[Federal Register Volume 71, Number 152 (Tuesday, August 8, 2006)]
[Notices]
[Pages 45089-45090]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E6-12838]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-54257; File No. SR-Phlx-2006-46]
Self-Regulatory Organizations; Philadelphia Stock Exchange,
Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule
Change Extending the Specialist Option Transaction Charge Credit Pilot
Program
August 1, 2006.
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 July 21, 2006, 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, II
and III below, which Items have been prepared by the Exchange. The
Exchange has designated this proposal as one establishing or changing a
due, fee, or other charge imposed by a self-regulatory organization
pursuant to Section 19(b)(3)(A)(ii) 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)(ii).
\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
The Exchange proposes to extend for a one-year period, until July
31, 2007, its current pilot program that provides for an option
transaction charge credit of $0.21 per contract for Exchange options
specialist units \5\ that incur Phlx option transaction charges when a
customer order is delivered to the limit order book via the Exchange's
Options Floor Broker Management System (``FBMS'') \6\ and is then sent
to an away market and executed via the Intermarket Option Linkage
(``Linkage'') under the Plan for the Purpose of Creating and Operating
an Intermarket Option Linkage (``Plan'') \7\ as a Principal Acting as
Agent Order (``P/A Order'').\8\
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\5\ The terms ``specialist'' and ``specialist unit'' are used
interchangeably.
\6\ The FBMS is a component of the Exchange's Automated Options
Market (AUTOM) System designed to enable Floor Brokers and/or their
employees to enter, route and report transactions stemming from
options orders received on the Exchange. The 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
Phlx Rule 1080, Commentary .06.
\7\ See Securities Exchange Act Release Nos. 43086 (July 28,
2000), 65 FR 48023 (August 4, 2000); and 43573 (November 16, 2000),
65 FR 70851 (November 28, 2000) (order approving Phlx as a
participant in the Plan).
\8\ 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 Phlx Rule 1083(k)(i).
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The pilot program in effect is currently scheduled to expire on
July 31, 2006.\9\ The text of the proposed rule change is available at
the Commission's Public Reference Room, at the Office of the Secretary
of the Exchange, and on the Exchange's Web site at http://www.Phlx.com.
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\9\ See Securities Exchange Act Release No. 53761 (May 5, 2006),
71 FR 27768 (May 12, 2006) (SR-Phlx-2006-20). This proposal is
scheduled to be in effect for the same time period as fees for
Linkage Principal Orders (``P Orders'') and P/A Orders. See
Securities Exchange Act Release No. 54233 (July 27, 2006) (SR-Phlx-
2006-44).
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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, 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
Currently, the Exchange provides 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 FBMS and is then sent to an away
market and executed via Linkage under the Plan as a P/A Order.
The purpose of this proposal is to continue to alleviate the
potential economic burden of multiple transaction charges imposed on
Exchange specialist units by establishing a credit for Exchange option
transaction charges incurred by an Exchange specialist unit when a
customer limit order placed on the limit order book by a Floor Broker
\10\ results in an execution of a P/A Order that is sent to another
exchange via Linkage. The Exchange believes that continuing to give an
options transaction charge credit of $0.21 per contract should
encourage the use of Linkage and should allow the Exchange to remain
competitive with other exchanges with respect to the assessment of
Linkage-related fees.\11\
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\10\ A Floor Broker who wishes to place a limit order on the
limit order book must submit such a limit order electronically
through the FBMS. See Phlx Rule 1063, Commentary .01. See also Phlx
Rule 1080, Commentary .02(b).
\11\ See Securities Exchange Act Release Nos. 53372 (February
24, 2006), 71 FR 11003 (March 3, 2006) (SR-CBOE-2006-10) (rebate of
certain transaction fees to Designated Primary Market Makers related
to the execution of outbound P/A orders) and 53526 (March 21, 2006),
71 FR 15794 (March 29, 2006) (SR-PCX-2006-19) (creating a credit
associated with the fees a Market Maker is charged for executions
that result from P/A Orders sent to and executed at away market
centers). See also Securities Exchange Act Release No. 54064 (June
28, 2006), 71 FR 38438 (July 6, 2006) (SR-CBOE-2006-59).
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This proposal is to remain in effect as a pilot program until July
31, 2007.\12\
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\12\ This proposal is in connection with an existing pilot
program for Linkage P and P/A Orders and is in effect for the same
time period as the pilot program for Linkage P and P/A Orders. The
Exchange filed a separate proposed rule change to extend the fees
for Linkage P and P/A orders for a one-year period until July 31,
2007. See Securities Exchange Act Release No. 54233, supra at note
9. See also Securities Exchange Act Release Nos. 53650 (April 13,
2006), 71 FR 20430 (April 20, 2006) (SR-Phlx-2006-22) and 53761 (May
5, 2006), 71 FR 27768 (May 12, 2006) (SR-Phlx-2006-20).
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[[Page 45090]]
2. Statutory Basis
The Exchange believes that its proposal to amend its schedule of
fees is consistent with Section 6(b) of the Act \13\ in general, and
furthers the objectives of Section 6(b)(4) of the Act \14\ in
particular, in that it is an equitable allocation of reasonable fees
and other charges among Exchange members.
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\13\ 15 U.S.C. 78f(b).
\14\ 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 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
The foregoing proposed rule change establishes or changes a due,
fee, or other charge applicable only to a member pursuant to Section
19(b)(3)(A)(ii) of the Act \15\ and Rule 19b-4(f)(2) thereunder.\16\
Accordingly, the proposal took effect upon filing with the Commission.
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\15\ 15 U.S.C. 78s(b)(3)(A)(ii).
\16\ 17 CFR 240.19b-4(f)(2).
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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.\17\
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\17\ See Section 19(b)(3)(C), 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 [email protected]. Please include
File Number SR-Phlx-2006-46 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-2006-46. 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 such
filing also will 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 Number SR-Phlx-2006-46 and should be submitted on or before August
29, 2006.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\18\
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\18\ 17 CFR 200.30-3(a)(12).
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Nancy M. Morris,
Secretary.
[FR Doc. E6-12838 Filed 8-7-06; 8:45 am]
BILLING CODE 8010-01-P