[Federal Register Volume 72, Number 39 (Wednesday, February 28, 2007)]
[Notices]
[Pages 9054-9056]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E7-3491]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-55333; File No. SR-Phlx-2007-13]


Self-Regulatory Organizations; Philadelphia Stock Exchange, Inc.; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change 
Relating to 100 Share Away Markets in Non-Nasdaq Securities on XLE

February 22, 2007.
    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 February 20, 2007, 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 and 
II, below, which Items have been prepared by the Phlx. The Exchange has 
designated the proposed rule change as constituting a ``non-
controversial'' rule change under Section 19(b)(3)(A) of the Act \3\ 
and Rule 19b-4(f)(6) 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).
    \4\ 17 CFR 240.19b-4(f)(6).
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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 XLE, Phlx's equity trading system, so 
as to prevent XLE from trading through 100 share away quotations in 
non-Nasdaq securities. In addition, XLE will be modified to route to 
100 share away quotations in non-Nasdaq securities. Accordingly, Phlx 
Rule 1(cc)(3) will be modified to include 100 share away quotations in 
the definition of Protected

[[Page 9055]]

Bids, Offers and Quotations for non-Nasdaq securities before the 
Trading Phase Date. The text of the proposed rule change is available 
at the Phlx, the Commission's Public Reference Room, and http://www.phlx.com.

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 reflect the impending 
elimination of the Intermarket Trading System (``ITS'') Plan in favor 
of the Trading Phase Date of Regulation NMS on March 5, 2007 by 
protecting additional away quotations in XLE. This would be 
accomplished by modifying XLE to consider 100 share bids, offers and 
quotations in non-Nasdaq securities in other markets as Protected Bids, 
Offers and Quotations beginning on February 26, 2007. Therefore, XLE 
would route to 100 share away quotations in non-Nasdaq securities and 
would not trade through or quote through such quotations unless 
simultaneously routing to those quotations, pursuant to Phlx Rules.
    Currently, XLE trades and quotes through 100 share away quotations 
in non-Nasdaq securities. Additionally, XLE does not route to 100 share 
away quotations in non-Nasdaq securities. This is because in the ITS 
Plan, which applies to non-Nasdaq securities, and the Phlx Rules 
adopted pursuant to the ITS Plan, provide an exemption from trade-
through and from locking and crossing protection for 100 share bids and 
offers of away markets. In contrast, commencing with the Trading Phase 
Date of Regulation NMS, which is currently March 5, 2007, the exemption 
for 100 share away quotation in the ITS Plan will not be available to 
Phlx (or any other exchange) under the new Order Protection Rule, Rule 
611.\5\ XLE will be ready for the Trading Phase Date in that it will 
not, among other things, trade or quote through 100 share away markets. 
However, Phlx believes that it is appropriate to modify its trading 
system, XLE, on February 26, 2007, to take 100 share away markets in 
non-Nasdaq securities into account for trading, quoting and routing 
because Phlx is currently rolling out XLE's routing functionality in 
non-Nasdaq securities.
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    \5\ 17 CFR 242.611.
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    Phlx has observed that other markets trading non-Nasdaq securities 
pursuant to the ITS Plan have modified or adapted their systems to 
provide for very rapid or immediate execution of their displayed 
quotations, including quotations of 100 shares. Phlx believes that the 
system modification in this proposed rule change could provide more 
opportunities for executions of orders that XLE routes away pursuant to 
Phlx Rules, since XLE would begin routing to 100 share away quotations, 
in addition to larger quotations. Finally, Phlx would modify Phlx Rule 
1(cc)(3) to clarify the change to XLE by stating that a Protected Bid, 
Offer or Quotation in non-Nasdaq securities includes a 100 share bid, 
offer or quotation.
2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act \6\ in general, and furthers the objectives of Section 
6(b)(5) of the Act \7\ in particular, in that it is 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, 
by increasing the category of Protected Bids, Offers and Quotations in 
non-Nasdaq securities to include 100 share away bids, offers and 
quotations.
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    \6\ 15 U.S.C. 78f(b).
    \7\ 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 burden on competition that is 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 proposed rule change has become effective pursuant to Section 
19(b)(3)(A) of the Act \8\ and Rule 19b-4(f)(6) thereunder \9\ because 
the proposal does not: (i) Significantly affect the protection of 
investors or the public interest; (ii) impose any significant burden on 
competition; and (iii) become operative for 30 days from the date on 
which it was filed, or such shorter time as the Commission may 
designate if consistent with the protection of investors and the public 
interest.\10\
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    \8\ 15 U.S.C. 78s(b)(3)(A).
    \9\ 17 CFR 240.19b-4(f)(6).
    \10\ Rule 19b-4(f)(6)(iii) under the Act requires that a self-
regulatory organization submit to the Commission written notice of 
its intent to file the proposed rule change, along with a brief 
description and text of the proposed rule change, at least five 
business days prior to the date of filing of the proposed rule 
change, or such shorter time as designated by the Commission. Phlx 
has satisfied the pre-filing requirement.
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    The Exchange has requested that the Commission waive the 30-day 
operative delay and make the proposed rule change operative on February 
26, 2007. The Commission hereby grants the request.\11\ The Commission 
believes that such waiver is consistent with the protection of 
investors and the public interest because the earlier operative date 
would enhance the protection of quotations in non-Nasdaq exchange-
listed securities displayed in away markets in that, pursuant to the 
proposal, the Phlx would no longer trade or quote though 100 share away 
quotations in non-Nasdaq securities. Further, the earlier operative 
date will allow XLE Participants to gain additional experience with the 
expanded XLE trading environment and functionality prior to its full 
implementation on the Trading Phase Date.
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    \11\ For purposes only of waiving the 30-day operative delay of 
the proposal, the Commission has considered the proposed rule's 
impact on efficiency, competition, and capital formation. See 15 
U.S.C. 78c(f).
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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.\12\
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    \12\ See 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,

[[Page 9056]]

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-2007-13 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-2007-13. 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-2007-13 and should be submitted on or before March 21, 2007.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\13\
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    \13\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7-3491 Filed 2-27-07; 8:45 am]
BILLING CODE 8010-01-P