[Federal Register Volume 61, Number 69 (Tuesday, April 9, 1996)]
[Notices]
[Pages 15856-15858]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-8709]



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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-37059; International Series Release No. 963; File No. 
SR-PHLX-96-10]


Self-Regulatory Organizations; Notice of Filing and Order 
Granting Accelerated Approval to a Proposed Rule Change by the 
Philadelphia Stock Exchange, Inc., Relating to a Change in the Holiday 
Trading Schedule for Foreign Currency Options for Good Friday 1996

April 2, 1996.
    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 April 1, 
1996, 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 and II 
below, which Items have been prepared by the self-regulatory 
organization. The Commission is approving this proposal on an 
accelerated basis.

[[Page 15857]]


I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The PHLX proposes to amend its holiday schedule with respect to the 
trading of foreign currency options (``FCOs'') on Good Friday, April 5, 
1996. Specifically, the PHLX intends to conduct a three-hour \1\ FCO 
trading session from 8 a.m. Eastern Standard Time (``E.S.T.'') through 
11 a.m. E.S.T. on Good Friday.

    \1\ The PHLX clarified that the trading session will last for 
three hours, rather than two hours, which was the length of the Good 
Friday trading session conducted in 1994. Telephone conversation 
between Murray L. Ross, Secretary, PHLX, and Yvonne Fraticelli, 
Attorney, Office of Market Supervision, Division of Market 
Regulation, Commission, on March 29, 1996.
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    The text of the proposal is available at the Office of the 
Secretary, the 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

    Recently, the PHLX learned that the U.S. Department of Labor has 
scheduled the release of employment figures on the morning of Good 
Friday, April 5, 1996. Under its previously adopted holiday schedule, 
the PHLX had planned to be closed on Good Friday, April 5, 1996. 
However, the Foreign Currency Options Committee recommended to the 
Exchange's Board of Governors, and the Board of Governors by unanimous 
poll procedures approved for filing with the Commission an amendment to 
the PHLX holiday schedule to permit a special trading session in FCOs 
from 8:00 a.m. E.S.T. to 11:00 a.m. E.S.T. on Good Friday, April 5, 
1996.
    The PHLX represents that the Board of Governors slated the special 
FCO trading session to accommodate customer interest and to meet 
competitive demand in light of the fact that the Chicago Mercantile 
Exchange as well as the Chicago Board of Trade have also scheduled 
special trading sessions on that date. The case of adverse movements in 
the underlying currencies while allowing the Exchange to remain 
competitive with other exchanges and the interbank market, which also 
will be open for trading on Good Friday.
    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 remove impediments to and perfect the mechanism 
of a free and open market and to protect investors and the public 
interest.

(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. Commission's Findings and Order Granting Accelerated Approval of 
Proposed Rule Change

    The Exchange has requested that the proposed rule change be given 
accelerated effectiveness pursuant to Section 19(b)(2) of the Act in 
order to provide member firms and customers with sufficient notice to 
prepare for operating during the proposed special trading session 
slated for 8:00 a.m. E.S.T. to 11:00 a.m. E.S.T. on Good Friday, April 
5, 1996.
    The Commission finds that the proposed rule change is consistent 
with the requirements of the Act and the rules and regulations 
thereunder applicable to a national securities exchange, and, in 
particular, the requirements of Section 6(b)(5).\2\ Specifically, the 
Commission believes that because of the release of the latest 
employment figures by the U.S. Department of Labor and because the 
futures exchanges and the interbank market will be open, there may be 
investor interest in trading FCOs on Good Friday. This limited FCO 
trading session will provide those investors with the opportunity to 
hedge their positions in response to movements in the underlying 
currencies on these other markets.

    \2\ 15 U.S.C. 78f(b)(5) (1988 & Supp. V 1993).
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    Moreover, the Commission notes that the Exchange has issued a 
notice to its membership advising them of this proposed schedule 
change,\3\ and following approval of the proposal will issue a second 
notice to members, thereby minimizing the possibility of investor 
confusion. The notice to members also describes the resulting changes 
in settlement procedures caused by the fact that the Options Clearing 
Corporation (``OCC'') will be closed on Good Friday. Specifically, all 
FCO transactions occurring on Good Friday will be processed by OCC on 
an ``as of April 5'' basis along with FCO transactions occurring on 
Monday, April 8, 1996. For example, FCOs exercised on Good Friday will 
be processed using the April 5 trading prices but the actual processing 
of the exercises will not occur until April 8, 1996. OCC represents 
that it has adequate systems capacity to process the FCO transactions 
executed during the special session in this manner. The Commission also 
notes that OCC has issued a notice to all clearing members notifying 
them of the special FCO trading session and the modified processing 
procedures.\4\

    \3\ See Circular 96-76, from Murray L. Ross, Secretary, PHLX, to 
all members, member organizations, FCO participants and participant 
organizations, dated March 29, 1996
    \4\ See Memorandum from John Peplinski, Vice President, National 
Operations, OCC, to all clearing members, dated March 29, 1996.
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    Based on the foregoing, the Commission finds that the Exchange's 
proposal to change the FCO trading hours on Good Friday as described 
herein is consistent with Section 6(b)(5) of the Act in that it will 
promote just and equitable principles of trade and remove impediments 
to a free and open market by allowing customers to trade FCOs on Good 
Friday while at the same time ensuring the protection of investors and 
the public interest in the trading of these products.
    The Commission finds good cause for approving the proposed rule 
change prior to the thirtieth day after the date of publication of 
notice of filing thereof in the Federal Register. Accelerating approval 
of this proposal will provide the Exchange with sufficient time to 
notify FCO specialist units, member firms, and customers of the 
schedule change and allow such persons and entities to consider their 
trading strategies in light of the amended holiday schedule. 
Accordingly, the Commission believes that granting accelerated approval 
of the proposed rule change is appropriate and consistent with Sections 
6(b)(5) and 19(b)(2) of the Act.

[[Page 15858]]


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, NW., 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, NW., 
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 April 30, 1996.
    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\5\ that the proposed rule change (SR-PHLX-96-10) is approved.

    \5\ 15 U.S.C. 78s(b)(2) (1982).
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    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\6\

    \6\ 17 CFR 200.30-3(a)(12) (1995).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 96-8709 Filed 4-8-96; 8:45 am]
BILLING CODE 8010-01-M