[Federal Register Volume 62, Number 26 (Friday, February 7, 1997)]
[Notices]
[Pages 5875-5876]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-3066]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-38225; File No. SR-NYSE-96-32]
Self-Regulatory Organizations; New York Stock Exchange,
Incorporated; Approval of Proposed Rule Change Relating to the
Exchange's Policy on Tape Indications
January 31, 1997.
I. Introduction
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ notice is hereby given that on November 26, 1996, the New
York Stock Exchange, Inc. (``NYSE'' or ``Exchange'') filed with the
Securities and Exchange Commission (``SEC'' or ``Commission'') a
proposed rule change relating to the Exchange's policy on tape
indications. The proposal was published for comment in the Federal
Register on December 10, 1996.\2\ No comments were received on the
proposed rule change. The Commission is approving the proposed rule
change.
\1\ 15 U.S.C. 78s(b)(1).
\2\ Securities Exchange Act Release No. 38015 (December 3,
1996), 61 FR 65099 (December 10, 1996).
---------------------------------------------------------------------------
II. Description of the Proposal
The NYSE proposed to amend the Exchange Policy on Indications,
Openings and Reopenings, which will be issued as an Information
Memorandum. Indications are price ranges published on the tape before
or during a trading halt to display the probable price range in which a
stock will open or reopen.
The Exchange's policy on dissemination of tape indications
currently requires a minimum of 15 minutes elapse between the first
indication and the opening or reopening of a stock. In addition, when
multiple indications are used, a minimum of 10 minutes must elapse
after the last indication when it does not overlap the prior
indication; a minimum of 5 minutes must elapse after the last
indication when it overlaps the prior indication. In all cases, a
minimum of 15 minutes must elapse between the first indication and the
opening or reopening of a stock.
The Exchange proposed that these minimum time periods before
opening or reopening a stock be compressed from 15 to 10 minutes after
the first indication; and to 5 minutes after the last indication,
regardless of whether it overlaps the prior indication, provided that a
minimum of 10 minutes elapse between the first indication and the
opening or reopening of a stock. The Exchange indicated that it
believes that a minimum time period of 10 minutes for dissemination has
proven sufficient in other contexts, such as the publication of
imbalances of 50,000 shares or more of market-on-close orders on
trading days other than expiration days.
The Exchange stated that over the years, in developing procedures
for openings, it has focused on providing a balance between timeless
and appropriateness of price, i.e., achieving a price that reflects an
appropriate equilibrium of buying and selling interest at the time. The
Exchange noted that since current procedures were formulated, the speed
of communications has increased, meaning that relevant market
information can be disseminated and responded to very quickly. The
Exchange believes that the proposed rule change would shorten the time
period for indications, thereby allowing the opening or reopening of a
stock in a more expeditious fashion, while still providing sufficient
time for appropriate pricing of orders.
The Exchange believes that the revised procedures for tape
indications strike an appropriate balance between preserving the price
discovery process while providing timely opportunities for investors to
participate in the market.
III. Discussion
After careful review, 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) of the Act.\3\
The proposed rule change is designed to promote just an equitable
principles of trade, to remove impediments to, and perfect the
mechanism of a free and open market,
[[Page 5876]]
and, in general, to protect investors and the public interest.
---------------------------------------------------------------------------
\3\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
Specifically, the Exchange proposed that minimum time periods
before opening or reopening a stock be compressed from 15 to 10 minutes
after the first indication; and to 5 minutes after the last indication,
regardless of whether it overlaps the prior indication, provided that a
minimum of 10 minutes elapse between the first indication and the
opening or reopening of a stock. For example, if only 3 minutes had
elapsed from the time of the first indication to the second indication,
the minimum waiting period after the second indication would be 7
minutes.
The Commission agrees with the Exchange that due to increases in
the speed of communications, relevant market information can be
disseminated and responded to very quickly. The Commission finds
reasonable the Exchange's determination that the proposed rule change
will allow the opening or reopening of a stock in more expeditious
fashion while still providing sufficient time for appropriate pricing
of orders. The Commission finds that in the rule change, the Exchange
has made a reasonable determination that balances the preservation of
the price discovery process while providing timely opportunities for
investors to participate in the market. Exchange staff has represented
that the change in the timing of tape indications is consistent with
Intermarket Trading System re-opening procedures.\4\
---------------------------------------------------------------------------
\4\ Telephone Conversation between Don Siemer, Director of Rule
Development, Market Surveillance Division, NYSE, and Janet W.
Russell-Hunter, Special Counsel, Office of Market Supervision,
Division of Market Regulation, SEC, on January 23, 1997. See Plan
for the Purpose of Creating and Operating an Intermarket
Communications Linkage Pursuant to Section 11A(a)(3)(B) of the
Securities Exchange Act of 1934 [Composite: Amendments Through May
21, 1991].
---------------------------------------------------------------------------
IV. Conclusion
It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\5\ that the proposed rule change (File No. SR-NYSE-96-32) is
approved.
\5\ 15 U.S.C. 78s(b)(2).
---------------------------------------------------------------------------
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\6\
---------------------------------------------------------------------------
\6\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 97-3066 Filed 2-6-97; 8:45 am]
BILLING CODE 8010-01-M
