Document ID: SEC-2007-0816-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: Philadelphia Stock Exchange, Inc.
Posted Date: 2007-06-13T04:00Z

[Federal Register: June 13, 2007 (Volume 72, Number 113)]
[Notices]               
[Page 32695-32697]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr13jn07-123]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-55860; File No. SR-Phlx-2007-41]

 
Self-Regulatory Organizations; Philadelphia Stock Exchange, Inc.; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change 
Relating to the Modification of Phlx Rule 185A

June 5, 2007.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ and Rule 19b-4 \2\ thereunder, notice is hereby given 
that on May 25, 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 amend Phlx Rule 185A, which clarified the 
entry, routing and other requirements of certain orders on XLE, the 
Exchange's electronic equity trading system, prior to March 5, 2007, 
the Trading Phase Date,\5\ to make certain provisions of the rule 
applicable until the All Stocks Phase Date.\6\ 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.
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    \5\ The Trading Phase Date was the ``[f]inal date for full 
operation of Regulation NMS-compliant trading systems [by exchanges] 
that intend[ed] to qualify their quotations for trade-through 
protection under Rule 611 [during the roll-out of Regulation NMS].'' 
See Securities Exchange Act Release No. 55160 (January 24, 2007), 72 
FR 4202 (January 30, 2007).
    \6\ The All Stocks Phase Date is the date that full industry 
compliance with Rules 610 and 611 of Regulation NMS, 17 CFR 242.610 
and 611, begins. Currently, the All Stocks Phase Date is scheduled 
to be August 20, 2007. See Securities Exchange Act Release No. 55160 
(January 24, 2007), 72 FR 4202 (January 30, 2007). However, should 
the Commission change the All Stocks Phase Date, the changes to Phlx 
Rule 185A adopted in this proposed rule change will remain in effect 
until that new date.
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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 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 
obligation of XLE Participants when submitting certain XLE order types 
before the All Stocks Phase Date. Phlx Rule 185A, Orders and Order 
Execution--Temporary, was adopted in November 2006, to clarify the 
entry, routing and other requirements of certain orders on XLE in the 
period before the Trading Phase Date.\7\ Phlx Rule 185A was 
subsequently amended twice.\8\ Each amendment addressed the period 
before the Trading Phase Date.
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    \7\ See Securities Exchange Act Release No. 54760 (November 15, 
2006), 71 FR 67687 (November 22, 2006) (SR-Phlx-2006-76).
    \8\ See Securities Exchange Act Release Nos. 55044 (January 5, 
2007), 72 FR 1361 (January 11, 2007) (SR-Phlx-2006-92) and 54788 
(November 20, 2006), 71 FR 68877 (November 28, 2006) (SR-Phlx-2006-
77).
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    Phlx Rule 185A clarified the routing of orders from XLE to other 
marketplaces,\9\ the entry of Intermarket Sweep Orders and IOC Cross 
Orders marked by the XLE Participant entering the order as meeting the 
requirement of an intermarket sweep order,\10\ the requirements for 
certain IOC Cross Orders marked as Benchmark,\11\ and the requirements 
for certain IOC Cross Orders marked as Qualified Continent Trades.\12\ 
At this time, Phlx proposes to delete the provisions of Phlx Rule 185A 
that applied to routing and modify the remaining provisions of the rule 
to make them applicable to the period prior to the All Stocks Phase 
Date.
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    \9\ See Phlx Rule 185A(a).
    \10\ See Phlx Rule 185A(b).
    \11\ See Phlx Rule 185A(c).
    \12\ See Phlx Rule 185A(d).
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    Specifically Phlx Rule 185A(a) is being modified to delete 
provisions

[[Page 32696]]

regarding routing of orders on XLE since intermarket sweep orders have 
been available at all venues to which XLE will route an order since the 
Trading Phase Date. In its place, Phlx Rule 185A(a) will define the 
term ``All Stocks Phase Date.'' Additionally, Phlx Rule 185A(b)-(d) are 
being amended to substitute the term ``All Stocks Phase Date'' for 
``Trading Phase Date'' as the provisions of these sections of the rule 
will apply until the All Stocks Phase Date. At that time, Phlx will 
delete Phlx Rule 185A from its rulebook as it will no longer have any 
effect.
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.
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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 either solicited or received.

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. 
In its filing, the Exchange stated its belief that waiver of the 
operative delay would be consistent with the protection of investors 
and the public interest because the amended temporary rule should 
eliminate potential confusion relating to orders on XLE and clarify XLE 
Participant obligations when submitting certain order types to the 
Exchange.
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    \18\ 17 CFR 240.19b-4(f)(6).
    \19\ 17 CFR 240.19b-4(f)(6)(iii).
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    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 obligations of XLE 
Participants when submitting certain order types to the Exchange before 
the All Stocks Phase Date. In particular, the proposal amends the text 
of Phlx Rule 185A, which had previously been applicable to the Trading 
Phase Date, to reflect the applicability of those provisions which will 
remain in effect until the All Stocks Phase Date. Once the All Stocks 
Phase Date arrives, the applicable provisions of Phlx Rule 185 will be 
operative and the Exchange will no longer need temporary Rule 185A.\20\ 
Accordingly, consistent with the protection of investors and the public 
interest, the Commission designates the proposed rule change to be 
operative upon filing with the Commission.\21\
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    \20\ As the Exchange has made clear in its filing, it intends to 
delete Phlx Rule 185A from its rulebook upon the All Stocks Phase 
Date. Given the definitively limited application of the amended rule 
and the specified removal date, the Exchange does not intend to file 
a separate proposed rule change to remove the rule text from its 
rulebook, but rather will remove the rule as specified.
    \21\ For the purposes only of waiving the 30-day operative 
delay, the Commission has considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 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 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.\22\
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    \22\ 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-2007-41 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-2007-41. 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

[[Page 32697]]

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-2007-41 and should be 
submitted on or before July 5, 2007.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\23\
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    \23\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7-11368 Filed 6-12-07; 8:45 am]

BILLING CODE 8010-01-P