[Federal Register Volume 62, Number 86 (Monday, May 5, 1997)]
[Notices]
[Pages 24525-24529]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-11527]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-38544; File No. SR-Phlx-97-11]


Self-Regulatory Organizations; Notice of Filing of Proposed Rule 
Change and Amendment Nos. 1 and 2 thereto by the Philadelphia Stock 
Exchange, Inc. Relating to PACE Execution Guarantees.

April 24, 1997.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''), 15 U.S.C. Sec. 78s(b)(1), notice is hereby given that on 
March 3, 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. On April 4, 1997, the Phlx filed Amendment No. 1 to the 
proposal.\1\ On April 21, 1997, the Exchange filed Amendment No. 2 to 
the proposed rule change.\2\ The Commission is publishing this notice 
to solicit comments on the proposed rule change from interested 
persons.
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    \1\ Amendment No. 1 makes several clarifying revisions to the 
proposal and corrects a typographical error. See Letter from Philip 
H. Becker, Senior Vice President, Chief Regulatory Officer, Phlx, to 
James T. McHale, Attorney, Office of Market Supervision (``OMS''), 
Division of Market Regulation (``Division''), Commission, dated 
April 3, 1997 (``Amendment No. 1'').
    \2\ Amendment No. 2 clarifies the operation of the proposed rule 
change by revising the fourth example under the heading ``Market 
orders.'' See letter from Philip H. Becker, Senior Vice President, 
Chief Regulatory Officer, Phlx, to James T. McHale, Attorney, OMS, 
Division, Commission, dated April 17, 1997 (``Amendment No. 2'').
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Phlx, pursuant to Rule 19b-4 of the Act, proposes to amend Rule 
229, Philadelphia Stock Exchange Automated Communication and Execution 
System (PACE), to amend the: (1) Execution guarantee applicable to PACE 
market \3\ and marketable limit orders over 599 shares; (2) out-of-
range protection provisions; (3) execution price for partial round 
lots; and (4) limit order provisions for clarity. First, the Exchange 
proposes to amend the execution guarantee applicable to orders greater 
than 599 shares.\4\ Specifically, where a specialist voluntarily agrees 
to automatically execute market or marketable limit orders greater than 
599 shares, an order is automatically executable at the PACE Quote,\5\ 
if it is: (a) Greater than 599 shares; (b) within the specialist's 
automatic execution guarantee; and (c) less than or equal to the size 
of the PACE Quote. Orders greater than the size of the PACE Quote are 
guaranteed either: (1) A manual execution at the PACE Quote price up to 
the size of the PACE Quote, with the balance of the order receiving a 
professional execution, in accordance with Rule 229.10(b) (``the First 
Guarantee''); or (ii) an automatic execution at the PACE Quote, up to 
the size of the order (within the specialist's execution guarantee 
size), regardless of the size of the PACE Quote (``the Second 
Guarantee'').
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    \3\ Market orders are defined as orders to buy or sell a stated 
amount of a security at the best price obtainable after the order is 
represented on the Exchange.
    \4\ Consistent with the existing provisions of Supplementary 
material .05, if an order is for 599 shares or less, it will 
continue to be automatically executable at the PACE Quote, 
regardless of the size of the PACE Quote, as the Exchange is not 
amending the automatic execution guarantee applicable to orders for 
599 shares or less.
    \5\ The PACE Quote is defined as the best bid/ask quote among 
the American, Boston, Cincinnati, Chicago, New York, Pacific, or 
Philadelphia Stock Exchanges, or the Intermarket Trading System/
Computer Assistant Execution System (``ITS/CAES'') quote, as 
appropriate.
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    The First Guarantee is applicable to all specialists who agree to 
accept orders greater than 599 shares. With respect to the portion of 
an order exceeding the size of the PACE Quote, such order shall receive 
a professional execution, meaning an execution consistent with 
prevailing market conditions, fair and orderly markets and other 
applicable Exchange rules; this language is proposed to be added to 
Supplementary Material .10(b). The Second Guarantee is applicable to 
orders greater than 599 shares and for which specialists have agreed to 
establish a guarantee for a security independent of the size of the 
PACE Quote. The First and Second execution guarantees are proposed to 
be added to Supplementary Material .05.
    Second, the provisions respecting out-of-range executions also are 
being amended. Currently, pursuant to Supplementary Material .07(a), 
member organizations which enter market orders after the opening may 
elect to have such orders executed (i) In accordance with the 
procedures set forth in Supplementary Material .05, or (ii) if such 
execution price would be outside the New York market high-low range for 
the day, manually at or within the New York market high-low range of 
the day. This is referred to as out-of-range protection, a long-
standing feature of the

[[Page 24526]]

PACE System.\6\ At this time, the limitation to orders less than 599 
shares in Supplementary Material .07(a) respecting market orders is 
proposed to be deleted, and a new provision applicable to limit orders 
is proposed to be adopted in Supplementary Material .10(a) to cover all 
sizes of limit orders. Currently, Supplementary Material .10(b) 
provides that orders executed under that paragraph will be executed at 
or within the primary market high-low range existing at the time of 
execution.
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    \6\ See e.g.,  Securities Exchange Act Release No. 28629 
(November 20, 1989) (SR-Phlx-90-19).
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    Third, the Exchange proposes to amend the provisions respecting the 
execution of partial round-lot orders. Currently, Supplementary 
Material .07(b) provides that, in the case of a partial round-lot 
order, the round-lot portion(s) of which is executed at more than one 
price, the odd-lot portion shall be executed at the same price as the 
last round-lot portion is executed. This provision is proposed to be 
amended to state that the execution should look back to the execution 
price of the first 100 shares. The same changes are proposed respecting 
Supplementary Material .09 and .10(b).
    Lastly, the Exchange is also proposing to reorganize Rule 229 by 
separating marketable limit orders and otherwise clarifying 
Supplementary Material .10(a). Further, Supplementary Material .07(b) 
is proposed to be amended to reflect that orders exceeding a 
specialist's automatic execution guarantee may nevertheless be 
delivered through the PACE System. Currently, this provision states 
that market orders (round-lots of 600 to 1000 shares or such greater 
size which the specialist agrees to accept and partial round-lots of 
601 to 1099 shares or such greater size which the specialist agrees to 
accept) which are entered after the opening shall not be subject to the 
execution parameters set forth in Rule 229 and shall be executed in 
accordance with other applicable rules of the Exchange. The proposal 
would clarify that this provision applies to orders which the 
specialist has not agreed to accept for automatic execution and are, 
instead, only delivered through the PACE System. The proposal would 
also codify that such orders are executable in accordance with 
Supplementary Material .10(b).
    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 Phlx 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 Phlx 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
a. Background
    The PACE System has served as the Exchange's automatic order 
routing and execution system for securities on the equity trading 
floor, providing certain execution guarantees. Initially, the PACE 
System was created to provide an efficient mechanism for the delivery 
of small customer orders, meaning up to 599 shares. Thereafter, PACE 
order size eligibility increased, automatic execution became a feature 
and the professional execution standard for orders greater than 600 
shares was codified.\7\ Pursuant to Supplementary Material .02, only 
agency orders are currently executed through PACE.\8\ PACE orders are 
only eligible for execution after the primary market has opened.\9\
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    \7\ Securities Exchange Act Release Nos. 23630 (September 16, 
1986) (SR-Phlx-86-30); and 25716 (May 16, 1988) (SR-Phlx-87-30).
    \8\ Securities Exchange Act Release Nos. 26968 (June 23, 1989) 
(SR-Phlx-89-13 defining agency orders); and 36442 (October 31, 1995) 
(SR-Phlx-95-32 permitting broker-dealer orders on PACE). Although 
approval for the delivery of broker-dealer orders through PACE was 
received, this feature is not currently utilized by broker-dealers.
    \9\ Securities Exchange Act Release No. 27596 (January 8, 1990) 
(SR-Phlx-89-15 at n.6). See also Chicago Stock Exchange, 
Incorporated (``CHX'') Rules, Article XX, Rule 37(a)(4).
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b. Market Orders
    At this time, the Exchange is proposing to amend the execution 
guarantee applicable to market and marketable limit PACE orders over 
599 shares. With respect to market orders, currently, Rule 229.05 
provides that market orders are stopped at the PACE Quote at the time 
of entry into the system (``Stop Price'') and subject to a delay of up 
to 15 seconds in order to receive an opportunity for price improvement. 
This feature is known as the ``Public Order Exposure System'' or 
``POES.'' If such market order is not executed within the 15 second 
window, the order will be automatically executed at the Stop Price.\10\
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    \10\ If the PACE Quote at the time of order entry into the 
system reflects a \1/8\ point spread between the best bid and offer, 
that order will be executed immediately without the 15 second delay.
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    Rule 229.05 further provides, that subject to these procedures, the 
specialist may voluntarily agree to execute market orders greater than 
599 shares. Thus, market orders over 599 shares that a specialist 
voluntarily agrees to accept are currently entitled to the same 
execution at the PACE Quote, regardless of the size of the PACE Quote. 
These orders are also subject to POES.
    The Exchange is proposing to adopt new language in Rule 229.05 to 
govern market orders over 599 shares that a specialist has agreed to 
automatically execute. The minimum execution guarantee for such orders, 
the First Guarantee, is proposed to be an automatic execution at the 
PACE Quote, up to the size of the PACE Quote. If the order size is 
greater than the size of the PACE Quote, the order shall manually 
receive an execution at the PACE Quote up to the size of the PACE 
Quote, with the balance of the order receiving a professional 
execution, in accordance with Supplementary Material .10(b). However, 
under the Second Guarantee, a specialist may agree to automatically 
execute orders greater than 599 shares that are also greater than the 
size of the PACE Quote in full at the PACE Quote (within the 
specialist's guarantee). The Exchange believes that although it is 
important to establish a minimum automatic execution guarantee, 
specialists should nevertheless be permitted, and encouraged, to 
voluntarily provide more favorable guarantees. The Exchange states that 
this belief is consistent with the rules and practices of other 
regional exchanges.\11\
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    \11\ See e.g., CHX, Article XX, Rule 37(d).
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    A professional execution is described in Rule 229.10(b), listing 
specific circumstances and standards that apply. The Exchange is 
proposing to add the general standards that all orders subject to 
Supplementary Material .10(b) be executed consistent with prevailing 
market conditions, fair an orderly markets and other applicable rules 
of the Exchange. For instance, the rules of priority, parity and 
precedence apply to PACE orders, as do many other important trading 
rules.
    The second paragraph of Rule 229.07 will continue to apply to 
market orders

[[Page 24527]]

greater than 599 shares where the specialist has not agreed to provide 
automatic executions. These PACE-delivered orders are not subject to 
the execution parameters set forth in Supplementary Material .05, but 
shall be executed in accordance with Supplementary Material .10(b) and 
other applicable rules of the Exchange.
    The following is an example of how the proposal would operate, 
assuming the specialist has voluntarily agreed to provide an automatic 
execution guarantee for orders greater than 599 shares and thus would 
be required to provide at least the minimum guarantee (the First 
Guarantee). In this example, the PACE Quote bid is composed of 1,000 
shares (Pacific Stock Exchange ``PSE''), 500 shares (New York Stock 
Exchange ``NYSE''), and 500 shares (CHX), for an aggregate total size 
\12\ of 2,000 shares and the specialist's automatic execution guarantee 
is 2,500 shares.
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    \12\ The aggregate total size is provided for purposes of 
providing a complete example and does not affect the outcome, 
because only the size of the PACE Quote is relevant to the proposed 
execution guarantee. See Amendment No. 1, supra note 1.
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    (1) The specialist receives a market order to sell 1,000 shares. 
This order is equal to the size of the PACE Quote (single market PSE) 
bid (1,000 shares) and less than the specialist's automatic execution 
guarantee size of 2,500 shares, thus, is automatically executable.
    (2) The specialist receives a market order to sell 1,100 shares. 
The order is greater than the PACE Quote bid size (PSE for 1,000 
shares), and thus would revert to manual status, with the specialist 
obligated to fill 1,000 shares at the PACE Quote, and the remaining 100 
shares entitled to a professional execution.
    (3) The specialist receives a market order to sell 2,200 shares. 
Same result: the entire order would revert to manual status with the 
specialist obligated to fill 1,000 shares at the PACE Quote, and the 
balance of 1,200 shares receiving a professional execution.
    (4) The specialist receives a market order to sell 3,000 shares. 
The order reverts to manual, because it exceeds the specialist's 
automatic execution guarantee, and the entire 3,000 share order 
receives a professional execution.\13\ The fact that the aggregate size 
of the best bid is for 2,000 shares does not determine or affect the 
execution.
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    \13\ There is no guarantee up to the PACE Quote size, because 
the customer order size is greater than the specialist guarantee. 
See Amendment No. 2, supra note 2.
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    Assuming the specialist has voluntarily agreed to provide an 
automatic execution guarantee for orders greater than 599 shares, the 
specialist may also determine to provide more than the minimum 
guarantee by guaranteeing an automatic execution at the PACE Quote to 
all orders within the specialist's guarantee size, regardless of the 
size of the PACE Quote (i.e. the Second Guarantee). For instance, where 
the specialist's automatic execution guarantee is 2,500 shares and the 
PACE Quote bid is composed of 1,000 shares (PSE), 500 shares (NYSE), 
and 500 shares (CHX), for an aggregate total size of 2,000 shares, a 
market order to sell 2,200 shares is received. This order is 
automatically executed at the PACE Quote, because it is less than the 
specialist's maximum size guarantee for automatic execution, despite 
the PACE Quote size being 1,000 shares.
    In light of significant changes to the marketplace as well as the 
competitive environment, one purpose of this proposal is to update the 
PACE automatic execution guarantees. For instance, new SEC Rule 11Acl-4 
requires specialists and market makers to, under normal market 
conditions, display within 30 seconds the price and full size of 
customer limit orders better than or, where the specialist's quote is 
the PACE Quote, that enhance the size of the specialist's quote.\14\ 
Other changes in the marketplace include the increase in third market 
trading, internalization, payment for order flow practices and the use 
of technology, as cited by the Commission both in the Adopting Release, 
as well as in the Market 2000 Study.\15\
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    \14\ Securities Exchange Act Release No. 37619A (September 6, 
1996), 61 FR 48290 (September 12, 1996) (``Adopting Release''). See 
also Securities Exchange Act Release Nos. 38110 (January 2, 1997), 
62 FR 1279 (January 9, 1997) (revising effective date until January 
13, 1997); and 38139 (January 8, 1997) (revising effective date to 
January 20, 1997).
    \15\ See Adopting Release at 8 and note 12, supra note 14.
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    The Exchange believes that the Display Rule may have a profound 
impact on the national market system, and may, for one, result in small 
bids and offers routinely comprising the PACE Quote. Although the 
Exchange understands the important purposes of the Display Rule cited 
by the Commission in the Adopting Release, the Exchange nevertheless 
believes that the resulting changes in displayed quote sizes may have a 
corresponding impact on the Exchange's PACE System and the automatic 
execution guarantees offered thereunder. The Commission has recognized 
that the new Rule may affect automatic execution guarantees.\16\ As 
described above, PACE execution guarantees do not currently take into 
account the size of the PACE Quote with respect to the execution of 
market and marketable limit orders. Specialists currently execute the 
excess size of an incoming PACE order over the PACE Quote size as 
principal. Thus, the purpose of this proposal is to establish a 
correlation between market size and PACE guarantee size.
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    \16\ See Adopting Release at note 144, supra note 14. See also 
Securities Exchange Act Release No. 38156 (January 10, 1997) (SR-
NASD-96-43).
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    Second, respecting the current competitive environment, the 
Exchange notes that other regional exchange automated order delivery 
and execution systems provide various types of execution guarantees. 
For market orders, most other regional exchange rules permit 
conditioning automatic execution at the PACE Quote on the displayed 
size of the PACE Quote. For instance, the Chicago Stock Exchange MAX 
System contemplates a contingency based on the size of the displayed 
PACE Quote.\17\ Thus, the effect on the Exchange's proposal is to 
similarly consider the PACE Quote size for certain order sizes, 
consistent with other systems.
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    \17\ See CHX, Article XX, Rule 37(b)(12), which states that 
notwithstanding anything contrary in Rule 37, no market or 
marketable limit order is automatically executed if it is greater 
than the size of the best bid/offer.
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    The Exchange is also proposing to amend the out-of-range guarantee. 
Specifically, PACE market orders are also subject to Supplementary 
Material .07, which provides that member organizations entering orders 
(up to 599 shares) after the opening may elect to have such orders 
executed: (i) Automatically on the PACE Quote, or (ii) if such 
execution price would be outside the New York market high-low range of 
the day, manually at or within the New York market high-low range of 
the day. Thus, market orders that would result in an out-of-range 
execution may be handled manually by the specialist, instead of 
receiving an execution, if so elected by the PACE entry firm. This 
provision is proposed to apply to all market orders, by deletion of the 
limitation to orders up to 599 shares. The purpose of this change is to 
provide member organizations the ability to elect out-of-range 
protection for all market orders within the parameters of the 
specialist's guarantee, because it is an important feature of the PACE 
System and important to member organization's order flow decisions. The 
Exchange notes that out-of-range protection is common to regional 
exchange systems.\18\
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    \18\ See e.g., CHX, Article XX, Rule 37(a)(6), (b)(11) and 
(e)(6), which provide for stopping such orders.

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[[Page 24528]]

    The Exchange is also proposing to correct its provisions respecting 
the execution guarantee applicable to partial round-lot (``PRL'') 
market orders. Currently, Supplementary Material .07(b) states that the 
odd-lot portion of PRLs of 601 or more shares shall be executed at the 
same price as the round-lot portion. In the case of a PRL order, the 
round-lot portion(s) of which is executed at more than one price, the 
odd-lot portion shall be executed at the same price as the last round-
lot portion is executed. A similar provision appears in Supplementary 
Material .09 respecting PRL limit orders. These provisions are proposed 
to be amended, such that, in the case of a PRL order, the round-lot 
portion(s) of which is executed at more than one price, the odd-lot 
portion shall be executed at the same price as the first 100 shares 
(round-lot), not the last round-lot portion, as the provisions 
currently state. The Exchange believes that these provisions have 
erroneously remained in the Rule and require correction to reflect 
today's market practice.
c. Marketable Limit Orders
    Limit orders are governed by separate provisions in Rule 229, 
namely Supplementary Material .09 and .10. Currently, round-lot limit 
orders up to 599 shares and the round-lot portion of PRL limit orders 
up to 599 shares which are entered at the PACE Quote shall be executed 
at the PACE Quote. This automatic execution guarantee for marketable 
limit orders up to 599 shares is unaffected by this proposal, other 
than to be reorganized into a new sub-paragraph (i) to differentiate 
marketable limit orders.
    Specialists may voluntarily agree to automatically execute 
marketable limit orders greater than 599 shares. Although Supplementary 
Material .10(a) does not apply to such orders, Supplementary Material 
.10(b) currently provides that professional execution standards apply. 
At this time, the Exchange proposes to adopt a minimum automatic 
execution guarantee for marketable limit orders greater than 599 
shares, which parallels the proposed provision in Supplementary 
Material .05 for market orders greater than 599 shares. Thus, where the 
specialist has agreed to automatically execute marketable limit orders 
greater than 599 shares, a marketable limit order within the guarantee 
is eligible for automatic execution at the PACE Quote up to the size of 
the PACE Quote. If the order size is greater than the size of the PACE 
Quote, the balance of the order would receive a professional execution, 
in accordance with Supplementary Material .10(b) below. However, a 
specialist may agree to automatically execute orders greater than 599 
shares that are also greater than the size of the PACE Quote in full at 
the PACE Quote.
    The provisions respecting non-marketable limit orders would be 
reorganized as sub-paragraph (ii), but otherwise remain unchanged. Such 
orders which are entered at a price different than the PACE Quote will 
be executed in sequence at the limit price when an accumulative volume 
of 1000 shares of the security named in the order prints at the limit 
price or better on the New York market after the time of entry of any 
such order into PACE. For each accumulation of 1000 shares which have 
been executed at the limit price on the New York market, the specialist 
shall execute a single limit order of a participant up to a maximum of 
500 shares for each round-lot limit order up to 500 shares or the 
round-lot portion of a PRL limit order up to 599 shares.
    The purpose of amending the PACE automatic execution guarantees 
applicable to marketable limit orders is similar to the reasoning 
described above, respecting market orders. The Display Rule and other 
market developments similarly impact marketable limit orders. 
Additionally, some regional exchanges provide guarantees dependent on 
the size of the PACE Quote.\19\
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    \19\ See e.q., CHX Article XX, Rule 37(b)(12).
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    The Exchange is also proposing to adopt an out-of-range protection 
provision for limit orders not currently covered by such a provision, 
namely orders less than 600 shares. As discussed above, the Exchange 
believes that out-of-range protection is an important PACE System 
feature and should be properly codified into the Rule as applicable to 
all order types.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6 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, prevent fraudulent and manipulative acts and 
practices, to remove impediments to and perfect the mechanism of a free 
and open market and a national market system, as well as to protect 
investors and the public interest. Specifically, the proposal is 
intended to update the automatic execution guarantees for orders 
greater than 599 shares, out-of-range protection and partial round-lots 
to facilitate execution of such orders in today's marketplace. The 
Exchange seeks to promote PACE System usage among its member 
organizations as well as its specialists. In this regard, the Exchange 
believes that the proposal will facilitate the acceptance of market and 
marketable limit PACE orders at the PACE Quote, which will promote 
liquidity and best execution principles with respect to such orders.
    Further, the investing public will continue to benefit from the 
speed and efficiency of a premier regional exchange automated order 
routing and execution system, the PACE System. The Exchange also 
believes that the proposal should encourage specialists to establish 
automatic execution guarantees higher than 599 shares, which should 
similarly promote liquidity, efficiency and best execution.
    The Exchange believes that the proposal is consistent with the 
Display Rule, in that it continues to guarantee executions at the PACE 
Quote, albeit limited to the PACE Quote size for orders greater than 
599 shares. The execution guarantees, as amended, should nevertheless 
promote the market transparency and customer protection principles of 
the Display Rule, by continuing to offer PACE Quote and primary market 
protection. Guaranteeing executions based on the actual size of the 
PACE Quote acknowledges that enhanced customer limit order display 
under the new Rule should create a more transparent and accessible 
national market system.
    In addition, the Exchange believes that the proposal is consistent 
with Section 11A of the Act, and paragraph (a)(1) thereunder, which 
encourages the use of new data processing and communication techniques 
that create the opportunity for more efficient and effective market 
operations. The Exchange notes that the specialist will be held 
accountable to specific, codified standards of fair execution. Thus, 
the use of a guarantee up to the PACE Quote size coupled with a 
professional execution creates consistency and certainty in the 
execution of PACE orders, such that investors will know how their 
orders are being handled. Thus, the Exchange believes that the proposal 
is consistent with the public interest and investor protection purposes 
of Section 11A, in that it should assure the practicability of 
executing customer orders in the best market as well as an opportunity 
for investors' orders being executed without the participation of a 
dealer.

[[Page 24529]]

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

    The Exchange believes the proposed rule change will impose no 
inappropriate burden on competition.

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

    Within 35 days of the 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 reasons for so finding or (ii) as to 
which the self-regulatory organization consents, the Commission will:
    (A) By order approve the 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, NW., Washington, DC 20549. 
Copies of the submissions, 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. Sec. 552, will be available for inspection and copying at 
the Commission's Public Reference Section, 450 Fifth street, NW., 
Washington, DC 20549. Copies of such filing will also be available for 
inspection and copying at the principal office of the Phlx. All 
submissions should refer to File No. SR-Phlx-97-11 and should be 
submitted by May 27, 1997.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\20\
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    \20\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 97-11527 Filed 5-2-97; 8:45 am]
BILLING CODE 8010-01-M