[Federal Register Volume 64, Number 228 (Monday, November 29, 1999)]
[Notices]
[Pages 66684-66686]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-30837]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-42156, File No. SR-Phlx-99-42]
Self-Regulatory Organizations; Notice of Filing of Proposed Rule
Change by the Philadelphia Stock Exchange, Inc. Relating to Exchange
Rule 98, Emergency Committee
November 19, 1999.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(the ``Act''),\1\ and Rule 19b-4 thereunder \2\ notice is hereby given
that on October 13, 1999, 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 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
The Exchange proposes to amend Exchange Rule 98, Emergency
Committee (``Emergency Committee'') to update the composition of the
Emergency Committee to correspond with previous revisions to the
Exchange's governance structure, and to clarify that the Emergency
Committee is authorized to take action if any emergency condition is
created by the Year 2000 date change. The proposed rule change also
deletes a provision authorizing the Emergency Committee to take action
regarding CENTRAMART, an equity order entry system which is no longer
used on the Exchange's equity trading floor. The text of the proposed
[[Page 66685]]
rule change is available at the 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 Exchange 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 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 Proposed Rule Change
1. Purpose
The proposed rule change updates the Emergency Committee's
composition to reflect recent changes to the Exchange's governance
structure. In 1997, various amendments to the Exchange's Certificate of
Incorporation and By-Laws dealing with the governance structure of the
Exchange were approved by the Commission.\3\ Among other things, a
provision was added authorizing the Board of Governors to appoint a
Chairman of the Board who would be the full-time, paid Chief Executive
Officer of the Exchange, and the President position was eliminated.\4\
This filing conforms the membership of the PHLX's Emergency Committee
to the 1997 structural amendments.
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\3\ See Securities Exchange Act Release No. 38960 (August 22,
1997), 62 FR 45904 (August 29, 1997).
\4\ Id. Other corresponding amendments to the By-Laws were made
in connection with the 1997 changes to the Exchange's governance
structure. For example, references to ``President'' were changed to
``Chief Executive Officer'' or ``Chairman of the Board.'' See PHLX
By-Law Article IV, Section 4-1 and PHLX By--Law Article V, Section
5-1.
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The Emergency Committee was formed in 1989,\5\ prior to the
aforementioned changes to the Exchange's governance structure.
Currently, Rule 98 provides that the Emergency Committee shall consist
of the Chairman of the Exchange, the President of the Exchange and the
Chairmen of the Floor Procedure, Options, and Foreign Currency Options
Committees. The proposed rule change would replace the ``Chairman of
the Exchange'' with the current ``Chairman of the Board'' designation,
delete the word ``President'' from the rule as the Exchange no longer
has a ``President''; and include the Exchange's On-Floor Vice Chairman
\6\ as a member of the Emergency Committee.
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\5\ See Securities Exchange Act Release No. 26858 (May 22,
1989), 54 FR 23007 (May 30, 1989).
\6\ See PHLX By-law, Article IV, Section 4-2.
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Thus, under the proposed rule, the Emergency Committee would
include five individuals: The Chairman of the Board of Governors; the
On-floor Vice Chairman of the Board of Governors; and the Chairmen of
the Floor Procedure Committee, the Options Committee, and the Foreign
Currency Options Committee. The Exchange represents that replacing the
President with the On-Floor Vice Chairman preserves the five-member
structure of the Emergency Committee, minimizing the possibility of a
tie vote on the Emergency Committee, and provides the Emergency
Committee with the most qualified replacement for the President; that
is, a member that can contribute direct knowledge of any potential or
existing emergencies existing on the trading floor.\7\
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\7\ Letter from Richard S. Rudolph, Counsel, PHLX, to Rebekah
Liu, Special Counsel, Division of Market Regulation (``Division''),
SEC, dated November 16, 1999 (Amendment No. 1).
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The proposed rule change also clarifies that potential emergency
conditions created by the Year 2000 date change are considered
``extraordinary market or emergency conditions'' warranting action by
the Emergency Committee.\8\ Previously, the Exchange described
``extraordinary market or emergency conditions'' as, among other
things, a declaration of war, a presidential assassination, an
electrical blackout, or events such as the 1987 market break or other
highly volatile trading conditions that require intervention for the
market's continued efficient operation.\9\ The proposed rule also
relates to a component of the Year 2000 contingency plan designed by
the Exchange's Year 2000 Task Force.\10\
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\8\ Telephone conversation between Richard S. Rudolph, Counsel,
PHLX, and Mandy Cohen, Special Counsel, Division, SEC, on November
16, 1999.
\9\ Letter from William W. Uchimoto, General Counsel, PHLX, to
Sharon L. Itkin, Division, SEC, dated March 15, 1989.
\10\ Telephone conversation between Richard S. Rudolph, Counsel,
PHLX, and Rebekah Liu, Special Counsel, Division, SEC, on November
17, 1999.
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Finally, the proposed rule change also deletes references to
CENTRAMARK, an equity order system which is no longer used on the
Exchange Equity Floor.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with Section 6(b) of the Act, in general, and Section 6(b)(5),\11\ in
particular, in that it is designed to promote just and equitable
principles of trade, to remove impediments to, and perfect the
mechanism of a free and open market and, in general, to protect
investors and the public interest by updating the composition of the
Emergency Committee to reflect the current governance structure of the
Exchange, by clarifying the procedures for taking the necessary and
appropriate action to respond to extraordinary market conditions or
other emergencies, and by eliminating reference to a defunct Exchange
trading system.
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\11\ 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 inappropriate burden on competition that is not necessary or
appropriate in furtherance of the purposes of the Act.
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 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 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, 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
[[Page 66686]]
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 Room, located at the above
address. Copies of such filing will also be available for inspection
and copying at the principal office of the Exchange. All submissions
should refer to File No. SR-Phlx-99-42, and should be submitted by
December 20, 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. 99-30837 Filed 11-26-99; 8:45 am]
BILLING CODE 8010-01-M