[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