[Federal Register Volume 59, Number 111 (Friday, June 10, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-14095]


[[Page Unknown]]

[Federal Register: June 10, 1994]


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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-34158; File No. SR-Phlx-94-30]

 

Self-Regulatory Organizations; Notice of Filing of Proposed Rule 
Change by the Philadelphia Stock Exchange, Inc. Adopting Rule 1015, 
Quotation Guarantees, Including a Trade or Fade Provision

June 3, 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 June 1, 
1994, 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 self-regulatory 
organization. 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 Purpose of and 
the Statutory Basis for the Proposed Rule Change

    The Phlx, pursuant to Rule 19b-4 of the Act, proposes to adopt Phlx 
Rule 1015 relating to quotation guarantees, to mirror the text of Floor 
Procedure Advice (``Advice'') A-11, with the addition of a ``trade or 
fade'' provision.\1\
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    \1\See SR-Phlx-91-45, as amended, for text of Advice A-11.
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II. Self-Regulatory Organization's Statements Regarding 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

    Currently, Rule 1033(a) states that all bids/offers in Phlx equity/
index options are deemed to be for one contract, unless otherwise 
specified; in addition, specialists and Registered Options Traders 
(``ROTs'') are required to fill public orders to a minimum depth of ten 
contracts at the best quoted bid/offer. Consequently, orders for public 
customers are provided with preferential treatment not afforded to 
other types of orders.
    The Phlx proposes to adopt a ``trade or fade'' provision comparable 
to the proposals of the other options exchanges for the handling of 
orders other than public customer orders.
    Specifically, when a non-public order is represented in the trading 
crowd at the displayed market on the Exchange, the trading crowd would 
be required to either satisfy the order at that price or better, or 
fade (withdraw) to a newly disseminated price. If the quote is faded, 
immediate re-display of the previously disseminated quote without a 
change in market conditions to warrant such action would be considered 
conduct inconsistent with just and equitable principles of trade,\2\ 
which could result in an Exchange disciplinary proceeding. For purposes 
of this rule, non-public orders include broker-dealer orders and that 
portion of customer orders exceeding the contract size guaranteed by 
the respective crowd.
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    \2\Phlx Rule 707.
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    The proposed rule is similar to proposals of other option exchanges 
in that it would expressly require the members of an options trading 
crowd to respond to non-public orders represented in that trading crowd 
by either satisfying the order or updating the market in that option 
series.
    The proposed rule change is consistent with Section 6 of the Act in 
general, and in particular, with Section 6(b)(5), in that it is 
designed to promote just and equitable principles of trade, prevent 
fraudulent and manipulative acts and practices, to remove impediments 
to and perfect the mechanism of a free and open market and a national 
market system, as well as 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 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

    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 Phlx 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, 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 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 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-94-30 and should be 
submitted by July 1, 1994.

    For the Commission by the Division of Market Regulation, 
pursuant to delegated authority. 17 CFR 200.30-3(a)(12).
Jonathan G. Katz,
Secretary.
[FR Doc. 94-14095 Filed 6-9-94; 8:45 am]
BILLING CODE 8010-01-M