[Federal Register Volume 62, Number 43 (Wednesday, March 5, 1997)]
[Notices]
[Pages 10105-10106]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-5374]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-38341; File No. SR-Phlx-97-01)
Self-Regulatory Organizations; Notice of Filing and Immediate
Effectiveness of Proposed Rule Change by the Philadelphia Stock
Exchange, Inc. Relating to the U-SAVE Program
February 26, 1997.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ notice is hereby given that on January 15, 1997 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.
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\1\ 15 U.S.C. 78s(b)(1).
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Phlx proposes to implement a program that will calculate and
then display on the execution reports sent to member firms the dollar
amounts realized as savings to their customers as a result of price
improvement in the execution of their orders on the Exchange.
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 implement a program
for calculating and displaying, on a PACE execution report sent to
member firms entering orders, the dollar value saved by their customers
as a result of price improvement of orders executed on the Exchange.
This program does not in any
[[Page 10106]]
way affect the actual execution of PACE orders. The Exchange is
proposing to refer to this calculated dollar savings as the ``U-SAVE''
program.
The U-SAVE program is proposed to be made available for intraday
round lot and partial round lot market and marketable limit orders \2\
entered via the Exchange's PACE system.\3\ The U-SAVE (almost of price
improvement) is calculated in comparison to the best bid and offer
displayed in the national market system at the time the order is
received. For buy side orders, only orders executed at a price lower
than the national best offer price will receive a U-SAVE indicator. For
sell side orders, only orders executed at a price higher than the
national best bid price will receive a U-SAVE indicator.
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\2\ Only limit orders that are marketable at the time they are
received by the Exchange are considered in calculating price
improvement savings. See letter from Michele R. Weisbaum, Vice
President and Associate General Counsel, Phlx, to Anthony P. Pecora,
Attorney, Division of Market Regulation, SEC, dated February 7, 1997
(``Amendment No. 1'').
\3\ Tick sensitive orders and orders entered on the Floor are
not included in the U-SAVE program. Id.
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The following examples illustrate how U-SAVE is proposed to work.
Example 1--Assume the national market quote is 50-50\1/4\. A
market order to sell 1,000 shares, entered on the Phlx, is stopped
at 50, meaning it is guaranteed a price at 50 or a better price. The
order is subsequently executed at 50\1/8\. This is an \1/8\ point
savings over the national bid price of 50, which translates into
$125 savings over the guaranteed price. Thus, the execution report
would display U-SAVE $125.
Example 2--Assume the national market quote is 50-50\1/4\. A
marketable limit order to sell 800 shares at 50 or better is entered
on the Phlx. The order is subsequently executed at 50\1/8\. This is
an \1/8\ point savings over taking the prevailing bid of 50. The
execution report would display U-SAVE $100.
Example 3--Assume the national market quote is 50-50\1/8\. A
market order to buy 1,000 shares, entered on the Phlx, is executed
at 50. This is an \1/8\ point savings over taking the prevailing
offer of 50\1/8\. The execution report would display U-SAVE $125.
If no price improvement was provided or if the firm has not
requested to participate in the program then no price improvement
information would be displayed on the execution report to the entering
firm.
The Exchange believes that the U-SAVE program may be expected to
enhance the information made available to investors and improve their
understanding of the auction market.
2. Statutory Basis
The proposed rule change is consistent with Section 6(b)(5) \4\ of
the Act in that it is designed to promote just and equitable principles
of trade, to remove impediments and to perfect the mechanism of a free
and open market and a national market system, and, in general, to
protect investors and the public interest. This rule change is designed
to perfect the mechanism of a free and open market in that it enhances
the information provided to investors by displaying to them the dollar
value of the price improvement their orders may have received when
executed on the Phlx.
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\4\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition
The proposed rule change does not impose any burden on competition
that is not necessary or appropriate in furtherance of the purposes of
the Act.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
The Exchange has neither solicited nor received written comments on
the proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Because the foregoing proposed rule change: (1) Does not
significantly affect the protection of investors or the public
interest, (2) does not impose any significant burden on competition,
and (3) does not have the effect of limiting access to or availability
of any Exchange order entry or trading system, the U-SAVE program has
become effective pursuant to Section 19(b)(3)(A)(iii) \5\ of the Act
and Rule 19b-4(e)(5) \6\ thereunder.
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\5\ 15 U.S.C. 78s(b)(3)(A)(iii).
\6\ 17 CFR 240.19b-4(e)(5).
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At any time within sixty days of the filing of such proposed rule
change, the Commission may summarily abrogate such rule change if it
appears to the Commission that such action is necessary or appropriate
in the public interest, for the protection of investors, or otherwise
in furtherance of the purposes of the Act.\7\
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\7\ The Commission notes that Amendment No. 1 substantively
modifies the proposed rule change. Therefore, the time period within
which the Commission may act to summarily abrogate this rule change
began on February 11, 1997, the date Amendment No. 1 was received.
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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, 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 at the
Commission's Public Reference Section, 450 Fifth Street, N.W.,
Washington, D.C. 20549. Copies of such filing also will be available
for inspection and copying at the principal office of the Phlx. All
submissions should refer to File No. SR-Phlx-97-01 and should be
submitted by March 26, 1997.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\8\
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\8\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 97-5374 Filed 3-4-97; 8:45 am]
BILLING CODE 8010-01-M
