[Federal Register Volume 59, Number 63 (Friday, April 1, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-7762]


[[Page Unknown]]

[Federal Register: April 1, 1994]


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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-33818; International Series Release No. 644; File No. 
SR-Phlx-94-17]

 

Self-Regulatory Organizations; Filing and Order Granting 
Accelerated Approval of Proposed Rule Change by the Philadelphia Stock 
Exchange, Inc., Relating to a Change in the Holiday Trading Schedule 
for Foreign Currency Options for Good Friday 1994

March 25, 1994.
    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 March 
24, 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 and 
II 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 Exchange, pursuant to rule 19b-4 of the Act, proposes to amend 
its holiday schedule with respect to the trading of foreign currency 
options (``FCOs'') on Good Friday, April 1, 1994. Specifically, the 
Exchange intends to conduct a two-hour FCO trading session from 8 a.m. 
Eastern Standard Time (``E.S.T.'') through 10 a.m. E.S.T. on Good 
Friday. 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 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 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 the 
Statutory Basis for, the Proposed Rule Change

    The Phlx, under its previously adopted holiday schedule, was 
scheduled to be closed on Good Friday. After learning of the decision 
of the U.S. Department of Labor to release the latest employment 
figures on the morning of Good Friday, April 1, 1994, however, the 
Foreign Currency Options Committee recommended to the Exchange's Board 
of Governors, and the Board of Governors by unanimous poll procedures 
approved for filing with the Commission, an amendment to the Phlx 
holiday schedule to permit a special trading session in foreign 
currency options from 8 a.m. E.S.T. to 10 a.m. E.S.T. on Good Friday.
    The Exchange represents that the Board of Governors slated the 
special trading session in foreign currency options to accommodate 
customer interest and to meet competitive demand in light of the fact 
that the Chicago Mercantile Exchange and the Chicago Board of Trade 
have also scheduled special trading sessions on that date. The Exchange 
believes that a special trading session in foreign currency options 
will allow market participants the opportunity to protect their 
positions in case of adverse movements in the underlying currencies 
while allowing the Exchange to remain competitive with other exchanges 
and the interbank market which will be open for trading on Good Friday.
    The Phlx 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 remove impediments to and perfect 
the mechanism of a free and open market and to protect investors and 
the public interest.

(B) Self-Regulatory Organization's Statement on Burden on Competition

    The Phlx does not believe that the proposed rule change will impose 
any 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

    The Phlx has requested that the proposed rule change be given 
accelerated effectiveness pursuant to section 19(b)(2) of the Act.
    The Commission finds that the proposed rule change is consistent 
with the requirements of the Act and the rules and regulations 
thereunder applicable to a national securities exchange, and, in 
particular, the requirements of section 6(b)(5).\1\ Specially, the 
Commission believes that because of the release of the latest 
employment figures by the U.S. Department of Labor and because the 
futures exchanges and the interbank market will be open, there may be 
investor interest in trading FCOs on Good Friday. This limited FCO 
trading session will provide those investors with the opportunity to 
hedge their positions in response to movements in the underlying 
currencies on these other markets.
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    \1\15 U.S.C. 78f(b)(5) (1988).
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    Moreover, the Commission notes that the Exchange has issued a 
notice to its membership advising them of this proposed schedule 
change,\2\ and following approval of the proposal will issue a second 
notice to members, thereby minimizing the possibility of investor 
confusion. The notice to members also describes the resulting changes 
in settlement procedures caused by the fact that The Options Clearing 
Corporation (``OCC'') will be closed on Good Friday. Specially, all FCO 
options transactions occurring on Good Friday will be process by OCC on 
an ``as of April 1'' basis along with FCO transactions occurring on 
Monday, April 4, 1994. For example, FCOs exercised on Good Friday will 
be processed using the April 1 trading prices but the actual processing 
of the exercises will not occur until April 4, 1994. OCC represents 
that it has adequate systems capacity to process the FCO transactions 
executed during the special session in this manner. The Commission also 
notes that OCC has issued a notice to all clearing members notifying 
them of the special FCO trading session and the modified processing 
procedures.\3\
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    \2\See Circular: 94-46, from Murray Ross, Secretary, Phlx, to 
all members, member organizations, foreign currency options 
participants and participant organizations, dated March 23, 1994.
    \3\See Memorandum #6689 from Ed Adinolfi, Vice President, 
Membership/Operations Services, OCC, to All Clearing Members, dated 
March 23, 1994.
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    Based on the foregoing, the Commission finds that the Exchange's 
proposal to change the FCO trading hours on Good Friday as described 
herein is consistent with section 6(b)(5) of the Act in that it will 
promote just and equitable principles of trade and remove impediments 
to a free and open market by allowing customers to trade FCOs on Good 
Friday while at the same time ensuring the protection of investors and 
the public interest in the trading of these products.
    The Commission finds good cause for approving the proposed rule 
change prior to the thirtieth day after the date of publication of 
notice of filing thereof in the Federal Register. Accelerating approval 
of this proposal will provide the Exchange with sufficient time to 
notify FCO specialist units, member firms, and customers of the 
schedule change and allow such persons and entities to consider their 
trading strategies in light of the amended holiday schedule. 
Accordingly, the Commission believes it is consistent with the Act to 
approve the proposed rule change on an accelerated basis.

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 in the 
Commission's Public Reference Section, 450 Fifth Street NW., 
Washington, DC. 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-94-17 and should be 
submitted by April 22, 1994.
    It is therefore ordered, pursuant to section 19(b)(2) of the 
Act,\4\ that the proposed rule change (File No. SR-Phlx-94-17), is 
approved.
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    \4\15 U.S.C. 78s(b)(2) (1988).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\5\
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    \5\17 CFR 200.30-3(a)(12) (1993).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 94-7762 Filed 3-31-94; 8:45 am]
BILLING CODE 8010-01-M