[Federal Register Volume 73, Number 106 (Monday, June 2, 2008)]
[Notices]
[Pages 31528-31529]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-12195]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-57872; File No. SR-Phlx-2008-27]


Self-Regulatory Organizations; Philadelphia Stock Exchange, Inc.; 
Order Approving Proposed Rule Change Relating To Access to XLE on 
Phlx's Options Floor

May 27, 2008.
    On April 11, 2008, 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: (1) Delete Phlx Rule 1014(e)(iii), which 
limits the actions of Registered Options Traders (``ROTs'') related to 
trading in Phlx's equity market in certain situations, and (2) add new 
Phlx Rule 175 to prohibit integrated market making by Phlx market 
makers. The proposed rule change was published for comment in the 
Federal Register on April 24, 2008.\3\ The Commission received no 
comments on the proposal. This order approves the proposed rule change.
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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. 57683 (April 18, 
2008), 73 FR 22199.
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    The Exchange proposes to delete Phlx Rule 1014(e)(iii), which 
limits the actions of ROTs related to trading in Phlx's equity market 
in certain situations, in order to permit members and member 
organizations on the Phlx options floor to have connectivity to XLE, 
the Phlx's electronic equity trading system. The Exchange also proposes 
new Phlx Rule 175 to prohibit integrated market making by Phlx market 
makers. Specifically, Phlx Rule 175 prohibits Phlx Market Makers on

[[Page 31529]]

XLE, or any member, limited partner, officer, or associated person 
thereof, from acting as an options Specialist or ROT or functioning in 
any capacity involving market making responsibilities, in any option 
overlying a security in which the Market Maker on XLE is registered as 
such.
    After careful review, 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.\4\ 
In particular, the Commission finds that the proposed rule change is 
consistent with Section 6(b)(5) of the Act,\5\ which requires, among 
other things, that the rules of a national securities exchange be 
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.
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    \4\ In approving this 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).
    \5\ 15 U.S.C. 78f(b)(5).
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    The Commission finds that the deletion of Phlx Rule 1014(e)(iii) is 
consistent with the Act. Phlx Rule 1014(e)(iii) was designed to 
mitigate the ``time and place'' advantages available to a ROT with 
access to the Phlx equities trading floor. The Commission notes that 
the Phlx no longer operates a physical equities trading floor. The 
Commission also notes that possession of XLE order entry technology by 
Phlx options floor participants does not offer any special information 
advantage that could be used on the Phlx options floor because access 
to XLE information is made available simultaneously to anyone. 
Likewise, physical presence on the Phlx options floor does not provide 
an advantage in priority for orders entered into XLE from the Phlx 
options floor because XLE executes orders in price-time priority based 
on a pre-set algorithm that may not be altered by the XLE participant 
entering the order and does not take into account the location where an 
order is entered. In addition, the Commission notes that options floor 
participants currently have access to other execution venues and order 
routing mechanisms for the underlying securities.
    The Commission also finds that the prohibition on integrated market 
making is consistent with the Act.
    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\6\ that the proposed rule change (SR-Phlx-2008-27) be, and hereby 
is, approved.
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    \6\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\7\
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    \7\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Acting Secretary.
 [FR Doc. E8-12195 Filed 5-30-08; 8:45 am]
BILLING CODE 8010-01-P