[Federal Register Volume 64, Number 161 (Friday, August 20, 1999)]
[Notices]
[Pages 45579-45580]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-21655]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-41737; File No. SR-Phlx-99-25]
Self-Regulatory Organizations; Notice of Filing and Immediate
Effectiveness of Proposed Rule Change by the Philadelphia Stock
Exchange, Inc. to Allow the Options Committee to Adopt Policies
Affecting Location of Members in the Trading Crowd on a Crowd-by-Crowd
Basis
August 12, 1999.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on July 21, 1999, 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
Exchange. 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).
\2\ 17 CFR 240.19b-4.
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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 Commentary .17 to Phlx Rule 1014,
Obligations and Restrictions Applicable to Specialists and Registered
Options Traders, allowing the Options Committee to adopt policies
affecting the location of members in the trading crowd on a crowd-by-
crowd basis in order to ensure fair and orderly markets. The text of
the proposed Rule is provided below. The new language is italicized.
Obligations and Restrictions Applicable to Specialists and
Registered Options Traders Rule 1014
Commentary .01-.16. No change.
Commentary .17.
In the interest of fair and orderly markets, the Options Committee
may adopt policies affecting the location of members in the trading
crowd on a crowd-by-crowd basis.
* * * * *
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 Exchange 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 Exchange 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
According to the Exchange's By-laws, the Options Committee has the
authority to make or recommend the adoption of, and administer such
rules as it may deem necessary for the convenient and orderly
transaction of business upon the equity and index options trading
floor.\3\ The proposal will give the Options Committee express
authority to adopt policies and implement those policies on an
expedient basis to ensure convenient and orderly transaction of
business upon the equity and index options trading floor. The Exchange
also believes that this proposal provides the Options Committee and the
trading crowd with flexibility to change member location policies in
trading crowds to adapt to changing technological advances, which may
call for locating members in specific areas or rethinking traditional
arrangements.
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\3\ See Phlx By-law Article 10-19.
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The proposed rule will allow the Options Committee to adopt
policies
[[Page 45580]]
regarding member location on a crowd-by-crowd basis, specific to the
trading crowd in question. For example, the Options Committee may adopt
a policy requiring floor brokers, for a specific series, to stand in
the area where the AUTO-X \4\ screens for that series are located.
Thus, under the proposed rule, the Options Committee may tailor a
policy to specific market conditions and readdress the situation,
periodically updating the policy where appropriate. The Exchange will
give the members of the trading crowd and the options floor one day's
notice of the Options Committee's decision prior to implementation of
the policy in that particular trading crowd.\5\ The decision may be
appealed to the Board of Governors pursuant to By-law Section 11-1.
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\4\ AUTO-X is a feature of AUTOM that automatically executes
public customer market and marketable limit orders up to the number
of contracts permitted by the Exchange for certain strike prices and
expiration months in equity options and index options, unless the
Options Committee determines otherwise. See Phlx Rule 1080.
\5\ The Exchange will provide notice in the form of a memorandum
to the trading floor, as well as by posting of a memorandum on an
electronic bulletin board. Telephone conversation between Nandita
Yagnik, Attorney, Phlx, and Joseph Morra, Attorney, Division of
Market Regulation (``Division''), SEC, August 6, 1999. The Exchange
notes that a specific policy adopted pursuant to this proposed
provision would be reasonably and fairly implied by an existing
rule, i.e., new Commentary .17 and therefore, would not be deemed to
be a proposed rule change pursuant to Securities Exchange Act Rule
19b-4(d).
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The Exchange believes that such a rule is necessary because changes
in technology and space reconfigurations will continue to affect how
business is conducted and where members in the trading crowds are
situated. The Exchange also believes that adopting policies concerning
members' personnel and the area accessing a trading crowd would be
covered under the proposed rule.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with Section 6 of the Act and, in particular, with Section 6(b)(5) of
the Act \6\ in that it promotes just and equitable principles of trade,
facilitates transactions in securities, and removes impediments to and
perfects the mechanism of a free and open market and a national market
system, and, in general, protects investors and the public interest by
granting express authority to the Options Committee to adopt policies
to regulate the location of members in the trading crowd to facilitate
changes in technology and space reconfigurations occurring on the
Options floor.
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\6\ 15 U.S.C. 78f(b).
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B. Self-Regulatory Organization's Statement on Burden of Competition
The Exchange 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 the date of filing or such shorter time as
the Commission may designate if consistent with the protection of
investors and the public interest, provided that the Exchange has given
the Commission written notice of its intent to file the proposed rule
change at least five business days prior to the filing date of the
proposed rule change, or such shorter time as designated by the
Commission, it has become effective pursuant to Section 19(b)(3)(A) of
the Act and Rule 19b-4(f)(6) thereunder. At any time within 60 days of
the filing of the 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, including whether the proposal is
consistent with the Act. Persons making written submissions should file
six copies thereof with the Secretary, Securities and Exchange
Commission, 450 Fifth Street, N.W., Washington, D.C. 20549-0609. 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 in the
Commission's Public Reference Room. 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 number SR-Phlx-99-25, and
should be submitted by September 10, 1999.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\7\
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\7\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 99-21655 Filed 8-19-99; 8:45 am]
BILLING CODE 8010-01-M
