSQTs trading 

options on Phlx Xl participants 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.

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The Exchange does not believe that 

the proposed rule change will impose 

any inappropriate burden on 

competition. 

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 

Within 35 days of the date of 

publication of this notice in the Federal 

Register or with 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 it reasons for so finding, or (ii) 

as to which the Phlx 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. 

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 rulecomment@sec.gov. Please include File 

Number SR–Phlx–2004–91 on the 

subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Jonathan G. Katz, Secretary, 

Securities and Exchange Commission, 

450 Fifth Street, NW., Washington, DC 

20549–0609. 

All submissions should rever to File 

Number SR–Phlx–2004–91. 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 

76822 Federal Register / Vol. 69, No. 245 / Wednesday, December 22, 2004 / Notices 

19 17 CFR 200.30–3(a)(12).

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 Reverence 

Section, 450 Fifth Street, NW., 

Washington, DC 20549. Copies of such 

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 

publicly available. All submissions 

should refer to File Number SR–Phlx–

2004–91 and should be submitted on or 

before January 12, 2005.

For the Commission, by the Division of 

Market Regulation, pursuant to delegated 

authority.19

J. Lynn Taylor, 

Assistant Secretary.

[FR Doc. 04–27939 Filed 12–21–04; 8:45 am] 

BILLING CODE 8010–01–M

DEPARTMENT OF STATE

[Public Notice 4939] 

HR/REE—Office of Recruitment, 

Examination, and Employment; 60-Day 

Notice of Proposed Information 

Collection: DS–3091, Thomas R. 

Pickering Foreign Affairs Fellowship 

Program, OMB # 1405–0143

ACTION: Notice of request for public 

comments. 

SUMMARY: The Department of State is 

seeking Office of Management and 

Budget (OMB) approval for the 

information collection described below. 

The purpose of this notice is to allow 60 

days for public comment in the Federal 

Register preceding submission to OMB. 

This process is conducted in accordance 

with the Paperwork Reduction Act of 

1995. 

• Title of Information Collection:

Thomas R. Pickering Foreign Affairs 

Fellowship Program. 

• OMB Control Number: 1405–0143. 

• Type of Request: Extension of a 

Currently Approved Collection. 

• Originating Office: HR/REE. 

• Form Number: DS–3091. 

• Respondents: University Graduate 

and Undergraduate Students. 

• Estimated Number of Respondents:

500. 

• Estimated Number of Responses:

500. 

• Average Hours Per Response: 3. 

• Total Estimated Burden: 1,500. 

• Frequency: Annual. 

• Obligation to Respond: Required to 

Obtain a Benefit.

DATES: The Department will accept 

comments from the public up to sixty 

days from December 2, 2004.

ADDRESSES: You may submit comments 

by the following methods: 

• Email: BetheaND@state.gov.

• Mail: Department of State, 2401 E 

Street NW., SA–1 RmH518, Washington, 

DC 20522. 

• Fax: 202–261–8841 Attn: Pickering 

Program.

FOR FURTHER INFORMATION CONTACT:

Direct requests for additional 

information regarding the collection 

listed in this notice, including requests 

of the proposed information collection 

and supporting documents, to Norris 

Bethea, Department of State, 2401 E 

Street, NW, 5H, Washington, DC 20522, 

who may be reached on 202–647–8994.

SUPPLEMENTARY INFORMATION: We are 

soliciting public comments to permit 

the Department of State to: 

• Evaluate whether the proposed 

information collection is necessary for 

the proper performance of the functions 

of the agency. 

• Evaluate the accuracy of the 

agency’s estimate of the burden of the 

proposed collection, including the 

validity of the methodology and 

assumptions used. 

• Enhance the quality, utility, and 

clarity of the information to be 

collected. 

• Minimize the reporting burden on 

those who are to respond, including 

through the use of automated collection 

techniques or other forms of technology. 

Abstract: The Department of State 

collects this information to identify 

qualified candidates for the Thomas R. 

Pickering Foreign Affairs Program. 

Methodology: Applications are 

accepted by mail.

Dated: October 20, 2004. 

Ruben Torres, 

Executive Director, Bureau of Human 

Resources, Department of State.

[FR Doc. 04–27989 Filed 12–21–04; 8:45 am] 

BILLING CODE 4710–15–P

DEPARTMENT OF STATE

[Public Notice 4940] 

Finding of No Significant Impact and 

Summary Environmental 

Assessment—Tornillo-Guadalupe New 

International Bridge, County of El 

Paso, TX 

The proposed action is to issue a 

Presidential Permit to the County of El 

Paso, Texas to construct, operate and 

maintain an international vehicular and 

pedestrian bridge (the proposed 

‘‘Tornillo-Guadalupe New International 

Bridge’’), its approaches and facilities at 

the international boundary between the 

United States and Mexico, southeast of 

the city of El Paso, Texas, approximately 

1,950 feet upstream on the Rio Grande 

from the existing Fabens-Caseta Bridge, 

near the small community of Caseta that 

is within the municipality of Guadalupe 

in the State of Chihuahua, Mexico. 

I. Background 

The U.S. Department of State (‘‘the 

Department’’) is charged with the 

issuance of Presidential Permits for the 

construction of international bridges 

between the United States and Mexico 

under the International Bridge Act of 

1972, 86 Stat. 731, 33 U.S.C. Section 535 

et seq., and Executive Order 11423 of 

August 16, 1968, 33 FR 11741 (1968), as 

amended by Executive Order 12847 of 

May 17, 1993, 58 FR 29511 (1993), 

Executive Order 13284 of January 23, 

2003, 68 FR 4075 (2003), and Executive 

Order 13337 of April 30, 2004, 69 FR 

25299 (2004). 

In 2001, Raba-Kistner Consultants, 

Inc. (RK) prepared, on behalf of the 

Presidential Permit applicant, the 

County of El Paso, Texas (the 

‘‘Sponsor’’), a draft Environmental 

Assessment of the proposed TornilloGuadalupe New International Bridge, 

port of entry, and connecting roadway. 

This Environmental Assessment was 

submitted to the Department as part of 

the Sponsor’s application for a 

Presidential Permit. The Department 

placed a notice in the Federal Register

regarding the receipt of the Sponsor’s 

application for a Presidential permit and 

seeking public comments regarding the 

application (68 FR 43567 (2003). No 

public comments were received in 

response to this notice. 

The Department has acted as the lead 

federal agency in the preparation and 

completion of the Environmental 

Assessment and has worked to address 

concerns or other issues that have been 

raised by cooperating governmental 

agencies. The Department, consistent 

with Council on Environmental Quality 

(CEQ) and Department of State