[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