

[Federal Register: March 7, 2007 (Volume 72, Number 44)]
[Notices]               
[Page 10288-10289]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr07mr07-180]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-55375; File No. SR-Phlx-2006-31]

 
Self-Regulatory Organizations; Philadelphia Stock Exchange, Inc.; 
Order Approving Proposed Rule Change as Modified by Amendment Nos. 1, 
2, and 3 Thereto Relating to Electronically Submitted Limit Orders

February 28, 2007.

I. Introduction

    On May 5, 2006, the Philadelphia Stock Exchange, Inc. (``Phlx'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission''), pursuant to Section 19(b)(1) of the Securities 
Exchange Act of 1934 (``Act''),\1\ and Rule 19b-4 thereunder,\2\ a 
proposed rule change to offer an additional mechanism for participants 
on the Exchange's electronic trading platform for options, Phlx XL, to 
trade against orders and electronic quotations. On December 8, 2006, 
the Exchange filed Amendment No. 1 to the proposed rule change. The 
Exchange filed Amendment No. 2 to the proposed rule change on January 
11, 2007. The proposed rule change, as modified by Amendment Nos. 1 and 
2, was published for comment in the Federal Register on January 24, 
2007.\3\ The Exchange filed Amendment No. 3 on February 28, 2007.\4\ 
The Commission received no comment letters on the proposed rule change. 
This order approves the proposed rule change as modified by Amendment 
Nos. 1, 2, and 3.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 55121 (January 18, 
2007), 72 FR 3186.
    \4\ Amendment No. 3 made minor clarifying changes to Commentary 
.04 to Phlx Rule 1080.
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II. Description of the Proposal

    The purpose of the proposed rule change is to offer an additional 
mechanism for participants on the Exchange's electronic trading 
platform for options, Phlx XL,\5\ to trade against orders and 
electronic quotations. Specifically, the proposal permits SQTs and 
RSQTs to enter Immediate or Cancel (``IOC'') \6\ orders electronically 
and expands the types of orders that non-SQT ROTs and specialists may 
enter for their proprietary accounts to include electronically entered 
IOC orders. The proposal also changes the minimum order size for a ROT 
Limit Order from ten contracts to one contract if such contract is 
designated IOC.
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    \5\ See Securities Exchange Act Release No. 50100 (July 27, 
2004), 69 FR 46612 (August 3, 2004) (SR-Phlx-2003-59).
    \6\ An immediate-or-cancel order is an order that is to be 
executed in whole or in part as soon as such order is submitted. Any 
portion not so executed is to be treated as cancelled.
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    The Exchange further proposes to amend Commentary .02 and .03 of 
Phlx Rule 1082 to reduce the one-second ``counting period'' to \1/4\ of 
one second during which SQTs, RSQTs and/or specialists may eliminate 
the locked or crossed markets caused by their electronic quotations. 
Any unresolved locked or crossed markets remaining after the counting 
period are automatically executed.

III. Discussion

    After careful review of the proposal, the Commission finds that the 
proposed rule change, as modified by Amendment Nos. 1, 2, and 3, is 
consistent with the requirements of the Act and the rules and 
regulations thereunder applicable to a national securities exchange.\7\ 
In particular, the Commission finds that the proposal is consistent 
with Section 6(b)(5) of the Act,\8\ which requires, among other things, 
that the rules of an exchange be 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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    \7\ In approving this proposed rule change, the Commission has 
considered the proposed rule's impact on efficiency, competition, 
and capital formation. See 15 U.S.C. 78c(f).
    \8\ 15 U.S.C. 78f(b)(5).
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    The Commission believes that the Phlx's proposal to expand the 
order types that SQTs, RSQTs, non-SQT ROTs

[[Page 10289]]

and specialists may enter electronically is consistent with the Act. In 
addition, the Commission believes that reducing the counting period 
from one-second to \1/4\ of one second during which market participants 
may resolve locked and crossed markets should improve market efficiency 
by eliminating locked and crossed markets in a more timely fashion.

IV. Conclusion

    It Is Therefore Ordered, pursuant to Section 19(b)(2) of the 
Act,\9\ that the proposed rule change (SR-Phlx-2006-31), as modified by 
Amendment Nos. 1, 2, and 3 be, and it is hereby approved.
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    \9\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\10\
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    \10\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7-3931 Filed 3-6-07; 8:45 am]

BILLING CODE 8010-01-P
