6360 Federal Register / Vol. 69, No. 27 / Tuesday, February 10, 2004 / Notices 

14 17 CFR 200.30–3(a)(12).

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

2 17 CFR 240.19b–4.

3On July 31, 2003, the Exchange filed a proposed 

rule change to implement a pilot program to deploy 

the Exchange’s new System. The proposed rule 

change was noticed, and accelerated approval was 

granted thereto, on July 31, 2003. The pilot was 

scheduled to expire on August 29, 2003. See

Securities Exchange Act Release No. 48266 (July 31, 

2003), 68 FR 152 (August 7, 2003) (SR–Phlx–2003–

56). On August 29, the Commission extended the 

pilot to September 12, 2003. See Securities 

Exchange Act Release No. 48425 (August 29, 2003), 

68 FR 53210 (September 9, 2003) (SR–Phlx–2003–

60). On September 12, 2003, the Commission 

extended the pilot again until November 14, 2003. 

See Securities Exchange Act Release No. 48490 

(September 12, 2003), 68 FR 54926 (September 19, 

2003). On December 18, 2003, the Commission 

extended the pilot until February 6, 2004. See

Securities Exchange Act Release No. 48947 

(December 18, 2003), 68 FR 75012 (December 29, 

2003). In order to avoid a lapse in the effectiveness 

of this pilot, the Commission now is approving the 

Exchange’s proposal to extend the rule from 

February 6, 2004 until August 2, 2004. The 

Exchange has also filed for permanent approval of 

the proposed rules. See Securities Exchange Act 

Release No. 48265 (July 31, 2003), 68 FR 47137 

(August 7, 2003) (SR–Phlx–2003–40). The Exchange 

acknowledges that SR–Phlx–2003–40 and 

Amendment No. 1 thereto are subject to public 

comment, which may result in amendments to the 

proposed rules.

4AUTOM 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 feature, AUTO–X. 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 Exchange Rule 1080.

5See note 3, supra.

6See Securities Exchange Act Release No. 41524 

(June 14, 1999), 64 FR 33127 (June 21, 1999) (SR–

Phlx–99–11). The FBOE, a component of AUTOM, 

currently provides a means for (but does not 

require) Floor Brokers to route eligible orders to the 

specialist’s post, consistent with the order delivery 

criteria of the AUTOM System set forth in Exchange 

Rule 1080(b). The new System would include the 

same functionality as the FBOE, in addition to 

providing an electronic audit trail for nonelectronic orders received by Floor Brokers by way 

of the entry of the required information in proposed 

Rule 1063(e).

7See Securities Exchange Act Release No. 43268 

(September 11, 2000) and Administrative 

Proceeding File 3–10282 (the ‘‘Order’’).

8 15 U.S.C. 78f(b).

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 at 

the Commission’s Public Reference 

Room. Copies of such filing will also be 

available for inspection and copying at 

the principal office of the Exchange. All 

submissions should refer to File No. 

SR–Phlx–2004–07 and should be 

submitted by March 2, 2004.

For the Commission, by the Division of 

Market Regulation, pursuant to delegated 

authority.14

Margaret H. McFarland, 

Deputy Secretary.

[FR Doc. 04–2810 Filed 2–9–04; 8:45 am] 

BILLING CODE 8010–01–P

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–49178; File No. SR–Phlx–

2004–10] 

Self-Regulatory Organizations; Notice 

of Filing and Order Granting 

Accelerated Approval of Proposed 

Rule Change by the Philadelphia Stock 

Exchange, Inc. Relating To a Pilot 

Program To Deploy the Options Floor 

Broker Management System 

February 3, 2004. 

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 February 

2, 2004, the Philadelphia Stock 

Exchange, Inc. (‘‘Phlx’’ or ‘‘Exchange’’) 

filed with the Securities and Exchange 

Commission (‘‘SEC’’ or ‘‘Commission’’) 

the proposed rule change as described 

in Items I and II 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 and to 

approval the proposal, on an accelerated 

basis.

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes to extend its 

pilot program pertaining to the Options 

Floor Broker Management System (the 

‘‘System’’) from February 6, 2004 until 

August 2, 2004.3 The System is a new 

component of the Exchange’s 

Automated Options Market (AUTOM) 

and Automatic Execution (AUTO–X) 

System.4

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 III 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 extend the effectiveness of 

the rules governing the System through 

August 2, 2004, in order to continue to 

have rules in place concerning the 

System and to ensure that Floor Brokers 

using the System during the continuing 

deployment would not be in violation of 

current Exchange rules regarding ticket 

marking requirements. The rules had 

previously been effective through 

August 29, 2003, extended through 

September 12, 2003, November 14, 

2003, and February 6, 2004.5

The System is designed to enable 

Floor Brokers and/or their employees to 

enter, route and report transactions 

stemming from options orders received 

on the Exchange. Floor Brokers or their 

employees access the System through an 

electronic Exchange-provided handheld 

device on which they would have the 

ability to enter the required information 

as set forth in Phlx Rule 1063(e), either 

from their respective posts on the 

options trading floor or in the trading 

crowd. The System will eventually 

replace the Exchange’s current Floor 

Broker Order Entry System (‘‘FBOE’’),6

as part of a roll-out of the new System 

floor-wide.

All of the rules pertaining to the 

System effective February 6, 2004 are 

proposed to be extended until August 2, 

2004, including: Rules 1014(g), 1015, 

1051, 1063, 1064, and 1080.06, as well 

as Option Floor Procedure Advices 

(‘‘Advice’’) A–11, B–6, B–8, C–2, C–3, 

F–1, F–2, and F–4. 

The Exchange believes that the 

System will enable Floor Brokers to 

handle orders they represent more 

efficiently, and will further enable the 

Exchange to comply with the audit trail 

requirement for non-electronic orders 

required under the Order Instituting 

Public Administrative Proceedings 

Pursuant to Section 19(h)(1) of the 

Securities Exchange Act of 1934, 

Making Findings and Imposing 

Sanctions.7

2. Statutory Basis 

The Exchange believes that the 

proposed rule change is consistent with 

Section 6(b) of the Act 8 in general, and 

Federal Register / Vol. 69, No. 27 / Tuesday, February 10, 2004 / Notices 6361

9 15 U.S.C. 78f(b)(5).

10 In approving this proposed rule change, the 

Commission notes that it has also considered the 

proposed rule’s impact on efficiency, competition, 

and capital formation. 15 U.S.C. 78c(f).

11 15 U.S.C. 78f(b)(5).

12 15 U.S.C. 78f(b)(2).

13 17 CFR 200.30–3(a)(12).

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

2 17 CFR 240.19b–4.

3See Securities Exchange Act Release No. 49098 

(January 16, 2004), 69 FR 3974 (January 27, 2004) 

(SR–Phlx–2003–73).

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, remove 

impediments to and perfect the 

mechanisms of a free and open market 

and a national market system, and to 

protect investors and the public interest, 

by providing a System that enables 

Floor Brokers to handle orders they 

represent more efficiently, while 

enabling the Exchange to comply with 

the requirement in the Order to provide 

an electronic audit trail for nonelectronic orders entered on the 

Exchange.

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 either 

solicited or received. 

III. 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. 

Persons making written submissions 

should file six copies thereof with the 

Secretary, Securities and Exchange 

Commission, 450 Fifth Street, NW., 

Washington, DC 20549–0609. 

Comments may also be submitted 

electronically at the following e-mail 

address: rule-comments@sec.gov. All 

comment letters should refer to File No. 

SR–Phlx–2004–10. 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, comments 

should be sent in hardcopy or by e-mail 

but not by both methods. 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. Copies of such filing will also be 

available for inspection and copying at 

the principal office of the Exchange. All 

submissions should be submitted by 

March 2, 2004. 

IV. Discussion 

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.10 In particular the 

Commission finds that the proposed 

rule is consistent with Section 6(b)(5) of 

the Act, which requires that the rules of 

an exchange be designed to promote just 

and equitable principles of trade, 

remove impediments to and perfect the 

mechanism of a free and open market 

and a national securities System, and 

protect investors and the public 

interest.11

The Commission finds good cause for 

approving the proposed rule change 

prior to the thirtieth day after the date 

of the publication of notice thereof in 

the Federal Register. The Commission 

believes that granting accelerated 

approval to the proposed rule change on 

a pilot basis will allow the Exchange to 

have enforceable rules governing use of 

the Exchange’s new System in effect 

prior to permanent approval of the 

rules, and will help ensure that 

members are properly trained and 

familiar with the rules. In addition, that 

Commission is granting accelerated 

approval in order to prevent a lapse in 

the effectiveness of the Exchange’s rules 

governing operation of the System to 

ensure continuity of the pilot. 

V. Conclusion 

It is therefore ordered, pursuant to 

Section 19(b)(2) of the Act,12 that the 

proposed rule change (SR–Phlx–2004–

10) is approved on an accelerated basis 

on a pilot basis until August 2, 2004.

For the Commission, by the Division of 

Market Regulation, pursuant to delegated 

authority.13

Margaret H. McFarland, 

Deputy Secretary.

[FR Doc. 04–2812 Filed 2–9–04; 8:45 am] 

BILLING CODE 8010–01–P

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–49181; File No. SR–Phlx–

2004–06] 

Self-Regulatory Organizations; Notice 

of Filing and Immediate Effectiveness 

of Proposed Rule Change by the 

Philadelphia Stock Exchange, Inc. 

Relating to Member Organizations’

Security Requirements 

February 3, 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 January 

23, 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 the 

Exchange has prepared. 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 

Rules 909 and 972. The amendment to 

Phlx Rule 909 would create an 

additional method for member 

organizations to provide security to the 

Exchange for the payment of any claims 

owed to the Exchange, Stock Clearing 

Corporation of Philadelphia (‘‘SCCP’’), 

and other Exchange members or 

member organizations (the ‘‘Security 

Requirement’’). The amendments to 

Phlx Rule 972 would extend the time 

available to member organizations to 

meet the Security Requirement 

following the transition of the Exchange 

from a non-stock to a stock corporation 

(the ‘‘Demutualization’’).3 The 

amendments to Phlx Rule 972 would 

also correct two cross-references 

contained in that rule.

The text of the proposed rule change 

is below. Proposed new language is 

italicized; deletions are in brackets.

* * * * *

Rule 909. Security for Exchange Fees 

and Other Claims 

(a) Each member organization, and all 

applicants for registration as such shall, 

except as provided below, be required to 

provide (and maintain) security to the 

Exchange for the payment of any claims