[Federal Register Volume 61, Number 81 (Thursday, April 25, 1996)]
[Notices]
[Pages 18454-18455]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-10126]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-37123; File No. SR-Phlx-96-03]
Self-Regulatory Organizations; Notice of Filing of Proposed Rule
Change and Amendment No. 1 Thereto by the Philadelphia Stock Exchange,
Inc. Relating to Component Additions to the Phlx Gold/Silver Index
April 18, 1996.
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 April 1,
1996, 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. On April,
16, 1996, the Exchange filed Amendment No. 1 to the proposal.\1\ The
Commission is publishing this notice to solicit comments on the
proposed rule change, as amended, from interested persons.
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\1\ In Amendment No. 1 the Phlx states that the Index has always
been a P.M. settled index and that it proposes to apply all of the
maintenance criteria of Rule 1009(A)(c) except the requirement that
the index be designated as A.M. settled. See letter from Michele R.
Weisbaum, Associate General Counsel, Phlx, to James T. McHale,
Attorney, Office of Market Supervision, Division of Market
Regulation, Commission, dated April 16, 1996 (``Amendment No. 1'').
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I. Self-Regulatory Organization's Statement of the Terms of
Substance of the Proposed Rule Change
The Exchange proposes to revise the composition of the Phlx Gold/
Silver Index (``XAU'' or ``Index'') by adding three underlying stocks
and to adopt a procedure regarding replacements, additions and
deletions of component stocks. The text of the proposed rule change is
available at the Office of the Secretary, Phlx and at the Commission.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, Phlx 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 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
The XAU is a capitalization weighted index currently composed of
the stocks of nine widely held U.S. companies in the gold and silver
mining industry. Options on the Index have an American style expiration
and the settlement value is based on the closing values of the
component issues on the last trading day prior to expiration. The Index
was the first narrow based or industry index approved for trading on
the Exchange.\2\ Pursuant to Footnote 10 to the Index Approval
Order,\3\ the Exchange had agreed to submit to the Commission pursuant
to Rule 19b-4 under the Act, any changes to the stocks comprising the
Index and to attempt to formulate a rule that will govern this process.
Accordingly, pursuant to this rule filing, the Exchange is requesting
approval to change the composition of the XAU by adding three stocks.
The stocks are AMAX Gold, Inc. (AU), Santa Fe Pacific Gold Corp. (GLD)
and TVX Gold Inc. (TVX) and they all currently trade on the New York
Stock Exchange. The addition of these three stocks will help ensure an
even more accurate response to overall market activity in the precious
[[Page 18455]]
metals mining industry. The Phlx represents that the proposed change
would increase the total capitalization of the Index from $28.63
billion to $32.8 billion. The three additional stocks combined will
account for 12.74% of the revised index by capitalization weight. The
value of the XAU Index as of the close of trading on March 28, 1996 was
143.83.
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\2\ See Securities Exchange Act Release No. 20437 (December 2,
1983) 48 FR 55229 (December 9, 1983) (``Index Approval Order'').
\3\ Id.
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Also pursuant to this filing, the Exchange proposes to adopt a
procedure which will govern future replacements, additions or deletions
of underlying stocks from the Index. If at any time a stock is deleted
from the Index due to merger, acquisition or otherwise, and the
Exchange determines to replace it, the Phlx will take into account the
capitalization, liquidity, volatility and name recognition of any
proposed replacement stock which fits the character of the Index.
Moreover, the Phlx will ensure that the Index meets all of the
maintenance criteria in Rule 1009A(c) \4\ except the requirement that
the Index be A.M. settled.\5\ The Phlx notes that this maintenance
criteria, in part, requires it to ensure that no fewer than 90% of the
stocks comprising the Index by weight, nor fewer than 80% of the total
number of stocks in the Index, qualify as eligible for equity options
trading under Phlx Rule 1009.\6\ Absent Commission approval, the
Exchange will not increase to more than 15, nor decrease to fewer than
9, the number of stocks in the Index.
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\4\ The maintenance criteria set forth in Rule 1009A(c) are
principally designed as index maintenance criteria that are required
to be met by narrow-based index option products that were listed
pursuant to Rule 1009A(b). See Securities Exchange Act Release No.
34157 (June 3, 1994), 59 FR 30062 (June 10, 1994).
\5\ See Amendment No. 1, supra note 1.
\6\ The three new stocks proposed to be added herein all
currently have overlying options being traded.
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The Exchange represents that the proposed rule change, as amended,
is consistent with Section 6 of the Act in general, and in particular,
with Section 6(b)(5), in that it is designed to prevent fraudulent and
manipulative acts and practices, to promote just and equitable
principles of trade, 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 a national market system, as well as to
protect investors and the public interest.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange believes the proposed rule change will impose no
inappropriate burden on competition.
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
Within 35 days of the 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 self-regulatory organization consents, the Commission will:
(A) By order approve the 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 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 will also be available
for inspection and copying at the principal office of the Phlx. All
submissions should refer to File No. SR-Phlx-96-03 and should be
submitted by May 16, 1996.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\7\
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\7\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 96-10126 Filed 4-24-96; 8:45 am]
BILLING CODE 8010-01-M
