[Federal Register Volume 60, Number 109 (Wednesday, June 7, 1995)]
[Notices]
[Pages 30131-30133]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-13896]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-35781; File No. SR-PHLX-95-29]
Self-Regulatory Organizations; Notice of Filing and Immediate
Effectiveness of Proposed Rule Change by the Philadelphia Stock
Exchange, Inc., Relating to an Increase in the Maximum AUTO-X Order
Size for U.S. Top 100 Index Options
May 30, 1995.
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 May 22,
1995, 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, 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.
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
Currently, public customer market and marketable limit orders for
up to 25 option contracts, as determined by the specialist, are
eligible for execution through AUTO-X, the automatic execution feature
of the PHLX's Automated Options Market (``AUTOM'') system. The PHLX
proposes to increase the maximum AUTO-X order size eligibility for
public customer market and marketable limit orders in U.S. Top 100
Index (``TPX'') options from 25 to 50 contracts.
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, 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 [[Page 30132]] 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 purpose of the proposal is to increase the maximum AUTO-X order
size eligibility for public customer market and marketable limit orders
in TPX options from 25 to 50 contracts.
AUTO-X, the automatic execution feature of AUTOM, was approved by
the Commission as part of the AUTOM pilot program in 1991.\1\ AUTOM,
which has operated on a pilot basis since 1988 and was most recently
extended through December 31, 1995,\2\ is an on-line system that allows
electronic delivery of options orders from member firms directly to the
appropriate specialist on the Exchange's trading floor. Currently,
orders for up to 100 options contracts are eligible for AUTOM and
public customer market and marketable limit orders for up to 25
contracts are eligible for AUTO-X.\3\ AUTO-X orders are executed
automatically at the disseminated quotation price on the Exchange and
reported to the originating firm. Orders that are not eligible for
AUTO-X are handled manually by the specialist.
\1\See Securities Exchange Act Release No. 28978 (March 15,
1991), 56 FR 12050 (order approving File No. SR-PHLX-90-34).
\2\See Securities Exchange Act Release No. 35183 (December 30,
1994), 60 FR 2420 (January 9, 1995) (order approving File No. SR-
PHLX-94-41). See also Securities Exchange Act Release Nos. 25540
(March 31, 1988), 53 FR 11390 (order approving AUTOM on a pilot
basis); 25868 (June 30, 1988), 53 FR 25563 (order approving File No.
SR-PHLX-88-22, extending pilot through December 31, 1988); 26354
(December 13, 1988), 53 FR 51185 (order approving File No. SR-PHLX-
88-33, extending pilot program through June 30, 1989); 26522
(February 3, 1989), 54 FR 6465 (order approving File No. SR-PHLX-89-
1, extending pilot through December 31, 1989); 27599 (January 9,
1990), 55 FR 1751 (order approving File No. SR-PHLX-89-03, extending
pilot through June 30, 1990); 28625 (July 26, 1990), 55 FR 31274
(order approving File No. SR-PHLX-90-16, extending pilot through
December 31, 1990); 28978 (March 15, 1991), 56 FR 12050 (order
approving File No. SR-PHLX-90-34), extending pilot through December
31, 1991); 29662 (September 9, 1991), 56 FR 46816 (order approving
File No. SR-PHLX-91-31, permitting AUTO-X orders up to 20 contracts
in Duracell options only); 29782 (October 3, 1991), 56 FR 55146
(October 24, 1991) (order approving File No. SR-PHLX-91-33,
permitting AUTO-X for up to 20 contracts for all strike prices and
expiration months); 29837 (October 18, 1991), 56 FR 36496 (order
approving File No. SR-PHLX-90-03, extending pilot through December
31, 1993); 32906 (September 15, 1993), 58 FR 15168 (order approving
File No. SR-PHLX-92-38, permitting AUTO-X orders up to 25 contracts
in all options); and 33405 (December 30, 1993), 59 FR 790 (order
approving File No. SR-PHLX-93-57, extending pilot through December
31, 1994).
\3\The Commission recently approved a PHLX proposal to codify
the use of AUTOM and AUTO-X for index options. See Securities
Exchange Act Release No. 34920 (October 31, 1994), 59 FR 5510
(November 7, 1994) (order approving File No. SR-PHLX-94-40). In
addition, the Commission has approved a PHLX proposal to codify the
Exchange's practice of accepting certain orders for AUTOM and AUTO-
X. See Securities Exchange Act Release No. 35601 (April 13, 1995),
60 FR 19616 (April 19, 1995) (order approving File No. SR-PHLX-95-
18).
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TPX options were approved recently for trading on the Exchange as
broad-based index options.\4\ The PHLX now proposes to permit the use
of AUTO-X for public customer market and marketable limit orders of up
to 50 contracts in TPX options. The Exchange believes that the proposed
expanded AUTO-X parameter should improve the AUTOM system by offering
the benefits of AUTO-X to investors in TPX options who place a high
premium on prompt and efficient automatic executions for 50-lot orders
at the displayed price. The Exchange notes that the increase from a
maximum of 25 to 50 contracts is in line with prior changes; for
example, the Commission previously approved an AUTO-X increase for
public customer orders from 10 to 20 contracts.\5\
\4\See Securities Exchange Act Release No. 35591 (April 11,
1995), 50 FR 19423 (April 18, 1995) (order approving File No. SR-
PHLX-95-07).
\5\See Securities Exchange Act Release No. 29837, supra note 2.
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According to the PHLX, the proposed expansion of the maximum AUTO-X
order size should not impose significant burdens on the operation and
capacity of the AUTOM system. Instead, the PHLX believes that
increasing the number of public customer orders eligible for automatic
execution, and thereby reducing manual processing, may enhance AUTOM's
effectiveness. In addition, the Exchange notes that the Commission has
previously approved the automatic execution of 50 contracts for a
broad-based index.\6\
\6\See Securities Exchange Act Release No. 33894 (April 11,
1994), 59 FR 18429 (April 18, 1994) (order approving File No. SR-
Amex-93-32, permitting the use of Auto-Ex on the American Stock
Exchange, Inc., for up to 50 contracts for public customer market
and marketable limit orders in Hong Kong Index options).
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 promote just and equitable principles of trade
and to prevent fraudulent and manipulative acts and practices, as well
as to protect investors and the public interest by extending the
benefits of AUTO-X to a larger number of public customer orders.
(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
Because the foregoing 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 become
operative for 30 days after May 22, 1995, the date on which it was
filed, and the Exchange provided the Commission with written notice of
its intent to file the proposed rule change at least five days prior to
the filing date, it has become effective pursuant to Section
19(b)(3)(A) of the Act and Rule 19b-4(e)(6) thereunder. In particular,
the Commission believes that the proposal does not significantly affect
the protection of investors or the public interest and does not impose
any significant burden on competition.
At any time within 60 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.
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. Copies of such filing [[Page 30133]] 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 June 28, 1995.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\7\
\7\17 CFR 200.30-3(a)(12) (1994).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 95-13896 Filed 6-6-95; 8:45 am]
BILLING CODE 8010-01-M
