[Federal Register Volume 61, Number 32 (Thursday, February 15, 1996)]
[Notices]
[Pages 6054-6056]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-3360]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-36822; Filed No. SR-Phlx-95-88]
Self-Regulatory Organizations; Notice of Filing and Order
Granting Accelerated Approval of Proposed Rule Change and Amendment
Nos. 1 and 2 to the Proposed Rule Change by the Philadelphia Stock
Exchange, Inc., Relating to Trading Rotations, Halts or Reopenings
February 8, 1996.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 12b-4 thereunder,\2\ notice is hereby given that
on December 26, 1995, the (``Phlx'' or ``Exchange'') filed with the
Securities and Exchange Commission (``Commission'') the proposed rule
change as described in Items I and II below, which Items have been
prepared by the Exchange. The Exchange submitted Amendment No. 1 to the
Commission on January 29, 1996.\3\ The Exchange submitted Amendment No.
2 to the Commission on February 8, 1996.\4\ The Commission is approving
this proposal, as amended, on an accelerated basis.
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ In Amendment No. 1, the Exchange proposes to further amend
Phlx Rule 1047A and Floor Procedure Advice G-2 to state that in
addition to the requirement that 75% of the current index value must
be open for trading on the primary market before an opening rotation
in Super Cap Index options can commence, at least 3 stocks
underlying the Super Cap Index must also be open for trading on the
primary market. See Letter from Edith Hallahan, Special Counsel,
Phlx, to Michael Walinskas, Branch Chief, Office of Market
Supervision (``OMS''), Division of Market Regulation (``Market
Regulation''), Commission, dated January 29, 1996 (``amendment No.
1'').
\4\ The Exchange proposes to further amend both Rule 1047A and
Floor Procedure Advice G-2 by incorporating the opening rotation
requirements for Super Cap Index options into Exchange Requirements
regarding re-openings. See Letter from Gerald O'Connell, First Vice
President, Market Regulation and Trading Operations, Phlx, to
Michael Walinskas, Branch Chief, OMS, Market Regulation, Commission,
dated February 8, 1996 (``amendment No. 2'').
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the terms of
Substance of the Proposed Rule Change
The Exchange proposed to amend Floor Procedure Advice (``Advice'')
G-2, Trading Rotations, Halts or Reopenings, to add reference to Super
Cap Index (``Index'') options to correspond to recent amendments to
Rule 1047A. Specifically, paragraph (a)(i) is proposed to be amended to
add Super Cap Index options, providing that the opening rotation for
Super Cap Index options may be held after underlying securities
representing 75% of the current index value of all securities
underlying the Index have opened for trading on the primary market, and
at least 3 stocks underlying the Index are open for trading on the
primary market.\5\ The second paragraph will continue to require that
an opening rotation be held as soon as practicable, respecting both
industry index and Super Cap Index options, once underlying securities
representing 90% of the current index value of all the securities
underlying the index have opened for trading on the primary market.
\5\ See Amendment no. 1, supra note 3.
---------------------------------------------------------------------------
The Exchange also proposes to amend provisions regarding reopenings
in both Rule 1047A and Floor Procedure Advice G-2 by incorporating the
requirements for a Super Cap Index opening rotation. Thus, the
underlying securities representing 75% of the current Index value and
three stocks must be open for trading on the primary market before
Super Cap Index options may reopen after a trading halt.\6\
\6\ See Amendment No. 2, supra note 4.
---------------------------------------------------------------------------
The Exchange also proposes to correct the recently approved text to
Rule 1047A respecting Super Cap Index options opening rotations to
state that 90% of the ``current index value'' of all the securities
underlying the index must have opened for trading on the primary market
in order for an opening to be required. Currently, the text incorrectly
refers to 90% of the securities. The entire sentence referring to Super
Cap Index options is proposed to be deleted, thus deleting the
incorrect text, and replacing it with new language pertaining to the
new ``75% of the current Index value, and 3 underlying stocks''
requirements. The text of the proposed rule change is available at the
Office of the Secretary, the Exchange, and at the Commission.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In this filing with the Commission, the Exchange 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 Exchange has prepared summaries, set
forth in Section (A), (B), and (C) below, of the most significant
aspects of such statements.
[[Page 6055]]
(A) Self-Regulatory Organization's Statement of the Propose of, and
Statutory Basis for, the Proposed Rule Change
The Commission recently approved the listing and trading of Phlx
Super Cap Index options, noting that the Index is not classified as
either an ``industry'' or a ``market'' index.\7\ Thus, the Exchange
amended various rules, including Rule 1047A, respecting trading
rotations, halts and reopenings. Currently, Rule 1047A, and the
corresponding Advice G-2, provide that the opening rotation for
industry index options may be held after underlying securities
representing 50% of the current index value of all the securities
underlying the index have opened for trading on the primary market.
Further, once underlying securities representing 90% of the current
index value of all the securities underlying the index have opened for
trading on the primary market, the opening rotation shall be held as
soon as practicable. With respect to a market index, the opening
rotation shall be held at or as soon as practicable after the opening
of business on the Exchange.
\7\ See Securities Exchange Act Release No. 36369 (October 13,
1995), 60 FR 54274 (October 20, 1995) (SR-Phlx-95-22) (``Super Cap
Index Options Approval Order'').
---------------------------------------------------------------------------
Rule 1047A was amended to state that the opening rotation for Super
Cap Index options may be held only after underlying securities
representing 74% of the current index value of all securities
underlying the index have opened for trading on the primary market.\8\
Moreover, an opening rotation is required to be held as soon as
practicable, respecting both industry index and Super Cap Index
options, once underlying securities representing 90% of the current
index value of all the securities underlying the index have opened for
trading on the primary market.
\8\ In addition to the 75% requirement for Super Cap Index
options, the Exchange will also require that at least 3 stocks
underlying the Super Cap Index must also be open for trading on the
primary market before the opening rotation may commence. See
Amendment No. 1, supra note 3.
---------------------------------------------------------------------------
The Exchange is proposing at this time to incorporate these changes
into Advice G-2. At the time Rule 1047A was being amended, the
corresponding change to Advice G-2 was inadvertently omitted.\9\ The
Exchange is also proposing to correct a portion of Rule 1047A, which
states that once 90% of the securities of the Super Cap Index are open
for trading, the opening rotation for the options must be held. The
corrected text would require that 90% of the current index value of the
Index must be open.
\9\ See Super Cap Index Options Approval Order, supra note 7.
---------------------------------------------------------------------------
The Exchange also proposes to amend provisions regarding reopenings
in both Rule 1047A and Floor Procedure Advice G-2 by incorporating the
requirements for a Super Cap Index opening rotation. Thus, the
underlying securities representing 75% of the current Index value and
three stocks must be open for trading on the primary market before
Super Cap Index options may reopen after a trading halt.\10\
\10\ See Amendment No. 2, supra note 4.
---------------------------------------------------------------------------
The Exchange notes that the remainder of Rule 1047A continues to
apply to Super Cap Index options. For instance, modified rotations/SORT
procedures are governed by paragraph (b), halts by paragraph (c), and
closing rotations are not required for expiring options, pursuant to
paragraph (e).
The Exchange believes that the proposed rule change is consistent
with Section 6(b) of the Act in general and furthers the objectives of
Section 6(b)(5) in particular in that it is designed to prevent
fraudulent and manipulative acts and practices, to promote just and
equitable principles of trade, and is not designed to permit unfair
discrimination between customers, issuers, brokers or dealers.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange believes that the proposed rule change will impose no
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 solicited or received with respect to the
proposed rule change.
III. Commission's Findings and Order Granting Accelerated Approval
of the Proposed Rule Change
The Exchange has requested that the proposed rule change be given
accelerated effectiveness pursuant to Section 19(b)(2) of the Act in
order to promptly correct both Rule 1047A and Advice G-2 respecting
Super Cap Index options. The Commission finds that the proposed rule
change is consistent with the requirements of the Act and the rules and
regulations thereunder applicable to a national securities exchange,
and, in particular the requirements of section 6(b) (5) thereunder.
Specifically, the Commission believes that the proposed rule change is
appropriate because it makes Floor Procedure Advice G-2 consistent with
recent amendments to Phlx Rule 1047A. The Commission notes further that
the proposed rule change ensures that in addition to requiring that at
least 75% of the current Super Cap Index value is open for trading on
the primary market, the Exchange will require that at least 3 of the 5
components will be open for trading. Given the small number of Index
components, the Commission believes that this requirement is important
to ensure that trading in the Index options only commences, or reopens
following a trading halt, if at least a majority of the Index
components are also open for trading.
The Commission finds good cause for approving the proposed rule
change, as amended, prior to the thirtieth day after the date of
publication of the notice thereof in the Federal Register. For reasons
discussed above, the Commission notes that the proposed rule change
does not raise any new or unique regulatory issues and is consistent
with changes recently approved by the Commission for the Super Cap
Index in Phlx Rule 1047A. The addition of the minimum 3 stock
requirement also will strengthen the ``75% of current index value''
requirement by ensuring that trading in the Super Cap Index only
commences, or reopens following a trading halt, when a sufficient
number of component stocks have opened, or reopened for trading.
Accordingly, the Commission believes that it is consistent with
Sections 6(b) (5) and 19(b)(2) of the Act to approve this proposed rule
change on an accelerated basis.
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 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
[[Page 6056]]
inspection and copying at the principal office of the Phlx. All
submissions should refer to File No. SR-Phlx-95-88 and should be
submitted by March 7, 1996.
It is therefore ordered, pursuant to Section 19(b) (2) of Act,\11\
that the proposed rule change (File No. SR-Phlx-95-88), as amended, is
hereby approved on an accelerated basis.
\11\ 15 U.S.C. 78s(b) (2).
---------------------------------------------------------------------------
For the Commission by the Division of Market Regulation,
pursuant to delegated authority.\12\
\12\ 17 CFR 200.30-3(a) (12).
---------------------------------------------------------------------------
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 96-3360 Filed 2-14-96; 8:45 am]
BILLING CODE 8010-01-M
