[Federal Register Volume 64, Number 105 (Wednesday, June 2, 1999)]
[Notices]
[Pages 29727-29729]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-13929]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-41450; File No. SR-PHLX-99-14]
Self-Regulatory Organizations; Notice of Filing and Immediate
Effectiveness of Proposed Rule Change by the Philadelphia Stock
Exchange, Inc. Adopting a Wireless Communications Policy Relating to
the Use of the Wireless Telephone System on the Options Floor
May 25, 1999.
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 11, 1999, the Philadelphia Stock Exchange, Inc. (``Phlx'' or
``Exchange'') filed with the Securities and Exchange Commission
(``Commission'' or ``SEC'') the proposed rule change as described in
Items I, II, and III below, which Items have been prepared by the
Exchange. 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.
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I. Self-Regulatory Organization's Statement of the Terms of
Substance of the Proposed Rule Change
Phlx proposes to adopt a policy and rule regarding the use of
telephonic communications devices at Phlx. Specifically, proposed Rule
606(b)(1) will state that no member, member organization or person
associated with a member organization shall establish or maintain any
telephonic communication between the (index/equity) Options Floor and
any other location, or between locations on the Options Floor, without
the prior written approval of the Options Committee.\3\ Rule 606,
Supplementary Material .02, will state that the Exchange has
established a Wireless Telephone System policy.\4\ Violations of the
Wireless Telephone System policy may result in disciplinary action by
the Exchange.
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\3\ The Exchange also has filed a proposed rule change to adopt
Rule 606(b)(2) and (d) respecting wireless and radio frequency
interference on the Options Floor. See Securities Exchange Act
Release No. 41451 (May 25, 1999) (SR-Phlx-99-15).
\4\ The Wireless Telephone System policy comprises proposed Rule
606b(1), (c), and Supplementary Materials .02. Telephone
conversation between John Dayton, Counsel, Phlx, and Kathy England,
Assistant Director, Division of Market Regulation, SEC (May 18,
1999).
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Below is the text of the proposed rule change. Proposed additions
are in italics, and deletions are in brackets.
[[Page 29728]]
Rule 606. [Connection with Non-members] Communications and Equipment
(a) No member or member organization shall establish or maintain
any private wire connection, private radio, television or wireless
system, between the Exchange Trading Floor and a non-member without
application to and approval by the Committee.
Every such means of communication shall be registered with the
Committee. Notice of the discontinuance of any such means of
communication shall be promptly given to the Committee.
(b) (1) No member, member organization or person associated with a
member organization shall establish or maintain any telephonic
communication between the Options Floor and any other location, or
between locations on the Options Floor, without the prior written
approval of the Options Committee.
(c) The Exchange may remove any telephonic, electronic and wireless
equipment that has not received written approval under subsection
(b)(1) from any Exchange facility.
Supplementary Material
.01 Specialists on the Exchange's equity floor shall permit each
NASDAQ System market maker telephone access to the specialist post in
any NASDAQ/NMS Security for which the latter is the assigned
specialist.
.02 The Exchange has established a Wireless Telephone System
policy. Violations of the Wireless Telephone System policy may result
in disciplinary action by 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, 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. 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
The purpose of the proposed rule change is to adopt a wireless
communications policy relating to the use of the Wireless Telephone
System on the Options Floor. The Exchange has arranged for Ericsson,
Inc. to install a wireless telephone communication system on the
Exchange's Options Floor. This system will allow only intra-floor
telephone calls.\5\
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\5\ The system will also allow users to place a telephone call
to another four-digit Phlx Complex telephone number.
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The proposed policy will address restrictions on use of the
Wireless Telephone System. The proposed rule also will address
sanctions for violations of the policy. For example, all members
wishing to use the Ericsson system will be required to sign an
agreement prior to receiving their Ericsson phone system. This
agreement contains provisions that deal with liability issues,
specifically paragraphs 13, 14, and 15.\6\ In addition, the policy will
amend the Exchange's current prohibition against the use of any
wireless voice communications on the equity option trading floor. The
proposed policy will be included in a memorandum that will be
distributed to all Options Floor members.
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\6\ Paragraph 13 states that Phlx shall not be liable to the
Subscriber for any consequential, indirect, special, or incidental
damages whatsoever (including, without limitation, any damages
claimed for loss of revenues, good will, or profits or claims by
third parties) arising from or related to this Agreement. Phlx's
sole liability to the Subscriber for any damages claimed under this
Agreement shall be limited to the amount of charges actually
assessed against the Subscriber by Phlx for the specific time period
of the incident(s) for which damages are claimed, and the
Subscriber's sole remedy against Phlx in the event of such claims
shall be the recovery of an appropriate billing credit. Paragraph 14
states that Phlx assumes no liability to Members or Member firms due
to conflicts between handsets in use on the Trading Floor or due to
electronic interference problems resulting from the use of the
intra-floor handsets on the Trading Floor. Finally, paragraph 15
states that the Subscriber shall indemnify Phlx and hold it harmless
from and against any claim, damage, liability or expense referred to
in the foregoing paragraphs.
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The Exchange believes that its customary floor surveillance
procedures are sufficient to monitor the system. The Exchange's
Wireless Telephone System is designed to allow only intra-floor
telephone calls. Members will be allowed to dial only in-house four
digit extension telephone numbers. These four digit telephone numbers
are not enabled to place outside telephone calls. Therefore, a member
will not be able to make outside calls from an Exchange wireless
headset. In addition, all incoming and outgoing telephone calls will be
captured on a monthly report and may be reviewed by the Exchange's
Market Surveillance department.
2. Statutory Basis
Phlx believes that the proposed rule change is consistent with
Section 6 \7\ of the Act in general and furthers the objectives of
Section 6(b)(5) \8\ in particular, because it removes impediments and
perfects the mechanism of a free and open market and protects investors
and the public interest by expediting and making more efficient the
process by which members receive and execute orders on the floor of the
Exchange.
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\7\ 15 U.S.C. 78f.
\8\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition.
C. Self-Regulatory Organization's Statement on Comments or 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
The foregoing proposed rule change has become effective pursuant to
Section 19(b)(3)(A) of the Act \9\ and Rule 19b-4(f)(6) thereunder \10\
because the 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; (3) does not become operative for 30
days from the date of filing, or such shorter time that the Commission
may designate if consistent with the protection of investors and the
public interest; and (4) Phlx provided the Commission with written
notice of its intent to file the proposed rule change at least five
business days prior to the filing date. At any time within 60 days of
the filing of the 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 the furtherance of the
purposes of the Act.
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\9\ 15 U.S.C. 78s(b)(3)(A).
\10\ 17 CFR 240.19b-4(f)(6). In reviewing this proposal, the
Commission has considered the proposed rule's impact on efficiency,
competition, and capital formation. 15 U.S.C. 78c(f).
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The Exchange has requested that the rule change be accelerated to
become operative immediately to allow for immediate use and enforcement
of the Wireless Telephone System policy.
[[Page 29729]]
Because the proposed policy helps to remove impediments to and perfect
the mechanism of a free and open market by making more efficient the
process by which members receive and execute orders on the floor of the
Exchange, the Commission finds that accelerating the operative date of
the rule change is consistent with the protection of investors and the
public interest. The Commission also finds that the proposal is
sufficiently similar to a previously approved policy of the American
Stock Exchange LLC.\11\ Thus, the Commission designates May 25, 1999,
the date of this notice, as the operative date of this filing.
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\11\ See Securities Exchange Act Release No. 37728 (September
26, 1996), 61 FR 51476 (October 2, 1996).
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IV. Solicitation 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, N.W., Washington, D.C. 20549-
0609. 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 Room. 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-99-14 and should
be submitted by June 23, 1999.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\12\
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\12\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 99-13929 Filed 6-1-99; 8:45 am]
BILLING CODE 8010-01-M