[Federal Register Volume 61, Number 170 (Friday, August 30, 1996)]
[Notices]
[Pages 46008-46009]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-22227]


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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-37605; File No. SR-NYSE-96-23]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by the New York Stock Exchange, 
Inc. Relating to Restrictions on Exercise of Options on the New York 
Stock Exchange Composite Stock Index

August 26, 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 August 
8, 1996, the New York Stock Exchange, Inc. (``NYSE'' or ``Exchange'') 
filed with the Securities and Exchange Commission (``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

    The Exchange proposes to issue an interpretation of Exchange Rule 
709 (Other Restrictions on Exchange Option Transactions and Exercises) 
that clarifies that members and member organizations may only exercise 
options

[[Page 46009]]

on the New York Stock Exchange Composite Stock Index (``NYA Options'') 
while those options are open for trading on the Exchange.

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

1. Purpose
    Exchange Rule 709 grants the Exchange discretion to impose 
restrictions on the exercise of an option dealt in on the Exchange if 
the Exchange deems the restriction to be advisable in the interests of 
maintaining a fair and orderly market in the option or its underlying 
security, or in the public interest or for the protection of investors. 
In furtherance of those goals, the Exchange has determined to act under 
Exchange Rule 709 to restrict the period during which a member or 
member organization may exercise NYA Options to hours during which 
those options are open for trading on the Exchange.
    Paragraph (b) of Exchange Rule 717 (Trading Rotations, Halts and 
Suspensions) grants the Exchange discretion to halt or suspend trading 
in an option whenever the Exchange deems such action appropriate in the 
interests of fair and orderly market and for the protection of 
investors. So, for instance, Rule 717(b) allows the Exchange to halt 
trading in NYA Options where trading in the Exchange's equities market 
(which is the market on which all securities underlying NYA options 
trade) halts pursuant to Exchange Rule 80B (Trading Halts Due to 
Extraordinary Market Volatility).
    Under that scenario, the Exchange would anticipate that, once 
imposed, the restriction against exercising NYA Options would remain in 
effect until trading in those options reopens. That reopening, in turn, 
would likely occur only when the Exchange's equities market reopens for 
trading.
    In accordance with Exchange Rule 709, the Exchange will not impose 
the restriction against the exercise of NYA Options on the last trading 
day prior to the option's expiration date.
2. Statutory Basis
    The basis under the Act for the proposed rule change is the 
requirement under Section 6(b)(5) that an exchange have rules that are 
designed to promote just and equitable principles of trade and to 
protect investors and the public interest.

B. Self-Regulatory Organization's Statement on Burden on Competition

    The proposed rule change will impose no 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 solicited or received with respect to the 
proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    The foregoing rule change constitutes a stated policy, practice, or 
interpretation with respect to the meaning, administration, or 
enforcement of an existing rule of the Exchange and, therefore, has 
become effective pursuant to Section 19(b)(3)(A) of the Act and 
subparagraph (e) of Rule 19b-4 thereunder. 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. 20549. Copies of such filing will also be available 
for inspection and copying at the principal office of the Exchange. All 
submissions should refer to File No. SR-NYSE-96-23 and should be 
submitted by September 20, 1996.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 96-22227 Filed 8-29-96; 8:45 am]
BILLING CODE 8010-01-M