[Federal Register Volume 59, Number 198 (Friday, October 14, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-25480]


[[Page Unknown]]

[Federal Register: October 14, 1994]


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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-34799 ; File No. SR-NYSE-94-33]

 

Self-Regulatory Organizations; Notice of Filing of Proposed Rule 
Change and Amendment No. 1 Thereto by the New York Stock Exchange, Inc. 
Relating to a Proposed Extension of the Trading Halt Provisions of Rule 
80B

October 6, 1994.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ notice is hereby given that on September 22, 1994, the 
New York Stock Exchange, Inc. (``NYSE'' 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. On September 30, 
1994, the Exchange filed Amendment No. 1 to the proposed rule 
change.\2\ 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\In Amendment No. 1, the NYSE requests that the Commission 
find good cause for accelerating approval of its proposal pursuant 
to Section 19(b)(2) of the Act to allow approval of its proposal 
prior to the October 31, 1994 expiration of the Rule 80B temporary 
approval. In addition, Amendment No. 1 corrects a typographical 
error appearing in Section I of Exhibit 1 to the filing by replacing 
1994 with 1995. See letter from Brian M. McNamara, Vice President, 
Market Surveillance, NYSE, to Sharon Lawson, Assistant Director, 
Division of Market Regulation, Commission, dated September 29, 1994 
(``Amendment No. 1'').
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to extend the effectiveness of the ``circuit 
breaker'' provisions of Exchange Rule 80B until October 31, 1995.

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

    Rule 80B provides, in part, that if the Dow Jones Industrial 
Average (``DJIA'') falls 250 or more points below its previous trading 
day's closing value, trading in all stocks on the Exchange will halt 
for one hour. It further provides that if on the same day the DJIA 
drops 400 or more points from its previous trading day's close, trading 
on the Exchange will halt for two hours.
    Rule 80B was enacted in response to studies of the October 1987 
Market Break. Following the Market Break, numerous market analyses and 
reports were undertaken. One such report was the Interim Report of the 
Working Group on Financial Markets (``Working Group'') issued in May 
1988 by the Undersecretary for Finance of the Department of the 
Treasury, and the Chairmen of the Commission, the Commodity Futures 
Trading Commission and the Board of Governors of the Federal Reserve 
System. The Working Group recommended ``coordinated trading halts and 
reopenings for large, rapid market declines that threaten to create 
panic conditions.'' The Working Group specifically recommended, and the 
Exchange endorsed, temporary halts in the trading of all stocks, stock 
options, and stock index options as well as the trading of stock index 
futures and options on stock index futures when the DJIA reaches 
certain trigger values. The Presidential Task Force on Market 
Mechanisms, (``Brady Commission''), also endorsed the concept of 
coordinated market trading halts.
    Rule 80B was approved by the Commission on a pilot basis on October 
19, 1988, and has been extended for another year every October since 
then. This pilot is due to expire on October 31, 1994. Since the 
original adoption of the rule in 1988, the provisions of Rule 80B have 
not been triggered. The Exchange continues to believe that coordinated 
trading halts and reopenings during large, rapid market declines is a 
viable concept, and is therefore seeking to extend the effectiveness of 
Rule 80B for another year, until October 31, 1995.
    The Exchange adopted Rule 80B with the understanding that all 
United States stock exchanges and the National Association of 
Securities Dealers would adopt rules or procedures substantively 
identical to Rule 80B with respect to the trading of stocks, stock 
options and stock index options, and that the Chicago Board of Trade, 
the Chicago Mercantile Exchange, the Kansas City Board of Trade and the 
New York Futures Exchange would adopt rules halting the trading of 
stock index futures and options on such futures contracts under 
circumstances substantively identical to those contained in Rule 80B. 
The Exchange is seeking the extension of the effectiveness of Rule 80B 
with the understanding that the market centers referred to above will 
similarly extend the effectiveness of their respective rules which are 
substantively identical to Rule 80B.
    The Exchange believes that its proposal is consistent with the 
requirement of Section 6(b)(5) of the Act that an Exchange have rules 
that are designed to promote just and equitable principals of trade, 
remove impediments to, and perfect the mechanism of, a free and open 
market, and in general protect investors and the public interest. The 
Exchange believes that extending the effectiveness of Rule 80B for an 
additional year is consistent with these objectives in that a trading 
halt requirement during a period of significant stress can be expected 
to provide market participants with a reasonable opportunity to become 
aware of and respond to significant price movements, thereby 
facilitating, in an orderly manner, the maintenance of an equilibrium 
between buying and selling interest.

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

    The NYSE believes that the proposed rule change will not impose any 
burden on competition that is not necessary or appropriate in 
furtherance of the purposes of the Act.

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

    The Exchange has neither solicited nor received written comments on 
the proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing 
for Commission Action

    The Exchange requests that the Commission find good cause for 
approving its proposal prior to the thirtieth day after publication in 
the Federal Register to allow for the uninterrupted effectiveness of 
Exchange Rule 80B which otherwise expires on October 31, 1994.
    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 above-mentioned 
self-regulatory organization. All submissions should refer to File No. 
SR-NYSE-94-33 and should be submitted by November 4, 1994.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\3\
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    \3\17 CFR 200.30-3(a)(12) (1993).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 94-25480 Filed 10-13-94; 8:45 am]
BILLING CODE 8010-01-M