[Federal Register Volume 62, Number 43 (Wednesday, March 5, 1997)]
[Notices]
[Pages 10105-10106]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-5374]


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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-38341; File No. SR-Phlx-97-01)


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by the Philadelphia Stock 
Exchange, Inc. Relating to the U-SAVE Program

February 26, 1997.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ notice is hereby given that on January 15, 1997 the 
Philadelphia Stock Exchange, Inc. (``Phlx'' 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.
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    \1\ 15 U.S.C. 78s(b)(1).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Phlx proposes to implement a program that will calculate and 
then display on the execution reports sent to member firms the dollar 
amounts realized as savings to their customers as a result of price 
improvement in the execution of their orders 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
    The purpose of the proposed rule change is to implement a program 
for calculating and displaying, on a PACE execution report sent to 
member firms entering orders, the dollar value saved by their customers 
as a result of price improvement of orders executed on the Exchange. 
This program does not in any

[[Page 10106]]

way affect the actual execution of PACE orders. The Exchange is 
proposing to refer to this calculated dollar savings as the ``U-SAVE'' 
program.
    The U-SAVE program is proposed to be made available for intraday 
round lot and partial round lot market and marketable limit orders \2\ 
entered via the Exchange's PACE system.\3\ The U-SAVE (almost of price 
improvement) is calculated in comparison to the best bid and offer 
displayed in the national market system at the time the order is 
received. For buy side orders, only orders executed at a price lower 
than the national best offer price will receive a U-SAVE indicator. For 
sell side orders, only orders executed at a price higher than the 
national best bid price will receive a U-SAVE indicator.
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    \2\ Only limit orders that are marketable at the time they are 
received by the Exchange are considered in calculating price 
improvement savings. See letter from Michele R. Weisbaum, Vice 
President and Associate General Counsel, Phlx, to Anthony P. Pecora, 
Attorney, Division of Market Regulation, SEC, dated February 7, 1997 
(``Amendment No. 1'').
    \3\ Tick sensitive orders and orders entered on the Floor are 
not included in the U-SAVE program. Id.
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    The following examples illustrate how U-SAVE is proposed to work.

    Example 1--Assume the national market quote is 50-50\1/4\. A 
market order to sell 1,000 shares, entered on the Phlx, is stopped 
at 50, meaning it is guaranteed a price at 50 or a better price. The 
order is subsequently executed at 50\1/8\. This is an \1/8\ point 
savings over the national bid price of 50, which translates into 
$125 savings over the guaranteed price. Thus, the execution report 
would display U-SAVE $125.
    Example 2--Assume the national market quote is 50-50\1/4\. A 
marketable limit order to sell 800 shares at 50 or better is entered 
on the Phlx. The order is subsequently executed at 50\1/8\. This is 
an \1/8\ point savings over taking the prevailing bid of 50. The 
execution report would display U-SAVE $100.
    Example 3--Assume the national market quote is 50-50\1/8\. A 
market order to buy 1,000 shares, entered on the Phlx, is executed 
at 50. This is an \1/8\ point savings over taking the prevailing 
offer of 50\1/8\. The execution report would display U-SAVE $125.

    If no price improvement was provided or if the firm has not 
requested to participate in the program then no price improvement 
information would be displayed on the execution report to the entering 
firm.
    The Exchange believes that the U-SAVE program may be expected to 
enhance the information made available to investors and improve their 
understanding of the auction market.
2. Statutory Basis
    The proposed rule change is consistent with Section 6(b)(5) \4\ of 
the Act in that it is designed to promote just and equitable principles 
of trade, to remove impediments and to perfect the mechanism of a free 
and open market and a national market system, and, in general, to 
protect investors and the public interest. This rule change is designed 
to perfect the mechanism of a free and open market in that it enhances 
the information provided to investors by displaying to them the dollar 
value of the price improvement their orders may have received when 
executed on the Phlx.
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    \4\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The proposed rule change does not impose any burden on competition 
that is not necessary or appropriate in furtherance of the purposes of 
the Act.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    The Exchange has neither solicited nor received written comments on 
the proposed rule change.

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

    Because the foregoing proposed rule change: (1) Does not 
significantly affect the protection of investors or the public 
interest, (2) does not impose any significant burden on competition, 
and (3) does not have the effect of limiting access to or availability 
of any Exchange order entry or trading system, the U-SAVE program has 
become effective pursuant to Section 19(b)(3)(A)(iii) \5\ of the Act 
and Rule 19b-4(e)(5) \6\ thereunder.
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    \5\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \6\ 17 CFR 240.19b-4(e)(5).
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    At any time within sixty 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.\7\
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    \7\ The Commission notes that Amendment No. 1 substantively 
modifies the proposed rule change. Therefore, the time period within 
which the Commission may act to summarily abrogate this rule change 
began on February 11, 1997, the date Amendment No. 1 was received.
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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 also will be available 
for inspection and copying at the principal office of the Phlx. All 
submissions should refer to File No. SR-Phlx-97-01 and should be 
submitted by March 26, 1997.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\8\
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    \8\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 97-5374 Filed 3-4-97; 8:45 am]
BILLING CODE 8010-01-M