Federal Register / Vol. 72, No. 15 / Wednesday, January 24, 2007 / Notices 3185 

6The Exchange estimates that the difference in 

the amount of Linkage Order Fees payable under 

the old rate as compared to the proposed revised 

rate by customers for trades executed on December 

1, 2006, would be less than $2,000.00. Telephone 

conversation between John Carey, Assistant General 

Counsel, NYSE, and Nathan Saunders, Special 

Counsel, Division of Market Regulation, 

Commission, December 7, 2006. 

7 In approving this proposed rule change, the 

Commission has considered the proposed rule’s 

impact on efficiency, competition, and capital 

formation. See 15 U.S.C. 78c(f). 

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

9 15 U.S.C. 78f(b)(4). 

10 Id. 

11 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. 54914 

(December 11, 2006), 71 FR 75798. 

6The Exchange may increase the MNQ levels by 

submitting to the Commission a rule filing pursuant 

to Section 19(b)(3)(A) of the Act and may decrease 

the MNQ levels upon Commission approval of a 

rule filing submitted pursuant to 19(b)(2) of the Act. 

See proposed Commentary .05 to Phlx Rule 507. 

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

OAESC has jurisdiction over, among other things: 

The appointment of specialists on the options and 

foreign currency options trading floors; allocation, 

retention and transfer of privileges to deal in 

options on the trading floors; and administration of 

the 500 series of Phlx rules. 

8See proposed Commentary .03 to Phlx Rule 507. 

9 15 U.S.C. 78s(b)(3)(A). 

transactions executed through the 

Linkage on December 1, 2006, with the 

regular equity transaction fee payable on 

that day because the difference in the 

amount payable by customers would be 

immaterial, but the Exchange would 

incur significant costs in identifying 

those transactions which should be 

charged the lower fee rate.6

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 7 and, in particular, the 

requirements of Section 6(b) of the Act 8

and the rules and regulations 

thereunder. Specifically, the 

Commission finds that the proposal to 

retroactively apply the increase in the 

Linkage Order Fee is consistent with 

Section 6(b)(4) of the Act,9 which 

requires the equitable allocation of 

reasonable dues, fees, and other charges 

among Exchange members and other 

persons using Exchange facilities. 

It is therefore ordered, pursuant to 

Section 19(b)(2) of the Act,10 that the 

proposed rule change (File No. SR–

NYSE–2006–110) be, and it hereby is, 

approved. 

For the Commission, by the Division of 

Market Regulation, pursuant to delegated 

authority.11

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E7–974 Filed 1–23–07; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–55114; File No. SR–Phlx–

2006–81] 

Self-Regulatory Organizations; 

Philadelphia Stock Exchange, Inc.; 

Order Granting Approval to Proposed 

Rule Change Relating to the 

Establishment of a Maximum Number 

of Quoting Participants Permitted in a 

Particular Option on the Exchange 

January 17, 2007. 

I. Introduction 

On December 5, 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 

amend Phlx Rule 507, which governs 

the assignment of options to Streaming 

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

Streaming Quote Traders (‘‘RSQRs’’),4

by adding commentary to the rule 

establishing a maximum number of 

quoting participants that may be 

assigned to a particular equity option at 

any one time. The proposed rule change 

was published for comment in the 

Federal Register on December 18, 

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 enable the Exchange to 

manage its quotation traffic and 

bandwidth capacity by limiting the 

number of streaming quote market 

participants that may be assigned to a 

particular option at a given point in 

time. The proposed amendments to Phlx 

Rule 507 would establish: (i) A 

maximum number of quoters (‘‘MNQ’’) 

in equity options based on each option’s 

monthly trading volume; (ii) a process 

for recalculating the MNQ based upon 

changes in an option’s monthly trading 

volume; (iii) an increase to the MNQ 

due to exceptional circumstances; (iv) 

the process by which the Exchange will 

notify market participants of changes to 

the MNQ; and (v) additional criteria 

relating to the process by which the 

Exchange will assign SQT and/or RSQT 

applicants in options in the event that 

there are more applicants for assignment 

in a particular option than there are 

positions. 

The Exchange proposes to limit the 

number of participants that may be 

assigned to a particular equity option at 

any one time based upon each option’s 

monthly national volume. Proposed 

Commentary .02 to Phlx Rule 507 sets 

forth tiered MNQ levels providing for 20 

participants for the top 5% most 

actively traded options; 15 participants 

for next 10% most actively traded 

options, and 10 market participants for 

all other options.6 The ranking is based 

upon the preceding month’s national 

volumes. The MNQ would be 

recalculated within the first five days of 

each month based on the previous 

month’s trading volume (‘‘new MNQ’’). 

The Exchange would inform market 

participants of changes to the MNQ via 

Exchange circular. 

The Exchange’s Options Allocation, 

Evaluation and Securities Committee 

(‘‘OAESC’’) 7 would be able to increase 

the MNQ in exceptional circumstances. 

Proposed Commentary .04 to Phlx Rule 

507 describes the events that may be 

considered ‘‘exceptional,’’ including 

substantial trading volume (whether 

actual or expected), a major news event, 

or corporate event. The Exchange would 

also be permitted to reduce the MNQ 

following the cessation of the 

exceptional circumstances, but would 

be required to follow the same 

procedures applicable for decreases to 

the MNQ due to a change in volume.8

When relying on this provision, the 

Exchange would submit a rule filing to 

the Commission pursuant to Section 

19(b)(3)(A) of the Act.9

The Exchange is also proposing to 

amend Phlx Rule 507 by adding criteria 

for the OAESC to consider when 

determining whether to assign an option 

to a member in the situation where there 

are more applicants for assignment in a 

particular option than there are 

positions available. Specifically, 

proposed paragraph (b)(iii) of Phlx Rule 

507 would require the OAESC to 

consider: (i) The financial and technical 

resources available to the applicant; (ii) 


pwalker on PROD1PC71 with NOTICES
3186 Federal Register / Vol. 72, No. 15 / Wednesday, January 24, 2007 / Notices 

10 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). 

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

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

13 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3An SQT is a Registered Options Trader (‘‘ROT’’) 

who has received permission from the Exchange to 

generate and submit option quotations 

electronically through AUTOM in eligible options 

in 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 

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

4An 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 Phlx Rule 

1014(b)(ii)(B). 

5An immediate-or-cancel order is an order that is 

to be executed in whole or in part as soon as such 

order is submitted. Any portion not so executed is 

to be treated as cancelled. 

6AUTOM 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 features, AUTO-X, Book Sweep and Book 

Match. 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. AUTOM is now commonly 

referred to as Phlx XL. See Phlx Rule 1080. 

7A ROT is an on-floor options participant of the 

Exchange who has received permission from the 

Exchange to trade in options for his own account 

in eligible options in which such ROT is assigned. 

See Phlx Rule 1014(b)(i). 

8Any unresolved locked or crossed markets 

remaining after the counting period are 

automatically executed. 

the applicant’s experience and expertise 

in market making or options trading; 

and (iii) the applicant’s prior 

performance as a specialist, SQT or 

RSQT, based on evaluations conducted 

pursuant to Phlx Rule 510, which 

includes quantified measures of 

performance. 

Finally, the Exchange represents that 

members assigned in a particular option 

as of the date of Commission approval 

of this proposed rule change will be 

guaranteed a position as a quoting 

participant in the particular option. 

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.10 In 

particular, the Commission finds that 

the proposal is consistent with Section 

6(b)(5) of the Act,11 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 a 

maximum number of quoting 

participants that may be assigned to a 

particular equity option at any one time 

based on the trading volume of that 

option should enhance the Exchange’s 

ability to manage its quotation traffic 

and bandwidth capacity. 

The Commission further believes that, 

in the event that there are more 

applicants for assignment in a particular 

option than there are available 

positions, the financial and technical 

capacity of SQTs and RSQTs, as well as 

prior performance, are appropriate 

factors to consider and should assist the 

OAESC in allocating the option on an 

equitable basis to the benefit of the 

Exchange and the public. 

IV. Conclusion 

It is therefore ordered, pursuant to 

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

proposed rule change (SR–Phlx–2006–

81), be, and hereby is, approved. 

For the Commission, by the Division of 

Market Regulation, pursuant to delegated 

authority.13

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E7–957 Filed 1–23–07; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–55121; File No. SR–Phlx–

2006–31] 

Self-Regulatory Organizations; 

Philadelphia Stock Exchange, Inc.; 

Notice of Filing of Proposed Rule 

Change and Amendment Nos. 1 and 2 

Thereto, Relating to Limit Orders 

Submitted by Streaming Quote Traders 

January 18, 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 May 5, 

2006, 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. On December 8, 2006, the 

Exchange filed Amendment No. 1 to the 

proposed rule change. On January 11, 

2007, the Exchange filed Amendment 

No. 2 to the proposed rule change. 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 Phlx 

Rule 1080(b)(i)(B) and Commentary .04 

thereto to permit Streaming Quote 

Traders (‘‘SQTs’’) 3 and Remote 

Streaming Quote Traders (‘‘RSQTs’’) 4 to 

enter Immediate or Cancel (‘‘IOC’’) 5

orders for their own account(s) through 

an electronic interface with AUTOM; 6

to permit non-SQT ROTs 7 and 

specialists to place proprietary limit 

orders with a size of 10 contracts or 

greater onto the limit order book; to 

expand the type of order that non-SQT 

ROTs and specialists may enter to 

include IOC; and to permit non-SQT 

ROTs and specialists to submit 

proprietary limit orders with a size of 

less than 10 contracts as IOC only. The 

Exchange further proposes to amend 

Commentary .02 and .03 of Phlx Rule 

1082 to reduce the one-second 

‘‘counting period’’ to 1⁄4 of one second 

during which SQTs, RSQTs and/or 

specialists may eliminate the locked or 

crossed markets caused by their 

electronic quotations.8 The text of the 

proposed rule change is available at 

Phlx, 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, 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. 


pwalker on PROD1PC71 with NOTICES