9052 Federal Register / Vol. 72, No. 39 / Wednesday, February 28, 2007 / Notices 

6 15 U.S.C. 78f. 

7 15 U.S.C. 78f(b)(5). 

8 15 U.S.C. 78s(b)(3)(A). 

9 17 CFR 240.19b–4(f)(6). 

10 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 filing of the proposed rule change, or 

such shorter time as designated by the Commission. 

The Commission has decided to waive the five-day 

pre-filing notice requirement. 

11 Id. 

12For purposes only of waiving the 30-day 

operative delay of this proposal, the Commission 

has considered the proposed rule’s impact on 

efficiency, competition, and capital formation. 15 

U.S.C. 78C(F). 13 17 CFR 200.30–3(a)(12). 

Amex securities may instruct Nasdaq to 

open their quotes either at the price of 

the firm’s quote when the quote was 

closed by the participant during the 

previous trading day or at a price and 

size entered by the participant between 

7 a.m. and 9:24:59 a.m. 

This opening process is consistent 

with the opening process for NYSE/ 

Amex securities that was utilized for 

such securities in Nasdaq’s ITS/CAES 

system pursuant to NASD Rule 4707(d) 

with the exception that the NMC System 

opens at 7 a.m. rather than 7:30 a.m. 

2. Statutory Basis 

Nasdaq believes that the proposed 

rule change is consistent with the 

provisions of Section 6 of the Act,6 in 

general, and with Section 6(b)(5) of the 

Act,7 in particular, in that the proposal 

is designed to prevent fraudulent and 

manipulative acts and practices, to 

promote just and equitable principles of 

trade, to foster cooperation and 

coordination with persons engaged in 

regulating, clearing, settling, processing 

information with respect to, and 

facilitating transactions in securities, 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 proposed rule 

change clarifies certain terms in 

Nasdaq’s rules. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

Nasdaq does not believe that the 

proposed rule change will result in any 

burden on competition that is not 

necessary or appropriate in furtherance 

of the purposes of the Act, as amended. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

Written comments were neither 

solicited nor received. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

Because the foregoing rule change 

does not: (i) Significantly affect the 

protection of investors or the public 

interest; (ii) impose any significant 

burden on competition; and (iii) become 

operative for 30 days after the date of 

the filing, or such shorter time as the 

Commission may designate, it has 

become effective pursuant to Section 

19(b)(3)(A) of the Act 8 and Rule 19b–

4(f)(6) thereunder.9

At any time within 60 days of the 

filing of such proposed rule change, the 

Commission may summarily abrogate 

the 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. 

A proposed rule change filed under 

Section 19b–4 of the Act normally does 

not become operative prior to 30 days 

after the date of the filing.10 However, 

Rule 19b–4(f)(6)(iii) permits the 

Commission to designate a shorter time 

if such action is consistent with the 

protection of investors and the public 

interest. Nasdaq has requested that the 

Commission waive the 30-day operative 

delay contained in Rule 19b–4(f)(6)(iii) 

under the Act.11 Because the filing 

would conform the opening of trading 

in NYSE/Amex securities to the opening 

of trading in Nasdaq securities, thus 

streamlining the Nasdaq’s opening 

process, the Commission believes 

waiver of the 30-day operative delay is 

consistent with the protection of 

investors and the public interest. 

Accordingly, the Commission 

designates the proposal to be effective 

and operative upon filing with the 

Commission.12

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 rulecomments@sec.gov. Please include File 

Number SR–NASDAQ–2007–008 in 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–NASDAQ–2007–008. 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. Copies of such filing also will be 

available for inspection and copying at 

the principal office of Nasdaq. 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–NASDAQ–2007–008 and 

should be submitted on or before March 

21, 2007. 

For the Commission, by the Division of 

Market Regulation, pursuant to delegated 

authority.13

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E7–3493 Filed 2–27–07; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–55330; File No. SR–

NYSEArca–2007–06] 

Self-Regulatory Organizations; NYSE 

Arca, Inc.; Notice of Filing and 

Immediate Effectiveness of a Proposed 

Rule Change Relating to Obvious 

Errors in Option Transactions 

February 21, 2007. 

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

Securities Exchange Act of 1934 


sroberts on PROD1PC70 with NOTICES
Federal Register / Vol. 72, No. 39 / Wednesday, February 28, 2007 / Notices 9053 

1 15 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). 

5 ‘‘Customer’’ as defined in NYSE Arca Rule 

6.1(b)(29) and NYSEArca 6.1A(a)(4) shall mean a 

non-broker dealer. 

6 ‘‘Trading Official’’ as defined in NYSE Arca 

Rule 6.1(b)(34). 

7 ‘‘Market Maker’’ as defined in NYSE Arca Rule 

6.32 or 6.32A. 

8The Exchange believes that the proposed basis 

for determining the theoretical price for 

transactions occurring during the opening does not 

implicate NYSE Arca users’ trade through liability, 

because the Linkage Plan provides for an exception 

to trade through liability for transactions occurring 

on the opening. 

9For the purpose of this rule ‘‘non-Market 

Maker’’ could include (but is not limited to) an 

away specialist, an off-floor firm or another 

Customer. 

10See, supra note 8. 

11See Securities Exchange Act Release No. 54004 

(June 16, 2006), 71 FR 36139 (June 23, 2006) 

(approval order for SR–CBOE–2005–63). 

(‘‘Act’’) 1 and Rule 19b–4 thereunder,2

notice is hereby given that on January 

18, 2007, NYSE Arca, Inc. (‘‘NYSE 

Arca’’ 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. 

The Exchange filed the proposed rule 

change as a ‘‘non-controversial’’

proposed rule change pursuant to 

Section 19(b)(3)(A) 3 of the Act 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 Exchange proposes to amend 

NYSE Arca Rule 6.87, which contains 

procedures for trade nullification and 

price adjustments on obvious errors in 

option transactions. The text of the 

proposed rule change is available at the 

Exchange, the Commission’s Public 

Reference Room, and http:// 

www.nysearca.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 

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. NYSE 

Arca 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 

The purpose of this filing is to amend 

Rule 6.87 in order to offer an extra level 

of protection for Customers 5 who are a 

party to a transaction involving an 

obvious error during the opening. Under 

existing rules, OTP Holders that have 

executed a trade on behalf of a Customer 

have a twenty (20) minute period from 

the time of execution to notify the 

Exchange and request a review of the 

trade for either nullification or price 

adjustment. The current twenty minute 

window, for nullification purposes, 

would not be changed by this proposal. 

However, under the proposed rule 

change, OTP Holders representing 

Customers would now have an extended 

period of time to request an obvious 

error review for adjustment purposes. 

OTP Holders would now be able to 

make a request to Trading Officials 6 to 

make price adjustments on transactions 

that occur on the opening, until 4:30 

p.m. (ET) on the day that the transaction 

occurs. The intention of this filing is to 

protect Customers who fail to discover 

an obvious error within twenty minutes 

of execution from being forced to accept 

an execution that results from an 

obvious error during the opening 

auction. 

An obvious pricing error is deemed to 

have occurred when the execution price 

of a transaction is higher or lower than 

the theoretical price for the series by an 

amount equal to at least the amount 

shown below: 

Theoretical price Minimum 

amount 

Below $2 ................................... $0.25 

$2 to $5 .................................... 0.40 

Above $5 to $10 ....................... 0.50 

Above $10 to $20 ..................... 0.80 

Above $20 ................................ 1.00 

The theoretical price of an option is, 

for series that are traded on at least one 

other exchange, the last bid price with 

respect to an erroneous sell transaction 

and the last offer price with respect to 

an erroneous buy transaction, just prior 

to the trade, disseminated by the 

competing options exchange that has 

the most liquidity in the option class 

over the previous two calendar months. 

If there are no quotes for comparison, 

the theoretical price shall be determined 

by designated Trading Officials. 

For transactions during the opening 

auction between a Customer and a 

Market Maker,7 after the twenty minute 

notification period has elapsed since the 

trade containing the obvious error 

occurred but before 4:30 p.m. (ET) on 

the same trading day, the OTP Holder, 

on behalf of its Customer, could request 

an obvious error review for possible 

adjustment to the theoretical price. In 

determining the theoretical price of an 

option series, the Trading Official 

would look to the away competing 

exchange with the most liquidity in the 

option class over the two preceding 

months. The transaction would be 

adjusted to the competing exchanges’

disseminated theoretical price at the 

time the trade occurred. With respect to 

sell transactions the last bid price, just 

prior to the trade, would be used. With 

respect to buy transactions the last offer 

price, just prior to the trade would be 

used.8 Price adjustments would be made 

up to the equivalent number of contracts 

that the competing exchange was listing 

as its disseminated size at the time the 

trade occurred. 

For transactions during the opening 

auction between a Customer and a nonMarket Maker,9 after the twenty minute 

notification period has elapsed but 

before 4:30 p.m. (ET) on the same 

trading day, an OTP Holder, on behalf 

of its Customer, could request an 

obvious error review. In determining 

how to adjust the transaction to the 

theoretical price, the Trading Official 

would look to the away competing 

exchange with the most liquidity in the 

option class over the two preceding 

months. The transaction would be 

adjusted to the competing exchanges’

disseminated theoretical price at the 

time the trade occurred. With respect to 

sell transactions the last bid price, just 

prior to the trade, would be used. With 

respect to buy transactions the last offer 

price, just prior to the trade would be 

used.10 Price adjustments would be 

made up to the equivalent number of 

contracts that the competing exchange 

was listing as its disseminated size at 

the time the trade occurred. 

The rule changes proposed in this 

filing are similar to those presented by 

the Chicago Board Options Exchange 

(‘‘CBOE’’) in SR–CBOE–2005–63.11 In 

that filing, the CBOE amended CBOE 

Rule 6.25 to include substantially 

similar provisions that NYSE Arca is 

presenting at this time. The Exchange 

notes that the Commission did receive 

one comment letter from Citadel 

Investment Group L.L.C. (the ‘‘Citadel 


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9054 Federal Register / Vol. 72, No. 39 / Wednesday, February 28, 2007 / Notices 

12See letter dated May 17, 2006 to Mr. Jonathan 

Katz, Secretary, Commission, from Mr. Matthew 

Hinerfeld, Deputy General Counsel, Citadel 

Investment Group, L.L.C. on behalf of Citadel 

Derivatives Group LLC. 

13 15 U.S.C. 78f(b). 

14 15 U.S.C. 78f(b)(5). 

15 15 U.S.C. 78s(b)(3)(A). 16 17 CFR 240.19b–4(f)(6). 

17 17 CFR 200.30–3(a)(12). 

1 15 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). 

Letter’’) regarding the CBOE proposal.12

In its approval notice, the Commission 

stated that ‘‘the Citadel Letter does not 

raise any issues that would preclude 

approval of the proposed rule change.’’

NYSE Arca feels that any similar issues 

contained in the Citadel Letter that may 

be raised in regard to proposed rule 

changes contained in this filing would 

not preclude approval. 

2. Statutory Basis 

The Exchange believes that the 

proposed rule change is consistent with 

Section 6(b) of the Act,13 in general, and 

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

of the Act,14 in particular, because it is 

designed to prevent fraudulent and 

manipulative acts and practices, to 

promote just and equitable principles of 

trade, to foster cooperation and 

coordination with persons engaged in 

facilitating transactions in securities, 

and to remove impediments to and 

perfect the mechanism of a free and 

open market and a national market 

system. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The Exchange does not believe that 

the proposed rule change would 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 

The Exchange has neither solicited 

nor received written comments on the 

proposed rule change. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

Because the proposed rule change 

does not: (i) Significantly affect the 

protection of investors or the public 

interest; (ii) impose any significant 

burden on competition; and (iii) become 

operative for 30 days after the date of 

filing (or such shorter time as the 

Commission may designate if consistent 

with the protection of investors and the 

public interest), the proposed rule 

change has become effective pursuant to 

Section 19(b)(3)(A) of the Act 15 and 

subparagraph (f)(6) of Rule 19b–4 

thereunder.16

At any time within 60 days of the 

filing of the 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 the 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: 

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–NYSEArca–2007–06 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–NYSEArca–2007–06. 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. Copies of such filing also will be 

available for inspection and copying at 

the principal office of NYSE Arca. 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–NYSEArca–2007–06 and 

should be submitted on or before March 

21, 2007. 

For the Commission, by the Division of 

Market Regulation, pursuant to delegated 

authority.17

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E7–3494 Filed 2–27–07; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–55333; File No. SR–Phlx–

2007–13] 

Self-Regulatory Organizations; 

Philadelphia Stock Exchange, Inc.; 

Notice of Filing and Immediate 

Effectiveness of Proposed Rule 

Change Relating to 100 Share Away 

Markets in Non-Nasdaq Securities on 

XLE 

February 22, 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 February 

20, 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 and II, below, which Items have 

been prepared by the Phlx. The 

Exchange has designated the proposed 

rule change as constituting a ‘‘noncontroversial’’ rule change under 

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 XLE, 

Phlx’s equity trading system, so as to 

prevent XLE from trading through 100 

share away quotations in non-Nasdaq 

securities. In addition, XLE will be 

modified to route to 100 share away 

quotations in non-Nasdaq securities. 

Accordingly, Phlx Rule 1(cc)(3) will be 

modified to include 100 share away 

quotations in the definition of Protected 


sroberts on PROD1PC70 with NOTICES