[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