[Federal Register Volume 63, Number 179 (Wednesday, September 16, 1998)]
[Notices]
[Pages 49627-49628]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-24820]



[[Page 49627]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-40420, File No. SR-PHLX-98-23]
September 9, 1998.


Self-Regulatory Organizations: Notice of Filing of Proposed Rule 
Change by the Philadelphia Stock Exchange, Inc. to Amend By-Law Article 
XI, Sec. 11-1--Appeals; Article XII, Sec. 12-4--Application; and 
Article XV, Sec. 15-3--Disposition of Proceeds of Sale of Membership

    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 August 18, 1998, the Philadelphia Stock Exchange, Inc. (``PHLX'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``SEC'' or ``Commission'') a proposed rule change as described in 
Items, I, II, and III below, which Items have been prepared by the 
Exchange.\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) (1994).
    \2\ 17 CFR 240.19b-4 (1997).
    \3\ The proposal was originally submitted on June 24, 1998, 
however, the PHLX failed to include the circulars as required by 
Form 19b-4. See Form 19b-4, 3 Fed. Sec. L (CCH) para. 33,351. The 
Exchange subsequently submitted Amendment No. 1 that included the 
circulars and made technical changes to the proposed rule language. 
See Letter from Murray L. Ross, Vice President and Secretary, PHLX, 
to Michael Walinskas, Deputy Associate Director, Division of Market 
Regulation (``Division''), Commission, dated August 17, 1998 
(``Amendment No. 1''). In addition, the PHLX agreed to additional 
technical changes to its proposed rule language to accurately 
reflect the differences between the proposed rule language and the 
PHLX's current rule language. Telephone conversation between Murray 
L. Ross, Vice President and Secretary, PHLX and Karl Varner, 
Attorney, Division, Commission, on September 1, 1998.
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I. Self-Regulatory Organization's Statement of the Terms of 
Substance of the Proposed Rule Change

    The Exchange seeks to amend By-Law Article XI, Sec. 11-1--Appeals; 
Article XII, Sec. 12-4--Application; and Article XV, Sec. 15-3--
Disposition of Proceeds of Sale of Membership. The Exchange has 
proposed a By-Law amendment to Article XV to permit the Board of 
Governors to determine the validity and amount of claims asserted 
against a membership. Additionally, the Exchange proposes to amend 
Article XI and Article XII to provide that an adverse Admissions 
Committee decision may be appealed to the Board. The text of the 
proposed rule change is available at the Office of the Secretary, the 
PHLX and 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. The 
text of these statements may be examined at the places specified in 
Item IV below. The Exchange 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 Propose Rule Change

1. Purpose
    The PHLX has proposed a By-Law amendment to Article XV, Sec. 15-3, 
Disposition of Proceeds of Sale of Membership, to permit the Board of 
Governors, rather than the Arbitration Committee or a panel thereof, to 
determine the validity and amount of claims asserted against a 
membership pursuant to the specified order of claims enumerated in the 
By-Laws. This proposed By-Law amendment, as recommended by the 
Arbitration and Executive Committees of the Board, seeks to conform the 
By-Law with procedures adopted by other registered national securities 
exchanges \4\ and provides for Board oversight of seat proceeds 
disposition.
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    \4\ See Chicago Board Options Exchange (``CBOE'') Rule 3.15 and 
New York Stock Exchange, Inc. Constitution, Article II, Sec. 11.
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    Additionally, the Exchange proposes to amend Article XI, Sec. 11-1, 
Appeals, and Article XII, Sec. 12-4, Application, to provide that an 
adverse Admissions Committee decision be appealed to the Board. These 
proposed amendments seek to conform the By-Laws with procedures adopted 
by other exchanges wherein appeals are taken to the Board or heard by a 
panel of the Board subject to ratification, such as CBOE Rule 19.5 and 
American Stock Exchange, Inc., Constitution, Article IV, Sec. 1(g). 
Thus, the proposal creates a right of appeal from Admissions Committee 
decisions.
2. Statutory Basis
    The proposed rule change is consistent with Section 6 of the Act 
\5\ in general, and in particular, with Section 6(b)(5) \6\ 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 regulating, clearing, 
settling, processing information with respect to, 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 providing Board 
oversight of the disposition of seat proceeds and Admissions Committee 
appeals.
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    \5\ 15 U.S.C. 78f.
    \6\ 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 received in response to Circulars 98-56 
and 98-67, which were distributed to all members and participants of 
the PHLX.

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

[[Page 49628]]

provisions of 5 U.S.C. 552, will be available for inspection and 
copying in the Commission's Public Reference Room. Copies of the filing 
will also be available for inspection and copying at the PHLX's 
principal offices. All submissions should refer to File No. SR-PHLX-98-
23 and should be submitted by October 7, 1998.

    For the Commission by the Division of Market Regulation, 
pursuant to delegated authority.\7\
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    \7\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 98-24820 Filed 9-15-98; 8:45 am]
BILLING CODE 8010-01-M