[Federal Register Volume 60, Number 109 (Wednesday, June 7, 1995)]
[Notices]
[Pages 30131-30133]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-13896]



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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-35781; File No. SR-PHLX-95-29]


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 AUTO-X Order 
Size for U.S. Top 100 Index Options

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 22, 
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, public customer market and marketable limit orders for 
up to 25 option contracts, as determined by the specialist, are 
eligible for execution through AUTO-X, the automatic execution feature 
of the PHLX's Automated Options Market (``AUTOM'') system. The PHLX 
proposes to increase the maximum AUTO-X order size eligibility for 
public customer market and marketable limit orders in U.S. Top 100 
Index (``TPX'') options from 25 to 50 contracts.
    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 [[Page 30132]] 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 AUTO-X order 
size eligibility for public customer market and marketable limit orders 
in TPX options from 25 to 50 contracts.
    AUTO-X, the automatic execution feature of AUTOM, was approved by 
the Commission as part of the AUTOM pilot program in 1991.\1\ AUTOM, 
which has operated on a pilot basis since 1988 and was most recently 
extended through December 31, 1995,\2\ is an on-line system that allows 
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 market and marketable limit orders for up to 25 
contracts are eligible for AUTO-X.\3\ 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.

    \1\See Securities Exchange Act Release No. 28978 (March 15, 
1991), 56 FR 12050 (order approving File No. SR-PHLX-90-34).
    \2\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 
(October 24, 1991) (order approving File No. SR-PHLX-91-33, 
permitting AUTO-X for up to 20 contracts 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 December 
31, 1994).
    \3\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).
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    TPX options were approved recently for trading on the Exchange as 
broad-based index options.\4\ The PHLX now proposes to permit the use 
of AUTO-X for public customer market and marketable limit orders of up 
to 50 contracts in TPX options. The Exchange believes that the proposed 
expanded AUTO-X parameter should improve the AUTOM system by offering 
the benefits of AUTO-X to investors in TPX options who place a high 
premium on prompt and efficient automatic executions for 50-lot orders 
at the displayed price. The Exchange notes that the increase from a 
maximum of 25 to 50 contracts is in line with prior changes; for 
example, the Commission previously approved an AUTO-X increase for 
public customer orders from 10 to 20 contracts.\5\

    \4\See Securities Exchange Act Release No. 35591 (April 11, 
1995), 50 FR 19423 (April 18, 1995) (order approving File No. SR-
PHLX-95-07).
    \5\See Securities Exchange Act Release No. 29837, supra note 2.
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    According to the PHLX, the proposed expansion of the maximum AUTO-X 
order size should not impose significant burdens on the operation and 
capacity of the AUTOM system. Instead, the PHLX believes that 
increasing the number of public customer orders eligible for automatic 
execution, and thereby reducing manual processing, may enhance AUTOM's 
effectiveness. In addition, the Exchange notes that the Commission has 
previously approved the automatic execution of 50 contracts for a 
broad-based index.\6\

    \6\See Securities Exchange Act Release No. 33894 (April 11, 
1994), 59 FR 18429 (April 18, 1994) (order approving File No. SR-
Amex-93-32, permitting the use of Auto-Ex on the American Stock 
Exchange, Inc., for up to 50 contracts for public customer market 
and marketable limit orders in Hong Kong Index options).
    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 AUTO-X to a larger number of public customer orders.

(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 22, 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 [[Page 30133]] 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.\7\

    \7\17 CFR 200.30-3(a)(12) (1994).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 95-13896 Filed 6-6-95; 8:45 am]
BILLING CODE 8010-01-M