[Federal Register Volume 67, Number 92 (Monday, May 13, 2002)]
[Notices]
[Pages 32076-32077]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 02-11887]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-45889; File No. SR-Phlx-2002-28]
Self-Regulatory Organizations; Notice of Filing and Immediate
Effectiveness of Proposed Rule Change by the Philadelphia Stock
Exchange, Inc. To Extend PACE Price Improvement and Order Execution and
Price Protection Pilot Programs
May 7, 2002.
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 April 24, 2002, 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, II,
and III below, which Items have been prepared by the Exchange. The
Exchange filed this proposal under Section 19(b)(3)(A) of the Act,\3\
and Rule 19b-4(f)(6) \4\ thereunder, 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). The Phlx requested that the
Commission waive the 5-day pre-filing notice requirement, and the
30-day operative delay.
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I. Self-Regulatory Organization's Statement of the Terms of
Substance of the Proposed Rule Change
The Exchange proposes to extend through September 30, 2002 two PACE
\5\ pilot programs that were introduced with the advent of decimal
pricing in the securities industry. The first PACE pilot program, which
is found in Supplementary Material .07(c)(i) to Phlx Rule 229, consists
of an automated price improvement feature that incorporates a
percentage of the spread between the bid and the offer (``price
improvement pilot program''). The price improvement pilot program has
been in effect since January 30, 2001.\6\
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\5\ Philadelphia Stock Exchange Automated Communication and
Execution System is the Phlx's automated order routing, delivery,
execution and reporting system for equities.
\6\ The price improvement pilot program was established in SR-
Phlx-2001-12. See Securities Exchange Act Release No. 43901 (January
30, 2001), 66 FR 8988 (February 5, 2001). It was extended several
times, currently through April 15, 2002. See Securities Exchange Act
Release Nos. 44672 (August 9, 2001), 66 FR 43285 (August 17, 2001)
(SR-Phlx-2001-67); 45078 (November 19, 2001), 66 FR 59293 (November
27, 2001) (SR-Phlx-2001-101); and 45284 (January 15, 2002), 67 FR
3253 (January 23, 2002) (SR-Phlx-2002-01).
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The second PACE pilot program, which is found in Supplementary
Material .05 and .07(c)(ii) to Phlx Rule 229, incorporates immediate
execution of certain market orders through the Public Order Exposure
System (``POES'') and mandatory double-up/double-down price protection
(the ``order execution and price protection pilot program''). The order
execution and price protection pilot program has been in effect since
August 25, 2000.\7\
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\7\ The order execution and price protection pilot program was
established in SR-Phlx-2000-08. See Securities Exchange Act Release
No. 43206 (August 25, 2000), 65 FR 53250 (September 1, 2000). It was
extended several times, currently through April 15, 2002. See
Securities Exchange Act Release Nos. 44185 (April 16, 2001), 66 FR
20511 (April 23, 2001) (SR-Phlx-2001-20); 44818 (September 19,
2001), 66 FR 49240 (September 26, 2001) (SR-Phlx-2001-81); 45079
(November 19, 2001), 66 FR 59292 (November 27, 2001) (SR-Phlx-2001-
102); and 45295 (January 16, 2002), 67 FR 3624 (January 24, 2002)
(SR-Phlx-2002-03).
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The Phlx is not proposing any changes, substantive or otherwise, to
the price improvement pilot program or the order execution and price
protection pilot program, other than extending the pilot programs
through September 30, 2002. The text of the proposed rule change is
available at the Phlx and at the Commission.
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.
[[Page 32077]]
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to extend the price improvement pilot program
and the order execution and price protection pilot program through
September 30, 2002. No other changes are proposed to these pilot
programs at this time.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with Section 6 of the Act \8\ in general, and in particular, with
Section 6(b)(5),\9\ in that it is designed to promote just and
equitable principles of trade, remove impediments to and perfect the
mechanism of a free and open market and a national market system, and,
in general, protect investors and the public interest.
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\8\ 15 U.S.C. 78f.
\9\ 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 inappropriate burden on competition.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
Written comments were neither solicited nor received.
III. Date of Effectiveness of the Proposed Rule Change and Timing
for Commission Action
Because the foregoing proposed rule change 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, it has
become effective pursuant to Section 19(b)(3)(A) of the Act \10\ and
Rule 19b-4(f)(6) thereunder.\11\ 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.
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\10\ 15 U.S.C. 78s(b)(3)(A).
\11\ 17 CFR 240.19b-4(f)(6).
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The Exchange has requested that the Commission waive the 5-day pre-
filing notice requirement, and accelerate the operative date. The
Commission finds good cause to waive the pre-filing notice requirement,
and to designate the proposal to be both effective and operative upon
filing because such designation is consistent with the protection of
investors and the public interest. Waiver of these requirements will
allow the pilot programs to continue uninterrupted through September
30, 2002. For these reasons, the Commission finds good cause to
designate that the proposal is both effective and operative upon filing
with the Commission.\12\
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\12\ For purposes only of accelerating the operative date of
this proposal, the Commission has considered the proposed rule's
impact on efficiency, competition, and capital formation. 15 U.S.C.
78c(f).
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IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposal is
consistent with the Act. Persons making written submissions should file
six copies thereof with the Secretary, Securities and Exchange
Commission, 450 Fifth Street, NW, Washington, DC 20549-0609. 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 such filing will also be available for
inspection and copying at the principal office of the Exchange. All
submissions should refer to file number SR-Phlx-2002-28, and should be
submitted by June 3, 2002.
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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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 02-11887 Filed 5-10-02; 8:45 am]
BILLING CODE 8010-01-P