[Federal Register Volume 60, Number 109 (Wednesday, June 7, 1995)]
[Notices]
[Pages 30136-30137]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-13895]



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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-35782; File No. SR-PHLX-95-30]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by the Philadelphia Stock 
Exchange, Inc., Relating to an Increase in the Maximum Size of Optioned 
Orders Eligible for Delivery Through the Automated Options Market 
System

May 30, 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 May 23, 
1995, 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

    Currently, orders of up to 100 option contracts are eligible for 
delivery through the Automated Options Market (``AUTOM'') system, the 
PHLX's electronic order routing and delivery system for equity and 
index options. The PHLX proposes to amend its rules to allow a maximum 
of 500 contracts to be delivered through AUTOM. Currently, only public 
customer orders of 25 option contracts or less are eligible for 
automatic execution through AUTO-X, the automatic execution feature of 
AUTOM. The proposal does not affect AUTO-X order size eligibility.
    The text of the proposed rule change is available at the Office of 
the Secretary, 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 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

    The purpose of the proposal is to increase the maximum eligible 
order size for the delivery of equity and index option orders through 
AUTOM from 100 to 500 contracts.
    AUTOM, which has operated on a pilot basis since 1988 and was not 
recently extended through December 31, 1995,\1\ is an on-line system 
that allows [[Page 30137]] electronic delivery of options orders from 
member firms directly to the appropriate specialist on the Exchange's 
trading floor. Currently, orders for up to 100 options contracts are 
eligible for AUTOM and public customer orders for up to 25 contracts 
are eligible for AUTO-X, the automatic execution feature of AUTOM.\2\ 
AUTO-X orders are executed automatically at the disseminated quotation 
price on the Exchange and reported to the originating firm. Orders that 
are not eligible for AUTO-X are handled manually by the specialist. The 
current proposal does not impact AUTO-X order size eligibility.

    \1\See Securities Exchange Act Release No. 35183 (December 30, 
1994), 60 FR 2420 (January 9, 1995) (order approving File No. SR-
PHLX-94-41). See also Securities Exchange Act Release Nos. 25540 
(March 31, 1988), 53 FR 11390 (order approving AUTOM on a pilot 
basis); 25868 (June 30, 1988), 53 FR 25563 (order approving File No. 
SR-PHLX-88-22, extending pilot through December 31, 1988); 26354 
(December 13, 1988), 53 FR 51185 (order approving File No. SR-PHLX-
88-33, extending pilot program through June 30, 1989); 26522 
(February 3, 1989), 54 FR 6465 (order approving File No. SR-PHLX-89-
1, extending pilot through December 31, 1989); 27599 (January 9, 
1990), 55 FR 1751 (order approving File No. SR-PHLX-89-03, extending 
pilot through June 30, 1990); 28625 (July 26, 1990), 55 FR 31274 
(order approving File No. SR-PHLX-90-16, extending pilot through 
December 31, 1990); 28978 (March 15, 1991), 56 FR 12050 (order 
approving File No. SR-PHLX-90-34, extending pilot through December 
31, 1991); 29662 (September 9, 1991), 56 FR 46816 (order approving 
File No. SR-PHLX-91-31, permitting AUTO-X orders up to 20 contracts 
in Duracell options only); 29782 (October 3, 1991), 56 FR 55146 
(order approving File No. SR-PHLX-91-33, permitting AUTO-X for all 
strike prices and expiration months); 29837 (October 18, 1991), 56 
FR 36496 (order approving File No. SR-PHLX-90-03, extending pilot 
through December 31, 1993); 32906 (September 15, 1993), 58 FR 15168 
(order approving File No. SR-PHLX-92-38, permitting AUTO-X orders up 
to 25 contracts in all options); and 33405 (December 30, 1993), 59 
FR 790 (order approving File No. SR-PHLX-93-57, extending pilot 
through 31, 1994).
    \2\The Commission recently approved a PHLX proposal to codify 
the use of AUTOM and AUTO-X for index options. See Securities 
Exchange Act Release No. 34920 (October 31, 1994), 59 FR 5510 
(November 7, 1994) (order approving File No. SR-PHLX-94-40). In 
addition, the Commission has approved a PHLX proposal to codify the 
Exchange's practice of accepting certain orders for AUTOM and AUTO-
X. See Securities Exchange Act Release No. 35601 (April 13, 1995), 
60 FR 19616 (April 19, 1995) (order approving File No. SR-PHLX-95-
18). AUTO-X was approved as part of the AUTOM pilot program in 1991. 
See Securities Exchange Act Release No. 28978, supra note 1.
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    The Exchange proposes to increase the maximum eligible size of 
AUTOM orders from 100 to 500 contracts. This change is intended to 
extend the benefits of AUTOM to additional users. The Exchange notes 
that the maximum AUTOM order size has remained the same since 1990. In 
light of the PHLX's experience with AUTOM over the past seven years, 
including five years during which the maximum AUTOM order size has been 
100 contracts, the Exchange believes that it is appropriate, at this 
time, to increase the maximum size of the option orders eligible for 
routing and delivery through AUTOM to 500 contracts. The PHLX notes 
that the most recent change, in 1990, increased the eligible order size 
for AUTOM from 10 to 100 contracts.\3\

    \3\See Securities Exchange Act Release No. 28516 (October 3, 
1990), 55 FR 41408 (October 11, 1990) (order approving File No. SR-
PHLX-90-18).
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    The PHLX states that the AUTOM system has sufficient capacity to 
operate with a maximum order size of 500 contracts, such that AUTOM and 
AUTO-X functioning would not be adversely affected by the proposal.
    Accordingly, the PHLX believes that the proposal is consistent with 
Section 6(b) 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 and to prevent fraudulent and manipulative acts and 
practices, as well as to protect investors and the public interest by 
extending the benefits of AUTOM, including prompt and efficient order 
handling, to orders for up to 500 contracts.

(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

    Because the foregoing rule change: (1) Does not significantly 
affect the protection of investors or the public interest; (2) does not 
impose any significant burden on competition; and (3) does not become 
operative for 30 days after May 23, 1995, the date on which it was 
filed, and the Exchange provided the Commission with written notice of 
its intent to file the proposed rule change at least five days prior to 
the filing date, it has become effective pursuant to Section 
19(b)(3)(A) of the Act and Rule 19b-4(e)(6) thereunder. In particular, 
the Commission believes that the proposal does not significantly affect 
the protection of investors or the public interest and does not impose 
any significant burden on competition.
    At any time within 60 days of the filing of such proposed rule 
change, the Commission may summarily abrogate such rule change if it 
appears to the Commission that such action is necessary or appropriate 
in the public interest, for the protection of investors, or otherwise 
in furtherance of the purposes of the Act.

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 at 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 the file 
number in the caption above and should be submitted by June 28, 1995.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\4\

    \4\17 CFR 200.30-3(a)(12) (1994).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 95-13895 Filed 6-6-95; 8:45 am]
BILLING CODE 8010-01-M