[Federal Register Volume 70, Number 28 (Friday, February 11, 2005)]
[Notices]
[Page 7318]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E5-583]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-51144; File No. SR-Phlx-2004-84]


Self-Regulatory Organizations; Philadelphia Stock Exchange, Inc.; 
Order Granting Approval to Proposed Rule Change To Eliminate the Public 
Order Exposure System Functionality From Phlx Rule 229

February 7, 2005.
    On November 26, 2004, 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 eliminate the Public Order 
Exposure System (``POES'') functionality from Phlx Rule 229. The 
proposed rule change was published for comment in the Federal Register 
on December 29, 2004.\3\ The Commission received no comments on the 
proposal.
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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. 50901 (December 21, 
2004), 69 FR 78089 (``Notice'').
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    Currently, Phlx Rule 229, Supplementary Material .05, provides that 
if the PACE \4\ Quote \5\ at the time of the entry of an order into the 
system reflects a point spread of more than $.05, round-lot market 
orders up to 500 shares and PRL \6\ market orders up to 599 shares will 
be stopped at the PACE Quote at the time of entry into the system 
(``Stop Price'') and be subject to a delay of up to 30 seconds from 
being executed in order to receive an opportunity for price 
improvement. During that time, specialists may, but are not required 
to, improve the execution price of the order to a price better than the 
Stop Price. Phlx proposes to amend Phlx Rule 229 to eliminate the POES 
functionality. As a result, orders that would have been subject to POES 
will be automatically executed at the PACE quote without a 30-second 
delay.
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    \4\ PACE is the Exchange's automated order routing, delivery, 
execution and reporting system for equities. See Phlx Rule 229.
    \5\ The PACE Quote means the best bid/ask quote among the 
American, Boston, National, Chicago, New York, or Philadelphia Stock 
Exchanges; the Pacific Exchange; or the Intermarket Trading System/
Computer Assisted Execution System (``ITS/CAES'') quote, as 
appropriate. See Phlx Rule 229.
    \6\ PRL means a combined round-lot and odd-lot order. See Phlx 
Rule 229.
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    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.\7\ In 
particular, the Commission believes that the proposal is consistent 
with Section 6(b)(5) of the Act,\8\ which requires that the rules of an 
exchange be designed, among other things, to promote just and equitable 
principles of trade, to perfect the mechanism of a free and open market 
and a national market system, and, in general, to protect investors and 
the public interest. Under the proposed rule change, orders that would 
have been subject to a 30-second delay will now be automatically 
executed at the PACE quote, thereby improving order turnaround time and 
reducing the number of manual orders. The Commission notes that 
specialists will still be able to offer price improvement through the 
Exchange's Automatic Price Improvement feature, where applicable, and 
through manual price improvement when certain conditions are met.\9\
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    \7\ In approving this proposed rule change, the Commission notes 
that it 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).
    \9\ See Notice.
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    It is therefore ordered, pursuant to section 19(b)(2) of the 
Act,\10\ that the proposed rule change (File No. SR-Phlx-2004-84) be, 
and it hereby is, approved.
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    \10\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\11\
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    \11\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
 [FR Doc. E5-583 Filed 2-10-05; 8:45 am]
BILLING CODE 8010-01-P