[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