Document ID: SEC-2006-1528-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: Philadelphia Stock Exchange, Inc.
Posted Date: 2006-11-28T05:00Z

[Federal Register: November 28, 2006 (Volume 71, Number 228)]
[Notices]               
[Page 68877-68878]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr28no06-104]                         

[[Page 68877]]

-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-54788; File No. SR-Phlx-2006-77]

 
Self-Regulatory Organizations; Philadelphia Stock Exchange, Inc.; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change 
Relating to Intermarket Sweep Orders in Nasdaq Securities

November 20, 2006.
    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 November 15, 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 and 
II, below, which Items have been prepared by the Phlx. On November 17, 
the Exchange filed Amendment No. 1 to the proposed rule change.\3\ The 
Exchange filed the proposal as a ``non-controversial'' rule change 
pursuant to Section 19(b)(3)(A) of the Act \4\ and Rule 19b-4(f)(6) 
thereunder,\5\ which rendered the proposal effective upon filing with 
the Commission. The Commission is publishing this notice to solicit 
comments on the amended proposed rule change from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ Partial Amendment No. 1 corrected a typographical error in 
the original filing.
    \4\ 15 U.S.C. 78s(b)(3)(A).
    \5\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Phlx proposes to amend Phlx Rule 185A, Intermarket Sweep 
Orders--Temporary, to describe the obligations of the XLE Participants 
sending Intermarket Sweep Orders (``ISOs'') \6\ or IOC Cross Orders 
that are marked as meeting the requirement to route to other market 
centers \7\ (both types of orders hereinafter are referred to as 
``Incoming Sweep Orders'') in Nasdaq Global Market Securities and 
Nasdaq Capital Market Securities (``Nasdaq Securities''). Specifically, 
before Rule 611 of Regulation NMS \8\ is operative on the Exchange (the 
``Trading Phase Date''),\9\ the amended rule would expressly require 
XLE Participants sending Incoming Sweep Orders in Nasdaq Securities to 
simultaneously send an intermarket sweep order (or comparable order) 
for the full displayed size of the top of book of every national 
securities exchange or national securities association displaying a 
better-priced protected quotation. The text of the proposed rule change 
is available on Phlx's Web site, http://www.phlx.com, at Phlx's 

principal office, and at the Commission's Public Reference Room.
---------------------------------------------------------------------------

    \6\ See Phlx Rule 185(b)(2)(C).
    \7\ See Phlx Rule 185(c)(2)(D).
    \8\ 17 CFR 242.611.
    \9\ The Trading Phase Date is February 5, 2007. See Securities 
Exchange Act Release No. 53829 (May 18, 2006), 71 FR 30038 (May 24, 
2006) (File No. S7-10-04).
---------------------------------------------------------------------------

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.

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 clarify the operation 
of Incoming Sweep Orders in Nasdaq Securities before the Trading Phase 
Date. Before the Trading Phase Date, Phlx will require XLE Participants 
who send Incoming Sweep Orders to the Exchange in Nasdaq Securities to 
simultaneously send an intermarket sweep order (or comparable order) 
for the full displayed size of the top of book of every national 
securities exchange or national securities association displaying a 
better-priced protected quotation. This requirement is intended to 
mirror the requirement, which will be operative after the Trading Phase 
Date, that all such Incoming Sweep Orders meet the requirement of 
intermarket sweep orders in Rule 600(b)(30) of Regulation NMS.\10\ Phlx 
recently adopted Rule 185A \11\ to deal with, among other things, the 
obligations of XLE Participants sending Incoming Sweep Orders, but now 
seeks to more clearly state how Rule 185A applies to Nasdaq Securities 
because the reference to ITS Participant in the rule could be 
ambiguous.
---------------------------------------------------------------------------

    \10\ 17 CFR 242.600(b)(30) (defining ``intermarket sweep 
order'').
    \11\ See SR-Phlx-2006-76.
---------------------------------------------------------------------------

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.
---------------------------------------------------------------------------

    \12\ 15 U.S.C. 78f(b).
    \13\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change, as 
amended, 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 either solicited or received by the 
Exchange.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Because the foregoing rule (i) does not significantly affect the 
protection of investors or the public interest; (ii) does not impose 
any significant burden on competition; and (iii) by its terms, does not 
become operative for 30 days from the date on which it was filed, or 
such shorter time as the Commission may designate if consistent with 
the protection of investors and the public interest, provided that the 
Exchange has given the Commission written notice of its intent to file 
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 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\ As required under Rule 19b-4(f)(6)(iii) under 
the Act,\16\ Phlx provided 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, prior to the date of the filing 
of the proposed rule change.
---------------------------------------------------------------------------

    \14\ 15 U.S.C. 78s(b)(3)(A).
    \15\ 17 CFR 240.19b-4(f)(6).
    \16\ 17 CFR 240.19b-4(f)(6)(iii).

---------------------------------------------------------------------------

[[Page 68878]]

    A proposed rule change filed under Rule 19b-4(f)(6) under the Act 
\17\ normally may not become operative prior to 30 days after the date 
of filing. However, Rule 19b-4(f)(6)(iii) under the Act \18\ 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, 
which would make the rule change effective and operative upon filing. 
The Commission believes that waiver of the 30-day operative delay is 
consistent with the protection of investors and the public interest 
because the proposed rule change clarifies the operation of Phlx Rule 
185A with respect to the protection of better-priced quotations in 
Nasdaq Securities. Accordingly, the Commission designates the amended 
proposal to be effective and operative upon filing with the 
Commission.\19\
---------------------------------------------------------------------------

    \17\ 17 CFR 240.19b-4(f)(6).
    \18\ 17 CFR 240.19b-4(f)(6)(iii).
    \19\ For the purposes only of accelerating the operative date of 
this proposal, the Commission has considered the proposed rule's 
impact on efficiency, competition, and capital formation. 15 U.S.C. 
78c(f).
---------------------------------------------------------------------------

    At any time within 60 days of the filing of the proposed rule 
change, as amended, 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.\20\
---------------------------------------------------------------------------

    \20\ See 15 U.S.C. 78s(b)(3)(C).
---------------------------------------------------------------------------

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change, as amended, 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-2006-77 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-2006-77. 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 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-2006-77 and should be submitted on or before December 19, 2006.
---------------------------------------------------------------------------

    \21\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\21\
Jill M. Peterson,
Assistant Secretary.
[FR Doc. E6-20128 Filed 11-27-06; 8:45 am]

BILLING CODE 8011-01-P