[Federal Register Volume 60, Number 25 (Tuesday, February 7, 1995)]
[Notices]
[Pages 7251-7252]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-2969]



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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-35308; File No. SR-PHLX-94-69]


Self-Regulatory Organizations; Notice of Filing of Proposed Rule 
Change by the Philadelphia Stock Exchange, Inc. Relating to a One Year 
Pilot Program for the Trading, Comparison, Clearing, Settling, Listing, 
and Delisting of Municipal Securities

January 31, 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 December 
20, 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 Terms of Substance 
of the Proposed Rule Change

    The PHLX proposes to amend its rules to establish a one year pilot 
program allowing the Exchange to list and trade municipal securities. 
Specifically, the PHLX proposes to (1) amend PHLX Rules 132, ``Dealings 
Outside the Exchange in Securities Dealt in on the Exchange,'' 501, 
``Specialist Appointment,'' 803, ``Criteria for Listing--Tier I,'' and 
810, ``Suspension and Delisting Policies Based on Exchange Findings;'' 
and (2) add PHLX Rule 309, ``Municipal Securities,'' to provide 
requirements for trading, comparison, settlement, clearing and listing 
and delisting of municipal securities.

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 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

    The purpose of the proposed rule change is to amend PHLX Rules 132, 
501, 803 and 810 and to add PHLX Rule 309 to initiate a one year pilot 
program for trading, comparison, clearance, settlement and listing and 
delisting of municipal securities. Under proposed PHLX Rule 803(c)(5), 
a municipal issuer may list municipal securities having an aggregate 
market value and principal amount of at least twenty million dollars 
($20,000,000) provided there are at least one hundred (100) public 
beneficial holders and the issue is rated as investment grade by at 
least one nationally recognized rating service.
    Proposed PHLX Rule 810(d) requires the delisting of the debt 
securities of a non-listed issuer when the issue no longer has at least 
a market value or principal amount outstanding of at least half a 
million dollars ($500,000), fails to be held by at least fifty (50) 
public [[Page 7252]] beneficial owners of record or is no longer 
investment grade rated by at least one nationally recognized rating 
service.\1\

    \1\Although the PHLX believes that proposed PHLX Rule 810(d) 
will apply primarily to municipal securities, it may also apply to 
the debt of issuers whose equities are not listed on the Exchange. 
Telephone conversation between Murray L. Ross, Secretary, PHLX, and 
Yvonne Fraticelli, Staff Attorney, Options Branch, Division of 
Market Regulation, Commission, on January 20, 1995.
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    The Exchange proposes to assign any municipal security it lists to 
a specialist\2\ and to trade municipal securities in accordance with 
all PHLX regulations otherwise applicable to the trading of securities 
on the equities trading floor of the Exchange, except that pursuant to 
proposed PHLX Rule 132(d)(17) municipal securities shall be exempt from 
the provisions of the Exchange's off-board trading rule. Under proposed 
PHLX Rule 309, municipal securities will be compared, settled and 
cleared in accordance with the applicable regulations of the MSRB. The 
PHLX believes that Exchange listing of municipal securities will allow 
public investors to have an alternative to the over-the-counter market 
to trade municipal debt securities.

    \2\In this regard, the Exchange intends to require specialist 
units applying for appointment and registration in municipal 
securities to be in compliance with the Municipal Securities 
Rulemaking Board (``MSRB'') G-3 regulations regarding municipal 
securities principals and representatives. The National Association 
of Securities Dealers (``NASD'') has authority to enforce MSRB rules 
for listed municipal securities. The PHLX enforcement in this regard 
will not preempt or limit in any manner the NASD's authority to act 
in this area.
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    The PHLX states that the proposed rule change is based on Section 
6(b)(5) of the Act in that it is designed to further promote 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 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 publication of this notice in the Federal 
Register or within such other 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, 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 also will be available for 
inspection and copying at the principal office of the PHLX. All 
submissions should refer to File No. SR-PHLX-94-69 and should be 
submitted by February 28, 1995.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\3\

    \3\17 CFR 200.30-3(a)(12) (1994).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 95-2969 Filed 2-6-95; 8:45 am]
BILLING CODE 8010-01-M