[Federal Register Volume 61, Number 69 (Tuesday, April 9, 1996)]
[Notices]
[Pages 15856-15858]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-8709]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-37059; International Series Release No. 963; File No.
SR-PHLX-96-10]
Self-Regulatory Organizations; Notice of Filing and Order
Granting Accelerated Approval to a Proposed Rule Change by the
Philadelphia Stock Exchange, Inc., Relating to a Change in the Holiday
Trading Schedule for Foreign Currency Options for Good Friday 1996
April 2, 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 (``SEC'' or
``Commission'') the proposed rule change as described in Items I and II
below, which Items have been prepared by the self-regulatory
organization. The Commission is approving this proposal on an
accelerated basis.
[[Page 15857]]
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The PHLX proposes to amend its holiday schedule with respect to the
trading of foreign currency options (``FCOs'') on Good Friday, April 5,
1996. Specifically, the PHLX intends to conduct a three-hour \1\ FCO
trading session from 8 a.m. Eastern Standard Time (``E.S.T.'') through
11 a.m. E.S.T. on Good Friday.
\1\ The PHLX clarified that the trading session will last for
three hours, rather than two hours, which was the length of the Good
Friday trading session conducted in 1994. Telephone conversation
between Murray L. Ross, Secretary, PHLX, and Yvonne Fraticelli,
Attorney, Office of Market Supervision, Division of Market
Regulation, Commission, on March 29, 1996.
---------------------------------------------------------------------------
The text of the proposal is available at the Office of the
Secretary, the 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, 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
Recently, the PHLX learned that the U.S. Department of Labor has
scheduled the release of employment figures on the morning of Good
Friday, April 5, 1996. Under its previously adopted holiday schedule,
the PHLX had planned to be closed on Good Friday, April 5, 1996.
However, the Foreign Currency Options Committee recommended to the
Exchange's Board of Governors, and the Board of Governors by unanimous
poll procedures approved for filing with the Commission an amendment to
the PHLX holiday schedule to permit a special trading session in FCOs
from 8:00 a.m. E.S.T. to 11:00 a.m. E.S.T. on Good Friday, April 5,
1996.
The PHLX represents that the Board of Governors slated the special
FCO trading session to accommodate customer interest and to meet
competitive demand in light of the fact that the Chicago Mercantile
Exchange as well as the Chicago Board of Trade have also scheduled
special trading sessions on that date. The case of adverse movements in
the underlying currencies while allowing the Exchange to remain
competitive with other exchanges and the interbank market, which also
will be open for trading on Good Friday.
The PHLX believes that the proposal is consistent with Section 6(b)
of the Act, in general, and, in particular, with Section 6(b)(5) in
that it is designed to remove impediments to and perfect the mechanism
of a free and open market and 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. Commission's Findings and Order Granting Accelerated Approval of
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 provide member firms and customers with sufficient notice to
prepare for operating during the proposed special trading session
slated for 8:00 a.m. E.S.T. to 11:00 a.m. E.S.T. on Good Friday, April
5, 1996.
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).\2\ Specifically, the
Commission believes that because of the release of the latest
employment figures by the U.S. Department of Labor and because the
futures exchanges and the interbank market will be open, there may be
investor interest in trading FCOs on Good Friday. This limited FCO
trading session will provide those investors with the opportunity to
hedge their positions in response to movements in the underlying
currencies on these other markets.
\2\ 15 U.S.C. 78f(b)(5) (1988 & Supp. V 1993).
---------------------------------------------------------------------------
Moreover, the Commission notes that the Exchange has issued a
notice to its membership advising them of this proposed schedule
change,\3\ and following approval of the proposal will issue a second
notice to members, thereby minimizing the possibility of investor
confusion. The notice to members also describes the resulting changes
in settlement procedures caused by the fact that the Options Clearing
Corporation (``OCC'') will be closed on Good Friday. Specifically, all
FCO transactions occurring on Good Friday will be processed by OCC on
an ``as of April 5'' basis along with FCO transactions occurring on
Monday, April 8, 1996. For example, FCOs exercised on Good Friday will
be processed using the April 5 trading prices but the actual processing
of the exercises will not occur until April 8, 1996. OCC represents
that it has adequate systems capacity to process the FCO transactions
executed during the special session in this manner. The Commission also
notes that OCC has issued a notice to all clearing members notifying
them of the special FCO trading session and the modified processing
procedures.\4\
\3\ See Circular 96-76, from Murray L. Ross, Secretary, PHLX, to
all members, member organizations, FCO participants and participant
organizations, dated March 29, 1996
\4\ See Memorandum from John Peplinski, Vice President, National
Operations, OCC, to all clearing members, dated March 29, 1996.
---------------------------------------------------------------------------
Based on the foregoing, the Commission finds that the Exchange's
proposal to change the FCO trading hours on Good Friday as described
herein is consistent with Section 6(b)(5) of the Act in that it will
promote just and equitable principles of trade and remove impediments
to a free and open market by allowing customers to trade FCOs on Good
Friday while at the same time ensuring the protection of investors and
the public interest in the trading of these products.
The Commission finds good cause for approving the proposed rule
change prior to the thirtieth day after the date of publication of
notice of filing thereof in the Federal Register. Accelerating approval
of this proposal will provide the Exchange with sufficient time to
notify FCO specialist units, member firms, and customers of the
schedule change and allow such persons and entities to consider their
trading strategies in light of the amended holiday schedule.
Accordingly, the Commission believes that granting accelerated approval
of the proposed rule change is appropriate and consistent with Sections
6(b)(5) and 19(b)(2) of the Act.
[[Page 15858]]
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, 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, NW.,
Washington, D.C. Copies of such filing will also be available for
inspection and copying at the principal office of the above-mentioned
self-regulatory organization. All submissions should refer to the file
number in the caption above and should be submitted by April 30, 1996.
It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\5\ that the proposed rule change (SR-PHLX-96-10) is approved.
\5\ 15 U.S.C. 78s(b)(2) (1982).
---------------------------------------------------------------------------
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\6\
\6\ 17 CFR 200.30-3(a)(12) (1995).
---------------------------------------------------------------------------
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 96-8709 Filed 4-8-96; 8:45 am]
BILLING CODE 8010-01-M
