Professional Documents
Culture Documents
At any time within 60 days of the Room, 100 F Street, NE., Washington, I. Self-Regulatory Organization’s
filing of the proposed rule change, the DC 20549, on official business days Statement of the Terms of Substance of
Commission may summarily abrogate between the hours of 10 a.m. and 3 p.m. the Proposed Rule Change
the rule change if it appears to the Copies of such filing also will be Phlx proposes to: (1) List and trade
Commission that such action is available for inspection and copying at U.S. dollar-settled foreign currency
necessary or appropriate in the public the principal office of the Exchange. All options (‘‘FCOs’’) on the Australian
interest, for the protection of investors, comments received will be posted dollar, the Canadian dollar, the Swiss
or otherwise in furtherance of the without change; the Commission does franc and the Japanese yen (together, the
purposes of the Act. not edit personal identifying ‘‘New Currencies’’); (2) amend certain
IV. Solicitation of Comments information from submissions. You rules relating to the quoting convention
should submit only information that for U.S. dollar-settled FCOs for purposes
Interested persons are invited to of clarity; (3) delete from Rule 1012 a
you wish to make available publicly. All
submit written data, views, and requirement that the Exchange delist
arguments concerning the foregoing, submissions should refer to File
Number SR–CBOE–2007–70 and should any series of U.S. dollar-settled FCOs
including whether the proposed rule outside of a ten percent band around the
change is consistent with the Act. be submitted on or before August 6,
2007. spot price that have no open interest; (4)
Comments may be submitted by any of amend the closing settlement value rule
the following methods: For the Commission, by the Division of by moving from 2 p.m. (Eastern time
Market Regulation, pursuant to delegated (‘‘ET’’)) to 5 p.m. ET the time after
Electronic Comments
authority.13 which the Exchange will use the
• Use the Commission’s Internet Florence E. Harmon, previously announced Noon Buying
comment form (http://www.sec.gov/
Deputy Secretary. Rate as the basis for the closing
rules/sro.shtml); or
[FR Doc. E7–13696 Filed 7–13–07; 8:45 am] settlement value; (5) extend the
• Send an e-mail to: rule-
applicability of Rule 1064, ‘‘Crossing,
comments@sec.gov. Please include File BILLING CODE 8010–01–P
Facilitation and Solicited Orders,’’ to
No. SR–CBOE–2007–70 on the subject
U.S. dollar-settled FCOs; and (6) clarify
line.
SECURITIES AND EXCHANGE the applicability of Rule 1092, ‘‘Obvious
Paper Comments COMMISSION Errors,’’ to U.S. dollar-settled FCOs.
The text of the proposed rule change
• Send paper comments in triplicate
is available on the Exchange’s Web site
to Nancy M. Morris, Secretary, [Release No. 34–56034; International Series
at http://www.Phlx.com/exchange/
Securities and Exchange Commission, Release No. 1304; File No. SR–Phlx–2007–
phlx_rule_fil.html, at the Exchange, and
100 F Street, NE., Washington, DC 34]
at the Commission’s Public Reference
20549–1090.
Self-Regulatory Organizations; Room.
All submissions should refer to File
Number SR–CBOE–2007–70. This file Philadelphia Stock Exchange, Inc.; II. Self-Regulatory Organization’s
number should be included on the Notice of Filing and Order Granting Statement of the Purpose of, and
subject line if e-mail is used. To help the Accelerated Approval of a Proposed Statutory Basis for, the Proposed Rule
Commission process and review your Rule Change, as Modified by Change
comments more efficiently, please use Amendment No. 1 Thereto, Relating to In its filing with the Commission, the
only one method. The Commission will U.S. Dollar-Settled Foreign Currency Exchange included statements
post all comments on the Commissions Options concerning the purpose of, and basis for,
Internet Web site (http://www.sec.gov/ the proposed rule change and discussed
rules/sro.shtml). Copies of the July 10, 2007.
any comments it received on the
submission, all subsequent Pursuant to Section 19(b)(1) of the proposed rule change. The text of these
amendments, all written statements Securities Exchange Act of 1934 statements may be examined at the
with respect to the proposed rule (‘‘Act’’),1 and Rule 19b-4 thereunder,2 places specified in Item III below. The
change that are filed with the notice is hereby given that on April 13, Exchange has prepared summaries, set
Commission, and all written forth in Sections A, B, and C below, of
2007, the Philadelphia Stock Exchange,
communications relating to the the most significant aspects of such
Inc. (‘‘Phlx’’ or ‘‘Exchange’’) filed with
proposed rule change between the statements.
the Securities and Exchange
Commission and any person, other than
those that may be withheld from the Commission (‘‘Commission’’) the A. Self-Regulatory Organization’s
public in accordance with the proposed rule change as described in Statement of the Purpose of, and
provisions of 5 U.S.C. 552, will be Items I and II below. On June 13, 2007, Statutory Basis for, the Proposed Rule
available for inspection and copying in the Exchange filed Amendment No. 1 to Change
the Commission’s Public Reference the proposed rule change.3 The
1. Purpose
Commission is publishing this notice to
data vendors (to the extent data from market data solicit comments on the proposed rule On January 8, 2007, the Exchange
vendors is available); (4) any capacity problems or change, as amended, from interested began trading U.S. dollar-settled options
other problems that arose during the operation of persons and is approving the proposal, on the British pound and the Euro on
the Pilot Program and how the Exchange addressed the Exchange’s electronic trading
such problems; (5) any complaints that the as modified by Amendment No. 1, on an
accelerated basis. platform for options, Phlx XL.4 These
hsrobinson on PROD1PC76 with NOTICES
in assessing the operation of the Pilot Program. The CFR 200.30–3(a)(12). (December 21, 2006), 71 FR 78506 (December 29,
1 15
U.S.C. 78s(b)(1).
report must be submitted to the Commission at least 2006) (SR–Phlx–2006–34) (‘‘Pound/Euro FCO
2 17 CFR 240.19b–4.
sixty (60) days prior to the expiration date of the Approval Order’’). In approving the listing and
Pilot Program. See Pilot Program Release, supra 3 Amendment No. 1 replaced the original filing in trading of U.S. dollar-settled FCOs on the British
note 5. its entirety. Continued
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38854 Federal Register / Vol. 72, No. 135 / Monday, July 16, 2007 / Notices
new U.S. dollar-settled FCOs were in bid and ask of the Thomson spot rate, unit of the underlying foreign currency,
addition to the Exchange’s existing rounded up to the nearest millionth if provided that the first two decimal
physical delivery FCOs. The Exchange the result ends in values greater than or places shall be omitted from all bid and
now proposes to list U.S. dollar-settled equal to five ten-millionths, and offer quotations for the Swiss franc, the
FCOs on the New Currencies. U.S. rounded down if less than five ten- Canadian dollar, and the Australian
dollar-settled FCOs on the New millionths, multiplied by the dollar, and the first four decimal places
Currencies will be subject to the same appropriate modifier.9 For the Canadian shall be omitted from all bid and offer
rules that now apply to existing U.S. dollar and the Swiss franc, the modifier quotations for the Japanese yen. Thus,
dollar-settled options on foreign will be 100. For the Japanese yen, the for example, a bid of ‘‘1.60’’ for an
currencies.5 In addition, a number of modifier will be 10,000.10 The Exchange option contract on the Japanese yen
rules are being amended to specifically believes that sufficient other venues shall represent a bid to pay $.000160 per
apply to U.S. dollar-settled options on exist for obtaining reliable spot market yen.11
the New Currencies, as described below. information on the New Currencies so Rule 1034, ‘‘Minimum Increments,’’
Like the British pound and the Euro, that investors in U.S. dollar-settled currently prescribes the minimum
physical delivery options on the four FCOs can monitor the underlying spot trading increment for all U.S. dollar-
New Currencies are already traded on market in the New Currencies. settled FCOs. This rule will now apply
the Exchange. These existing, physical Rule 1012, ‘‘Series Of Options Open to the New Currencies as well. However,
delivery options on the New Currencies For Trading,’’ Commentary .06, the rule is being amended to add an
will not be affected by this proposal and currently provides that the Exchange example of the minimum trading
will continue to trade as they do today, will initially list exercise strike prices increment in the case of U.S. dollar-
by open outcry. for each expiration of U.S. dollar-settled settled options on the Japanese yen,
The Exchange proposes to options on the Euro and the British which differs from the other U.S. dollar-
disseminate, over the facilities of the pound within a ten percent band around settled currencies options in that four
Consolidated Tape Association, at least the current spot price at half-cent decimal places, rather than two, are to
once every fifteen seconds while the ($.005) intervals. This rule is being be disregarded.12
Exchange is open for trading, a modified expanded to cover all U.S. dollar-settled Rule 1057, ‘‘U.S. Dollar-Settled
spot rate for the four New Currencies foreign currency options, including Foreign Currency Option Closing
like the modified spot rate currently options on the New Currencies. The Settlement Value,’’ currently provides
disseminated for the British pound and Exchange also is proposing to amend for the determination of the closing
the Euro.6 The modified spot rate will the rule by deleting a current settlement value for U.S. dollar-settled
be calculated by the Exchange based on requirement that the Exchange delist options on the British pound and the
spot prices (bids and asks) it receives any previously-listed series outside of Euro. The rule is being amended to
from Thomson Financial LLC the current ten percent band that have provide for the closing settlement value
(‘‘Thomson’’). For the Australian dollar, no open interest. The Exchange has for U.S. dollar settled options on the
the Exchange will determine the found that this requirement is an New Currencies. Because the Noon
midpoint between the bid and the ask administrative burden and does not Buying Rate is expressed differently for
and will modify that rate by multiplying believe that the restriction is justified.
it by 100.7 However, because the For example, the Exchange has found
11 Rule 1014, ‘‘Obligations and Restrictions
Thomson spot rate selected by the Applicable to Specialists and Registered Options
that approximately once a week, it is Traders,’’ and Options Floor Procedure Advice F–
Exchange 8 is expressed differently for
required to delete a series only to have 6, ‘‘Option Quote Parameters,’’ are being revised to
the Canadian dollar, the Japanese yen provide an illustration of the different option quote
it be listed again in a day or two due to
and the Swiss franc than for the spread parameters for U.S. dollar-settled options on
movement in the currency. Delisting
Australian dollar, the British pound and the Japanese yen, which differ from the other U.S.
and relisting various exercise prices dollar-settled FCOs in that four decimal places,
the Euro (in foreign currency units per
with no advance notice on a daily basis rather than two, are to be disregarded when the
U.S. dollar rather than in U.S. dollars quote parameters are expressed.
has the potential to confuse investors
per unit of foreign currency) the Rules 1014 and 1034 are also being amended by
and complicate their trading strategies
modified spot rate Phlx will disseminate removing the dollar sign before the ‘‘expressed as’’
and decisions. values for quotes and quote spread parameters.
for the Canadian dollar, the Japanese
Rule 1033, ‘‘Bids and Offers— Similarly, dollar signs are being added to Options
yen and the Swiss franc will be one
divided by the midpoint between the Premium,’’ will apply to U.S. dollar- Floor Procedure Advice F–6 in front of the
settled options on the New Currencies maximum quote spreads (but not in front of the
‘‘expressed as’’ values for the maximum quote
pound and the Euro, the Commission’s approval
as well as to the existing U.S. dollar- spreads). The Exchange believes that these changes
order stated that the listing and trading of settled options on the British pound and will make the quoting convention (i.e., disregarding
additional U.S. dollar-settled FCOs on other foreign the Euro. Pursuant to Rule the first four decimal places for the Japanese yen
currencies would require the Exchange to file 1033(b)(ii)(A), bids and offers are to be and the first two decimal places for the other
additional proposed rule changes on Form 19b–4. currencies underlying the U.S. dollar-settled FCOs)
Id. expressed in terms of U.S. dollars per less confusing to the investing public. The changes
5 See Pound/Euro FCO Approval Order, supra will also make Rules 1014 and 1034 more
9 Premiums and spot rates for the Canadian consistent with Rule 1033.
note 4, for a description of the rules applicable to
U.S. dollar-settled FCOs. dollar, the Japanese yen, and the Swiss franc have 12 Thus, the amended rule provides that all U.S.
6 See Securities Exchange Act Release No. 55513 been quoted in foreign currency units per U.S. dollar-settled FCOs on the Japanese yen quoting at
(March 22, 2007), 72 FR 14636 (March 28, 2007) dollar for years in connection with the Exchange’s $.000300 (expressed as 3.00) or higher shall have
(SR–Phlx–2007–28). The modified spot rate physical delivery FCOs. The Exchange also a minimum trading increment of $.000010 per unit
disseminated by the Exchange will not otherwise represents that other major market data vendors of the foreign currency, expressed as .10 per unit
amend or affect the Exchange’s existing rules also quote spot rates in terms of foreign currency of the foreign currency, which equals a $10.00
governing U.S. dollar-settled FCOs. units per U.S. dollar for these currencies as well.
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Federal Register / Vol. 72, No. 135 / Monday, July 16, 2007 / Notices 38855
the Canadian dollar, the Japanese yen, than the Exchange’s physical delivery or orders ahead of members of the
and the Swiss franc than for the contract on the same currencies.14 The trading crowd. These participation
Australian dollar, the British pound, position limit rules were originally guarantees currently apply to
and the Euro—in foreign currency units adopted for the larger physical delivery transactions in equity and index options
per U. S. dollar rather than in U. S. contracts. only. The Exchange proposes to amend
dollars per unit of foreign currency—the Rule 1014, Commentary .13 is being Rule 1064, Commentary .02, to provide
closing settlement value for the revised to delete the requirement that a participation guarantee for trading in
Canadian dollar, the Japanese yen, and the Options Committee and the Foreign U.S. dollar-settled options that is the
the Swiss franc will be an amount equal Currency Options Committee each same as the participation guarantee for
to one divided by the day’s announced establish separate in-person amounts for index options.
Noon Buying Rate, as determined by the equity and index options and foreign The Exchange also is proposing to
Federal Reserve Bank of New York on currency options, respectively. For amend Rule 1092, ‘‘Obvious Errors,’’ to
the trading day prior to expiration, purposes of Rule 1014, Commentary .13, clarify that the obvious error amounts
rounded to the nearest .0001 (except in the Exchange believes that there is no stated in the existing rule are the
the case of the Japanese yen where the useful reason to establish separate amounts by which the amount is
amount shall be rounded to the nearest requirements for equity and index ‘‘expressed’’ and not the actual
.000001). options on the one hand, and U.S. amounts. This is merely a technical
In addition, Rule 1057 provides that dollar-settled FCOs on the other.15 This correction.
if the Noon Buying Rate is not amendment will permit the Options Exchange rules designed to protect
announced by 2 p.m. ET, the closing Committee to establish one in-person public customers trading in FCOs will
settlement value will be based upon the requirement applicable to all ROTs and apply to U.S. dollar-settled FCOs on the
most recently announced Noon Buying permit any ROT to satisfy that in-person New Currencies. Specifically, Phlx Rule
Rate, unless the Exchange determines to requirement by trading any kind of 1024(b) relating to approval of customer
apply an alternative closing settlement option, be it equity, index or FCOs. accounts to trade options, Phlx Rule
value as a result of extraordinary The Exchange also is proposing to 1026 relating to suitability, Phlx Rule
circumstances. The Exchange is amend Rule 1064, ‘‘Crossing, 1027 relating to discretionary power
proposing to amend Rule 1057 to Facilitation and Solicited Orders,’’ to over customer accounts trading in
provide that the closing settlement extend the applicability of the rule to options, Phlx Rule 1025 relating to the
value will be based upon the most U.S. dollar-settled FCOs. Rule 1064 sets supervision of accounts, Phlx Rule 1028
recently announced Noon Buying Rate if forth, among other things, the relating to confirmations, and Phlx Rule
the Noon Buying Rate is not announced procedures by which a floor broker 1029 relating to delivery of options
by 5 p.m. ET (rather than 2 p.m. ET). holding an equity or index option order disclosure documents will apply to
The Exchange believes that moving the (‘‘original order’’) may cross it with trading in U.S. dollar-settled FCOs,
deadline to 5 p.m. ET should decrease another order or orders he or she is including FCOs on the New Currencies.
the likelihood that it may be required to holding, or, in the case of a public The Exchange represents that it has an
base the closing settlement value on the customer order, with a contra side order adequate surveillance program in place
previously announced Noon Buying provided by the originating firm from its for FCOs. The Exchange is also a
Rate, which is likely not to be current. own proprietary account (‘‘facilitation member of the Intermarket Surveillance
The rule will continue to permit the order’’). Under certain conditions, Rule Group (‘‘ISG’’) and may obtain trading
Exchange to apply an alternative closing 1064 provides ‘‘participation information via the ISG from other
settlement value as a result of guarantees’’ in such crossing or exchanges who are members or
extraordinary circumstances. facilitation transactions, entitling the affiliated members of the ISG.16 Futures
Rule 1001, ‘‘Position Limits,’’ floor broker to cross a certain percentage on the New Currencies trade on the
provides that the position limits shall be of the original order with the other order Chicago Mercantile Exchange (‘‘CME’’)
200,000 put or call option contracts and the New York Board of Trade
(aggregating both U.S. dollar-settled and 14 The size of the U.S. dollar-settled Australian (‘‘NYBOT’’). The New York Stock
physical delivery contracts) on the same dollar option contract is 10,000 Australian dollars, Exchange (‘‘NYSE’’) and NYSE Arca list
side of the market relating to the same which is one-fifth the size of the physical delivery
the following exchange traded funds:
underlying foreign currency. Rule 1001 contract size of 50,000 Australian dollars. The size
of the U.S. dollar-settled Canadian dollar option CurrencyShares Australian Dollar Trust,
is being amended, however, to provide contract is 10,000 Canadian dollars, which is one- CurrencyShares Canadian Dollar Trust,
that one U.S. dollar-settled Australian fifth the size of the physical delivery contract size and CurrencyShares Swiss Franc Trust.
dollar option contract shall count as of 50,000 Canadian dollars. The size of the U.S.
The Exchange represents that, to the
one-fifth of a contract, one U.S. dollar- dollar-settled Swiss franc option contract is 10,000
Swiss francs, which is approximately one-sixth the best of the Exchange’s knowledge, these
settled Canadian dollar option contract size of the physical delivery contract size of 62,500 U.S. markets are the primary trading
shall count as one-fifth of a contract, Swiss francs. The size of the U.S. dollar-settled markets in the world for exchange-
one U.S. dollar-settled Swiss Franc Japanese yen option contract is 1,000,000 Japanese
traded futures, options on futures and
option contract shall count as one-sixth yen, which is approximately one-sixth the size of
the physical delivery contract size of 6,250,000 trust shares on these currencies. Phlx
of a contract, and one U.S. dollar-settled Japanese yen. can obtain surveillance information
Japanese yen option contract shall count 15 Currently, Options Floor Procedure Advice B–
from the NYSE, NYSE Arca, CME and
as one-sixth of a contract.13 The 3 provides that a ROT (other than a Remote NYBOT, as they are members of the ISG.
counting of U.S. dollar-settled option Streaming Quote Trader (‘‘RSQT’’)) is required to
In addition, Phlx is able to obtain
contracts as less than one full contract trade in-person, and not through the use of orders,
the greater of 1,000 contracts or 50% of his contract
reflects the fact that the size of the U.S.
hsrobinson on PROD1PC76 with NOTICES
volume on the Exchange each quarter. ROTs may 16 The members of the ISG include all of the U.S.
dollar-settled option contract is smaller satisfy this requirement in any option traded on the registered stock and options markets. The ISG
Exchange. Floor Procedure Advice B–3 also members work together to coordinate surveillance
13 Currently, Rule 1001 provides that one U.S. contains a separate requirement that at least 50% and investigative information sharing in the stock
dollar-settled British pound option contract shall of a ROT’s trading activity in each quarter must be and options markets. In addition, the major futures
count as one-third of a contract, and that one U.S. in assigned options. This requirement will continue exchanges are affiliated members of the ISG, which
dollar-settled Euro option contract shall count as to apply to ROTs assigned to equity and index allows for the sharing of surveillance information
one-sixth of a contract. options and FCOs. for potential intermarket trading abuses.
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38856 Federal Register / Vol. 72, No. 135 / Monday, July 16, 2007 / Notices
information regarding trading in these III. Solicitation of Comments rules and regulations thereunder
products through Phlx members, in Interested persons are invited to applicable to a national securities
connection with such members’ submit written data, views, and exchange.20 In particular, the
proprietary or customer trades which arguments concerning the foregoing, Commission finds that the proposed
they effect on any relevant market.17 including whether the proposed rule rule change is consistent with Section
change is consistent with the Act. 6(b)(5) of the Act,21 which requires that
Finally, the Exchange represents that
Comments may be submitted by any of an exchange have rules designed, among
it has the necessary systems capacity to
the following methods: other things, to promote just and
support new options series that will
equitable principles of trade, to remove
result from the introduction of U.S. Electronic Comments impediments to and perfect the
dollar-settled options on the New mechanism of a free and open market
Currencies. • Use the Commission’s Internet
comment form (http://www.sec.gov/ and a national market system, and, in
2. Statutory Basis rules/sro.shtml); or general, to protect investors and the
• Send an e-mail to rule- public interest. Significant aspects of
The Exchange believes that its comments@sec.gov. Please include File the proposal are discussed below.
proposal is consistent with Section 6(b) Number SR–Phlx–2007–34 on the A. U.S. Dollar-Settled FCOs on the New
of the Act 18 in general, and furthers the subject line. Currencies
objectives of Section 6(b)(5) of the Act,19
in particular, in that it is designed to Paper Comments The Commission notes that it recently
promote just and equitable principles of approved rules governing the listing and
• Send paper comments in triplicate
trade, to remove impediments to and trading on Phlx of U.S. dollar-settled
to Nancy M. Morris, Secretary,
perfect the mechanism of a free and options on the British pound and the
Securities and Exchange Commission,
open market and a national market Euro,22 and that such rules will be
100 F Street, NE., Washington, DC
system, and, in general to protect applicable to U.S. dollar-settled options
20549–1090.
investors and the public interest, by on the New Currencies.23 The
All submissions should refer to File Commission believes that these rules
offering investors the ability to invest in Number SR–Phlx–2007–34. This file
U.S. dollar-settled FCOs on the New provide for regulation of the listing and
number should be included on the trading of FCOs on the New Currencies
Currencies and by simplifying existing subject line if e-mail is used. To help the on Phlx consistent with the Act, as
rules relating to the expression of strike Commission process and review your
prices and quotes in the U.S. dollar- discussed further below.
comments more efficiently, please use
settled FCO products. only one method. The Commission will 1. Settlement Value and Dissemination
B. Self-Regulatory Organization’s post all comments on the Commission’s of Information
Statement on Burden on Competition Internet Web site (http://www.sec.gov/ The Commission believes that
rules/sro.shtml). Copies of the sufficient venues exist for obtaining
The Exchange does not believe that submission, all subsequent reliable information on the New
the proposed rule change will impose amendments, all written statements Currencies so that investors in U.S.
any burden on competition not with respect to the proposed rule dollar-settled FCOs can monitor the
necessary or appropriate in furtherance change that are filed with the underlying spot market in the New
of the purposes of the Act. Commission, and all written Currencies. The Commission notes that,
communications relating to the in addition to other major market
C. Self-Regulatory Organization’s proposed rule change between the vendors providing such information,
Statement on Comments on the Commission and any person, other than Phlx will disseminate a modified spot
Proposed Rule Change Received From those that may be withheld from the rate for the New Currencies at least once
Members, Participants or Others public in accordance with the every fifteen seconds while the
No written comments were either provisions of 5 U.S.C. 552, will be Exchange is open for trading, which will
solicited or received. available for inspection and copying in give investors an additional means to
the Commission’s Public Reference track the value of the New Currencies
17 See Equity Floor Procedure Advice F–8 and
Room. Copies of such filing also will be underlying the FCOs. The Commission
Options Floor Procedure F–8, ‘‘Failure to Comply available for inspection and copying at also believes that Phlx’s procedures and
with an Exchange Inquiry.’’ Pursuant to Phlx Rule the principal office of the Exchange. All the competitive nature of the spot
1022, specialists and Registered Options Traders comments received will be posted market for the New Currencies should
(‘‘ROTs’’) are required to identify all accounts without change; the Commission does
maintained for foreign currency trading in which
help to ensure that the settlement values
the specialist or ROT engages in trading activity or not edit personal identifying for U.S. dollar-settled FCO contracts
over which he exercises investment discretion, and information from submissions. You will accurately reflect the spot price for
no specialist or ROT may engage in foreign should submit only information that the New Currencies. Finally, the closing
currency trading in any account not reported you wish to make available publicly. All settlement value, as calculated pursuant
pursuant to the rule. Phlx Rule 1022 also requires
every specialist and ROT to make available to Phlx submissions should refer to File
upon request all books, records and other Number SR–Phlx–2007–34 and should 20 In approving this rule change, the Commission
information relating to transactions for their own be submitted on or before August 6, notes that it has considered the proposed rule’s
account or accounts of associated persons with impact on efficiency, competition, and capital
2007. formation. See 15 U.S.C. 78c(f).
respect to the foreign currency underlying U.S.
dollar-settled FCOs, including transactions in the IV. Commission’s Findings and Order 21 15 U.S.C. 78f(b)(5).
cash market as well as the futures, options and 22 See Pound/Euro FCO Approval Order, supra
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Federal Register / Vol. 72, No. 135 / Monday, July 16, 2007 / Notices 38857
to Phlx rules, will be posted on the 4. Position and Exercise Limits (including U.S. dollar-settled FCOs on
Exchange’s Web site, where it will be Like other U.S. dollar-settled FCOs, the New Currencies) are consistent with
publicly available to all visitors on an U.S. dollar-settled FCO contracts on the the Act. First, the Commission believes
equal basis, without the need to enter New Currencies will be aggregated with that it is reasonable for Phlx to remove
any kind of password.24 physical delivery contracts for position the requirement that the Exchange delist
and exercise limit purposes. The any series of U.S. dollar-settled FCOs
2. Customer Protection outside of the current ten percent band
Commission believes that aggregation of
The Commission believes that a U.S. dollar-settled FCOs on the New that has no open interest. The
regulatory system designed to protect Currencies with the physical delivery Commission notes that the Exchange
public customers must be in place contracts for position and exercise limit has found this requirement to be an
before the trading of sophisticated purposes is prudent and minimizes administrative burden and does not
financial instruments, such as U.S. concerns regarding manipulations or believe the restriction is justified.28
dollar-settled FCOs on the New disruptions of the markets for U.S. The Commission also believes that it
Currencies, can commence on a national dollar-settled FCO contracts and is reasonable for the Exchange to change
securities exchange. The Commission physical delivery contracts. from 2 p.m. ET to 5 p.m. ET the time
believes this goal has been satisfied by up to which the Exchange will use the
the application of Phlx customer 5. Other Rules previously announced Noon Buying
protection rules to U.S. dollar-settled The Commission believes that the Rate as the basis for the closing
FCOs on the New Currencies. other rule changes proposed by Phlx to settlement value, because this will give
accommodate the trading of U.S. dollar- the Exchange a greater opportunity to
3. Surveillance use the Noon Buying Rate on the trading
settled FCOs on the New Currencies are
The Commission notes that Phlx will consistent with the Act. In particular, day prior to expiration instead of having
integrate U.S. dollar-settled FCOs on the the Commission believes it is reasonable to rely on a less-current previously
New Currencies into existing Phlx for Phlx to initially list exercise strike announced Noon Buying Rate.
market surveillance programs for equity prices for each expiration around the Further, the Commission believes that
and index options, physical delivery current spot price at half-cent ($0.005) it is reasonable for the Exchange to
foreign currency options, and other U.S. intervals up to five percent on each side, extend the application of Rule 1064
dollar-settled FCOs, and that Phlx as it currently does for other U.S. dollar- governing crossing, facilitation and
intends to apply those same program settled FCOs.25 The Commission notes solicited orders to U.S. dollar-settled
procedures to U.S. dollar-settled FCOs that Phlx has represented that it has the FCOs. The Commission notes the
on the New Currencies. The system capacity to support the Exchange’s existing rule provides
Commission also notes that Phlx Rule additional quotations and messages that participation guarantees in crossing or
1022, Equity Floor Procedure Advice F– will result from listing options on U.S. facilitation transactions for trading in
8, and Options Floor Procedure F–8 dollar-settled FCOs on the New equity and index options, and the
provide Phlx with the authority to Currencies.26 Commission believes that it is
obtain information regarding trading in The Commission also believes that it consistent with the Act to provide the
CurrencyShares Australian Dollar Trust is consistent with the Act for the same participation guarantee for trading
shares, CurrencyShares Canadian Dollar Exchange to apply the current minimum in U.S. dollar-settled FCOs as for index
Trust shares, CurrencyShares Swiss trading increments for other U.S. dollar- options.
Franc Trust shares, options on the New settled FCOs provided in Rule 1034 to C. Accelerated Approval
Currencies, and futures and options on U.S. dollar-settled FCOs on the New
futures on the New Currencies through Pursuant to Section 19(b)(2) of the
Currencies. The Commission notes that
Phlx members, in connection with such Act, the Commission finds good cause
the Exchange has made appropriate
members’ proprietary or customer trades to approve the proposal, as amended,
clarifying changes to the rule to account
which they effect on any relevant prior to the thirtieth day after the
for U.S. dollar-settled options on the
market. In addition, Phlx may obtain amended proposal is published for
Japanese yen, which differ from the
trading information through the ISG comment in the Federal Register. The
other U.S. dollar-settled FCOs in that
from other exchanges who are members Commission notes that U.S. dollar-
four decimal places, rather than two, are
or affiliates of the ISG. Specifically, Phlx settled FCOs on the New Currencies
disregarded.27
can obtain such information from the will be subject to the same Phlx rules
B. Other Rule Changes Relating to All and requirements as other U.S. dollar-
NYSE and NYSE Arca in connection
U.S. Dollar-Settled FCOs settled FCOs, with technical changes
with trading in the CurrencyShares
Australian Dollar Trust, CurrencyShares The Commission believes that the where appropriate to account for U.S.
Canadian Dollar Trust, and other rule changes proposed by Phlx dollar-settled FCOs on the New
CurrencyShares Swiss Franc Trust on applicable to all U.S. dollar-settled Currencies. The Commission also notes
the NYSE and NYSE Arca, and from the FCOs listed and traded on Phlx that it recently approved rules for the
CME and NYBOT in connection with listing and trading of cash-settled FCOs
trading of futures on the New 25 When listing additional strikes, the on the New Currencies on the
Currencies on those exchanges. Commission expects the Exchange to consider International Securities Exchange,
whether the listing of such strikes will be consistent LLC.29 Further, the Commission notes
Therefore, the Commission believes that with the maintenance of a fair and orderly market.
Phlx should have the tools necessary to 26 See letter dated June 21, 2007 from Thomas A.
that it has previously approved Phlx’s
adequately surveil trading in U.S. Whitman, Senior Vice President, Phlx, to Heather rule governing crossing, facilitation, and
Seidel, Assistant Director, Division of Market
hsrobinson on PROD1PC76 with NOTICES
Division of Market Regulation, Commission, on July Japanese yen. See e.g., Rule 1014, Rule 1033, and (April 3, 2007), 72 FR 17963 (April 10, 2007) (SR–
3, 2007. Options Floor Procedure Advice F–6. ISE–2006–59).
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38858 Federal Register / Vol. 72, No. 135 / Monday, July 16, 2007 / Notices
solicited orders and providing for design criteria for the Zeppelin Reopening of Comment Period
participation guarantees for equity and Luftschifftechnik GmbH Model LZ N07 For the reasons provided in this
index options, and it believes that Airship. The notice was issued on April notice, we believe that good cause exists
extending the applicability of such 10, 2007 and published on May 3, 2007 for reopening the comment period for
provisions to U.S. dollar-settled FCOs (72 FR 24656). In that document, the the proposed design criteria until
raises no new or novel issues.30 The FAA announced the availability and August 15, 2007. Absent unusual
Commission also believes that the other request for comments on a design circumstances, the FAA does not
proposed clarifications to Phlx’s rules criteria for the airship. anticipated any further extension of the
serve to enhance the proposal and raise DATES: Comments must be received on comment period for the design criteria.
no new regulatory issues. Therefore, the or before August 15, 2007. Issued in Kansas City, Missouri, on July 7,
Commission believes that the proposed 2007.
rule changes relating to the listing and ADDRESSES: Send all comments on the
proposed design criteria to: Federal Sandra J. Campbell,
trading of U.S. dollar-settled FCOs on
Aviation Administration, Attention: Mr. Acting Manager, Small Airplane Directorate,
the New Currencies on Phlx do not raise
Karl Schletzbaum, Project Support Aircraft Certification Service.
additional significant regulatory issues
Office, ACE–112, 901 Locust, Kansas [FR Doc. E7–13707 Filed 7–13–07; 8:45 am]
that have not been previously
considered by the Commission. As such, City, Missouri 64106. Comments may be BILLING CODE 4910–13–P
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