[Federal Register Volume 60, Number 132 (Tuesday, July 11, 1995)]
[Notices]
[Pages 35771-35773]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-16931]



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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-35925; File No. SR-PHLX-95-35]


Self-Regulatory Organizations; Notice of Filing of Proposed Rule 
Change and Amendment No. 1 to the Proposed Rule Change by the 
Philadelphia Stock Exchange, Inc., Relating to the Routing and Delivery 
of Broker-Dealer Orders in USTOP 100 Index Options Through the 
Automated Options Market System

June 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.\1\ The Commission is publishing this notice to solicit 
comments on the proposed rule change from interested persons.

    \1\ The PHLX amended its proposal to limit the scope of the 
proposed rule change to one index option, the USTOP 100 Index 
(``TPX''). See Letter from Gerald D. O'Connell, First Vice 
President, Market Regulation and Trading Operations, PHLX, to 
Michael Walinskas, Branch Chief, Office of Market Supervision, 
Division of Market Regulation, Commission, dated June 14, 1995 
(``Amendment No. 1'').
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    Currently, only public customer orders are eligible for delivery 
through 

[[Page 35772]]
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 the orders of PHLX member and 
non-member broker-dealers in USTOP 100 Index (``TPX'') options to be 
routed and delivered through AUTOM and executed manually. The broker-
dealer TPX options orders will not be eligible for AUTO-X, the 
automatic execution feature of AUTOM.
    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 permit TPX orders for the 
accounts of broker-dealers to be delivered through AUTOM. 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, 
public customer orders for up to 500 options contracts are eligible for 
AUTOM \3\ and public customer orders for up to 25 contracts, in 
general, are eligible for AUTO-X,\4\ the automatic execution feature of 
AUTOM.\5\ 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. Under the proposal, broker-dealer TPX option orders will 
not be eligible for AUTO-X.

    \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 
(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 December 31, 1994).
    \3\ See Securities Exchange Act Release No. 35782 (May 30, 
1995), 60 FR 30136 (File No. SR-PHLX-95-30).
    \4\ Recently, the Commission approved a proposal increasing the 
maximum number of public customer orders in USTOP 100 Index options 
that are eligible for AUTO-X from 25 to 50 contracts. See Securities 
Exchange Act Release No. 35781 (May 30, 1995) (order approving File 
No. SR-PHLX-95-29).
    \5\ The Commission has 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 order 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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    At this time, the PHLX proposes to permit broker-dealer TPX option 
orders to avail upon the Exchange's AUTOM system. The PHLX believes 
that extending AUTOM to broker-dealer TPX option orders will allow 
additional orders to benefit from AUTOM's prompt and efficient 
electronic order delivery and reporting. This, in turn, should add 
liquidity to the PHLX's marketplace for TPX options by encouraging 
broker-dealer orders who seek such automated order treatment. As noted 
above, AUTO-X will not be available for broker-dealer TPX orders; all 
such broker-dealer TPX orders will be handled manually by the 
specialist.
    For these reasons, 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 protect investors and the 
public interest by extending the benefits of AUTOM to broker-dealer 
accounts.

(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

    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 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 August 1, 1995.


[[Page 35773]]

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\6\

    \6\ 17 CFR 200.30-3(a)(12) (1994).
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Jonathan G. Katz,
Secretary.
[FR Doc. 95-16931 Filed 7-10-95; 8:45 am]
BILLING CODE 8010-01-M