[Federal Register Volume 63, Number 27 (Tuesday, February 10, 1998)]
[Page 6790]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-3276]



[Release No. 34-39616; File No. SR-PHLX 97-49]

Self-Regulatory Organizations; Order Granting Approval to 
Proposed Rule Change and Amendment No. 1 Thereto by the Philadelphia 
Stock Exchange, Inc., Relating to Exchange Approval of Member 

February 3, 1998.

I. Introduction

    On November 13, 1997, pursuant to Section 19(b)(1) of the 
Securities Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 
thereunder,\2\ the Philadelphia Stock Exchange, Inc. (``Phlx'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``SEC'' or ``Commission'') a proposed rule change (SR-PHXL-97-49) to 
require Exchange approval of member advertising. On December 15, 1997, 
the Exchange filed Amendment No. 1 to the proposed rule change. The 
proposed rule change was published for comment in the Federal Register 
on December 29, 1997.\3\ No comments were received on the proposal. 
This order approves the proposal.

    \1\ 15 U.S.C. 78s(b)(1)/
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 39466 (December 18, 
1997), 62 FR 67680.

II. Description of the Proposal

    In the rule proposal, the Phlx proposed to amend Phlx Rule 605 to 
require member or foreign currency option participant organizations for 
which the Phlx is the designated examining authority (``DEA''): (1) to 
receive Exchange consent prior to using the Internet to provide market 
quotations or to advertise to the general public; (2) to receive prior 
Exchange consent before making use of radio or television broadcasts 
for any business purpose or broadcasting Exchange quotations on radio 
or television programs or via public telephone reports; and (3) to 
submit the text of all commercials or program materials about 
securities or investing sponsored by the firm on radio, television, 
public telephone or on the Internet, promptly following the program in 
which it was used. Further, the commentary to the rule which states 
that the provisions of the rule do not apply to advertisements, market 
letters and sales literature relating to options as defined in Rule 
1049 would be deleted so that the rule would apply to all products 
traded on the Exchange, including, options. The Exchange filed 
Amendment No. 1 to make clear that print advertisements are also 
subject to prior Exchange review and approval under the new proposed 
language of Phlx Rule 605.

III. Discussion

    After careful review, the Commission finds that the proposed rule 
change is consistent with the requirements of the Act and the rules and 
regulations thereunder. the Commission believes the proposal is 
consistent with the requirements of 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, and to protect investors and the 
public interest.\4\

    \4\ In approving this rule, the Commission notes that it has 
also considered the proposed rule's impact on efficiency, 
competition, and capital formation. 15 U.S.C. 78(c)(f).

    The Commission believes that it is beneficial and in the public 
interest to add a layer of review to the advertisements of Phlx 
members. The Commission believes that the review process will protect 
investors because it will help prevent misleading advertisements and 
fraudulent practices.

IV. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\5\ that the proposed rule change (SR-PHLX-97-49) is approved.

    \5\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\6\

    \6\ 17 CFR 200.30-3(a)(12).

Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 98-3276 Filed 2-9-98; 8:45 am]