The Securities and Exchange Commission has approved a proposal by the Philadelphia Stock Exchange (Phlx) to extend its directed order pilot program for an additional year. The pilot allows specialists, Streaming Quote Traders (SQTs) and Remote Streaming Quote Traders (RSQTs) assigned in options that trade on Phlx XL to receive directed orders from a member (Order Flow Provider, or OFP) that submits, as agent, the customer order to Phlx through its Automated Options Market (AUTOM).
The pilot also establishes a participation guarantee to reward the directed specialist, SQT or RSQT for attracting such order flow to Phlx. Under the applicable rules, the OFP must transmit the directed order to a particular specialist, SQT or RSQT through AUTOM, and if the Phlx best bid or offer is at the national best bid and offer (NBBO), the directed order will automatically execute on Phlx XL and the directed specialist, SQT or RSQT will receive a participation allocation if it was quoting at the NBBO at the time the directed order was received.
Comments to the Phlx proposal must be submitted by June 21.