[Federal Register Volume 60, Number 122 (Monday, June 26, 1995)]
[Notices]
[Pages 33025-33026]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-15569]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-35864; File No. SR-PHLX-95-31]
Self-Regulatory Organizations; Notice of Filing of Proposed Rule
Change by the Philadelphia Stock Exchange, Inc., Relating to Compliance
With Position and Exercise Limits for Non-PHLX Listed Options
June 19, 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 March
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, PHLX Rule 1001, ``Position Limits,''\1\ applies only to
transactions by PHLX members or member organizations in Exchange-listed
options. The PHLX proposes to amend PHLX Rules 1001 and 1002,
``Exercise Limits,''\2\ to require PHLX members who trade non-PHLX
listed options and who are not members of the exchange where the
options transactions are effected to comply with the applicable option
position and exercise limits of the exchange where the options
transactions are effected.
\1\Position limits impose a ceiling on the number of option
contracts which an investor or group of investors acting in concert
may hold or write in each class of options on the same side of the
market (i.e.,) aggregating long calls and short puts or long puts
and short calls).
\2\Exercise limits prohibit an investor or group of investors
acting in concert from exercising more than a specified number of
puts or calls in a particular class within five consecutive business
days.
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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 eliminate a loophole in position
and exercise limit jurisdiction among the option exchanges. According
to the Exchange, a PHLX member entering into an opening transaction on
another exchange in an option not listed on the PHLX and who is not a
member of the exchange where the transaction is effected escapes the
jurisdiction of both the PHLX and the other exchange for purposes of
position limit compliance. The PHLX notes that Exchange Rule 1001 does
not apply because the rule is limited to options dealt in on the PHLX.
Likewise, if the transaction is effected by a non-member of the other
exchange, the other exchange cannot enforce its position limit rule.
The PHLX believes that the proposed amendments to PHLX Rule 1001
should enable the PHLX to exercise jurisdiction over a PHLX member
violating the position limit in a non-PHLX listed option. The PHLX
believes that the same is true for exercise limits. The proposal
applies to both equity options and index options. [[Page 33026]]
In pursuing such position limit violations, the PHLX will apply the
applicable position limit of the other exchange, together with any
applicable exemption, interpretation or policy, to transactions in non-
PHLX options by a PHLX member. When a PHLX member enters into an
opening transaction on another exchange in a PHLX-listed option, the
PHLX will continue to apply the position limits and exemptions set
forth in the PHLX's rules.
The PHLX anticipates that the other options exchanges will file
substantially similar proposals with the Commission.
The Exchange believes that the proposal is consistent with Section
6 of the Act, in general, and, in particular, with Section 6(b)(5), in
that it is designed to remove impediments to and perfect the mechanism
of a free and open market as well as to protect investors and the
public interest by expanding option exchange position and exercise
limit jurisdiction to uniformly cover excessive transactions.
(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 received or requested.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
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 reason 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 person 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 July 17, 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. 95-15569 Filed 6-23-95; 8:45 am]
BILLING CODE 8010-01-M