[Federal Register Volume 60, Number 167 (Tuesday, August 29, 1995)]
[Notices]
[Pages 44927-44928]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-21357]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-36131; International Series Release No. 844 File No.
SR-Phlx-95-52]
Self-Regulatory Organizations; Notice of Filing of Proposed Rule
Change by the Philadelphia Stock Exchange, Inc. Relating to Customized
Expiration Dates for Customized Foreign Currency Options
August 22, 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 July 27,
1995, 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 Phlx. 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
The Phlx proposes to amend Exchange Rule 1069(a) in order to offer
the ability to trade customized foreign currency options (``Customized
FCOs'') with any expiration date up to two years from the date of
issuance. The text of the proposed rule change is available at the
Office of the Secretary, the 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 Phlx 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
[[Page 44928]]
in Item IV below. The Phlx 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
On November 1, 1994, the Commission approved the Exchange's
proposal to trade Customized FCOs.\1\ Customized FCOs provide users of
the Exchange's foreign currency options (``FCOs'') markets with the
ability to customize the strike price and quotation method and to
choose any underlying and base currency combination out of all
Exchange-listed currencies, including the U.S. dollar, for their FCO
transactions. The Phlx represents that Customized FCOs were introduced
to attract institutional customers who enjoy the flexibility and
variety offered in the over-the-counter foreign currency market but who
prefer the benefits attributed to an exchange auction market for
hedging their exchange rate risks.
\1\See Securities Exchange Act Release No. 34925 (November 1,
1994), 59 FR 55720 (November 8, 1994).
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The Exchange now proposes to add a new feature to Customized FCOs--
customized expiration dates. Presently, users can only trade Customized
FCO contracts with expiration dates corresponding to those for non-
Customized FCOs pursuant to Exchange Rule 1012. Thus, Customized FCO
contracts with mid-month and end-of-month expirations at 1, 2, 3, 6, 9,
12, 18, and 24 months may be traded.
Under this proposal, Customized FCO contracts expiring on any
business day (excluding Exchange holidays (e.g., Memorial Day) and
Exchange-designated holidays (e.g., Boxing Day)) in any month up to two
years from the date of issuance would be available. The Exchange
represents that institutions and multinational corporations will thus
be able to hedge their exchange rate exposure more accurately by
trading a contract that expires on any trading day that they choose.
Under the proposal, any Customized FCO contract opened with a
customized expiration date will cease trading at 9:00 a.m.,
Philadelphia time, on its expiration date and will expire at 10:15
a.m., Philadelphia time, on that date. Customized FCOs with expiration
dates pursuant to Phlx Rule 1012 (i.e., Customized FCOs with expiration
dates corresponding to the expiration dates for non-Customized FCOs)
will not follow this procedure. These option contracts will still cease
trading at 2:30 p.m., Philadelphia time, on their expiration dates, and
expire at 11:59 p.m., Philadelphia time, on those dates, even if
intentionally or unintentionally designated as a Customized FCO with a
customized expiration date. New series of Customized FCOs with ``same
day'' expiration dates may not be opened, but open positions can be
reduced or increased on their expiration date. The Exchange represents
that the Options Clearing Corporation (OCC) will use a pro rata
assignment process instead of the current random assignment process for
Customized FCOs with customized expiration dates.
The Exchange believes that the proposed rule change is consistent
with Section 6 of the Act, in general, and with Section 6(b)(5), in
particular, in that it is designed to promote just and equitable
principles of trade, prevent fraudulent and manipulative acts and
practices, facilitate transactions in securities, remove impediments to
and perfect the mechanism of a free and open market and a national
market system, and protect investors and the public interest by
offering users of FCOs the ability to customize the expiration dates of
the Customized FCOs in order to better hedge their exchange rate risks.
(B) Self-Regulatory Organization's Statement on Burden on Competition
The Phlx does not believe that this 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 solicited or received with respect to the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Within 35 days of the date of publication of this notice in the
Federal Register or within such longer 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 such 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, 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 in the
Commission's Public Reference Section, 450 Fifth Street, N.W.,
Washington, D.C. 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-95-52 and should be
submitted by September 19, 1995.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\2\
\2\17 CFR 200.30-3(a)(12) (1994).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 95-21357 Filed 8-28-95; 8:45 am]
BILLING CODE 8010-01-M
