[Federal Register Volume 63, Number 117 (Thursday, June 18, 1998)]
[Notices]
[Pages 33430-33431]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-16261]


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SECURITIES AND EXCHANGE COMMISSION

[Released No. 34-40082; File No. SR-Phlx-98-19]


Self-Regulatory Organization; Notice of Filing of Proposed Rule 
Change by the Philadelphia Stock Exchange, Inc., and Amendment No. 1 
Thereto Relating to When a Security is Considered Open For Trading

June 10, 1998.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on May 1, 1998, 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 Phlx. 
On May 22, 1998, the Phlx filed an amendment to the proposal.\3\ 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).
    \2\ 17 CFR 240.19b-4.
    \3\ See letter from Linda S. Christie, Counsel, Phlx, to Yvonne 
Fraticelli, Attorney, Division of Market Regulation (``Division''), 
Commission (May 22, 1998) (``Amendment No. 1''). In Amendment No. 1 
Phlx replaces the phase ``principal exchange'' in Rule 1047 with the 
phrase ``primary market'' to provide consistency with the language 
in the proposed amendments to Phlx Rule 1047A and Option Floor 
Procedure Advice G-2. Corresponding with Amendment No. 1, the word 
``exchange'' should be replaced by the word ``market'' in the 
amended portion of Phlx Rule 1047. Telephone conversation between 
Linda S. Christie, Counsel, Phlx, and Marc McKayle, Attorney, 
Division, Commission (May 26, 1998).
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I. Self-Regulatory Organization's Statement of the Terms of 
Substance of the Proposed Rule Change

    The Phlx proposes to amend Phlx Rules 1047 (Trading Rotations, 
Halts and Suspensions), 1047A (Trading Rotations, Halts or Reopenings), 
and Option Floor Procedure Advice G-2 (``Advice G-2'') (Trading 
Rotations, Halts or Reopenings), to clarify when a security is consider 
open for trading. Specifically, and underlying security

[[Page 33431]]

shall be considered open for trading where a transaction has been 
reported or an opening indication disseminated, whichever occurs first, 
and there has not been an indication of a delayed opening given.

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

    The Phlx proposes amending Phlx Rules 1047 (Trading Rotations, 
Halts and Suspensions), 1047A (Trading Rotations, Halts or Reopenings), 
and Options Floor Procedure Advice G-2 (Trading Rotations, Halts or 
Reopenings) to clarify when a security is open. These provisions govern 
the various types of option rotations. Commentary .01(a) of Rule 1047 
pertains to opening rotations, specifying that the opening rotation in 
each class of potions shall be held promptly following the opening of 
the underlying security on the principal market where it is traded. 
However, neither Commentary .01 of Rule 1047, Rule 1047A, or Advice G-2 
delineates when a security is considered open for trading. For 
clarification purposes, the Phlx proposes amending Rule 1047 Commentary 
.01(a) to indicate that an underlying security shall be deemed to have 
opened on the primary market where it is traded it such market has 
either (1) reported a transaction in the underlying security, or (2) 
disseminated an opening quotation for the underlying security and given 
no indication of a delayed opening.\4\ A corresponding amendment is 
also proposed for Rule 1047A and Advice G-2. Thus, the proposal is 
intended to correct an ambiguity and expressly provide in Exchange 
rules that an opening quote signals the opening of a security.\5\ The 
proposal should promote more prompt options openings by not requiring a 
transaction to occur in the underlying security.
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    \4\ Telephone conversation between Linda S. Christie, Counsel, 
Phlx, and Yvonne Fraticelli, Attorney and Marc Mckayle, Attorney, 
Division of Market Regulation, Commission (May 28, 1998).
    \5\ Only quotations disseminated at the opening of a trading day 
will be deemed to have opened the market in an underlying security. 
Stale quotations disseminated on a prior trading day will be 
ineffective under this proposed rule change. Telephone conversation 
between Linda S. Christie, Counsel, Phlx, and Yvonne Fraticelli, 
Attorney, and Marc McKayle, Attorney, Division, Commission (May 8, 
1998).
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    The proposed rule change is consistent with Section 6 of the Act, 
in general,\6\ and Section 6(b)(5),\7\ in particular, in that it is 
designed to promote just and equitable principles of trade, prevent 
fraudulent and manipulative acts and practices, to foster cooperation 
and coordination with persons engaged in relating, and facilitating 
transactions in securities, 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. By clarifying the 
Exchange's provisions concerning options openings and encouraging more 
prompt openings, the aim of the Act should be achieved.
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    \6\ 15 U.S.C. 78f.
    \7\ 15 U.S.C. 78f(b)(5).
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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 reasons for so finding or (ii) as to 
which the Phlx 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, including whether the proposed rule 
change is consistent with the Act. 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 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 in 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-98-19 and should be 
submitted by July 9, 1998.

    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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Jonathan G. Katz,
Secretary.
[FR Doc. 98-16261 Filed 6-17-98; 8:45 am]
BILLING CODE 8010-01-M