Document ID: SEC-2007-1361-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: Philadelphia Stock Exchange, Inc.
Posted Date: 2007-10-02T04:00Z

[Federal Register: October 2, 2007 (Volume 72, Number 190)]
[Notices]               
[Page 56116-56117]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr02oc07-88]                         

[[Page 56116]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-56535; File No. SR-Phlx-2007-59]

 
Self-Regulatory Organizations; Philadelphia Stock Exchange, Inc.; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change 
Relating to a System Change to the Phlx's Electronic Options Trading 
Platform, Phlx XL

September 26, 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 August 10, 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 prepared substantially by the 
Phlx. The Exchange filed the proposal pursuant to Section 19(b)(3)(A) 
of the Act \3\ and Rule 19b-4(f)(5) thereunder,\4\ which renders the 
proposal effective upon filing with the Commission. The Commission is 
publishing this notice to solicit comments on the proposed rule change 
from interested persons.
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    \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)(5).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Phlx proposes to add a new feature to the Exchange's electronic 
options trading platform, Phlx XL,\5\ that will automatically purge 
quotations submitted by specialists, Streaming Quote Traders 
(``SQTs''),\6\ and Remote Streaming Quote Traders (``RSQTs'') \7\ with 
a bid price of $0.00 and an offering price of $99,999.00.
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    \5\ See Securities Exchange Act Release No. 50100 (July 27, 
2004), 69 FR 46612 (August 3, 2004) (order approving File No. SR-
Phlx-2003-59).
    \6\ An SQT is an Exchange 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 Phlx 
Rule 1014(b)(ii)(A).
    \7\ An RSQT is a participant in Phlx XL who has received 
permission from the Exchange to trade in options for his own 
account, and to generate and submit option quotations electronically 
from off the floor of the Exchange through AUTOM in eligible options 
to which the RSQT has been assigned.
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    The proposed rule change is available at the Phlx, in the 
Commission's Public Reference Room, and on the Phlx's Web site at 
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.

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 help Exchange members 
manage risk by adding a new mechanism to the Phlx XL system to purge 
certain electronic quotations.
    Members quoting and trading on Phlx XL currently have the ability 
to purge electronic quotations in specific options series under certain 
circumstances by sending the appropriate electronic message to Phlx XL.
    It has recently come to the Exchange's attention, however, that 
certain members do not have the ability to send a formatted ``purge'' 
message. Instead, such members that wish to remove their electronic 
quotations in a series submit an artificially wide quotation of $0.00 
bid, $99,999.00 offered with the expectation that the Exchange will 
purge their quotation for the series. Currently, the Exchange does not 
purge such quotations. The Phlx believes that this could result in 
trading errors of great magnitude, necessitating nullification of such 
trades based on the Phlx's obvious error rule.\8\ The Phlx believes 
that member organizations could be inconvenienced during the time 
period needed to investigate and correct the error, and could miss 
trading opportunities while their accounts are corrected.
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    \8\ See Phlx Rule 1092.
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    To address this issue, the Exchange has built a feature of the Phlx 
XL system that will purge any electronic quotation received with a bid 
price of $0.00 and an offering price of $99,999.00. The Exchange 
believes that this will eliminate the substantial risk borne by the 
Exchange and its members in handling such quotations.
2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act,\9\ in general, and furthers the objectives of Section 
6(b)(5) of the Act,\10\ 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 enabling members to better manage risk through the 
automated quote purge feature.
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    \9\ 15 U.S.C. 78f(b).
    \10\ 15 U.S.C. 78f(b)(5).
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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 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.

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

    The Phlx has filed the proposed rule change pursuant to Section 
19(b)(3)(A) of the Act \11\ and subparagraph (f)(5) of Rule 19b-4 
thereunder.\12\ Because the Phlx has designated the foregoing proposed 
rule change as one that effects a change in an existing order entry or 
trading system that does not: (i) Significantly affect the protection 
of investors or the public interest; (ii) impose any significant burden 
on competition; or (iii) have the effect of limiting access to or 
availability of the system, it has become effective pursuant to Section 
19(b)(3)(A) of the Act and Rule 19b-4(f)(5) thereunder.
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    \11\ 15 U.S.C. 78s(b)(3)(A).
    \12\ 17 CFR 240.19b-4(f)(5).
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    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.\13\
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    \13\ 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

[[Page 56117]]

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-2007-59 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-2007-59. 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 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-2007-59 and should be 
submitted on or before October 23, 2007.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\14\
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    \14\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
 [FR Doc. E7-19398 Filed 10-1-07; 8:45 am]

BILLING CODE 8011-01-P