Document ID: SEC-2008-1537-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NASDAQ OMX PHLX, Inc.
Posted Date: 2008-11-13T05:00Z

[Federal Register: November 13, 2008 (Volume 73, Number 220)]
[Notices]               
[Page 67239-67241]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr13no08-88]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-58906; File No. SR-Phlx-2008-76]

 
Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by the NASDAQ OMX PHLX, Inc. 
Relating to an Increase in the Maximum Number of Quoters Permitted in 
an Option

November 6, 2008.
    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 4, 2008, NASDAQ OMX PHLX, Inc. (``Phlx'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``SEC'' or ``Commission'') the proposed rule change as described in 
Items I, II,

[[Page 67240]]

and III, below, which Items have been prepared by the Exchange. 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.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange, pursuant to Section 19(b)(1) of the Act \3\ and Rule 
19b-4 thereunder,\4\ proposes to amend Exchange Rule 507, Application 
for Approval as an SQT or RSQT and Assignment in Options, which governs 
the assignment of options to Streaming Quote Traders (``SQTs'') \5\ and 
Remote Streaming Quote Traders (``RSQTs''),\6\ by establishing a higher 
maximum number of quoting participants (``Maximum Number of Quoters'' 
or ``MNQ'') in equity options that are not in the top 15% most actively 
traded based upon monthly national volume.
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    \3\ 15 U.S.C. 78s(b)(1).
    \4\ 17 CFR 240.19b-4.
    \5\ An SQT is an Exchange Registered Options Trader (``ROT'') 
who has received permission from the Exchange to generate and submit 
options quotations electronically through AUTOM in eligible options 
to which such SQT is assigned. An SQT may only submit such 
quotations while such SQT is physically present on the floor of the 
Exchange. See Exchange Rule 1014(b)(ii)(A).
    \6\ An RSQT is a ROT that is a member or member organization 
with no physical trading floor presence who has received permission 
from the Exchange to generate and submit option quotations 
electronically through AUTOM in eligible options to which such RSQT 
has been assigned. An RSQT may only submit such quotations 
electronically from off the floor of the Exchange. See Exchange Rule 
1014(b)(ii)(B).
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    The Exchange further proposes to amend Commentary .05 to Rule 507 
to reflect the current practice of announcing changes to the MNQ on its 
web site.
    The text of the proposed rule change is available on the Exchange's 
Web site at http://www.phlx.com/regulatory/reg_rulefilings.aspx.

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 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 the proposed rule change is to provide additional 
liquidity in equity options on the Exchange by increasing the MNQ in 
certain options.
    Currently, the Exchange limits the number of participants that may 
be assigned to a particular equity option at any one time based upon 
each option's monthly national volume. Commentary .02 to Rule 507 sets 
forth tiered MNQ levels permitting 22 market participants for the top 
5% most actively traded options; 17 market participants for next 10% 
most actively traded options, and 12 market participants for all other 
options.\7\ The ranking is based upon the preceding month's national 
volumes. The Exchange proposes to increase the MNQ level for equity 
options that are not in the top 15% most actively traded from 12 market 
participants to 15.\8\
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    \7\ When initially adopted, Commentary .01 (a)-(c) established 
MNQ levels of 20 market participants for the top 5% most actively 
traded options; 15 market participants for next 10% most actively 
traded options; and 10 market participants for all other options. 
See Securities Exchange Act Release No. 55114 (January 17, 2007), 72 
FR 3185 (January 24, 2007) (SR-Phlx-2006-81). These MNQ levels were 
subsequently increased to the current levels of 22, 17, and 12, 
respectively. See Securities Exchange Act Release No. 56261 (August 
17, 2007), 72 FR 47112 (August 22, 2007) (SR-Phlx-2007-51).
    \8\ Commentary .05 to Rule 507 states that the Exchange may 
increase the MNQ levels established in this Commentary (meaning the 
22, 17, and 12 numbers established in Commentary .01(a)-(c)) by 
submitting to the SEC a rule filing pursuant to Section 19(b)(3)(A) 
of the Exchange Act. The Exchange may decrease the MNQ levels 
established in this Commentary upon SEC approval of a rule filing 
submitted pursuant to Section 19(b)(2) of the Exchange Act.
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    Finally, Commentary .05 to Rule 507 states that the Exchange will 
inform market participants of changes to the MNQ via Exchange circular. 
The Exchange proposes to amend Commentary .05 to Rule 507 to reflect 
its current practice of announcing changes to the MNQ on its Web site.
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 adding depth and liquidity to the Exchange's markets in 
certain equity options.
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    \9\ 15 U.S.C. 78f(b).
    \10\ 15 U.S.C. 78f(b)(5).
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    The Exchange further believes that increasing the MNQ in certain 
equity options is pro-competitive, because it adds depth and liquidity 
to the Exchange's markets by permitting additional participants to 
compete on the Exchange.

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 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 does not (i) Significantly affect the 
protection of investors or the public interest; (ii) impose any 
significant burden on competition; and (iii) 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 self-regulatory organization 
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 \11\ and Rule 19b-4(f)(6) 
thereunder.\12\ At any time within 60 days of the filing of such 
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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    \11\ 15 U.S.C. 78s(b)(3)(A).
    \12\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) 
requires a self-regulatory organization to provide 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, 
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 Exchange fulfilled this requirement.

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[[Page 67241]]

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-2008-76 on the subject line.

Paper Comments

     Send paper comments in triplicate to Secretary, Securities 
and Exchange Commission, 100 F Street, NE., Washington, DC 20549-1090.

All submissions should refer to File Number SR-Phlx-2008-76. 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 will also be available for 
inspection and copying at the principal office of the self-regulatory 
organization. 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-2008-76 and should be submitted on or before December 4, 2008.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\13\
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    \13\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Acting Secretary.
 [FR Doc. E8-26957 Filed 11-12-08; 8:45 am]

BILLING CODE 8011-01-P