[Federal Register Volume 73, Number 220 (Thursday, November 13, 2008)]
[Notices]
[Pages 67239-67241]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-26957]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-58906; File No. SR-Phlx-2008-76]
Self-Regulatory Organizations; Notice of Filing and Immediate
Effectiveness of Proposed Rule Change by the NASDAQ OMX PHLX, Inc.
Relating to an Increase in the Maximum Number of Quoters Permitted in
an Option
November 6, 2008.
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 November 4, 2008, NASDAQ OMX PHLX, Inc. (``Phlx'' or
``Exchange'') filed with the Securities and Exchange Commission
(``SEC'' or ``Commission'') the proposed rule change as described in
Items I, II,
[[Page 67240]]
and III, below, which Items have been prepared by the Exchange. The
Commission is publishing this notice to solicit comments on the
proposed rule change from interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange, pursuant to Section 19(b)(1) of the Act \3\ and Rule
19b-4 thereunder,\4\ proposes to amend Exchange Rule 507, Application
for Approval as an SQT or RSQT and Assignment in Options, which governs
the assignment of options to Streaming Quote Traders (``SQTs'') \5\ and
Remote Streaming Quote Traders (``RSQTs''),\6\ by establishing a higher
maximum number of quoting participants (``Maximum Number of Quoters''
or ``MNQ'') in equity options that are not in the top 15% most actively
traded based upon monthly national volume.
---------------------------------------------------------------------------
\3\ 15 U.S.C. 78s(b)(1).
\4\ 17 CFR 240.19b-4.
\5\ An SQT is an Exchange Registered Options Trader (``ROT'')
who has received permission from the Exchange to generate and submit
options quotations electronically through AUTOM in eligible options
to which such SQT is assigned. An SQT may only submit such
quotations while such SQT is physically present on the floor of the
Exchange. See Exchange Rule 1014(b)(ii)(A).
\6\ An RSQT is a ROT that is a member or member organization
with no physical trading floor presence who has received permission
from the Exchange to generate and submit option quotations
electronically through AUTOM in eligible options to which such RSQT
has been assigned. An RSQT may only submit such quotations
electronically from off the floor of the Exchange. See Exchange Rule
1014(b)(ii)(B).
---------------------------------------------------------------------------
The Exchange further proposes to amend Commentary .05 to Rule 507
to reflect the current practice of announcing changes to the MNQ on its
web site.
The text of the proposed rule change is available on the Exchange's
Web site at http://www.phlx.com/regulatory/reg_rulefilings.aspx.
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 Exchange 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 Exchange 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 provide additional
liquidity in equity options on the Exchange by increasing the MNQ in
certain options.
Currently, the Exchange limits the number of participants that may
be assigned to a particular equity option at any one time based upon
each option's monthly national volume. Commentary .02 to Rule 507 sets
forth tiered MNQ levels permitting 22 market participants for the top
5% most actively traded options; 17 market participants for next 10%
most actively traded options, and 12 market participants for all other
options.\7\ The ranking is based upon the preceding month's national
volumes. The Exchange proposes to increase the MNQ level for equity
options that are not in the top 15% most actively traded from 12 market
participants to 15.\8\
---------------------------------------------------------------------------
\7\ When initially adopted, Commentary .01 (a)-(c) established
MNQ levels of 20 market participants for the top 5% most actively
traded options; 15 market participants for next 10% most actively
traded options; and 10 market participants for all other options.
See Securities Exchange Act Release No. 55114 (January 17, 2007), 72
FR 3185 (January 24, 2007) (SR-Phlx-2006-81). These MNQ levels were
subsequently increased to the current levels of 22, 17, and 12,
respectively. See Securities Exchange Act Release No. 56261 (August
17, 2007), 72 FR 47112 (August 22, 2007) (SR-Phlx-2007-51).
\8\ Commentary .05 to Rule 507 states that the Exchange may
increase the MNQ levels established in this Commentary (meaning the
22, 17, and 12 numbers established in Commentary .01(a)-(c)) by
submitting to the SEC a rule filing pursuant to Section 19(b)(3)(A)
of the Exchange Act. The Exchange may decrease the MNQ levels
established in this Commentary upon SEC approval of a rule filing
submitted pursuant to Section 19(b)(2) of the Exchange Act.
---------------------------------------------------------------------------
Finally, Commentary .05 to Rule 507 states that the Exchange will
inform market participants of changes to the MNQ via Exchange circular.
The Exchange proposes to amend Commentary .05 to Rule 507 to reflect
its current practice of announcing changes to the MNQ on its Web site.
2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act \9\ in general, and furthers the objectives of Section
6(b)(5) of the Act \10\ 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 adding depth and liquidity to the Exchange's markets in
certain equity options.
---------------------------------------------------------------------------
\9\ 15 U.S.C. 78f(b).
\10\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
The Exchange further believes that increasing the MNQ in certain
equity options is pro-competitive, because it adds depth and liquidity
to the Exchange's markets by permitting additional participants to
compete on the Exchange.
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 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
Because the foregoing rule 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, provided that the self-regulatory organization
has given the Commission written notice of its intent to file 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, the proposed rule change has become effective
pursuant to Section 19(b)(3)(A) of the Act \11\ and Rule 19b-4(f)(6)
thereunder.\12\ At any time within 60 days of the filing of such
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.
---------------------------------------------------------------------------
\11\ 15 U.S.C. 78s(b)(3)(A).
\12\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii)
requires a self-regulatory organization to provide the Commission
with 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. The Exchange fulfilled this requirement.
---------------------------------------------------------------------------
[[Page 67241]]
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 an e-mail to [email protected]. Please include
File Number SR-Phlx-2008-76 on the subject line.
Paper Comments
Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street, NE., Washington, DC 20549-1090.
All submissions should refer to File Number SR-Phlx-2008-76. 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, 100 F Street, NE.,
Washington, DC 20549, on official business days between the hours of 10
a.m. and 3 p.m. Copies of the filing will also be available for
inspection and copying at the principal office of the self-regulatory
organization. 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-2008-76 and should be submitted on or before December 4, 2008.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\13\
---------------------------------------------------------------------------
\13\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Florence E. Harmon,
Acting Secretary.
[FR Doc. E8-26957 Filed 11-12-08; 8:45 am]
BILLING CODE 8011-01-P