55190 Federal Register / Vol. 73, No. 186 / Wednesday, September 24, 2008 / Notices 

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

14 17 CFR 240.19b–4(f)(6). 

15For purposes only of waiving the 30-day 

operative delay and five business-day pre-filing 

requirement, the Commission has considered the 

proposed rule’s impact on efficiency, competition, 

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

16See Securities Exchange Act Release Nos. 

58203 (July 22, 2008), 73 FR 43812 (July 28, 2008) 

(SR–NYSEArca–2008–57) and 58204 (July 22, 

2008), 73 FR 43807 (July 28, 2008) (SR–CBOE– 

2008–64). 

17 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)(6). 

5 15 U.S.C. 78s(b)(1). 

6 17 CFR 240.19b–4. 

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 

nor received. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

Because the foregoing proposed rule 

change: (1) Does not significantly affect 

the protection of investors or the public 

interest; (2) does not impose any 

significant burden on competition; and 

(3) by its terms does not become 

operative for 30 days after the date of 

this filing, or such shorter time as the 

Commission may designate if consistent 

with the protection of investors and the 

public interest, the proposed rule 

change has become effective pursuant to 

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

Rule 19b–4(f)(6) thereunder.14

A proposed rule change filed under 

Rule 19b–4(f)(6) normally does not 

become operative for 30 days after the 

date of filing. In addition, Rule 19b– 

4(f)(6)(iii) requires a self-regulatory 

organization to provide the Commission 

with written notice of its intent to file 

the proposed rule change, along with a 

brief description and text of the 

proposed rule change, at least five 

business days prior to the date of filing 

of the proposed rule change, or such 

shorter time as designated by the 

Commission. However, Rule 19b– 

4(f)(6)(iii) permits the Commission to 

designate a shorter time if such action 

is consistent with the protection of 

investors and the public interest. The 

Exchange requests that the Commission 

waive the 30-day operative delay as well 

as the five business-day pre-filing 

requirement so that the Exchange is able 

to compete with other options 

exchanges that are currently permitted 

to list and trade options on IndexLinked Securities. The Commission 

believes that waiving the 30-day 

operative delay and five business-day 

pre-filing requirement is consistent with 

the protection of investors and the 

public interest.15 The Commission notes 

the proposal is substantively identical to 

proposals that were recently approved 

by the Commission, and does not raise 

any new regulatory issues.16 For these 

reasons, the Commission designates the 

proposed rule change as operative upon 

filing. 

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–2008–60 on the 

subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Secretary, Securities and Exchange 

Commission, 100 F Street, NE., 

Washington, DC 20549–1090. 

All submissions should refer to File 

Number SR–Phlx–2008–60. 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, 100 F Street, NE., Washington, 

DC 20549, on official business days 

between the hours of 10 a.m. and 3 p.m. 

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 

Number SR–Phlx–2008–60 and should 

be submitted on or before October 15, 

2008. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.17

J. Lynn Taylor, 

Assistant Secretary. 

[FR Doc. E8–22249 Filed 9–23–08; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–58582; File No. SR–Phlx– 

2008–66] 

Self-Regulatory Organizations; 

NASDAQ OMX PHLX, Inc.; Notice of 

Filing and Immediate Effectiveness of 

Proposed Rule Change Relating to 

Quotation Size Decrementation 

September 18, 2008. 

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 

September 16, 2008, the NASDAQ OMX 

PHLX, Inc. (‘‘Phlx’’ or ‘‘Exchange’’) filed 

with the Securities and Exchange 

Commission (‘‘Commission’’) the 

proposed rule change as described in 

Items I and II below, which Items have 

been prepared by Phlx. Phlx filed the 

proposed rule change pursuant to 

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

19b–4(f)(6) thereunder,4 which renders 

it effective upon filing with the 

Commission. 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 Exchange, pursuant to Section 

19(b)(1) of the Act 5 and Rule 19b–4 

thereunder,6 proposes to amend 

Exchange Rule 1082, Firm Quotations, 

to reflect a change to its fully electronic 


jlentini on PROD1PC65 with NOTICES
Federal Register / Vol. 73, No. 186 / Wednesday, September 24, 2008 / Notices 55191 

7See Securities Exchange Act Release No. 50100 

(July 27, 2004), 69 FR 44612 (August 3, 2004) (SR– 

Phlx–2003–59). [sic] 

8An SQT is a Registered Options Trader (‘‘ROT’’) 

who has received permission from the Exchange to 

generate and submit option quotations 

electronically through an electronic interface with 

AUTOM via an Exchange approved proprietary 

electronic quoting device in eligible options to 

which such SQT is assigned. See Exchange Rule 

1014(b)(ii)(A). 

9An RSQT is an 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). 

10A non-SQT ROT is an ROT who is neither an 

SQT nor an RSQT. See Exchange Rule 

1014(b)(ii)(C). 11See Exchange Rule 1082(a)(ii)(B)(1). 

12 15 U.S.C. 78f(b). 13 15 U.S.C. 78f(b)(5). 14 15 U.S.C. 78s(b)(3)(A). 15 17 CFR 240.19b–4(f)(6). Pursuant to Rule 19b– 

4(f)(6)(iii) under the Act, the Exchange is required 

to give the Commission written notice of its intent 

to file the proposed rule change, along with a brief 

description and text of the proposed rule change, 

at least five business days prior to the date of filing 

of the proposed rule change, or such shorter time 

as designated by the Commission. The Exchange 

has requested that the Commission waive the 5-day 

pre-filing notice requirement. The Commission has 

determined to waive this requirement. 

trading platform for options, Phlx XL,7

in which automatic executions will 

decrement the Exchange’s disseminated 

size by the amount of the automatic 

execution. 

The text of the proposed rule change 

is available on the Exchange’s Web site 

at http://www.phlx.com/regulatory/ 

reg_rulefilings.aspx. 

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 

Exchange 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 

Exchange 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 enhance the ability of 

Exchange Streaming Quote Traders 

(‘‘SQTs’’),8 Remote Streaming Quote 

Traders (‘‘RSQTs’’),9 non-SQT ROTs,10

and specialists (collectively, ‘‘Phlx XL 

participants’’) to better manage risk by 

modifying the Phlx XL system such that 

when a trade occurs, the Phlx XL system 

will decrement the quote size by the 

number of contracts traded in the 

affected option series on the side of the 

market that has traded (i.e., bid size for 

sell transactions and offer size for buy 

transactions). 

Phlx XL currently does not decrement 

quotation size in real time. Instead, a 

Phlx XL participant has control over his 

or her quotation size and can refresh the 

size (and price) for which he or she is 

firm at the disseminated price. Phlx XL 

participants have experienced situations 

where they execute more contracts at a 

particular price than they intended due 

to the fact that Phlx XL currently does 

not decrement quote size in real time. 

The following example illustrates the 

issue that the proposed system change 

would solve: 

A Phlx XL participant submits an 

electronic quotation (a bid) to buy 100 

contracts. Under the current system 

functionality, if a single trade of 100 

contracts to sell interacts with that bid 

for 100 contracts, all 100 contracts will 

be executed and the Phlx XL 

participant’s quotation will be 

exhausted and removed from the market 

place until that Phlx XL participant 

refreshes his or her quotation.11

If, however, a single trade of 100 

contracts to sell interacts with that bid 

for anything less than its full size, the 

Phlx XL system currently does not 

decrement the size of the bid, and the 

bid is still firm for the full original size 

of 100 contracts. For example, a single 

trade of 90 contracts occurs on the bid 

price, all 90 contracts would be 

executed automatically, but the 

disseminated size of the quotation will 

continue to be 100 contracts. Phlx XL 

participants have experienced situations 

where a quotation could be for a size of 

100 contracts and an execution occurs 

for 99 contracts, followed by an 

additional execution of 100 contracts at 

the same price before the Phlx XL 

participant can revise his or her 

quotation in the affected series, for a 

total execution of 199 contracts when 

the quotation was only intended to be 

for a size of 100 contracts at the 

disseminated price. The Exchange 

believes that this aspect of the current 

system exposes Phlx XL participants to 

undue risk respecting the size for which 

they are firm at a particular price in a 

particular option series. 

Accordingly, under the proposal, 

every trade executed automatically in 

the Phlx XL system would cause the 

Exchange’s disseminated size to be 

reduced by the number of contracts 

traded in the affected series at the 

disseminated price. Receipt of a revised 

quote from the affected Phlx XL 

participant would reset the price and 

size for that series. 

2. Statutory Basis 

The Exchange believes that its 

proposal is consistent with Section 6(b) 

of the Act 12 in general, and furthers the 

objectives of Section 6(b)(5) of the Act 13

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 

providing Phlx XL participants with 

additional protection from exposure to 

undue market risk through the real-time 

decrementation of the Exchange’s 

disseminated size. 

The Exchange further believes that the 

proposed rule change is consistent with 

the Act because the risk protection 

afforded Phlx XL participants should 

encourage them to quote options series 

with greater size, adding liquidity to the 

Exchange’s markets against which 

customers can trade. 

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 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 were neither 

solicited nor received. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

Because the proposed rule change: (i) 

Does not significantly affect the 

protection of investors or the public 

interest; (ii) does not impose any 

significant burden on competition; and 

(iii) does not become operative for 30 

days after the date of the filing, or such 

shorter time as the Commission may 

designate if consistent with the 

protection of investors and the public 

interest, the proposed rule change has 

become effective pursuant to Section 

19(b)(3)(A) of the Act 14 and Rule 19b– 

4(f)(6) thereunder.15

A proposed rule change filed 

pursuant to Rule 19b–4(f)(6) under the 


jlentini on PROD1PC65 with NOTICES
55192 Federal Register / Vol. 73, No. 186 / Wednesday, September 24, 2008 / Notices 

16 17 CFR 240.19b–4(f)(6). 

17 17 CFR 240.19b–4(f)(6)(iii). 

18For purposes only of waiving the 30-day 

operative delay, the Commission has considered the 

proposed rule’s impact on efficiency, competition, 

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

19 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. 58101 

(July 3, 2008), 73 FR 40002. 

4See e-mail from Kirk Allen, Managing Director, 

Trading, NWQ Investment Management, dated 

August 1, 2008 (‘‘NWQ Investment Letter’’) and 

letter from William D. Edick, Pickard and Djinis 

LLP, to Florence E. Harmon, Acting Secretary, 

Commission, dated September 11, 2008 (‘‘Pickard 

Letter’’). 

5Nasdaq states that a step-out is a clearing entry 

used to transfer a broker’s position in a security to 

another broker, or within accounts at a firm. 

6Rule 7038(b). 

7Rule 7038(c). 

8Rule 7042. Nasdaq states that this requirement 

follows the general standard for riskless principal 

transactions articulated in Financial Industry 

Regulatory Authority (‘‘FINRA’’) Rule 4632(d)(3)(B). 

9Rule 7038(d), 7042(b) and 7043(a). 

10Rule 7043. 

Act 16 normally does not become 

operative for 30 days after the date of its 

filing. However, Rule 19b–4(f)(6)(iii) 17

permits the Commission to designate a 

shorter time if such action is consistent 

with the protection of investors and the 

public interest. The Exchange has 

requested that the Commission waive 

the 30-day operative delay. The 

Commission believes that waiving the 

30-day operative delay is consistent 

with the protection of investors and the 

public interest. The Commission notes 

that under the proposal, the Exchange’s 

disseminated size should accurately 

reflect revised quotation sizes based on 

automatic executions through Phlx XL 

in real time. Accordingly, the 

Commission designates that the 

proposed rule change become operative 

immediately.18

At any time within 60 days of the 

filing of the proposed rule change, the 

Commission may summarily abrogate 

the 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–2008–66 on the 

subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Secretary, Securities and Exchange 

Commission, 100 F Street, NE., 

Washington, DC 20549–1090. 

All submissions should refer to File 

Number SR–Phlx–2008–66. 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, 100 F Street, NE., Washington, 

DC 20549, on official business days 

between the hours of 10 am and 3 pm. 

Copies of such filing also will be 

available for inspection and copying at 

the principal office of 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–2008–66 and should 

be submitted on or before October 15, 

2008. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.19

J. Lynn Taylor, 

Assistant Secretary. 

[FR Doc. E8–22378 Filed 9–23–08; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–58569; File No. SR– 

NASDAQ–2008–033] 

Self-Regulatory Organizations; The 

NASDAQ Stock Market LLC; Order 

Approving Proposed Rule Change as 

Modified by Amendment Nos. 1 and 2 

Related to Submission of Non-Tape 

Reports 

September 17, 2008. 

I. Introduction 

On April 18, 2008, The NASDAQ 

Stock Market LLC (‘‘Nasdaq’’) filed with 

the Securities and Exchange 

Commission (‘‘Commission’’), pursuant 

to Section 19(b)(1) of the Securities 

Exchange Act of 1934 (‘‘Exchange Act’’ 

or ‘‘Act’’) 1 and Rule 19b–4 thereunder,2

a proposed rule change related to 

submission of non-tape reports. On July 

3, 2008, Nasdaq filed Amendment No. 1 

to the proposed rule change. The 

proposed rule change was published for 

comment in the Federal Register on July 

11, 2008.3 Two comments were received 

in support of the proposed rule change.4

On August 11, 2008, Nasdaq filed 

Amendment No. 2 to the proposed rule 

change to make certain technical, nonsubstantive modifications to the original 

rule filing. This order approves the 

proposed rule change, as amended. 

II. Description of the Proposal 

The proposed rule change would: 

Expand the scope of step-outs 5 to 

include all securities transfers from one 

Nasdaq member to another provided the 

transfer does not constitute a reportable 

trade,6 eliminate the requirement for an 

authorizing agreement when Nasdaq 

members use the Automated 

Confirmation Transaction service 

(‘‘ACT’’) to effect a step-out along with 

the transfer of a sales fee or similar fee,7

describe riskless transactions,8 state that 

members may not use the step-out 

function in lieu of reporting a trade,9

and establish a fee for the use of the 

step-out function to transfer a 

transaction fee.10

Nasdaq will allow members to submit 

records for riskless transfers using the 

following capacities: ‘‘Riskless 

Principal’’ where the member acted as 

principal on the trade or trades related 

to the riskless submission; ‘‘Agent’’ 

where the member acted as agent on the 

trade or trades related to the riskless 

submission; and ‘‘Intra-Broker’’ where 

the transfer is occurring strictly within 

a member firm. 

Transaction Fees 

According to Nasdaq, trade reporting 

rules of other SROs allow transaction 

fees to be included in clearing reports. 

Nasdaq proposes to permit members to 

include transaction fees in clearing 

reports submitted under Rule 7038 or 

7042, if the members agree in advance 

to transfer the transaction fee and if they 

are parties to a written agreement 


jlentini on PROD1PC65 with NOTICES