[Federal Register Volume 59, Number 118 (Tuesday, June 21, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-15041]
[[Page Unknown]]
[Federal Register: June 21, 1994]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-34216; File No. SR-Phlx-93-41]
Self-Regulatory Organizations; Notice of Filing of Proposed Rule
Change by Philadelphia Stock Exchange, Inc. to Adopt Equity Floor
Procedure Advice A-2, Stopping Orders
June 15, 1994.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''), 15 U.S.C. Sec. 78s(b)(1), notice is hereby given that on
November 2, 1993, the Philadelphia Stock Exchange, Inc. (``Phlx'' or
``Exchange'') filed with the Securities and Exchange Commission
(``Commission'' or ``SEC``) the proposed rule change as described in
Items I, II and III below, which Items have been prepared by the self-
regulatory organization. On June 1, 1994, the Exchange submitted to the
Commission Amendment No. 1 to the proposed rule change in order to
narrow the scope of its original filing, to revise certain language
used therein and to request approval to amend its Minor Rule Violation
Enforcement and Reporting Plan (``Plan'').\1\ The Commission is
publishing this notice to solicit comments on the proposed rule change
from interested persons.
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\1\See letter from Gerald D. O'Connell, First Vice President,
Phlx, to Sharon Lawson, Assistant Director, Division of Market
Regulation, SEC, dated May 31, 1994 (``Amendment No. 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 adopt Equity Floor Procedure Advice
(``Advice'') A-2, Stopping Orders, which would require that any order
on the book that is stopped by the specialist be displayed at its price
or better if not executed immediately after being stopped. Moreover,
the proposed advice would prohibit the specialist from trading for the
specialist's own account with any order that specialist stopped, while
the specialist is in possession of an order at that price or better. In
this regard, the specialist must exercise due diligence to match the
stopped order with the other order pursuant to Phlx Rules 119 and 120.
Proposed Advice A-2(E) is followed by the designator ``(E)'' to
identify it as an equity floor advice, applicable only to the
Exchange's equity floor. In this regard, the Exchange's Plan would be
amended to include this Advice. Accordingly, violations of proposed
Advice A-2(E) would be subject to a fine schedule, which results in a
$250 fine for the first occurrence, a $500 fine for the second
occurrence and a sanction discretionary with the Exchange's Business
Conduct Committee for any violations thereafter.
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 Phlx proposed to adopt Advice A-2(E) to govern stopping orders
on the equity trading floor. The purpose of the proposal is to codify
stopping policies into an advice as a ready reminder to the equity
floor and also to establish that minor violations may result in the
issuance of pre-established fines. The advice is also intended to
contribute to the standardization of trading floor rules among the
Intermarket Trading System (``ITS'') participant exchanges.
With respect to stopped orders on the book, the proposed text is
consistent with the specialist's requirements to engage in a course of
dealings to assist in the maintenance of a fair and orderly market,
pursuant to Phlx Rule 203. Specifically, the first requirement is that
a stopped order on the book must be displayed at its price or better if
not executed immediately after being stopped. The second requirement of
this Advice prohibits a specialist from trading with a stopped order
for his own account, while in possession of another order at an equal
or better price. Instead, the specialist would be required to exercise
due diligence to ``match'' the stopped order with the other order,
consistent with Phlx Rule 218.
2. Statutory Basis
The proposed rule is consistent with Section 6 of the Act, in
general, and, in particular, with Section 6(b)(5), in that it is
designed to promote just and equitable principles of trade and prevent
fraudulent and manipulative acts and practices, by furthering the
purposes of Rule 203, which in turn, should foster a fair and orderly
market in Exchange traded securities.
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. 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 other 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, NW., Washington, DC 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. Sec. 552, will be available for inspection and copying at
the Commission's Public Reference Section, 450 Fifth Street, NW.,
Washington, DC 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-93-41 and should be
submitted by July 12, 1994.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 94-15041 Filed 6-20-94; 8:45 am]
BILLING CODE 8010-01-M
