[Federal Register Volume 61, Number 218 (Friday, November 8, 1996)]
[Notices]
[Pages 57940-57941]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-28700]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-37914; File No. SR-Phlx-96-41]
Self-Regulatory Organizations; Notice of Filing of Proposed Rule
Change by the Philadelphia Stock Exchange, Inc. Relating to Designating
Options as Tier I Securities
November 1, 1996.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''), 15 U.S.C. Sec. 78s(b)(1), notice is hereby given that on
October 11, 1996, 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 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 Terms of Substance
of the Proposed Rule Change
The Exchange, pursuant to Rule 19b-4 of the Act, proposes to
include equity options, index options and other option like products
issued, cleared and guaranteed by the Options Clearing Corporation
(``OCC'') as Tier I securities under Exchange Rule 803.
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 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
1. Purpose
The purpose of the proposed rule change is to amend Exchange Rule
803 to include equity options, index options and other OCC issued
products as Tier I securities in order to allow these options to take
advantage of the blue sky exemptions afforded the Phlx's Tier I
securities.
In 1994, the Exchange received approval to adopt a two tier listing
criteria program for equity and debt securities.\1\ The Exchange
originally adopted its Tier I listing standards in conjunction with the
signing of a Memorandum of Understanding (``MOU'') with the North
American Securities Administrators Association
[[Page 57941]]
(``NASAA'').\2\ The Phlx MOU is modeled after the MOU between the
National Association of Securities Dealers (``NASD'') and NASAA,\3\
which is entitled ``A Model Uniform Marketplace Exemption.'' In the
order approving the Exchange's new Tier I listing standards, the
Commission noted that the Exchange was adopting the MOU standards in an
effort to provide issuers whose securities were listed under Tier I, a
greater opportunity to obtain blue sky exemptions.\4\ Since adopting
that MOU, the Exchange has received blue sky exemptions for its Tier I
listed securities from a number of states. The Exchange did not,
however, include equity and index options as Tier I securities. Since
the Exchange's equity/debt security listing standards are provided in a
separate rule from its option listing standards \5\, the exclusion of
the options as Tier I securities were merely an oversight rather than
an intentional exclusion.
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\1\ See Securities Exchange Act Release No. 34235 (June 17,
1994), 59 FR 32736 (June 24, 1994).
\2\ NASAA is an association of securities administrators from
each of the 50 states, the District of Columbia, Puerto Rico and ten
Canadian provinces.
\3\ See Securities Act Release No. 6810 (Dec. 16, 1988), 53 FR
52550 (Dec. 28, 1988).
\4\ See supra note 1 n. 12.
\5\ See Rules Phlx 803 through 805 for equity and debt security
listing standards; Phlx Rules 1009 and 1009A for listing standards
applicable to options on equities and indexes respectively.
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The OCC, which is considered the issuer of all Phlx listed options,
has the responsibility of registering these options. OCC has indicated
to the Exchange that because it is not able to take advantage of the
blue sky exemptions accorded to the Phlx's Tier I securities, it must
register Phlx listed options in numerous states in which it would not
otherwise be required to register if the options were considered Tier I
securities. The Exchange, therefore, proposes to include its equity
options, index options and any other OCC issued, cleared and guaranteed
products as Tier I securities.
This proposal is not without precedent. The Pacific Stock Exchange
(``PSE'') includes equity and index options as Tier I securities \6\
under its MOU with NASAA. Since the PSE's Tier I securities listing
standards and its equity and index option listing standards \7\ are
virtually identical to those of the Phlx, the Exchange does not believe
that NASAA will object to the Phlx making this amendment to its MOU.
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\6\ See PSE Rule 3.2(b).
\7\ See PSE Rules 3.6 and 7.
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2. Statutory Basis
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 foster cooperation
and coordination with persons engaged in regulating, clearing,
settling, processing information with respect to, 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.
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
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 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 self-regulatory organization consents, the Commission will:
(A) By order approve the 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 the provisions
of 5 U.S.C. Sec. 552, will be available for inspection and copying at
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 No. SR-Phlx-96-41 and
should be submitted by November 29, 1996.
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. 96-28700 Filed 11-7-96; 8:45 am]
BILLING CODE 8010-01-M
