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
Federal Register / Vol. 72, No. 15 / Wednesday, January 24, 2007 / Notices 3187 

9See Securities Exchange Act Release No. 50100 

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

Phlx–2003–59). 

10Currently, the IOC order type is not eligible for 

submission by non-SQT ROTs and specialists, and 

all orders must be for a minimum size of 10 

contracts. The proposal would permit orders with 

a size of less than 10 contracts, provided that such 

orders must be submitted as IOC only. Orders 

submitted by non-SQT ROTs and specialists with 

a size of 10 contracts or greater would be eligible 

to be placed on the limit order book. 

11Currently, the Exchange permits SQTs to 

submit electronic quotations only. The proposal 

would permit SQTs to submit IOC limit orders in 

addition to electronic quotations. The quoting 

obligations applicable to SQTs contained in 

Exchange Rule 1014(b)(ii)(D) would be unchanged. 

12Any unresolved locked or crossed markets 

remaining after the counting period are 

automatically executed. 

13See Phlx Rule 1082. 

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

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

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 offer an additional 

mechanism for participants on the 

Exchange’s electronic trading platform 

for options, Phlx XL,9 to trade against 

orders and electronic quotations. 

Currently, only non-SQT ROTs and 

specialists may enter limit orders, and 

such limit orders may only be submitted 

with a minimum size of 10 contracts as 

Good-Till-Cancelled, day limit and 

simple cancel orders. Under the 

proposal, the Exchange would expand 

limit order entry to SQTs and RSQTs, 

who would be permitted to enter IOC 

orders with no size limitation. 

The proposal would include 

limitations on the eligible order type 

and permissible order size, depending 

on the status of the participant 

submitting the order. Specifically, nonSQT ROTs and specialists would be 

permitted to submit limit orders with a 

size of 10 contracts or greater as GoodTill-Cancelled, day limit, IOC or simple 

cancel order types. Orders for less than 

10 contracts submitted by non-SQT 

ROTs and specialists would be required 

to be submitted as IOC only.10

SQTs and RSQTs would be permitted 

to submit limit orders of any size,11

provided that all limit orders submitted 

must be IOC. Thus, limit orders 

submitted by SQTs and RSQTs would 

not be eligible to rest on the limit order 

book, and would be cancelled if not 

executed immediately. If only a part of 

such an order is executed immediately, 

the remaining unexecuted contracts in 

such an order would be cancelled. 

Under the proposal, specialists and 

non-SQT ROTs that submit limit orders 

with a size of less than 10 contracts 

must submit such orders as IOC only. 

According to the Exchange, this is to 

ensure that limit orders with a size of 

less than 10 contracts are not placed on 

the limit order book. The Exchange 

believes that this provision should 

encourage liquidity on the Exchange 

and limit orders on the limit order book 

that represent the Exchange’s best bid or 

offer and would thus result in a 

disseminated size of at least 10 contracts 

on the Exchange. 

The purpose of the proposed change 

to Commentary .02 and .03 of Phlx Rule 

1082 is to improve the speed by which 

the Exchange’s systems can 

automatically execute locked or crossed 

quotations against one another and 

eliminate the locked or crossed market 

situation,12 which should, in turn, 

facilitate compliance with firm quote 

obligations.13

2. Statutory Basis 

The Exchange believes that its 

proposal is consistent with Section 6(b) 

of the Act,14 in general, and furthers the 

objectives of Section 6(b)(5) of the Act,15

in particular, in that the proposal 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 increasing the 

efficiency of options trading on the 

Exchange by allowing on-floor 

participants to electronically enter an 

additional type of order, which should 

increase the number of automatic 

executions. The Exchange believes that 

this new functionality should increase 

order interaction between market 

participants on the Exchange and the 

electronic limit order book. The 

Exchange also believes that reducing the 

counting period during which market 

participants may resolve locked and 

crossed markets should improve market 

efficiency by eliminating locked and 

crossed markets in a more timely 

fashion. 

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 solicited 

or 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 Phlx 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 

Number SR–Phlx–2006–31 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–2006–31. 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 


pwalker on PROD1PC71 with NOTICES
3188 Federal Register / Vol. 72, No. 15 / Wednesday, January 24, 2007 / Notices 

16 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3See Securities Exchange Act Release No. 54890 

(December 7, 2006), 71 FR 74975. 

4The MDDN is an internet protocol multicast 

network developed by PBOT and SAVVIS 

Communications. 

5Approximately 65 vendors, including for 

example Bloomberg L.P., Telekurs Financial 

Information Ltd. and Thomson Financial, have 

already entered into such market data agreements 

with PBOT. The PBOT has contracted with one or 

more major Market Data Vendors to receive realtime and closing index values over the MDDN and 

promptly redistribute such values. At least three of 

the vendors have elected to offer only the 

continuous real-time market data and will not offer 

snapshot or delayed data. The fees described in this 

proposed rule change cover values of all the 

indexes disseminated over the MDDN. 

6See Securities Exchange Act Release No. 53790 

(May 11, 2006), 71 FR 28738 (May 17, 2006) 

(‘‘Original Approval Order’’). The subscriber fees 

are set out in agreements that PBOT executed with 

various market data vendors for the right to receive, 

store, and retransmit the current and closing index 

values transmitted over the MDDN. In its original 

proposal, the Exchange stated that, under these 

vendor agreements PBOT may change any of the 

fees enumerated in the agreement by giving the 

vendor or subvendor advance written notice of such 

changes. The Commission conditioned any such fee 

change on the submission by Phlx of a proposed 

rule change under Section 19(b) of the Act, and 

approval of such proposal. See 71 FR at 28740. 

7The Commission notes that all market data 

vendors which provide market data to 200,000 or 

more Devices in any month qualify for a 15% 

Administrative Fee credit for that month, to be 

deducted from the monthly Subscriber Fees that 

they collect and are obligated to pay PBOT under 

the Vendor/Subvendor Agreement. 

8 In approving this proposed rule change, the 

Commission has considered the proposed rule’s 

impact on efficiency, competition, and capital 

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

9 15 U.S.C. 78f. 

10 15 U.S.C. 78f(b)(5). 

11 17 CFR 242.603. See Original Approval Order, 

71 FR at 28739, supra note 6, noting that the 

subscriber fees were consistent with Rule 603 under 

the Act. 

12 17 CFR 242.603. 

13 15 U.S.C. 78f(b)(4). 

14 15 U.S.C. 78s(b)(2). 

15 17 CFR 200.30–3(a)(12). 

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–2006–31 and should 

be submitted on or before February 14, 

2007. 

For the Commission, by the Division of 

Market Regulation, pursuant to delegated 

authority.16

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E7–977 Filed 1–23–07; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–55111; File No. SR–Phlx–

2006–59] 

Self-Regulatory Organizations; 

Philadelphia Stock Exchange, Inc.; 

Order Granting Approval of Proposed 

Rule Change as Modified by 

Amendments No. 1 and 2 Thereto 

Relating to an Amendment to a 

Philadelphia Board of Trade Market 

Data Distribution Network Fee 

January 16, 2007. 

I. Introduction 

On September 26, 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 proposal to increase a fee 

assessed by the Exchange’s wholly 

owned subsidiary, the Philadelphia 

Board of Trade (‘‘PBOT’’), on market 

data vendors for certain index values 

that subscribers receive over PBOT’s 

Market Data Distribution Network 

(‘‘MDDN’’). The Phlx filed Amendment 

No. 1 to the proposed rule change on 

November 1, 2006 and filed 

Amendment No. 2 on December 6, 2006. 

The proposed rule change, as amended, 

was published for comment in the 

Federal Register on December 13, 

2006.3 The Commission received no 

comments regarding the proposal. This 

order approves the proposed rule 

change, as amended. 

II. Description of the Proposal 

The Phlx proposes to amend one of 

the fees charged by the PBOT for certain 

market data disseminated over the 

MDDN.4 The Phlx has licensed the 

current and closing index values 

underlying most of the Phlx’s 

proprietary indexes to PBOT for the 

purpose of selling, reproducing, and 

distributing the index values over 

PBOT’s MDDN. On each trading day, 

the Exchange or its third party designee 

calculates and makes available to PBOT 

a real-time index value every 15 seconds 

and a closing index value at the end of 

the day. In exchange for subscriber fees 

paid to PBOT, market data vendors are 

allowed to widely disseminate this 

market data for all the values of Phlx’s 

proprietary indexes to their 

subscribers.5

As approved by the Commission, the 

market data fees charged by PBOT 

included a $.00025 per request fee for 

‘‘snapshot data,’’ which is essentially 

market data that is refreshed no more 

frequently than once every 60 seconds.6

The Exchange is now proposing to 

increase that fee from $.00025 to $.0025 

per request for snapshot data.7

III. Discussion 

After careful consideration, the 

Commission finds that the proposed 

rule change, as amended, is consistent 

with the requirements of the Act and the 

rules and regulations thereunder 

applicable to a national securities 

exchange 8 and, in particular, the 

requirements of Section 6 of the Act.9

Specifically, the Commission finds that 

the proposed rule change is consistent 

with Section 6(b)(5) of the Act,10 which 

requires, among other things, that the 

rules of a national securities 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 continues to believe 

that Phlx’s proposal is consistent with 

Rule 603 under the Act.11 In this regard, 

the Commission notes that the Exchange 

represented that PBOT’s proposed fee 

increase reflects a more accurate 

valuation of the value of snapshot data 

to investors than the original snapshot 

data fee did, consistent with Rule 603 

under the Act.12 The Commission 

believes that the proposal is consistent 

with Section 6(b)(4) of the Act,13 in that 

the proposed rule change provides for 

the equitable allocation of reasonable 

dues, fees, and other charges among the 

Exchange’s members and issuers and 

other persons using its facilities. 

IV. Conclusion 

It is therefore ordered, pursuant to 

Section 19(b)(2) of the Act,14 that the 

proposed rule change (SR–Phlx–2006–

59), as amended, is hereby approved. 

For the Commission, by the Division of 

Market Regulation, pursuant to delegated 

authority.15

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E7–958 Filed 1–23–07; 8:45 am] 

BILLING CODE 8011–01–P 


pwalker on PROD1PC71 with NOTICES