14318 Federal Register / Vol. 72, No. 58 / Tuesday, March 27, 2007 / Notices 

15 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)(5). 

5An SQT is an Exchange Registered Options 

Trader (‘‘ROT’’) who has received permission from 

the Exchange to generate and submit options 

quotations electronically through AUTOM in 

eligible options to which such SQT is assigned. An 

SQT may only submit such quotations while such 

SQT is physically present on the floor of the 

Exchange. See Exchange Rule 1014(b)(ii)(A). 

6An RSQT is a 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). 

7See Exchange Rule 1080, Commentary .01(a). 

8See Exchange Rule 1080, Commentary .01(b). 

9See Securities Exchange Act Release No. 50100 

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

Phlx–2003–59). 

100 F Street, NE., Washington, DC 

20549–1090. 

All submissions should refer to File 

Number SR–Phlx–2007–19. 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 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–2007–19 and should be 

submitted on or before April 17, 2007. 

For the Commission, by the Division of 

Market Regulation, pursuant to delegated 

authority.15

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E7–5547 Filed 3–26–07; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–55498; File No. SR–Phlx–

2007–15] 

Self-Regulatory Organizations; 

Philadelphia Stock Exchange, Inc.; 

Notice of Filing and Immediate 

Effectiveness of Proposed Rule 

Change To Delete the Exchange’s 

Auto-Quote Options Pricing 

Functionality 

March 20, 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 February 

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 

Phlx. The Exchange filed the proposed 

rule change pursuant to Section 

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

4(f)(5) thereunder,4 which renders the 

proposal immediately effective upon 

filing. 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 1080, Commentary .01, 

to delete references to ‘‘Auto-Quote.’’

The text of the proposed rule change is 

available on the Exchange’s Web site at 

http://www.Phlx.com, at the Phlx’s 

Office of the Secretary, and at the 

Commission’s Public Reference Room. 

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 eliminate the outmoded 

and little-used options pricing 

functionality of the Exchange’s 

Automated Quotation System (‘‘AutoQuote’’), which should reduce updating 

and modification costs which could 

ultimately be passed on to customers, as 

described more fully below. Auto-Quote 

is the Exchange’s electronic options 

pricing system, which enables 

specialists, Streaming Quote Traders 

(‘‘SQTs’’) 5 and Remote Streaming Quote 

Traders (‘‘RSQTs’’),6 to automatically 

monitor and instantly update and 

submit electronic quotations for equity 

option and index option contracts.7

Currently, the wide majority of traders 

on the Exchange use their own 

proprietary options pricing systems, and 

access the Exchange’s electronic options 

trading system, Phlx XL, through a 

specialized connection, by-passing 

Auto-Quote. This specialized 

connection is known as a specialized 

quote feed (‘‘SQF’’).8 SQF users who do 

not use Auto-Quote submit proprietary 

electronic option quotations via SQF. 

SQF users submit electronic option 

quotations through their own pricing 

models or through quotation vendors. 

In July, 2004, the Exchange 

implemented its fully electronic trading 

system for options, Phlx XL.9 At that 

time, vendor options pricing systems 

used by Exchange members often were 

not technologically capable of providing 

full options pricing services to Exchange 

members. Consequently, many members 

used Auto-Quote instead of vendor 

option pricing systems. Since that time, 

vendor options pricing systems have 

been upgraded to address shortcomings 

that existed previously. As a result, very 

few options traders still use Auto-Quote 

on the Exchange. Such options traders 

have received written notification by 

way of Exchange circular of the 

Exchange’s intention to eliminate the 

Auto-Quote options pricing 

functionality from its options trading 

systems and will make necessary 

arrangements with the appropriate 

vendors to price options and to access 

the Exchange’s trading systems via SQF. 

Recent changes in options trading 

such as quoting and trading of options 

in pennies, increased quote traffic, and 

the automation of processing complex 

orders, to name a few, would mandate 

continual upgrades to the technological 

requirements to maintain Auto-Quote as 

a component of the Exchange’s options 

trading systems. The Exchange’s 


sroberts on PROD1PC70 with NOTICES
Federal Register / Vol. 72, No. 58 / Tuesday, March 27, 2007 / Notices 14319 

10The Exchange’s Financial Automation 

Department is responsible for the design, 

development, implementation, testing and 

maintenance of the Exchange’s automated trading 

systems, surveillance systems, and back office 

systems, and for monitoring the quality of 

performance and operational readiness of such 

systems, in addition to user training and validation 

of user technology as it pertains to such users’

interface with the Exchange’s systems. 

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

12 15 U.S.C. 78f(b)(5). 

13 15 U.S.C. 78s(b)(3)(A). 

14 17 CFR 240.19b–4(f)(5). 

15 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

Financial Automation Department 10

describes Auto-Quote as an older system 

that would require a large investment to 

update it to match existing industry and 

vendor functionality. The Exchange 

believes that such a large investment 

could result in increased fees that might 

eventually be passed on to customers, 

which is one result that the Exchange 

seeks to avoid by eliminating the AutoQuote options pricing functionality 

from its options trading systems. 

Therefore, because of the limited use 

of the Auto-Quote options pricing 

functionality on the Exchange, together 

with the disproportionate expense the 

Exchange would incur to continually 

upgrade Auto-Quote to meet industry 

needs, the Exchange proposes to 

eliminate the Auto-Quote options 

pricing functionality from its options 

trading systems, and to delete all 

references to Auto-Quote from its rules. 

The Exchange’s systems will no longer 

incorporate the Auto-Quote options 

pricing functionality beginning March 

19, 2007. 

2. Statutory Basis 

The Exchange believes that its 

proposal is consistent with Section 6(b) 

of the Act 11 in general, and furthers the 

objectives of Section 6(b)(5) of the Act 12

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, by 

enabling the Exchange to limit expenses 

relating to the under-used and 

antiquated Auto-Quote options pricing 

functionality. 

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 

effects a change in an existing orderentry or trading system of a selfregulatory organization that: (1) Does 

not significantly affect the protection of 

investors or the public interest; (2) does 

not impose any significant burden on 

competition; and (3) does not have the 

effect of limiting the access to or 

availability of the system. Therefore, it 

has become effective pursuant to 

Section 19(b)(3)(A) 13 of the Act and 

Rule 19b–4(f)(5) 14 thereunder. 

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 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–Phlx–2007–15 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–2007–15. 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 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 

Number SR–Phlx–2007–15 and should 

be submitted on or before April 17, 

2007. 

For the Commission, by the Division of 

Market Regulation, pursuant to delegated 

authority.15

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E7–5548 Filed 3–26–07; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–55501; File No. SR–Phlx–

2007–22] 

Self-Regulatory Organizations; 

Philadelphia Stock Exchange, Inc.; 

Notice of Filing and Immediate 

Effectiveness of Proposed Rule 

Change Relating to Orders With TwoDay Delivery 

March 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 March 16, 

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 

Phlx. The Exchange has designated the 

proposed rule change as constituting a 

‘‘non-controversial’’ rule change under 


sroberts on PROD1PC70 with NOTICES