[Federal Register Volume 62, Number 248 (Monday, December 29, 1997)]
[Notices]
[Pages 67680-67681]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-33715]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-39466; File No. SR-PHLX 97-49]
Self-Regulatory Organizations; Notice of Filing of Proposed Rule
Change and Amendment No. 1 Thereto by the Philadelphia Stock Exchange,
Inc., Relating to Exchange Approval of Member Advertising
December 18, 1997.
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 November
13, 1997, 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 (``SRO''). On December 15, 1997, the Exchange
filed Amendment No. 1 to the rule proposal. 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
Pursuant to Rule 19b-4 of the Act, the PHLX proposes 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. The Amendment changed the proposed new language of the rule
to reflect this change. The text of the proposed rule change, as
amended, is below. Brackets represent deletions; italics represent
additions.
Rule 605
Advertisements, Market Letters, Research Reports and Sales
Literature
(a) No member, foreign currency option participant, member
organization or foreign currency option participant organization shall
issue any advertisement, market letter, research report, telemarketing
script or sales literature unless such member, foreign currency option
participant or a general partner or holder of voting stock in such
organization shall have endorsed his approval prior to publication or
distribution thereof on an exact copy thereof bearing the name of the
person who wrote such material. Such copy so endorsed shall be made
part of the permanent records of such member or foreign currency option
participant organization and shall be retained for three years, two
years in an easily accessible location.
(b) Member or foreign currency option participant organizations for
which the Exchange is the designated examining authority (``DEA'')
desiring to broadcast Exchange quotations on radio or television
programs, or in public telephone market reports, or make use of radio
or television broadcast or print advertising for any business purpose,
or to make use of the Internet for the purpose of providing market
quotations or advertising to the general public must first obtain the
consent of the Exchange by submitting an outline of the program
material to the Exchange.
(c) The text of all commercials, advertisements and program
material (except lists of market quotations) about securities or
investing sponsored by Exchange designated member or foreign currency
option participant organizations on radio, television, or public
telephone reports, or on the Internet, or program material supplied to
these media must be sent to the Exchange promptly following the program
in which it is used.
[Commentary: The provisions of this rule do not apply to
advertisements, market letters and sales literature relating to options
as defined in Rule 1049.]
Supplementary Material: No change.
[[Page 67681]]
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 SRO 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 SRO 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 Exchange proposes to amend PHLX Rule 605, Advertisements,
Market Letters, Research Reports and Sales Literature, in order to
assure that the Exchange has the opportunity to review and approve
advertisements, including market quotation reports, which are
disseminated over the Internet, radio, television and via public
telephone prior to their dissemination. Exchange Rule 605 currently
requires prior approval only by the member/participant or its general
partner or voting stock holder. The Exchange has recently become aware
of certain Internet advertisements by at least one of its members which
it believes may not comply with the communication guidelines contained
in the Supplementary Material to PHLX Rule 605. The Exchange therefore,
believes that prior Exchange approval is warranted. The rule will be
amended to apply to members and foreign currency options participants
for which the Exchange is the DEA so that firms for which another SRO
is the DEA will not have to be burdened by duplication of approvals.
The revised language will apply to advertisements, broadcasts of
Exchange market quotations or broadcasts for any other business
purpose, which could even include advertisements for brokers or
traders. It will also specify that it applies to advertisements and
broadcasts that are disseminated over radio, television, public
telephone and the Internet.
Another new requirement under the proposed rule will be that these
firms must also supply to the Exchange the text of all commercials and
program material (except lists of market quotations) about securities
or investing promptly following the program in which it is used. This
will assure that the approved text is actually the one that was
publicly disseminated. Finally, the Commentary to Rule 605 which made
the rule specifically not applicable to options will be deleted. The
Exchange believes that the requirements imposed under this rule are
equally important for option advertising as for advertising of any
other type of securities.
2. 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 and to protect investors
and the public interest by assuring that the Exchange reviews its
designated firms' advertisements
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 submission
should file six copies thereof with the Secretary, Securities and
Exchange Commissions, 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 Room. Copies of the 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-97-49 and should
be submitted by January 20, 1998.
For the Commission by the Division of Market Regulation,
pursuant to delegated authority, 17 CFR 200.30-3(a)(12).
Margaret H.McFarland,
Deputy Secretary.
[FR Doc. 97-33715 Filed 12-24-97; 8:45 am]
BILLING CODE 8010-01-M
