[Federal Register Volume 59, Number 60 (Tuesday, March 29, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-7282]


[[Page Unknown]]

[Federal Register: March 29, 1994]


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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-33801; File No. SR-Phlx-94-8]

 

Self-Regulatory Organizations; Filing of Proposed Rule Change by 
the Philadelphia Stock Exchange, Inc. (``Phlx'') Relating to Its Off-
Hours Trading Pilot Program

March 22, 1994.
    Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 
(``the Act''), 15 U.S.C. 78s(b)(1), notice is hereby given that on 
January 21, 1994, 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. The Commission is publishing this notice to solicit 
comments on the proposed rule change from interested persons.\1\
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    \1\Concurrently with this notice, the Commission is also 
publishing for comment proposals submitted by the New York Stock 
Exchange, Inc., the American Stock Exchange Inc., the Chicago Stock 
Exchange, Inc., the Boston Stock Exchange, Inc. and the Pacific 
Stock Exchange, Inc., to request permanent approval for their 
respective programs which provide for executions of securities after 
regular trading hours. See File Nos. SR-NYSE-93-50; SR-CHX-93-23; 
SR-Amex-93-15; SR-BSE-93-24; and SR-PSE-94-2.
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I. Self-Regulatory Organization's Statement of the Terms of 
Substance of the Proposed Rule Change

    The Phlx requests permanent approval of its Off-Hours Trading 
(``OHT'') pilot program. The rule change requires Exchange specialists 
to provide primary market protection for limit orders entered during 
the Exchange's regular 9:30 a.m. to 4 p.m. trading session that the 
customer designates as ``GTX'' orders (executable after the Phlx close 
based on the primary market's volume).\2\ On February 1, 1994, the 
Phlx's pilot program was extended until April 30, 1994.\3\
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    \2\On June 13, 1991, the Commission approved, on a pilot basis, 
File No. SR-Phlx-91-26, which adopted Phlx Rule 232. See Securities 
Exchange Act Release No. 29300 (June 13, 1991), 56 FR 28212 (June 
19, 1991) (order approving File No. SR-Phlx-91-26) (Phlx Approval 
Order). The Exchange's procedures provide primary market protection 
for customer GTX orders (good until canceled, executable in the 
afternoon session) in securities listed on the NYSE and on the Amex 
and traded during the after-hours sessions of those Exchanges. The 
New York Stock Exchange (``NYSE'') initiated its Off-Hours trading 
(``OHT'') sessions in June 1991. See Securities Exchange Act Release 
No. 29237 (May 24, 1991), 56 FR 24853 (May 31, 1991) (approving File 
Nos. SR-NYSE-90-52 and NYSE-90-53). The American Stock Exchange, 
Inc. (``Amex'') established an after-hours trading facility in 
August 1991. See Securities Exchange Act Release No. 29515 (August 
2, 1991), 56 FR 37736 (August 8, 1991) (approving File No. SR-Amex-
91-15). The Commission approved extensions of the NYSE, Amex and 
Phlx pilots, as well as pilots by the other regional exchanges until 
January 31, 1994 and further extended the pilots until April 30, 
1994. See Securities Exchange Act Release Nos. 32364 (May 25, 1993), 
58 FR 31574 (June 3, 1993) and 33562 (February 8, 1994), 59 FR 5792 
(February 8, 1994).
    \3\See Securities Exchange Act Release No. 33562, supra note 2.
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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 purpose of the proposed rule change is to request permanent 
approval of the Exchange's price protection of limit orders based on 
after-hours prints in a primary market. On May 30, 1991, the Commission 
approved the NYSE's proposed rule change which established the NYSE's 
OHT sessions,\4\ and, thereafter, on June 13, 1991, granted temporary 
approval to Phlx rule 232 through May 24, 1993, which required Phlx 
specialists to provide primary market protection for limit orders 
entered during the Exchange's regular 9:30 a.m. to 4 p.m. trading 
session that the customer designated as executable after the close of 
the regular Exchange auction market trading session, known as ``GTX'' 
orders (``good until cancelled, executable in the afternoon session''). 
Exchange rule 232 continues to govern the foregoing.
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    \4\See Securities Exchange Act Release No. 29257, supra note 2.
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    If the specialist does not execute these orders during regular Phlx 
trading hours, the Phlx GTX orders will be eligible for execution after 
the Phlx close based on volume that prints in Crossing Session I of the 
primary market's OHT session. Since the original filing, this procedure 
remains equally unchanged.\5\ On February 1, 1994, the Commission 
approved an extension of the pilot program until April 30, 1994.\6\ The 
Exchange now seeks permanent approval of the pilot program.
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    \5\However, the Phlx later added the Amex's volume to the 
definition of the primary market (in addition to the NYSE's volume) 
for the purposes of GTX orders. See Securities Exchange Act Release 
No. 29749 (September 27, 1991) 56 FR 50405.
    \6\See supra note 2.
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    The Commission requested in its order extending the pilot until 
April 30, 1994, that the Exchange submit to the Commission by March 15, 
1994, an updated report concerning the pilot activity through February 
28, 1994. This updated report will assist the Commission in considering 
the Exchange's request for permanent approval prior to the April 30, 
1994, expiration of the pilot program.
    Although Phlx OHT business remains de minimis, the Phlx 
nevertheless, must continue the GTX order guarantees for competitive 
reasons. The Phlx, therefore, requests approval for its OHT GTX 
guarantee program on a permanent basis.
2. Statutory Basis
    The proposed rule change is consistent with Section 6(b)(5) and 11A 
of the Act in that it is designed to promote just and equitable 
principles of trade, perfect the mechanism of a free and open national 
market system, and, in general, further investor protection and the 
public interest in fair and orderly markets on national securities 
exchanges.

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange believes that no burdens will be placed on competition 
as a result of the proposed rule change.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants or Others

    No comments were received on 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 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. 552, will be available for inspection and copying at the 
Commission's Public Reference Room, 450 Fifth Street, NW., Washington, 
DC 20549. Copies of the 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-94-8 and should be submitted by April 19, 
1994.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 94-7282 Filed 3-28-94; 8:45 am]
BILLING CODE 8010-01-M