[Federal Register Volume 61, Number 95 (Wednesday, May 15, 1996)]
[Notices]
[Pages 24525-24526]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-12175]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-37180; File No. SR-Phlx-96-04]
Self-Regulatory Organizations; Philadelphia Stock Exchange, Inc.;
Order Granting Approval to Proposed Rule Change and Notice of Filing
and Order Granting Accelerated Approval to Amendment No. 1 Relating to
Amendment of Its By-Laws To Require That the Chairman of Each Standing
Committee Must Be a Member of the Board of Governors
May 9, 1996.
I. Introduction
On January 22, 1996, the Philadelphia Stock Exchange, Inc.
(``Phlx'' or ``Exchange'') submitted to the Securities and Exchange
Commission (``SEC'' or ``Commission''), pursuant to Section 19(b)(1) of
the Securities Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4
thereunder,\2\ a proposed rule change to require that the Chairman of
each Standing Committee of the Exchange's Board of Governors must be a
member of the Board of Governors.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
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The proposed rule change was published for comment in Securities
Exchange Act Release No. 36832 (February 12, 1996), 61 FR 6280
(February 16, 1996). No comments were received on the proposal. On May
9, 1996, the Exchange submitted to the Commission Amendment No. 1 to
the proposed rule change.\3\ This order approves the proposal,
including Amendment No. 1 on an accelerated basis.
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\3\ See Letter from Murray L. Ross, Secretary, Phlx, to Jon
Kroeper, Attorney, SEC, dated May 8, 1996 (``Amendment No. 1'').
Amendment No. 1 amends the text of the proposed rule change to delay
the implementation of the proposed rule change until March 26, 1997,
which is the organizational meeting of the Phlx Board of Governors
after the next scheduled annual election of governors. In its April
17, 1996 meeting, the Board resolved by consensus to retain for the
1996-97 governance year recently appointed Chairmen of Standing
Committees that are not members of the Board. Amendment No. 1 also
contains representations by the Exchange as to the application of
its conflict of interest policy to Standing Committees of the Board
and the Chairmen thereof. See infra note 7 for a description of such
representations.
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II. Description
The proposed rule change to Article X, Section 10-1(a) of the
Exchange's By-Laws mandates that, effective March 26, 1997, the
Chairman of each Standing Committee of the Phlx's Board of Governors
shall be a member of the Board of Governors. The proposed rule change
is intended to update the structural composition of the Standing
Committees and make them more directly responsive to the Board of
Governors.
III. Discussion
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, with the requirements of Section 6(b).\4\ Specifically, the
Commission believes that the proposed rule change is consistent with
the Section 6(b)(1) \5\ requirement that an exchange be organized to
carry out the purposes of the Act and to enforce compliance by its
members and persons associated with its members with the provisions of
the Act and the rules and regulations thereunder.
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\4\ 15 U.S.C. 78f(b).
\5\ 15 U.S.C. 78f(b)(1).
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By requiring that the Chairman of each Standing Committee of the
Board of Governors \6\ must be a member of the Board of Governors, the
proposed rule change will enable the Board to more closely oversee the
exercise of the authority it has delegated to the Standing Committees
and increase the responsiveness of the Committees to the Board's
concerns therewith. As a result, the proposed rule change may enhance
the Board's ability to perform its responsibilities under the By-Laws
and Rules of the Exchange and, in turn, the
[[Page 24526]]
Exchange's performance of its obligations under the Act.\7\
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\6\ Presently, the Standing Committees of the Phlx Board of
Governors consist of the following: an Admissions Committee, an
Allocation, Evaluation and Securities Committee, an Arbitration
Committee, an Audit Committee, a Business Conduct Committee, an
Elections Committee, an Executive Committee, a Finance Committee, a
Foreign Currency Options Committee, a Marketing Committee, a
Nominating Committee, and an Options Committee. See Phlx By-Laws,
Art. X, Sec. 10-1(a).
\7\ In Amendment No. 1 the Exchange has represented that Art.
IV, Sec. 4-8 of the Phlx By-Laws, which provides that ``no person
shall participate in the adjudication of a matter in which he is
personally interested,'' specifically applies to members of the
Board of Governors acting as such. The Exchange also has represented
that it has applied this conflict of interest provision to the
conduct of all Standing Committee, subcommittee, hearing panel and
panel members. Moreover, in the context of the proposed rule change,
the Exchange has represented that no Chairman of a Standing
Committee may participate in the deliberation or voting on any
matter in which such member or his or her affiliated firm may have
an interest in the outcome. See Amendment No. 1, supra note 3.
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The Commission finds good cause for approving Amendment No. 1 prior
to the thirtieth day after the date of publication of notice thereof in
the Federal Register. Amendment No. 1 merely delays the implementation
of the rule until the 1997-98 governance year, and does not propose new
substantive provisions to the proposed rule change. Accordingly, the
Commission believes that consistent with Section 19(b)(2), good cause
exists to accelerate approval of Amendment No. 1.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views and
arguments concerning Amendment No. 1 to the proposed rule change.
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 rules
change that are filed with the Commission, and all written
communications relating to Amendment No. 1 between the Commission and
any persons, 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, N.W., Washington, D.C. 20549. Copies of such filing
will also be available at the principal office of the Phlx. All
submissions should refer to File No. SR-Phlx-96-04 and should be
submitted by [insert date 21 days from date of publication].
V. Conclusion
It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\8\ that the proposed rule change (SR-Phlx-96-04), as amended, is
approved.
\8\ 15 U.S.C. 78s(b)(2).
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For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\9\
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\9\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 96-12175 Filed 5-14-96; 8:45 am]
BILLING CODE 8010-01-M
