[Federal Register Volume 70, Number 45 (Wednesday, March 9, 2005)]
[Notices]
[Pages 11722-11723]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E5-976]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-51302; File No. SR-Phlx-2005-09]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of a Proposed Rule Change by the Philadelphia Stock 
Exchange, Inc. Relating to Fees for Data Provided to Streaming Quote 
Traders Trading Options on the Exchange's Electronic Trading Platform, 
Phlx XL

March 2, 2005.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ and Rule 19b-4 \2\ thereunder, notice is hereby given 
that on January 28, 2005, 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 
Phlx. The proposed rule change has been filed by the Phlx as 
establishing or changing a due, fee, or other change, pursuant to 
Section 19(b)(3)(A)(ii) of the Act,\3\ and Rule 19b-4(f)(2) \4\ 
thereunder, 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 Phlx proposes to amend its fee schedule relating to its 
electronic trading platform for options, Phlx XL.\5\ Specifically, the 
Exchange proposes to establish charges applicable to Exchange 
Registered Options Traders (``ROTs'') that submit proprietary 
electronic quotations (``streaming quotes'').\6\
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    \5\ See Securities Exchange Act Release No. 49832 (June 8, 
2004), 69 FR 33442 (June 15, 2004) (SR-Phlx-2003-59).
    \6\ Such ROTs are known as Streaming Quote Traders (``SQTs''). 
See Exchange Rule 1014(b).
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    The Exchange has determined to charge SQTs a 100% pass-through 
charge relating to costs borne by the Exchange for data it will provide 
to SQTs who desire to obtain real-time underlying data to enable them 
to price the overlying options (known as ``Hyperfeed'' costs) \7\ in 
addition to any

[[Page 11723]]

other applicable fees.\8\ The 100% pass-through charge will be 
implemented beginning on February 1, 2005.
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    \7\ SQTs trading options on Phlx XL generally use handheld 
devices for the purpose of streaming quotations in options in which 
they are assigned. The Exchange does not supply the handheld 
devices; SQTs generally obtain the handheld devices from one of 
several Exchange-approved vendors. Some vendors provide underlying 
data to the SQT who uses their handheld as a service to enable such 
SQT to price overlying options, while other vendors do not. The 
Exchange provides such underlying data, obtained from a third-party 
service provider, to those SQTs whose vendors do not provide such 
data as part of the service they provide to the SQT. The proposed 
Hyperfeed fee represents a pass-through of 100% of the costs borne 
by the Exchange in obtaining and providing such data to such SQTs.
    \8\ SQTs will also pay any Exchange transaction-related fees as 
well as non transaction-related fees and membership-related fees, 
when applicable, such as trading post/booth, floor facility, shelf 
space and permit fees.
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    The text of the proposed rule change is available on Phlx's website 
(http://www.phlx.com), at the Phlx's Office of the Secretary, and at 
the Commission's Public Reference Room.

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 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 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 adopt fees relating 
to Phlx XL to reflect the expiration of a pilot program under which the 
Exchange absorbed 50% of the Hyperfeed costs for data it supplied to 
SQTs.\9\ The pilot program was intended to recoup 50% of the costs 
borne by the Exchange for data supplied by the Exchange to SQTs in 
connection with Phlx XL. The purpose of the instant proposal is to 
recoup 100% of the costs borne by the Exchange for such data.\10\ The 
Exchange believes that the 100% pass-through cost applicable to SQTs is 
an appropriate fee for data provided by the Exchange to SQTs.
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    \9\ See Securities Exchange Act Release No. 50332 (September 9, 
2004), 69 FR 55858 (September 16, 2004) (SR-Phlx-2004-49) 
(implementing the 50% pass-through cost on a 180-day pilot basis, to 
expire January 28, 2005).
    \10\ The Commission notes that the Phlx pilot program, which 
implemented a 50% pass-through charge for SQTs, expired on January 
28, 2005 and the instant proposal is effective starting on February 
1, 2005. Thus, the Phlx did not account for January 31, 2005 when it 
implemented the 50% and 100% pass-through charges for SQTs. 
Accordingly, the Exchange has represented that it will assess SQTs a 
pass-through charge for only 19 of the 20 business days in January 
2005. This prorated amount will reflect the exclusion of any pass-
through charge for January 31, 2005. Telephone conversation between 
Richard Rudolph, Director and Counsel, Phlx, Marc McKayle, Special 
Counsel, and A. Michael Pierson, Attorney, Division of Market 
Regulation, Commission, on March 1, 2005.
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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 \11\ 
in general, and furthers the objectives of Section 6(b)(4) of the Act 
\12\ in particular, in that it is an equitable allocation of reasonable 
dues, fees, and other charges among Exchange members functioning as 
SQTs.
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    \11\ 15 U.S.C. 78f(b).
    \12\ 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 inappropriate burden on competition.

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 has become effective pursuant to 
Section 19(b)(3)(A)(ii) of the Act,\13\ and Rule 19b-4(f)(2) \14\ 
thereunder, because it establishes or changes a due, fee, or other 
charge. 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.
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    \13\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \14\ 17 CFR 240.19b-4(f)(2).
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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 E-mail to [email protected]. Please include File 
Number SR-Phlx-2005-09 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-2005-09. 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 Section, 450 Fifth 
Street, NW., Washington, DC 20549. Copies of such 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-2005-09 and should be submitted on or before March 30, 2005.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\15\
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    \15\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. E5-976 Filed 3-8-05; 8:45 am]
BILLING CODE 8010-01-P