[Federal Register Volume 65, Number 43 (Friday, March 3, 2000)]
[Notices]
[Pages 11628-11629]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-5185]


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 SECURITIES AND EXCHANGE COMMISSION

[Release No. 42458; File No. SR-Phlx-00-12]


Self-Regulatory Organizations; Notice of Filing of Proposed Rule 
Change by the Philadelphia Stock Exchange, Inc. To Rescind Exchange 
Rule 132, ``Dealings Outside of Exchange in Securities Dealt in on the 
Exchange''

February 25, 2000.
    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 February 10, 2000, the Philadelphia Stock Exchange, Inc. 
(``Exchange'' or ``Phlx'') 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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    The Exchange's proposed rule change raises issues similar to those 
raised by the New York Stock Exchange's (``NYSE'') proposal to repeal 
NYSE Rule 390, which rule generally prohibits NYSE members and their 
affiliates from effecting transactions in certain NYSE-listed 
securities away from a national securities exchange. The Commission 
recently issued the notice of filing for the NYSE's proposal (``NYSE 
Notice'') and solicited comment on a number of important issues that 
have broad implications for the structure of the U.S. securities 
markets.\3\ Specifically, the Commission requested comment on market 
fragmentation--the trading of orders in multiple locations without 
interaction among those orders--and on several options for addressing 
market fragmentation. To promote a comprehensive discussion of off-
board trading restrictions and related market fragmentation issues, the 
Commission requests that persons interested in the Exchange's proposal 
refer to the NYSE Notice and submit comments that respond to the 
questions presented in the NYSE Notice.\4\
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    \3\ See Securities Exchange Act Release No. 42450 (Feb. 23, 
2000) (File No. SR-NYSE-99-48). The Commission notes that similar 
proposals have been filed by the American Stock Exchange and the 
Chicago Stock Exchange. See Securities Exchange Act Release Nos. 
42460 (Feb. 25, 2000) (File No. SR-Amex-00-05) and 42459 (Feb. 25, 
2000) (File No. SR-CHX-00-12).
    \4\ The Commission notes that the NYSE Notice is available on 
the Commission's website at: (http://www.sec.gov/rules/sros/ny9948n.htm).
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I. Self-Regulatory Organization's Statement of the Terms of 
Substance of the Proposed Rule Change

    The Exchange seeks to rescind Exchange Rule 132, ``Dealings Outside 
of Exchange in Securities Dealt on the Exchange.'' The text of the 
proposed rule change is available at the Exchange and at the 
Commission.

[[Page 11629]]

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 Exchange seeks to rescind Exchange Rule 132, which currently 
places restrictions on off-board trading by Exchange members and member 
organizations. With certain exceptions, and Exchange member, member 
organization, or affiliated person may not effect any transaction in 
any ``listed security,'' as defined in Exchange Rule 132, in the over-
the-counter market, either as principal or agent.
    The staff of the Commission recently asked the Exchange to review 
its off-board trading restrictions and consider measures to repeal such 
restrictions.\5\ In proposing the rescission of Exchange Rule 132, the 
Exchange intends to broaden the free market trading activities of 
Exchange members and the investors they represent by removing 
restrictions on over-the-counter trading in listed securities.
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    \5\ See Letter from Annette L. Nazareth, Director, Division of 
Market Regulation, Commission, to Meyer S. Frucher, Chairman and 
Chief Executive Officer, Exchange, dated December 22, 1999.
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2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section of the Act,\6\ in general, and with Section 6(b)(5),\7\ in 
particular, in that it is designed to promote just and equitable 
principles of trade, and protect investors and the public interest by 
broadening the free market trading activities of Exchange members and 
the investors that they represent by removing restrictions on over-the-
counter trading in listed securities.
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    \6\ 15 U.S.C. 78f.
    \7\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange believes that the proposed rule change will not impose 
any 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 
Rules Change Received From Members, Participants or Others

    The Exchange neither solicited nor received written comments with 
respect to 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 Exchange 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. The Commission also invites 
interested persons to submit written data, views, and arguments on the 
market fragmentation issues presented in the NYSE Notice.\8\ Persons 
making written submissions should file six copies thereof with the 
Secretary, Securities and Exchange Commission, 450 Fifth Street, NW, 
Washington, DC 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 persons, 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 Section, 450 Fifth Street, NW, Washington, DC 20549-0609. 
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-00-12 and should be submitted by March 24, 2000. 
Comments responding to the Commission's request for comment on market 
fragmentation issues should refer to File No. SR-NYSE-99-48 and should 
be submitted by April 28, 2000.
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    \8\ See supra notes 3 and 4.

    For the Commission by the Division of Market Regulation, 
pursuant to delegated authority.\9\
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    \9\ 17 CFR 200.30-3(a)(12).
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Jonathan G. Katz,
Secretary.
[FR Doc. 00-5185 Filed 3-2-00; 8:45 am]
BILLING CODE 8010-01-M