Document ID: SEC-2007-0459-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: Philadelphia Stock Exchange, Inc.
Posted Date: 2007-03-27T04:00Z

[Federal Register: March 27, 2007 (Volume 72, Number 58)]
[Notices]               
[Page 14316-14318]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr27mr07-82]                         

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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

[[Page 14317]]

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.
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    \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.
    \4\ 15 U.S.C. 78s(b)(3)(A).
    \5\ 17 CFR 240.19b-4(f)(2).
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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.

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    \6\ An 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). .
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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.
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    \8\ The 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.
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    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.
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    \10\ 15 U.S.C. 78f(b).
    \11\ 15 U.S.C. 78f(b)(4).
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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\
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    \12\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \13\ 17 CFR 240.19b-4(f)(2).
    \14\ For 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).
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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 rule-comments@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,

[[Page 14318]]

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\
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    \15\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
 [FR Doc. E7-5547 Filed 3-26-07; 8:45 am]

BILLING CODE 8010-01-P