14316 Federal Register / Vol. 72, No. 58 / Tuesday, March 27, 2007 / Notices 

3Supplementary Material .03 to ISE Rule 716 

prohibits members from entering Responses for the 

account of an options market maker from another 

options exchange. This is the only limitation 

regarding who may enter Responses. 

4 15 U.S.C. 78f(b). 

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

6 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3 In Partial Amendment No. 1, the Exchange made 

several clarifying and technical changes to the 

original filing. In addition, the Exchange included 

a revised Exhibit 5 in Partial Amendment No. 1 to 

reflect technical and clarifying changes made 

therein, which, for clarity and ease of reference, 

replaces in its entirety the Exhibit 5 contained in 

the original filing. The Exchange did not propose 

any new fees in Partial Amendment No. 1. 

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 Exchange offers a Block 

Mechanism for the execution of singlesided, block-sized orders. The Block 

Mechanism exposes orders of at least 50 

contracts to all ISE members for three 

seconds, giving members an opportunity 

to respond with contra-side trading 

interest for their own account or on 

behalf of their customers.3 Currently, 

orders may be entered and executed 

using the Block Mechanism at the 

standard 5 and 10 cent increments and 

at ‘‘split prices’’ (2.5 cents for options 

trading in 5 cent standard increments 

and 5 cents for options trading in 10 

cent standard increments). The 

Exchange proposes to allow these orders 

to be entered and executed in penny 

increments as a way to provide greater 

flexibility in the pricing of block-size 

orders and to allow a greater 

opportunity for price improvement. 

2. Statutory Basis 

The Exchange believes that the 

proposed rule change is consistent with 

Section 6(b) of the Act,4 in general, and 

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

of the Act,5 in particular, in that it is 

designed to prevent fraudulent and 

manipulative acts and practices, 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. In 

particular, the proposal will provide 

additional pricing flexibility and 

opportunities for block-size orders to 

receive price improvement. 

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 

Written comments on the proposed 

rule change were neither solicited nor 

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 the Exchange 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 rulecomments@sec.gov. Please include File 

No. SR–ISE–2006–77 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 No. 

SR–ISE–2006–77. 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 at 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 Exchange. 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–ISE–2006–77 and should be 

submitted on or before April 17, 2007. 

For the Commission, by the Division of 

Market Regulation, pursuant to delegated 

authority.6

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E7–5546 Filed 3–26–07; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–55494; File No. SR–Phlx–

2007–19] 

Self-Regulatory Organizations; 

Philadelphia Stock Exchange, Inc.; 

Notice of Filing and Immediate 

Effectiveness of Proposed Rule 

Change as Modified by Amendment 

No. 1 Thereto Relating to Odd Lot Fees 

for XLE Transactions 

March 20, 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 March 8, 

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 

Exchange. On March 16, 2007, the 

Exchange submitted Amendment No. 1 

to the proposed rule change.3 The Phlx 

has designated this amended proposal 

as one establishing or changing a due, 

fee, or other charge imposed by the 


sroberts on PROD1PC70 with NOTICES
Federal Register / Vol. 72, No. 58 / Tuesday, March 27, 2007 / Notices 14317 

4 15 U.S.C. 78s(b)(3)(A). 

5 17 CFR 240.19b–4(f)(2). 

6An odd lot order means an order for less than 

a round lot, which is defined for purposes of XLE 

as a unit of trading that is 100 shares. See Exchange 

Rules 1(w) and 1(gg). The execution fee for odd lot 

orders applies to orders initially entered as odd lot 

orders. 

7 XLE provides the opportunity for entirely 

automated executions to occur within a central 

matching system accessible by Exchange members 

and member organizations and their Sponsored 

Participants. See Securities Exchange Act Release 

Nos. 54538 (September 28, 2006), 71 FR 59184 

(October 6, 2006) (SR–Phlx–2006–43) and 54941 

(December 14, 2006), 71 FR 77079 (December 22, 

2006) (SR–Phlx–2006–70) (establishing fees for the 

trading of equity securities on XLE). 

8The execution fees for odd lot transactions are 

set forth in the Miscellaneous Transaction Fee 

section of the XLE fee schedule. The Exchange has 

adopted volume tiers in connection with the 

assessment of transaction fees, which are based on 

the monthly shares executed per XLE Participant 

Organization. 

9 IOC Cross and Mid-Point Cross orders entered 

over technology provided by Phlx are subject to a 

maximum charge of $50.00 per trade side. 

10 15 U.S.C. 78f(b). 

11 15 U.S.C. 78f(b)(4). 

12 15 U.S.C. 78s(b)(3)(A)(ii). 

13 17 CFR 240.19b–4(f)(2). 

14For purposes of calculating the 60-day period 

within which the Commission may summarily 

abrogate the proposed rule change under Section 

19(b)(3)(C) of the Act, the Commission considers 

the period to commence on March 16, 2007, the 

date on which Phlx filed Amendment No. 1. See 15 

U.S.C. 78s(b)(3)(C). 

Exchange under Section 19(b)(3)(A),4

and Rule 19b–4(f)(2) thereunder,5 which 

renders the proposal effective upon 

filing with the Commission. The 

Commission is publishing this notice to 

solicit comments on the proposed rule 

change, as amended, from interested 

persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Phlx proposes to amend the fees 

applicable to certain odd lot 

transactions 6 over XLE,7 the Exchange’s 

equity trading system, as follows: to (1) 

Decrease the execution fee for odd-lot 

Immediate-or-Cancel (‘‘IOC’’) Cross and 

Mid-Point Cross orders; and (2) increase 

the fee for single-sided odd lot orders 

routed to and executed at an away 

market, as set forth in detail below. The 

text of the proposed rule change is 

available at the Exchange, the 

Commission’s Public Reference Room, 

and http://www.phlx.com. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, 

Phlx included statements concerning 

the purpose of, and basis for, the 

proposed rule change and discussed any 

comments it received on the proposal. 

The text of these statements may be 

examined at the places specified in Item 

IV below. 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 continue to encourage 

executions of odd lot IOC Cross and 

Mid-Point Cross orders on XLE. The 

Exchange believes that lowering the fees 

for these types of transactions should, in 

turn, encourage additional odd lot IOC 

Cross and Mid-Point Cross transactions, 

thereby allowing the Exchange to 

remain competitive. In addition, the 

Exchange believes that increasing the 

odd lot fee for away market executions 

should help it recover its costs 

associated with away market 

executions. 

Currently, all odd lot executions (IOC 

Cross and Mid-Point Cross orders and 

single-sided orders) are charged the 

execution fee for odd lot orders, which 

is $0.003 per share for all tiers.8

Pursuant to this proposal: (1) The 

execution fee for odd lot IOC Cross and 

Mid-Point Cross orders entered over 

technology provided by Phlx will be 

reduced to $0.0023 per share per side 

for all tiers.9 This is the same amount 

as round lot IOC Cross and Mid-Point 

Cross orders today, such that odd lot 

and round lot IOC Cross and Mid-Point 

Cross orders will be charged the same 

amount when entered over technology 

provided by Phlx; (2) odd lot IOC Cross 

and Mid-Point Cross orders that are not 

entered over technology provided by 

Phlx will no longer be assessed any fee, 

such that odd lot and round lot IOC 

Cross and Mid-Point Cross orders not 

entered over technology provided by 

Phlx will not be charged execution fees. 

In addition, the Exchange proposes to 

increase the fee for single-sided odd lot 

orders that are routed to and executed 

at an away market from $0.003 to $0.03 

per share for all tiers. The execution fee 

for single-sided odd lot orders executed 

on XLE against another XLE Participant 

will remain at the current rate of $0.003 

per share for all tiers. 

The fee changes set forth in this 

proposal are scheduled to become 

effective for transactions settling on or 

after March 9, 2007. 

2. Statutory Basis 

The Exchange believes that its 

proposal to amend its schedule of fees 

is consistent with Section 6(b) of the 

Act,10 in general, and furthers the 

objectives of Section 6(b)(4) of the Act,11

in particular, in that it is designed to 

provide for the equitable allocation of 

reasonable fees and other charges among 

Phlx members and other persons using 

its facilities. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The Phlx 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 solicited 

or received with respect to the proposed 

rule change. 

III. Date of Effectiveness of the Proposed 

Rule Change and Timing for 

Commission Action 

The foregoing rule change has become 

effective pursuant to Section 

19(b)(3)(A)(ii) of the Act 12 and 

subparagraph (f)(2) of Rule 19b–4 

thereunder,13 since it establishes or 

changes a due, fee or other charge 

imposed by the Exchange. At any time 

within 60 days of the filing of such 

proposed rule change, the Commission 

may summarily abrogate such rule 

change if it appears to the Commission 

that such action is necessary of 

appropriate in the public interest, for 

the protection of investors, or otherwise 

in the furtherance of the purposes of the 

Act.14

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–2007–19 on the 

subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Nancy M. Morris, Secretary, 

Securities and Exchange Commission, 


sroberts on PROD1PC70 with NOTICES
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