Document ID: SEC-2007-0255-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rulechanges: Philadelphia Stock Exchange, Inc.
Posted Date: 2007-02-20T05:00Z

[Federal Register: February 20, 2007 (Volume 72, Number 33)]
[Notices]               
[Page 7807-7809]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr20fe07-38]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-55273; File No. SR-Phlx-2007-11]

 
Self-Regulatory Organizations; Philadelphia Stock Exchange, Inc.; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change 
Relating to the Trading Phase Date of Regulation NMS

February 12, 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 February 6, 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 and 
II, below, which Items have been prepared by the Phlx. The Exchange 
filed the proposal as a ``non-controversial'' rule change pursuant to 
Section 19(b)(3)(A) of the Act \3\ and Rule 19b-4(f)(6) thereunder,\4\ 
which rendered 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)(6).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Phlx proposes to clarify the operation of XLE, the Exchange's 
new equity trading system, and various Phlx Rules in light of the 
Commission's extension of the Trading Phase Date of Regulation NMS from 
February 5, 2007 until March 5, 2007.\5\ There is no change to Phlx 
Rule text.
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    \5\ See Securities Exchange Act Release No. 55160 (January 24, 
2007), 72 FR 4202 (January 30, 2007).
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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, the Phlx included statements 
concerning the purpose of and basis for the

[[Page 7808]]

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 effect on 
XLE and various Phlx Rules of the Commission's extension of the Trading 
Phase Date of Regulation NMS from February 5, 2007 until March 5, 
2007.\6\ The Trading Phase Date is significant to the Exchange because 
that is the ``[f]inal date for full operation of Regulation NMS-
compliant trading systems [by exchanges] that intend to qualify their 
quotations for trade-through protection under Rule 611 [during the 
roll-out of Regulation NMS].'' \7\ The Phlx intends to qualify its 
quotations for trade-through protection under Rule 611 during the roll-
out of Regulation NMS and therefore intends to operate a Regulation 
NMS-compliant trading system no later than the Trading Phase Date.\8\
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    \6\ Id.
    \7\ Id. at 4203.
    \8\ See Phlx Rule 160.
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    A number of Phlx Rules or portions of Rules adopted by Phlx in 
connection with XLE were approved with delayed effectiveness by the 
Commission until the Trading Phase Date that was in effect at that 
time, which was February 5, 2007.\9\ With this proposed rule change, 
the Exchange clarifies that the effectiveness of these rules or 
portions of rules is tied to the Trading Phase Date, currently March 5, 
2007, not to February 5, 2007. The Phlx Rules that are affected by this 
clarification include, but are not necessarily limited to the 
following: Phlx Rule 1(cc), Definition of Protected Bid, Offer or 
Quotation; Phlx Rule 185(b)(2)(C), regarding Intermarket Sweep Orders 
(``ISOs''); \10\ Phlx Rule 185(c)(2)(D), regarding IOC Cross Orders 
marked by the XLE Participant entering the order as meeting the 
requirements of an intermarket sweep order in Regulation NMS Rule 
600(b)(30); \11\ Phlx Rule 185(c)(3), regarding IOC Cross Orders marked 
Benchmark or Qualified Contingent Trade; \12\ Phlx Rule 185(h), 
regarding the ``self-help'' exemption to Rule 611; and Phlx Rule 186, 
Locking or Crossing Quotations in NMS Stocks. The Exchange also 
clarifies that the use of the term ``Trading Phase Date'' in Phlx Rule 
185A means the Trading Phase Date, currently March 5, 2007, not 
February 5, 2007.
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    \9\ See Securities Exchange Act Release No. 54538 (September 28, 
2006), 71 FR 59184 (October 6, 2006) (``XLE Approval Order'').
    \10\ Phlx notes, however, ISOs and IOC Cross Orders marked by 
the XLE Participant entering the order as meeting the requirements 
of an intermarket sweep order in Regulation NMS Rule 600(b)(30) 
currently have a limited effectiveness pursuant to Phlx Rule 
185A(b). See Securities Exchange Act Release Nos. 54788 (November 
20, 2006), 71 FR 68877 (November 28, 2006) (SR-Phlx-2006-77) and 
54760 (November 15, 2006), 71 FR 67687 (November 22, 2006) (SR-Phlx-
2006-76).
    \11\ See supra note 10.
    \12\ Phlx notes, however, IOC Cross Orders marked Benchmark or 
Qualified Contingent Trade for Nasdaq securities currently are 
effective pursuant to Phlx Rule 185A(c) and (d). See Securities 
Exchange Act Release No. 55044 (January 5, 2007), 72 FR 1361 
(January 11, 2007) (SR-Phlx-2006-92). In addition, Phlx may file 
additional proposed rule change(s) regarding IOC Cross Orders marked 
Benchmark or Qualified Contingent Trade for non-Nasdaq securities 
before March 5, 2007.
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    Finally, the XLE Approval Order noted that the certain features of 
XLE would be rolled out in three phases. Phases 1 and 2, concerning 
two-sided orders and ``Do Not Route'' orders, are completed. Phase 3, 
routing functionally, is currently being rolled out and is scheduled to 
be completed before March 5, 2007.
2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act \13\ in general, and furthers the objectives of Section 
6(b)(5) of the Act \14\ 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 clarifying the effect on Phlx Rules of the recent extension 
of the Trading Phase Date of Regulation NMS from February 5, 2007 until 
March 5, 2007.
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    \13\ 15 U.S.C. 78f(b).
    \14\ 15 U.S.C. 78f(b)(5).
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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 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 \15\ and Rule 19b-
4(f)(6) thereunder.\16\ As required under Rule 19b-4(f)(6)(iii) under 
the Act,\17\ 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.
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    \15\ 15 U.S.C. 78s(b)(3)(A).
    \16\ 17 CFR 240.19b-4(f)(6).
    \17\ 17 CFR 240.19b-4(f)(6)(iii).
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    A proposed rule change filed under Rule 19b-4(f)(6) under the Act 
\18\ normally may not become operative prior to 30 days after the date 
of filing. However, Rule 19b-4(f)(6)(iii) under the Act \19\ 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 effect on Phlx Rules of 
the recent extension of the Trading Phase Date of Regulation NMS from 
February 5, 2007 until March 5, 2007.\20\ Accordingly, the Commission 
designates the proposal to be effective and operative upon filing with 
the Commission.
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    \18\ 17 CFR 240.19b-4(f)(6).
    \19\ 17 CFR 240.19b-4(f)(6)(iii).
    \20\ For the purposes only of waiving the operative delay for 
this proposal, the Commission has considered the proposed rule's 
impact on efficiency, competition, and capital formation. 15 U.S.C. 
78c(f).
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    At any time within 60 days of the filing of the proposed rule 
change, the

[[Page 7809]]

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.\21\
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    \21\ 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-2007-11 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-2007-11. 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-2007-11 and should be submitted on or before March 13, 2007.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\22\
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    \22\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7-2843 Filed 2-16-07; 8:45 am]

BILLING CODE 8011-01-P