[Federal Register Volume 69, Number 207 (Wednesday, October 27, 2004)]
[Notices]
[Pages 62735-62738]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E4-2868]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-50572; File No. SR-Phlx-2004-61]


Self-Regulatory Organizations; Notice of Filing and Order 
Granting Accelerated Approval of a Proposed Rule Change by the 
Philadelphia Stock Exchange, Inc. Relating to Its Equity Options 
Payment for Order Flow Program

October 20, 2004.
    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 September 22, 2004, the Philadelphia Stock Exchange, Inc. (``Phlx'' 
or ``Exchange'') filed with the Securities and Exchange Commission 
(``Commission'' or ``SEC'') the proposed rule change as described in 
Items I and II below, which Items have been prepared by the Phlx. The 
Commission is publishing this notice to solicit comments on the 
proposed rule change from interested persons, and at the same time is 
granting accelerated approval of the proposed rule change.
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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 Phlx proposes to modify the Exchange's equity options payment 
for order flow program for trades settling on or after September 1, 
2004 through September 21, 2004. In addition, the Exchange proposes to 
amend its equity options payment for order flow program as it relates 
to the reimbursement of equity options payment for order flow funds, 
which was in effect for trades settling on or after August 2, 2004 
through August 31, 2004.

Equity Options Payment for Order Flow Program Commencing September 22, 
2004

    The Exchange recently amended its equity options payment for order 
flow program.\3\ Pursuant to that program, for trades settling on or 
after September 22, 2004, the Exchange will assess a payment for order 
flow fee as follows when Registered Options Traders (``ROTs'') trade 
against a customer order: (1) $1.00 per contract for options on the 
Nasdaq-100 Index Tracking Stock\SM\ traded under the symbol QQQ, 
currently the most actively traded equity option; \4\ and (2) $0.40 per 
contract for the remaining top 150 equity options, other than the 
QQQ.\5\

[[Page 62736]]

The payment for order flow fee applies, in effect, to equity option 
transactions between a ROT and a customer.\6\ In addition, a 500 
contract cap per individual cleared side of a transaction is 
imposed.\7\
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    \3\ See Securities Exchange Act Release No. 50471 (September 29, 
2004), 69 FR 59636 (October 5, 2004) (SR-Phlx-2004-60) (``Release 
34-50471'').
    \4\ QQQ is currently the most actively-traded equity option. The 
Nasdaq-100[supreg], Nasdaq-100 Index[supreg], Nasdaq[supreg], The 
Nasdaq Stock Market[supreg], Nasdaq-100 Shares\SM\, Nasdaq-100 
Trust\SM\, Nasdaq-100 Index Tracking Stock\SM\, and QQQ\SM\ are 
trademarks or service marks of The Nasdaq Stock Market, Inc. 
(``Nasdaq'') and have been licensed for use for certain purposes by 
the Phlx pursuant to a License Agreement with Nasdaq. The Nasdaq-100 
Index[supreg] (``Index'') is determined, composed, and calculated by 
Nasdaq without regard to the Licensee, the Nasdaq-100 Trust\SM\, or 
the beneficial owners of Nasdaq-100 Shares\SM\. Nasdaq has complete 
control and sole discretion in determining, comprising, or 
calculating the Index or in modifying in any way its method for 
determining, comprising, or calculating the Index in the future.
    \5\ The top 150 options are calculated based on the most 
actively traded equity options in terms of the total number of 
contracts that are traded nationally, based on volume statistics 
provided by the Options Clearing Corporation (``OCC'') and that are 
also traded on the Exchange. For example, if two of the most 
actively traded equity options, based on volume statistics provided 
by the OCC are not traded on the Exchange, then the next two most 
actively traded equity options that are traded on the Exchange will 
be selected. (For example, if the list of the top 150 options 
includes two options that are not traded on the Exchange, then the 
options ranked 151 and 152 will be included in the Exchange's top 
150, assuming those options are traded on the Exchange). The 
measuring periods for the top 150 options are calculated every three 
months. For example, for trade months September, October and 
November, the measuring period to determine the top 150 options will 
be based on volume statistics from May, June and July. This cycle 
will continue every three months. Members will be notified of the 
top 150 options approximately two weeks before the beginning of a 
new three-month trading period. As discussed below, the payment for 
order flow fees are incurred only when the specialist elects to 
participate in the equity options payment for order flow program. 
The Exchange's fee schedule reflects the fee of $1.00 for options on 
the QQQ and $0.40 for the remaining top 150 equity options, other 
than options on the QQQ. Any change to the rate at which the equity 
options payment for order flow fee is assessed would be the subject 
of a separate proposed rule change filed with the Commission.
    \6\ Thus, consistent with current practice, the ROT payment for 
order flow fee is not assessed on transactions between: (1) A 
specialist and a ROT; (2) a ROT and a ROT; (3) a ROT and a firm; and 
(4) a ROT and a broker-dealer. The ROT payment for order flow fee 
does not apply to index options or foreign currency options. 
Accordingly, the ROT payment for order flow fees applies, in effect, 
to equity option transactions between a ROT and a customer.
    \7\ Under the Exchange's equity options payment for order flow 
program, a 500 contract cap per individual cleared side of a 
transaction is imposed. Thus, the applicable payment for order flow 
fee is imposed only on the first 500 contracts, per individual 
cleared side of a transaction. For example, if a transaction 
consists of 750 contracts by one ROT, the applicable payment for 
order flow fee would be applied to, and capped at, 500 contracts for 
that transaction. Also, if a transaction consists of 600 contracts, 
but is equally divided among three ROTs, the 500 contract cap would 
not apply to any such ROT, and each ROT would be assessed the 
applicable payment for order flow fee on 200 contracts, as the 
payment for order flow fee is assessed on a per ROT, per transaction 
basis. See Securities Exchange Act Release Nos. 47958 (May 30, 
2003), 68 FR 34026 (June 6, 2003) (proposing SR-Phlx-2002-87); and 
48166 (July 11, 2003), 68 FR 42450 (July 17, 2003) (approving SR-
Phlx-2002-87). See also Release 34-50471.
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    Specialist units \8\ elect to participate or not to participate in 
the program in all options in which they are acting as a specialist by 
notifying the Exchange in writing no later than five business days 
prior to the start of the month.\9\ If a specialist unit elects not to 
participate in the program, that specialist unit waives its right to 
any reimbursement of payment for order flow funds for the month(s) 
during which it elected to opt out of the program.\10\
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    \8\ The terms ``specialist'' and ``specialist unit'' are used 
interchangeably herein.
    \9\ A specialist unit must notify the Exchange in writing to 
either elect to participate or not to participate in the program. 
Once a specialist unit has either elected to participate or not to 
participate in the Exchange's equity options payment for order flow 
program in a particular month, it is not required to notify the 
Exchange in a subsequent month, as described above, if it does not 
intend to change its participation status. For example, if a 
specialist unit elected to participate in the program and provided 
the Exchange with the appropriate notice, that specialist unit would 
not be required to notify the Exchange in the subsequent month(s) if 
it intends to continue to participate in the program. However, if it 
elects not to participate (a change from its current status), it 
would need to notify the Exchange in accordance with the 
requirements stated above.
    \10\ For any month (or part of a month where an option is 
allocated mid-month) the specialist unit has elected to opt out of 
the program, no ROT payment for order flow fee will apply.
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    Specialists request payment for order flow reimbursements on an 
option-by-option basis. The collected funds are used by each specialist 
unit to reimburse it for monies expended to attract options orders to 
the Exchange by making payments to order flow providers who provide 
order flow to the Exchange. They receive their respective funds only 
after submitting an Exchange certification form identifying the amount 
of the requested funds.\11\ Each specialist unit establishes the 
amounts that will be paid to order flow providers.
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    \11\ While all determinations concerning the amount that will be 
paid for orders and which order flow providers shall receive these 
payments will be made by the specialists, the specialists will 
provide to the Exchange on an Exchange form certain information, 
including what firms they paid for order flow, the amount of the 
payment, and the price paid per contract. The purpose of the form, 
in part, is to assist the Exchange in determining the effectiveness 
of the proposed fee and to account for and track the funds 
transferred to specialists, consistent with normal bookkeeping and 
auditing practices. In addition, certain administrative duties will 
be provided by the Exchange to assist the specialists.
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    Pursuant to the Exchange's current equity options payment for order 
flow program, any excess payment for order flow funds are carried 
forward to the next month by option and may not be applied 
retroactively to past deficits, which may be incurred when the 
specialist requests more than the amount collected.\12\ Thus, excess 
funds will not be rebated to ROTs except in the limited situation 
discussed below, nor will deficits carry forward to subsequent months. 
ROTs may, however, receive a rebate of excess funds in a particular 
option for a particular month if the specialist unit does not request 
reimbursement by option of at least 50% of the total amount of payment 
for order flow funds billed to and collected from ROTs for each option 
in which that specialist unit is acting as specialist, as more fully 
described below.\13\
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    \12\ Specialists may not receive more than the payment for order 
flow amount billed and collected in a given month; however, the 
amounts specialists receive may include excesses, if any, for that 
option, carried forward from prior months, up to the payment for 
order flow amount billed and collected in such month. Telephone 
conversation between Cynthia K. Hoekstra, Counsel, Phlx, and David 
Liu, Attorney, Division, Commission, on September 24, 2004.
    \13\ The Exchange will periodically review its equity options 
payment for order flow program to determine whether a cap on the 
amount collected for each option should be imposed in the future. 
Any such cap would have to be filed with the Commission as a 
proposed rule change under Section 19(b)(1) of the Act.
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    Specialists units may opt out entirely from the program as long as 
they notify the Exchange in writing by the 15th of the month, or the 
next business day if the 15th of the month is not a business day. If a 
specialist unit opts out of the program by the 15th of the month, no 
payment for order flow charges will be incurred for either the 
specialist unit or ROTs for transactions in the affected options for 
that month.
    In addition to opting out entirely from the program, specialists 
may opt out of the program on an option-by-option basis if they notify 
the Exchange in writing no later than three business days after the end 
of the month (which is before the payment for order flow fee is 
billed). If a specialist unit opts out of an option at the end of the 
month, then no payment for order flow fees will be assessed on the 
applicable ROT(s) for that option. If a specialist unit opts out of the 
program in a particular option more than two times in a six-month 
period, it will be precluded from entering into the payment for order 
flow program for that option for the next three months.
    If a specialist unit opts into the program (and does not opt out of 
the program entirely by the 15th day of the month or by option by the 
third business day after the end of the month) and does not request 
reimbursement by option of at least 50% of the total amount of payment 
for order flow funds billed to and collected from ROTs for each option 
in which that specialist unit is acting as the specialist, then any 
excess payment for order flow funds remaining after the specialist has 
been reimbursed will be rebated, on a pro rata basis, to the affected 
ROTs for those particular options in which the 50% threshold was not 
met.\14\
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    \14\ For example, if a specialist unit requests $10,000 in 
reimbursement for one option and the total amount billed and 
collected from the ROTS was $30,000, then the specialist unit did 
not satisfy the 50% threshold, given the fact that it did not 
request reimbursement of at least $15,000. Therefore, the remaining 
amount of $20,000 will be rebated to the ROTs on a pro rata basis. 
If ROT A was assessed $15,000 in payment for order flow fees, he 
would receive a rebate of $10,000 ($15,000/$30,000 = 50% and 50% of 
$20,000 is $10,000). If ROT B was assessed $8,000 in payment for 
order flow fees, it would receive $5,333.33, which represents 26.67% 
($8,000/$30,000) of $20,000. If ROT C was assessed $7,000 in payment 
for order flow fees, it would receive $4,666.67, which represents 
23.33% ($7,000/$30,000) of $20,000.
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    The payment for order flow fee is billed and collected on a monthly 
basis. Because the specialists are not being charged the payment for 
order flow fee for their own transactions, they may not request 
reimbursement for order flow funds in connection with any transactions 
to which they were a party.\15\
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    \15\ The amount a specialist may receive in reimbursement is 
limited to the percentage of ROT monthly volume to total specialist 
and ROT monthly volume in the equity options payment for order flow 
program. For example, if a specialist unit has a payment for order 
flow arrangement with an order flow provider to pay that order flow 
provider $0.70 per contract for order flow routed to the Exchange 
and that order flow provider sends 90,000 customer contracts to the 
Exchange in one month for one option, then the specialist would be 
required, pursuant to its agreement with the order flow provider, to 
pay the order flow provider $63,000 for that month. Assuming that 
the 90,000 represents 30,000 specialist transactions, 20,000 ROT 
transactions and 40,000 transactions from firms, broker-dealers and 
other customers, the specialist may request reimbursement of up to 
40% (20,000/50,000) of the amount paid ($63,000 x 40% = $25,200). 
However, because the ROTs will have paid $8,000 into the payment for 
order flow fund for that month, the specialist may collect only 
$8,000 (20,000 contracts x $0.40 per contract) of its $25,200 
reimbursement request, plus, if applicable, any excess funds for 
that particular option carried over from a prior month up to the 
specialist's $25,200 reimbursement request.

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[[Page 62737]]

    The Exchange may audit a specialist's payments to payment-accepting 
firms to verify the use and accuracy of the payment for order flow 
funds remitted to the specialists based on their certification.\16\
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    \16\ See Exchange Rule 760.
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    The Exchange continues to implement a quality of execution 
program.\17\
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    \17\ See, e.g., Securities Exchange Act Release No. 43436 
(October 11, 2000), 65 FR 63281 (October 23, 2000) (SR-Phlx-00-83).
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    The payment for order flow fees as set forth in this proposal would 
be in effect for trades settling on or after September 1, 2004 through 
September 21, 2004.

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 its proposal and discussed any 
comments it received on the proposal. The text of these statements may 
be examined at the places specified in Item III 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 implement the current 
equity options payment for order flow program for trades settling on or 
after September 1, 2004 through September 21, 2004,\18\ and to adopt 
changes to the reimbursement request process in effect for trades 
settling on or after August 2, 2004 through August 31, 2004. The Phlx 
believes that implementing a consistent equity options payment for 
order flow program for the month of September should minimize member 
confusion. In addition, requiring specialists to request reimbursement 
for payment for order flow funds on an option-by-option basis and 
rebating any excess funds collected but not reimbursed to specialists 
to the affected ROTs would provide for a method of distributing those 
funds collected under the August equity options payment for order flow 
program, which is no longer in effect.\19\
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    \18\ The Exchange represents that its members were notified of 
modifications to the Exchange's equity options payment for order 
flow program in memoranda sent to members and member organizations 
on August 9, 2004, September 1, 2004, September 7, 2004, and 
September 8, 2004.
    \19\ SR-Phlx-2004-50 was filed with the Commission on July 29, 
2004 and subsequently amended on August 16, 2004. SR-Phlx-2004-56 
was filed with the Commission on August 16, 2004. SR-Phlx-2004-50 
and SR-Phlx-2004-56 were both abrogated by the Commission. See 
Securities Exchange Act Release No. 50420 (September 22, 2004), 69 
FR 58007 (September 28, 2004) (``Abrogation Order''). SR-Phlx-2004-
50, as amended, modified the Phlx's fee schedule to assess an equity 
options payment for order flow fee as follows when ROTs trade 
against a customer order by: (1) Assessing a $1.00 per contract (for 
options on the QQQ) and $0.35 per contract (for all equity options 
other than options on the QQQ); (2) permitting specialists to opt in 
or out of the program by notifying the Exchange in writing at least 
five business days prior to the start of the month; and (3) 
combining the payment for order flow fees collected from ROTs in one 
account to form a ``pool'' from which specialists may request 
reimbursement for the amounts that they pay to order flow providers 
to send order flow to the Exchange. SR-Phlx-2004-56 amended the 
Phlx's fees schedule to revise its equity options payment for order 
flow program by (1) requiring a specialist unit to pay equity option 
payment for order flow fees in a given month at the same rate as 
ROTs, if the specialist unit elects to participate in the program 
and does not pay at least 50% of the total amount of equity options 
payment for order flow funds collected from ROTs in the options for 
which that specialist unit is acting as the specialist; and (2) 
providing that specialist units may opt out of the equity options 
payment for order flow program, as long as they notify the Exchange 
in writing by the 15th day of the month.
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    The Exchange believes that adopting the proposed equity options 
payment for order flow program should allow the Exchange to implement a 
more competitive equity options payment for order flow program. Equity 
options payment for order flow programs are in place at each of the 
other options exchanges. The Phlx states that the revenue generated by 
the $1.00 or $0.40 payment for order flow fees, as outlined in this 
proposal, is intended to be used by specialist units to compete for 
order flow in equity options listed for trading on the Exchange. The 
Exchange believes that, in today's competitive environment, changing 
its equity options payment for order flow program to compete more 
directly with other options exchanges is important and appropriate.
2. Statutory Basis
    The Exchange believes that its proposal to amend its schedule of 
dues, fees and charges is consistent with section 6(b) of the Act \20\ 
in general, and furthers the objectives of section 6(b)(4) of the Act 
\21\ in particular, in that it is an equitable allocation of reasonable 
fees among Phlx members and that it is designed to enable the Exchange 
to compete with other markets in attracting customer order flow. 
Because the equity options payment for order flow fees are collected 
only from member organizations respecting customer transactions, the 
Phlx believes that there is a direct and fair correlation between those 
members who fund the equity options payment for order flow fee program 
and those who receive the benefits of the program. The Exchange states 
that ROTs also potentially benefit from additional customer order flow. 
In addition, the Phlx believes that the proposed payment for order flow 
fees would serve to enhance the competitiveness of the Phlx and its 
members and that this proposal therefore is consistent with and 
furthers the objectives of the Act, including Section 6(b)(5) 
thereof,\22\ which requires the rules of exchanges to be designed to 
promote just and equitable principles of trade, and to remove 
impediments to and perfect the mechanism of a free and open market and 
a national market system. The Phlx believes that attracting more order 
flow to the Exchange should, in turn, result in increased liquidity, 
tighter markets and more competition among exchange members.
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    \20\ 15 U.S.C. 78f(b).
    \21\ 15 U.S.C. 78f(b)(4).
    \22\ 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 inappropriate burden on competition.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants or Others

    The Phlx states that no written comments were either solicited or 
received.\23\
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    \23\ Previously, in connection with SR-Phlx-2004-50, the 
Exchange received one written comment letter, dated August 10, 2004, 
which was forwarded to the Commission on August 20, 2004.
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III. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule

[[Page 62738]]

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-2004-61 on the subject line.

Paper Comments

     Send paper comments in triplicate to Jonathan G. Katz, 
Secretary, Securities and Exchange Commission, 450 Fifth Street, NW., 
Washington, DC 20549-0609.
    All submissions should refer to File Number SR-Phlx-2004-61. 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 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-2004-61 and should be submitted on or before 
November 17, 2004.

IV. Commission's Findings and Order Granting Accelerated Approval of 
Proposed Rule Change

    The Commission finds that the proposed rule change is consistent 
with the requirements of the Act and the rules and regulations 
thereunder applicable to a national securities exchange.\24\ 
Specifically, the Commission believes that the proposed rule change is 
consistent with section 6(b)(4) of the Act,\25\ which requires that the 
rules of the Exchange provide for the equitable allocation of 
reasonable dues, fees, and other charges among its members and issuers 
and other persons using its facilities.
    On July 29, 2004 \26\ and August 16, 2004,\27\ the Exchange filed 
proposed rule changes with the Commission, which were immediately 
effective,\28\ relating to the Exchange's equity options payment for 
order flow program for trades settling on or after August 2, 2004. On 
September 22, 2004, the Commission summarily abrogated these proposed 
rule changes.\29\ On that same day, the Exchange filed a proposed rule 
change, which was immediately effective, that implemented a new payment 
for order flow program for trades settling on or after September 22, 
2004.\30\ Because, under Section 19(b)(3)(C) of the Act,\31\ the 
Abrogation Order does not affect the validity or force of the proposed 
rule changes filed on July 29, 2004,\32\ and August 16, 2004\33\ during 
the period that they were in effect (i.e., for trades settling on or 
after August 2, 2004 through September 21, 2004), this proposed rule 
change would modify the Exchange's equity options payment for order 
flow program that was in effect for trades settling on or after 
September 1, 2004 through September 21, 2004 to be consistent with the 
equity options payment for order flow program that has been in effect 
as of September 22, 2004.
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    \24\ The Commission has considered the proposed rule's impact on 
efficiency, competition and capital formation. 15 U.S.C. 78c(f).
    \25\ 15 U.S.C. 78f(b)(4).
    \26\ See SR-Phlx-2004-50.
    \27\ See SR-Phlx-2004-56.
    \28\ 15 U.S.C. 78s(b)(3)(A).
    \29\ See Abrogation Order, supra note 19. Under Section 
19(b)(3)(C) of the Act, any proposed rule change that has taken 
effect pursuant to section 19(b)(3)(A) of the Act may be enforced to 
the extent it is not inconsistent with the Act, the rules and 
regulations thereunder, and applicable federal and state law. 15 
U.S.C. 78s(b)(3)(C).
    \30\ See Securities Exchange Act Release No. 50471 (September 
29, 2004), 69 FR 59636 (October 5, 2004) (SR-Phlx-2004-60).
    \31\ 15 U.S.C. 78s(b)(3)(C).
    \32\ See SR-Phlx-2004-50.
    \33\ See SR-Phlx-2004-56.
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    The Exchange also proposes to permit specialists to request 
reimbursement for payment for order flow funds on an option-by-option 
basis and to rebate to the affected ROTs any excess funds collected, 
but not distributed to, specialists for trades settling on or after 
August 2, 2004 through August 30, 2004.
    The Commission believes that the Exchange's proposal to modify its 
equity options payment for order flow program that was in effect 
immediately preceding the Abrogation Order would provide for a uniform 
program for the month of September 2004 and thus would reduce confusion 
and promote consistency with respect to the application of its payment 
for order flow program for trades settling during the month of 
September 2004. The Commission further believes that the Exchange's 
proposal to provide a method for distributing payment for order flow 
fees, on an option-by-option basis, for trades settling during August 
2004 and for rebating any excess fees that were collected but not 
distributed would provide an appropriate method for handling fees 
collected under the equity options payment for order flow program that 
was in effect for August 2004, but was later summarily abrogated by the 
Commission.\34\ Therefore, the Commission finds that there is good 
cause, consistent with Section 19(b)(2) of the Act,\35\ to approve the 
proposed rule change prior to the 30th day of the date of publication 
of notice of filing thereof in the Federal Register.
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    \34\ See Abrogation Order, supra note 19.
    \35\ 15 U.S.C. 78s(b)(2).
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V. Conclusion

    It is therefore ordered, pursuant to section 19(b)(2) of the 
Act,\36\ that the proposed rule change (File No. SR-Phlx-2004-61) be 
approved on an accelerated basis.
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    \36\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\37\
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    \37\ 17 CFR 200.30-3(a)(12).
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J. Lynn Taylor,
Assistant Secretary.
 [FR Doc. E4-2868 Filed 10-26-04; 8:45 am]
BILLING CODE 8010-01-P