[Federal Register Volume 63, Number 30 (Friday, February 13, 1998)]
[Notices]
[Pages 7488-7489]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-3631]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-39622; File No. SR-PHLX-97-45]
Self-Regulatory Organizations; Notice of Filing of Proposed Rule
Change by the Philadelphia Stock Exchange, Inc. To Amend Its By-Law
Article XII, Section 12-10, With Respect to the Eligibility of Persons
To Serve as Inactive Nominees
February 4, 1998.
Purusant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ notice is hereby given that on December 15, 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 Phlx.\2\ The Commission is publishing
this notice to solicit comments on the proposed rule changes from
interested persons.
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\1\ 15 U.S.C. Sec. 78s(b)(1).
\2\ On January 14, 1998, the Exchange submitted Amendment No. 1
to the filing, in which it proposed a new rule, Phlx Rule 21,
defining ``Inactive Nominee,'' and explaining the role of an
Inactive Nominee on the Phlx. See Letter from Murray L. Ross, vice
President and Secretary, Phlx, to Richard Strasser, Assistant
Director, Division of Market Regulation, Commission, dated January
14, 1998. Amendment No. 1 is described further in note 3 and in the
text, below.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Phlx hereby proposes to amend its By-Law Article XII, Section
12-10, with respect to the eligibility of persons to serve as Inactive
Nominees.\3\ The text of the proposed rule change to By-Law Article
XII, Section 12-10, is set forth in full in Exhibit A.
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\3\ In Amendment No. 1, the PHlx proposed a new rule, to be
designated as Rule 21, which would define an Inactive Nominee as
follows:
The term ``inactive nominee'' shall mean a natural person
associated with and designated by a member organization whom has
applied for and been approved by the Admissions Committee for such
status and is registered as such with the Office of the Secretary.
An inactive nominee shall have no rights or privileges of membership
unless and until said inactive nominee becomes a member of the
Exchange pursuant to the By-Laws and Rules of the Exchange. An
inactive nominee merely stands ready to assume legal title to a
membership upon notice by the member organization to the Office of
the Secretary to be transferred intra-firm on an expedited basis.
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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. 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
Phlx By-Law Article XII, Section 12-10, sets forth the eligibility
requirements with respect to persons designated to serve as Inactive
Nominees. An Inactive Nominee must be a person affiliated with a member
organization who has submitted a membership application and met all
membership qualification requirements, including an examination
administered by the Phlx's Market Surveillance Department. The proposed
amendment will allow an approved Inactive Nominee to assume the legal
title to a membership on an intra-firm and expedited basis in the event
of an emergency due to illness or other factors. In Amendment No. 1,
the Phlx stated that an Inactive Nominee would serve in the ``event of
an emergency due to illness or other factors,'' and ``would allow a
member organization to have a full complement of traders or specialists
available to conduct business on the Exchange trading floors by
transferring legal title intra-firm to the inactive nominee thereby
making that person an Exchange member.''
The proposed rule change would subject a person designated as an
Inactive Nominee to the existing membership application process,
including fees. Additionally, the member organization with whom an
Inactive Nominee is affiliated will be subject to a fee for the
privilege of maintaining an Inactive Nominee's status.
A member organization seeking to designate an affiliated person as
an Inactive Nominee shall submit a membership application on behalf of
a proposed Inactive Nominee, who would go through the existing
membership application process. Upon meeting all membership
requirements and after posting for a two-week period in the membership
Bulletin, this person will be registered as an Inactive Nominee. Upon
notice filed with the Phlx Office of the Secretary in writing prior to
9 a.m. on any business day the Exchange is open, under specified
circumstances, an Inactive Nominee may assume the legal title to a
membership on an intra-firm basis and be eligible to transact business
on the Exchange that day or for such longer period consistent with the
seat lease or membership title and use agreement (ABC agreement).
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, to 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 national market system, as well
as to protect investors and the public interest.
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 proposal is
consistent with the Act. Persons making written submissions should file
six copies thereof with the Secretary,
[[Page 7489]]
Securities and Exchange Commission, 450 Fifth Street, N.W., Washington,
D.C. 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,
N.W., Washington, D.C. 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-97-45 and should
be submitted by March 6, 1998.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\4\
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\4\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
Exhibit A--Proposed Rule Change
The Philadelphia Stock Exchange, Inc.
By-Law Article XII, Section 12-10
Additions are in italics; deletions are bracketed
[Associate Memberships] Inactive Nominees
Ssection 12-10. A member organization may designate an individual as
an ``Inactive Nominee.'' The member organization shall pay a fee for
the privilege of maintaining the Inactive Nominee status.
The following requirements shall apply to Inactive Nominees:
(a) To be eligible for Inactive Nominee status, an individual
must be approved for membership in accordance with the Rules of the
Exchange.
(b) An Inactive Nominee shall have no rights or privileges of
membership unless and until said Inactive Nominee becomes an
effective member and all applicable Exchange fees are paid.
(c) An Inactive Nominee's status will terminate after six months
unless it has been reaffirmed in writing by the member organization
or terminated prior thereto. Further, the Inactive Nominee's status
must be reaffirmed in writing every six months thereafter to remain
in effect.
[FR Doc. 98-3631 Filed 2-12-98; 8:45 am]
BILLING CODE 8010-01-M
