[Federal Register Volume 62, Number 129 (Monday, July 7, 1997)]
[Notices]
[Pages 36328-36329]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-17540]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-38779; File No. SR-Phlx-97-27]
Self-Regulatory Organizations; Notice of Filing and Immediate
Effectiveness of Proposed Rule Change by the Philadelphia Stock
Exchange, Inc. To Trade in Sixteenths
June 26, 1997.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ notice is hereby given that on June 11, 1997 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 (``SRO''). The
Commission is publishing this notice to solicit comments on the
proposed rule change from interested persons.
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\1\ 15 U.S.C. 78s(b)(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 permit Phlx equity securities to be traded in
sixteenths. The text of the proposed rule change is as follows (deleted
text is bracketed):
Rule 125 Variations in Bids and Offers
Bids or offers shall [not] be made at a [less] variation [than \1/
8\ of one dollar in stocks, and \1/8\ of 1 percent of the principal
amount of bonds, except as specifically] authorized by the Committee.
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
Currently, Rule 125 states that bids or offers shall not be made at
a less variation than \1/8\ of one dollar in stocks, and \1/8\ of 1
percent of the principal amount of bonds, except as specifically
authorized by the Committee. In 1995, the Floor Procedure Committee
authorized that Phlx equity securities up to $10 that are listed on the
American Stock Exchange, Inc. (``Amex'') be permitted to trade in
sixteenths. Recently, the Amex received Commission approval to
implement a minimum fractional change of \1/16\ for equity securities
trading at or above $0.25.\2\ As a result, Amex-listed securities
became eligible to trade in sixteenths through the Intermarket Trading
System (``ITS''). Last month, following Floor Procedure Committee
approval on May 6, 1997, the Exchange began trading Amex-listed issues
trading at or above $0.25 in sixteenths.
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\2\ Securities Exchange Act Release No. 38571 (May 5, 1997), 62
FR 25682 (May 9, 1997) (approving File No. SR-Amex-97-14).
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In response to recent industry events, the Exchange has determined
that the trading increment applicable to equity securities be changed
from \1/8\ to \1/16\, upon implementation of certain system changes by
the Intermarket Trading System (``ITS'') to accommodate trading in
sixteenths.\3\ Currently, Rule 125 provides that bids or offers shall
not be made at a less variation than \1/8\ of one dollar in stocks, and
\1/8\ of 1 percent of the principal amount of bonds, except as
specifically authorized by the Committee. Thus, the Exchange proposes
to delete the reference to \1/8\ and, rather than replacing it with a
particular increment, emphasize the discretion of the Committee to
modify trading increments.\4\
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\3\ The Commission notes that these changes to ITS were
implemented on June 24, 1997.
\4\ Nevertheless, the Commission notes that any further change
in the minimum increments constitutes (1) a change in a stated
policy, practice, or interpretation with respect to the meaning,
administration, or enforcement of an existing rule of the Phlx, or
(2) a change in an existing order-entry or trading system of an SRO,
or (3) both. Therefore, the Exchange is still obligated to file such
proposed changes with the Commission. These changes, however, may
become effective upon filing if they meet certain statutory
requirements. See 15 U.S.C. 78s(b)(3)(A)(i) and 17 CFR 240.19b-4(e).
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The purpose of this proposal is to extend the benefits of trading
in a narrower increment to Phlx securities. This should promote more
accurate
[[Page 36329]]
pricing of securities and tighter quotations.
2. Statutory Basis
The Exchange believes the proposed rule change is consistent with
Section 6 \5\ of the Act in general and, in particular, with Section
6(b)(5),\6\ in that it is designed 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, and to remove impediments to and perfect the mechanism of a
free and open market and a national market system by adopting a
narrower minimum fractional change in Phlx equity securities in a
gradual, orderly fashion. The Exchange also believes the proposal is
consistent with Section 11A of the Act because it is designed to
promote competition among the exchanges and market makers.\7\
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\5\ 15 U.S.C. 78f(b).
\6\ Id. Sec. 78f(b)(5).
\7\ Id. Sec. 78k-1.
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B. Self-Regulatory Organization's Statement on Burden on Competition
The proposed rule change does not impose any burden on competition
that is not necessary or appropriate in furtherance of the purposes of
the Act.
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
The foregoing rule change constitutes a change in a stated policy,
practice, or interpretation with respect to the meaning,
administration, or enforcement of an existing rule of the Phlx and,
therefore, has become effective pursuant to Section 19(b)(3)(A) of the
Act \8\ and subparagraph (e) of Rule 19b-4 thereunder.\9\
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\8\ Id. Sec. 78s(b)(3)(A).
\9\ 17 CFR 240.19b-4.
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At any time within sixty 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 Room, 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-97-27 and should be submitted by July 28,
1997.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\10\
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\10\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 97-17540 Filed 7-3-97; 8:45 am]
BILLING CODE 8010-01-M
