[Federal Register Volume 64, Number 222 (Thursday, November 18, 1999)]
[Notices]
[Pages 63099-63100]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-30088]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-42123; File No. SR-Phlx-99-7]
Self-Regulatory Organizations; Notice of Filing and Immediate
Effectiveness of Proposed Rule Change by the Philadelphia Stock
Exchange, Inc. To Increase the Maximum Size of Option Orders Eligible
for Delivery through the Automated Options Market System
November 10, 1999.
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 October 13, 1999, the Philadelphia Stock Exchange, Inc. (``Phlx'' or
``Exchange'') filed with the Securities Exchange Commission (``SEC or
``Commission'') the proposed rule change as described in Item I and II
below, which Items have been prepared by the Exchange. 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.
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I. Self-Regulatory Organization's Statement of the Terms of
Substance of the Proposed Rule Change
The Exchange proposed to revise Phlx Rule 1080(b)(ii) to state
that, subject to the approval of the Phlx Options Committee, orders up
to 500 contracts in any Phlx equity or index option may be entered
through ``AUTOM,'' the Exchange's Automated Options Market System.\3\
The text of the proposed rule change is available at the Phlx and at
the Commission.
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\3\ AUTOM is the Exchange's electronic order routing and
delivery system for equity and index options. See Phlx Rule 1080.
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II. Self-Regulatory Organization's Statement of Purpose of and
Statutory Basic for, 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 aspect of such statements.
[[Page 63100]]
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, Proposed Rule Change
1. Purpose
In 1995, the Exchange received Commission approval to increase to
500 contracts the maximum order size for all equity and index option
orders entered through AUTOM.\4\ The Exchange's Board of Governors,
however, decided to make the 500 contract threshold available only to
orders in U.S. Top 100 Index Options (TPX).\5\ Therefore, orders for
all other equity and index options traded on the Exchange are
restricted to a maximum AUTOM order size of 100 contracts.
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\4\ See Securities Exchange Act Release No. 35782 (May 30,
1995), 60 FR 30136 (June 7, 1995).
\5\ The Commission has previously noted that ``although the
Exchange received approval to expand the maximum AUTOM order size to
500 contracts, the Exchange's Board of Governors has limited
implementation to TPX only.'' See Securities Exchange Act Release
No. 38683 (May 27, 1997), 62 FR 30366 (June 3, 1997).
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The proposed rule change deletes the language in Phlx Rule 1080
that restricts AUTOM order size to 100 contracts for all options other
than TPX \6\ and revises it to state that orders up to 500 contracts
are eligible for AUTOM order delivery, subject to Options Committee
approval. By increasing the number of option contracts eligible for
automated order delivery through AUTOM, the Exchange believes the
proposed rule change provides the flexibility necessary to more
effectively respond to the changing trading environment. Additionally,
the Exchange believes this change would allow it to provide electronic
order delivery for larger orders in a greater number of options.
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\6\ Exchange Rule 1080(b0(ii) presently states, ``Orders up to
the maximum number of contracts permitted by the Exchange may be
entered. Currently, ordered up to 100 contracts are eligible for
AUTOM, except orders of 500 contracts are eligible in U.S. Top 100
Index Options.''
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2. Statutory Basis
For the reasons above, the Exchange believes the proposed rule
change is consistent with Section 6 of the Act,\7\ in general, and with
Section 6(b)(5),\8\ in particular, in that it is designed to facilitate
transactions in securities, remove impediments to and perfect the
mechanism of a free and open market system, and protect investors and
the public interest.\9\
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\7\ 15 U.S.C. 78f.
\8\ 15 U.S.C. 78f(b)(5).
\9\ In reviewing this proposal, the Commission has considered
its impact on efficiency, competition, and capital formation. 15
U.S.C. 78c(f).
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B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange believes that the proposed rule change will not impose
any burden on competition not necessary or appropriate in furtherance
of the purposes of the Act.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
The Exchange neither solicited nor received written comments with
respect to the proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing
for Commission Action
Because the foregoing proposed rule change: (1) Does not
significantly affect the protection of investors or the public
interest; (2) does not impose any significant burden on competition;
and (3) the Exchange provided the Commission with written notice of its
intent to file the proposed rule change at least five business days
prior to the filing date; the proposed rule change has become effective
pursuant to Section 19(b)(3)(A) of the Act \10\ and Rule 19b-4(f)(6)
\11\ thereunder.
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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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Under Rule 19b-4(f)(6)(iii),\12\ a proposed rule change normally
does not become operative prior to 30 days after the date of filing.
However, Rule 19b-4(f)(6)(iii) permits the Commission to designate such
shorter time if such action is consistent with the protection of
investors and the public interest. The Exchange has requested that the
Commission designate such shorter time period so that the proposed rule
change may become operative immediately upon its filing.
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\12\ 17 CFR 240.19b-4(f)(6)(iii).
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The Commission has determined, consistent with the protection of
investors and the public interest, to make the proposed rule change
operative upon filing. The Commission believes it is appropriate to
make the proposed rule change operative upon filing because the
proposal allows the Exchange to fully implement AUTOM order size
requirements previously approved by the Commission. The revised AUTOM
order size requirements should help the Exchange to better serve
investors by providing automated delivery for large orders. In
addition, users of options other than TPX should benefit from the
increased availability of AUTOM for order delivery.
For all of the reasons set forth above, the Commission believes it
is consistent with the protection of investors and the public interest
to make the proposed rule change operative upon the date of filing,
October 13, 1999. 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.
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, N.W., Washington, D.C. 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 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, 450 Fifth Street, N.W., Washington,
D.C. 20549-0609. Copies of such filing also will be available for
inspection and copying at the principal office of the Phlx. All
submissions should refer to File No. SR-Phlx-99-37 and should be
submitted by December 9, 1999.
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. 99-30088 Filed 11-17-99; 8:45 am]
BILLING CODE 8010-D-M