[Federal Register Volume 63, Number 117 (Thursday, June 18, 1998)]
[Notices]
[Pages 33430-33431]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-16261]
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SECURITIES AND EXCHANGE COMMISSION
[Released No. 34-40082; File No. SR-Phlx-98-19]
Self-Regulatory Organization; Notice of Filing of Proposed Rule
Change by the Philadelphia Stock Exchange, Inc., and Amendment No. 1
Thereto Relating to When a Security is Considered Open For Trading
June 10, 1998.
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 May 1, 1998, 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 Phlx.
On May 22, 1998, the Phlx filed an amendment to the proposal.\3\ 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\ See letter from Linda S. Christie, Counsel, Phlx, to Yvonne
Fraticelli, Attorney, Division of Market Regulation (``Division''),
Commission (May 22, 1998) (``Amendment No. 1''). In Amendment No. 1
Phlx replaces the phase ``principal exchange'' in Rule 1047 with the
phrase ``primary market'' to provide consistency with the language
in the proposed amendments to Phlx Rule 1047A and Option Floor
Procedure Advice G-2. Corresponding with Amendment No. 1, the word
``exchange'' should be replaced by the word ``market'' in the
amended portion of Phlx Rule 1047. Telephone conversation between
Linda S. Christie, Counsel, Phlx, and Marc McKayle, Attorney,
Division, Commission (May 26, 1998).
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I. Self-Regulatory Organization's Statement of the Terms of
Substance of the Proposed Rule Change
The Phlx proposes to amend Phlx Rules 1047 (Trading Rotations,
Halts and Suspensions), 1047A (Trading Rotations, Halts or Reopenings),
and Option Floor Procedure Advice G-2 (``Advice G-2'') (Trading
Rotations, Halts or Reopenings), to clarify when a security is consider
open for trading. Specifically, and underlying security
[[Page 33431]]
shall be considered open for trading where a transaction has been
reported or an opening indication disseminated, whichever occurs first,
and there has not been an indication of a delayed opening given.
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 Phlx 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 Phlx 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
The Phlx proposes amending Phlx Rules 1047 (Trading Rotations,
Halts and Suspensions), 1047A (Trading Rotations, Halts or Reopenings),
and Options Floor Procedure Advice G-2 (Trading Rotations, Halts or
Reopenings) to clarify when a security is open. These provisions govern
the various types of option rotations. Commentary .01(a) of Rule 1047
pertains to opening rotations, specifying that the opening rotation in
each class of potions shall be held promptly following the opening of
the underlying security on the principal market where it is traded.
However, neither Commentary .01 of Rule 1047, Rule 1047A, or Advice G-2
delineates when a security is considered open for trading. For
clarification purposes, the Phlx proposes amending Rule 1047 Commentary
.01(a) to indicate that an underlying security shall be deemed to have
opened on the primary market where it is traded it such market has
either (1) reported a transaction in the underlying security, or (2)
disseminated an opening quotation for the underlying security and given
no indication of a delayed opening.\4\ A corresponding amendment is
also proposed for Rule 1047A and Advice G-2. Thus, the proposal is
intended to correct an ambiguity and expressly provide in Exchange
rules that an opening quote signals the opening of a security.\5\ The
proposal should promote more prompt options openings by not requiring a
transaction to occur in the underlying security.
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\4\ Telephone conversation between Linda S. Christie, Counsel,
Phlx, and Yvonne Fraticelli, Attorney and Marc Mckayle, Attorney,
Division of Market Regulation, Commission (May 28, 1998).
\5\ Only quotations disseminated at the opening of a trading day
will be deemed to have opened the market in an underlying security.
Stale quotations disseminated on a prior trading day will be
ineffective under this proposed rule change. Telephone conversation
between Linda S. Christie, Counsel, Phlx, and Yvonne Fraticelli,
Attorney, and Marc McKayle, Attorney, Division, Commission (May 8,
1998).
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The proposed rule change is consistent with Section 6 of the Act,
in general,\6\ and Section 6(b)(5),\7\ in particular, in that it is
designed to promote just and equitable principles of trade, prevent
fraudulent and manipulative acts and practices, to foster cooperation
and coordination with persons engaged in relating, and facilitating
transactions in securities, 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. By clarifying the
Exchange's provisions concerning options openings and encouraging more
prompt openings, the aim of the Act should be achieved.
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\6\ 15 U.S.C. 78f.
\7\ 15 U.S.C. 78f(b)(5).
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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, including whether the proposed rule
change 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. 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 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-98-19 and should be
submitted by July 9, 1998.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\8\
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\8\ 17 CFR 200.30-3(a)(12)
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Jonathan G. Katz,
Secretary.
[FR Doc. 98-16261 Filed 6-17-98; 8:45 am]
BILLING CODE 8010-01-M