Document ID: SEC-2008-0381-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Philadelphia Stock Exchange, Inc
Posted Date: 2008-03-12T04:00Z

[Federal Register: March 12, 2008 (Volume 73, Number 49)]
[Notices]               
[Page 13269-13271]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr12mr08-124]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-57434; File No. SR-Phlx-2008-19]

 
Self-Regulatory Organizations; Philadelphia Stock Exchange, Inc.; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change 
Relating to the Specialist Option Transaction Charge Credit Pilot 
Program

March 5, 2008.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (``Act'') and Rule 19b-4 thereunder,\2\ notice is hereby given 
that on February 28, 2008, 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. The Exchange filed the proposed rule change pursuant to 
Section 19(b)(3)(A) of the Act,\3\ and Rule 19b-4(f)(2) 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)(2).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    Phlx proposes to expand the Exchange's current $0.21 per contract 
specialist option transaction charge credit pilot program and to amend 
the Exchange's fee schedule to include all customer orders that are 
delivered electronically by Phlx XL \5\ and subsequently executed via 
the Intermarket Option Linkage (``Linkage'') \6\ as a Principal Acting 
as Agent (``P/A'') order.\7\
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    \5\ Phlx XL, formerly referred to as AUTOM, is the Exchange's 
electronic options trading platform. See Exchange Rule 1080.
    \6\ Linkage is governed by the Options Linkage Authority under 
the conditions set forth under the Plan for the Purpose of Creating 
and Operating an Intermarket Option Linkage (the ``Plan'') approved 
by the Securities and Exchange Commission. The registered U.S. 
options markets are linked together on a real-time basis through a 
network capable of transporting orders and messages to and from each 
market.
    \7\ A P/A order is an order for the principal account of a 
specialist (or equivalent entity on another participant exchange 
that is authorized to represent public customer orders), reflecting 
the terms of a related unexecuted public customer order for which 
the specialist is acting as agent. See Plan for the Purpose of 
Creating and Operating an Intermarket Option Linkage Section 
2(16)(a) and Exchange Rule 1083.
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    While changes to the fee schedule pursuant to this proposal are 
effective upon filing, the Exchange has designated the changes to be in 
effect for transactions settling on or after March 1, 2008 through July 
31, 2008.\8\ The text of the proposed rule change is available at Phlx, 
the Commission's Public Reference Room, and at http://www.phlx.com.
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    \8\ This proposal is scheduled to be in effect for the same time 
period as fees for Linkage Principal (``P'') and P/A orders. See 
Securities Exchange Act Release No. 56166 (July 30, 2007), 72 FR 
43312 (August 3, 2007) (SR-Phlx--2007-52).
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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 Exchange included statements 
concerning the purpose of, and basis for,

[[Page 13270]]

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 Exchange 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 this proposed rule change is to expand the 
Exchange's current specialist option transaction charge credit pilot 
program and to amend the Exchange's fee schedule to include all 
customer orders that are delivered electronically by Phlx XL and 
subsequently executed via Linkage as a P/A order. The Exchange options 
specialist units incur a $0.21 per contract option transaction charge 
when they execute against the customer order that corresponds with the 
order that was delivered either through Phlx XL or Exchange's Options 
Floor Broker Management System \9\ (``FBMS'') to the limit order book 
and subsequently executed at another exchange via Linkage as a P/A 
order. Currently, the Exchange provides for an option transaction 
charge credit of $0.21 per contract for Exchange options specialist 
units that incur Phlx option transaction charges when a customer order 
is delivered to the limit order book via the FBMS and then is executed 
via Linkage as a P/A Order.\10\
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    \9\ FBMS is designed to enable Floor Brokers and/or their 
employees to enter, route and report transactions stemming from 
options orders received on the Exchange. FBMS also is designed to 
establish an electronic audit trail for options orders represented 
and executed by Floor Brokers on the Exchange, such that the audit 
trail provides an accurate, time-sequenced record of electronic and 
other orders, quotations and transactions on the Exchange, beginning 
with the receipt of an order by the Exchange, and further 
documenting the life of the order through the process of execution, 
partial execution, or cancellation of that order. See Exchange Rule 
1080, Commentary .06.
    \10\ See Securities Exchange Act Release No. 56101 (July 19, 
2007), 72 FR 40920 (July 25, 2007) (SR-Phlx-2007-50).
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    This proposal seeks to expand the $0.21 credit to include all 
customer orders that are delivered electronically by Phlx XL, not just 
FBMS orders, and that are subsequently executed via Linkage as a P/A 
order.
    The purpose of this proposal is to help alleviate the potential 
economic burden of multiple transaction charges imposed on Exchange 
specialist units in connection with routing these types of Linkage 
orders. The Exchange believes it is appropriate to assist specialist 
units in offsetting some of the costs that they incur in routing orders 
to other options exchanges in order to obtain the National Best Bid or 
Offer. By expanding the option transaction charge credit to all 
electronically delivered orders as described above, the Exchange should 
remain competitive with other exchanges with respect to the assessment 
of Linkage-related fees.
3. Statutory Basis
    The proposed rule change is consistent with Section 6(b) of the 
Act,\11\ in general, and furthers the objectives of Section 6(b)(4) of 
the Act,\12\ in particular, in that it is designed to provide for the 
equitable allocation of reasonable dues, fees, and other charges among 
Exchange members. The expanded $0.21 credit should help alleviate the 
undue financial burden of multiple transaction charges that are 
incurred by these specialist units in connection with P/A orders 
executed via Linkage.
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    \11\15 U.S.C. 78f(b).
    \12\15 U.S.C. 78f(b)(4).
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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

    The Exchange has not solicited, and does not intend to solicit, 
comments on this proposed rule change.

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

    The foregoing proposed rule change is effective upon filing 
pursuant to Section 19(b)(3)(A)(ii) \13\ of the Act and Rule 19b-
4(f)(2) \14\ thereunder because it establishes or changes a due, fee, 
or other charge applicable only to a member imposed by the Exchange. 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.
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    \13\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \14\ 17 CFR 240.19b-4(f)(2).
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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-2008-19 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-2008-19. 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, on official business 
days between the hours of 10 a.m. and 3 p.m. Copies of such filing will 
also be available for inspection and copying at the principal office of 
the Exchange. 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-
2008-19 and should be submitted on or before April 2, 2008.

[[Page 13271]]

    For the Commission, by the Division of Trading and Markets, 
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. E8-4822 Filed 3-11-08; 8:45 am]

BILLING CODE 8011-01-P