2324 Federal Register / Vol. 72, No. 11 / Thursday, January 18, 2007 / Notices 

13Section 12(a) of the Act, 15 U.S.C. 78l(a), 

generally prohibits a broker-dealer from trading a 

security on a national securities exchange unless 

the security is registered on that exchange pursuant 

to Section 12 of the Act. Section 12(f) of the Act 

excludes from this restriction trading in any 

security to which an exchange ‘‘extends UTP.’’

When an exchange extends UTP to a security, it 

allows its members to trade the security as if it were 

listed and registered on the exchange even though 

it is not so listed and registered. 

14 See supra note 3. 

15 17 CFR 240.12f–5. 

16 15 U.S.C. 78k–1(a)(1)(C)(iii). 

17See supra note 3. 

18 15 U.S.C. 78s(b)(2). 

19 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3See Phlx Rule 1014(b)(ii)(A). 

4See Phlx Rule 1014(b)(ii)(B). 

5See Securities Exchange Act Release No. 54859 

(December 1, 2006), 71 FR 71605. 

6See Phlx By-Law Article X, Section 10–7. 

another exchange.13 The Commission 

notes that it previously approved the 

listing and trading of the Shares on 

Amex.14 The Commission also finds that 

the proposal is consistent with Rule 

12f–5 under the Act,15 which provides 

that an exchange shall not extend UTP 

to a security unless the exchange has in 

effect a rule or rules providing for 

transactions in the class or type of 

security to which the exchange extends 

UTP. The Exchange has represented that 

it meets this requirement because it 

deems the Shares to be equity securities, 

thus rendering trading in the Shares 

subject to the Exchange’s existing rules 

governing the trading of equity 

securities. 

The Commission further believes that 

the proposal is consistent with Section 

11A(a)(1)(C)(iii) of the Act,16 which sets 

forth Congress’ finding that it is in the 

public interest and appropriate for the 

protection of investors and the 

maintenance of fair and orderly markets 

to assure the availability to brokers, 

dealers, and investors of information 

with respect to quotations for and 

transactions in securities. Quotations for 

and last sale information regarding the 

Shares are disseminated through the 

Consolidated Quotation System. 

Furthermore, the IOPV calculator 

updates the applicable IOPV every 15 

seconds to reflect price changes in the 

principal foreign markets, and converts 

such prices into U.S. dollars based on 

the currency exchange rate. When the 

foreign market or markets are closed but 

Amex is open for trading, the IOPV is 

updated every 15 seconds to reflect 

changes in currency exchange rates. 

NYSE Arca Equities Rule 7.34 describes 

the situations when the Exchange would 

halt trading when the IOPV or the value 

of the Index underlying one of the 

Funds is not calculated or widely 

available. 

The Commission notes that, if the 

Shares should be delisted by Amex, the 

original listing exchange, the Exchange 

would no longer have authority to trade 

the Shares pursuant to this order. 

In support of this proposal, the 

Exchange has made the following 

representations: 

1. The Exchange’s surveillance 

procedures are adequate to monitor the 

trading of the Shares. 

2. In connection with the trading of 

the Shares, the Exchange would inform 

ETP Holders in an Information Circular 

of the special characteristics and risks 

associated with trading the Shares. 

3. The Information Circular would 

inform participants of the prospectus or 

product delivery requirements 

applicable to the Shares. 

This approval order is conditioned on 

the Exchange’s adherence to these 

representations. 

The Commission finds good cause for 

approving this proposal before the 

thirtieth day after the publication of 

notice thereof in the Federal Register. 

As noted previously, the Commission 

previously found that the listing and 

trading of the Shares on Amex is 

consistent with the Act.17 The 

Commission presently is not aware of 

any regulatory issue that should cause it 

to revisit that earlier finding or preclude 

the trading of Shares on the Exchange 

pursuant to UTP. Therefore, accelerating 

approval of this proposal should benefit 

investors by creating, without undue 

delay, additional competition in the 

market for the Shares. 

V. Conclusion 

It is therefore ordered, pursuant to 

Section 19(b)(2) of the Act,18 that the 

proposed rule change (SR–NYSEArca–

2006–39) is approved on an accelerated 

basis. 

For the Commission, by the Division of 

Market Regulation, pursuant to delegated 

authority.19

Nancy M. Morris, 

Secretary. 

[FR Doc. E7–614 Filed 1–17–07; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–55080; File No. SR–Phlx–

2006–51] 

Self-Regulatory Organizations; 

Philadelphia Stock Exchange, Inc.; 

Order Granting Approval to Proposed 

Rule Change Relating to Performance 

Evaluations for Streaming Quote 

Traders and Remote Streaming Quote 

Traders 

January 10, 2007. 

I. Introduction 

On November 22, 2006, the 

Philadelphia Stock Exchange, Inc. 

(‘‘Phlx’’ or ‘‘Exchange’’) filed with the 

Securities and Exchange Commission 

(‘‘Commission’’), pursuant to Section 

19(b)(1) of the Securities Exchange Act 

of 1934 (‘‘Act’’),1 and Rule 19b–4 

thereunder,2 a proposed rule change to 

adopt Phlx Rule 510, SQT and RSQT 

Performance Evaluation, to establish 

performance requirements for Streaming 

Quote Traders (‘‘SQTs’’) 3 and Remote 

Streaming Quote Traders (‘‘RSQTs’’).4

The proposed rule change was 

published for comment in the Federal 

Register on December 11, 2006.5 The 

Commission received no comments 

regarding the proposal. This order 

approves the proposed rule change. 

II. Description of the Proposal 

The purpose of the proposed rule 

change is to adopt new Phlx Rule 510 

to: (1) Establish performance 

requirements for SQTs and RSQTs; (2) 

authorize the Exchange to conduct 

performance evaluations periodically; 

and (3) authorize the Exchange’s 

Options Allocation, Evaluation and 

Securities Committee (‘‘OAESC’’) 6 to 

take corrective action where minimum 

requirements are not met. 

Proposed Phlx Rule 510 would 

provide for monthly performance 

evaluations of SQTs and RSQTs to 

determine whether they have fulfilled 

performance standards relating to, 

among other things, quality of markets, 

efficient quote submission to the 

Exchange (including quotes submitted 

through a third party vendor), 

competition, observance of ethical 

standards, and administrative factors. 

The proposal would permit the 

Exchange to consider requests for relief 

from established quote spread 


pwalker on PROD1PC71 with NOTICES
Federal Register / Vol. 72, No. 11 / Thursday, January 18, 2007 / Notices 2325 

7See Phlx Rule 1014(c)(i)(A). 

8Phlx Rule 1014(b)(ii)(D)(1) provides that an SQT 

and an RSQT shall be responsible to quote 

continuous, two-sided markets in not less than 60% 

of the series in each option in which such SQT or 

RSQT is assigned, provided that, on any given day, 

a Directed SQT (‘‘DSQT’’) or a Directed RSQT 

(‘‘DRSQT’’) (as defined in Phlx Rule 1080(l)(i)(C)) 

shall be responsible to quote continuous, two-sided 

markets in not less than 99% of the series listed on 

the Exchange in at least 60% of the options in 

which such DSQT or DRSQT is assigned. Whenever 

a DSQT or DRSQT enters a quotation in an option 

in which such DSQT or DRSQT is assigned, such 

DSQT or DRSQT must maintain continuous 

quotations for not less than 99% of the series of the 

option listed on the Exchange until the close of that 

trading day. 

9Phlx Rule 1034 establishes maximum allowable 

bid/ask differentials on the Exchange. 

10A quote ‘‘block’’ is a component of the 

Exhange’s SQF application that allows for delivery 

of a set of multiple quotations from the SQT or 

RSQT to the Exchange. Within a single ‘‘block,’’ the 

SQT or RSQT can deliver quotes for any number 

of option series ranging from 1 to 99. 

11 In approving this proposed rule change, the 

Commission notes that it has considered the 

proposed rule’s impact on efficiency, competition, 

and capital formation. See 15 U.S.C. 78c(f). 12 15 U.S.C. 78f(b)(5). 

13 15 U.S.C. 78s(b)(2). 

14 17 CFR 200.30–3(a)(12). 

parameters on the Exchange 7 and 

efficiency of quote submission through 

the Specialized Quote Feed (‘‘SQF’’), as 

defined in Phlx Rule 1080, Commentary 

.01. Failure to meet established 

minimum performance requirements 

could result in restriction by the OAESC 

of additional options assignments; 

suspension, termination, or restriction 

of an existing assignment on one or 

more options; or suspension, 

termination, or restriction of an SQT’s 

or RSQT’s status as such. 

Phlx Rule 510 would establish 

specific criteria for each option assigned 

to an SQT or RSQT that would be 

regularly evaluated by the Exchange. 

First, the Exchange would evaluate the 

percentage of total quotes submitted by 

the SQT or RSQT that represent the 

NBBO. If the percentage of the total 

quotes that represent the NBBO is in the 

lowest quartile of all SQTs or RSQTs for 

two or more consecutive months, this 

may be considered sub-standard 

performance. Second, the Exchange 

would evaluate the SQT or RSQT’s 

adherence to the Exchange’s established 

quoting requirements pursuant to Phlx 

Rule 1014.8 If an SQT or RSQT fails to 

meet the quoting requirements as 

prescribed by the rule, this may be 

considered sub-standard performance. 

Third, the Exchange would consider the 

number of requests for quote spread 

parameter 9 relief for the purposes of 

evaluating performance standards. 

Finally, to evaluate efficient quote 

submission to the Exchange, the 

Exchange would consider how an SQT 

or RSQT optimizes the submission of 

quotes through the SQF, as defined in 

Phlx Rule 1080, by evaluating the 

number of individual quotes per quote 

‘‘block’’ received by the Exchange.10 An 

SQT or RSQT is assigned a number of 

ports or lines on which they can send 

quote blocks. The number of lines 

assigned dictates the number of blocks 

that may be sent simultaneously by the 

SQT or RSQT. The number of lines 

assigned to an SQT or RSQT is generally 

a function of the number of products 

being quoted, taking into account the 

throughput required to minimize quote 

latency risk. The Exchange intends to 

evaluate the average number of quotes 

(1–99) submitted within the SQT or 

RSQT’s quote blocks. The number of 

quotes delivered in each block would 

generally be a measure of the SQT or 

RSQT’s quoting efficiency. For example, 

a firm sending an average of 1 quote in 

each block may be considered 

inefficient while a firm sending an 

average of 99 quotes in each block 

would be considered very efficient. 

The Exchange explained that, in 

general, the expenditure of systemic 

resources required to process an 

inefficient block is nearly equal to the 

expenditure of systemic resources 

required to process an efficient block. 

Therefore, an efficient SQT or RSQT can 

achieve a much higher level of quote 

submission than an inefficient SQT or 

RSQT using nearly the same amount of 

exchange system resources. The 

Exchange believes that the regular 

monitoring of quoting efficiency in this 

fashion will result in more efficient 

quoting on the Exchange (i.e., more 

quotes submitted per block), thus 

preserving and maximizing Exchange 

system capacity for handling quote 

traffic. 

III. Discussion 

After careful review of the proposal, 

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.11 In 

particular, the Commission finds that 

the proposal is consistent with Section 

6(b)(5) of the Act,12 which requires, 

among other things, that the rules of an 

exchange be 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. 

The Commission believes that the 

Exchange’s proposal to establish 

performance requirements for SQTs and 

RSQTs should, among other things, 

encourage Exchange traders to enhance 

quoting efficiency, preserve system 

capacity, and minimize requests for 

relief from quote spread parameters. 

Consequently, the proposal should 

encourage Phlx SQTs and RSQTs to 

strive to improve their performance as 

market makers on the Exchange, as well 

as help to mitigate the Exchange’s quote 

message traffic. 

IV. Conclusion 

It is therefore ordered, pursuant to 

Section 19(b)(2) of the Act,13 that the 

proposed rule change (SR–Phlx–2006–

51), be, and hereby is, approved. 

For the Commission, by the Division of 

Market Regulation, pursuant to delegated 

authority.14

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E7–586 Filed 1–17–07; 8:45 am] 

BILLING CODE 8011–01–P 

SMALL BUSINESS ADMINISTRATION 

Advisory Committee on Veterans 

Business Affairs; Public Meeting 

The U.S. Small Business 

Administration (SBA), pursuant to the 

Veterans Entrepreneurship and Small 

Business Development Act of 1999 (Pub. 

L. 106–50), Advisory Committee on 

Veterans Business Affairs will host a 

public meeting on Friday, January 26, 

2007, starting at 9 a.m. until 5 p.m. EST. 

The meeting will take place at SBA, 409 

3rd Street, SW., Eisenhower Conference 

Room, Side B, 2nd Floor, Washington, 

DC 20416. 

The purpose of the meeting is to 

select the Committee’s Chairman and 

Vice-Chairman and outline the agenda 

for 2007. 

Anyone wishing to attend must 

contact Cheryl Clark, Program Liaison, 

Office of Veterans Business 

Development at (202) 205–6773, or send 

e-mail to cheryl.clark@sba.gov. 

Matthew Teague, 

Committee Management Officer. 

[FR Doc. E7–613 Filed 1–17–07; 8:45 am] 

BILLING CODE 8025–01–P 


pwalker on PROD1PC71 with NOTICES