[Federal Register Volume 59, Number 111 (Friday, June 10, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-14095]
[[Page Unknown]]
[Federal Register: June 10, 1994]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-34158; File No. SR-Phlx-94-30]
Self-Regulatory Organizations; Notice of Filing of Proposed Rule
Change by the Philadelphia Stock Exchange, Inc. Adopting Rule 1015,
Quotation Guarantees, Including a Trade or Fade Provision
June 3, 1994
Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''), 15 U.S.C. 78s(b)(1), notice is hereby given that on June 1,
1994, the Philadelphia Stock Exchange, Inc. (``Phlx'' or ``Exchange'')
filed with the Securities and Exchange Commission (``SEC'' or
``Commission'') the proposed rule change as described in Items I, II,
and III below, which Items have been prepared by the self-regulatory
organization. The Commission is publishing this notice to solicit
comments on the proposed rule change from interested persons.
I. Self-Regulatory Organization's Statement of the Purpose of and
the Statutory Basis for the Proposed Rule Change
The Phlx, pursuant to Rule 19b-4 of the Act, proposes to adopt Phlx
Rule 1015 relating to quotation guarantees, to mirror the text of Floor
Procedure Advice (``Advice'') A-11, with the addition of a ``trade or
fade'' provision.\1\
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\1\See SR-Phlx-91-45, as amended, for text of Advice A-11.
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II. Self-Regulatory Organization's Statements Regarding the Proposed
Rule Change
In its filing with the Commission, the self-regulatory organization
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 self-regulatory organization
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
Currently, Rule 1033(a) states that all bids/offers in Phlx equity/
index options are deemed to be for one contract, unless otherwise
specified; in addition, specialists and Registered Options Traders
(``ROTs'') are required to fill public orders to a minimum depth of ten
contracts at the best quoted bid/offer. Consequently, orders for public
customers are provided with preferential treatment not afforded to
other types of orders.
The Phlx proposes to adopt a ``trade or fade'' provision comparable
to the proposals of the other options exchanges for the handling of
orders other than public customer orders.
Specifically, when a non-public order is represented in the trading
crowd at the displayed market on the Exchange, the trading crowd would
be required to either satisfy the order at that price or better, or
fade (withdraw) to a newly disseminated price. If the quote is faded,
immediate re-display of the previously disseminated quote without a
change in market conditions to warrant such action would be considered
conduct inconsistent with just and equitable principles of trade,\2\
which could result in an Exchange disciplinary proceeding. For purposes
of this rule, non-public orders include broker-dealer orders and that
portion of customer orders exceeding the contract size guaranteed by
the respective crowd.
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\2\Phlx Rule 707.
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The proposed rule is similar to proposals of other option exchanges
in that it would expressly require the members of an options trading
crowd to respond to non-public orders represented in that trading crowd
by either satisfying the order or updating the market in that option
series.
The proposed rule change is consistent with Section 6 of the Act in
general, and in particular, with Section 6(b)(5), in that it is
designed to promote just and equitable principles of trade, prevent
fraudulent and manipulative acts and practices, to remove impediments
to and perfect the mechanism of a free and open market and a national
market system, as well as to protect investors and the public interest.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Phlx 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
No written comments were either solicited or received.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Within 35 days of the date of publication of this notice in the
Federal Register or within such longer period (i) as the Commission may
designate up to 90 days of such date if it finds such longer period to
be appropriate and publishes its reasons for so finding or (ii) as to
which the Phlx consents, the Commission will:
(A) by order approve such proposed rule change, or,
(B) institute proceedings to determine whether the proposed rule
change should be disapproved.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views and
arguments concerning the foregoing. Persons making written submissions
should file six copies thereof with the Secretary, Securities and
Exchange Commission, 450 Fifth Street, NW, Washington, DC 20549. 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 provisions of 5
U.S.C. 552, will be available for inspection and copying in the
Commission's Public Reference Section, 450 Fifth Street, NW,
Washington, DC 20549. Copies of such filing will also be available for
inspection and copying at the principal office of the Phlx. All
submissions should refer to File No. SR-Phlx-94-30 and should be
submitted by July 1, 1994.
For the Commission by the Division of Market Regulation,
pursuant to delegated authority. 17 CFR 200.30-3(a)(12).
Jonathan G. Katz,
Secretary.
[FR Doc. 94-14095 Filed 6-9-94; 8:45 am]
BILLING CODE 8010-01-M