[Federal Register Volume 66, Number 8 (Thursday, January 11, 2001)]
[Notices]
[Pages 2469-2470]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-791]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-43799; International Series Release No. 1244; File No. 
SR-Phlx-00-111]


Self-Regulatory Organizations; Notice of Filing and Order 
Granting Accelerated Approval of Proposed Rule Change by the 
Philadelphia Stock Exchange, Inc. To Amend Temporarily Rule 1063(a) and 
Options Floor Procedure Advices A-10 and C-1, Which Address Trading in 
Foreign Currency Options

    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 January 2, 2001, the Philadelphia Stock Exchange, Inc. (``Phlx'') 
filed with the Securities and Exchange Commission (``Commission'') the 
proposed rule change as described in Items I and II below, which Items 
have been prepared by the Phlx. The Commission is publishing this 
notice to solicit comments on the proposed rule change from interested 
persons and to approve the proposal on an accelerated basis. By its 
terms, the proposed rule change will be effectively only until March 
31, 2001.
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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 Phlx proposes to amend Phlx Rule 1063(a), Phlx Options Floor 
Procedure Advice A-10, and Phlx Options Floor Procedure Advice C-1. The 
proposed amendments would provide a temporary exception from the 
current requirement that a Registered Options Trader (``ROT'') be 
present at the trading post in certain circumstances. The exception is 
limited to foreign currency options (``FCOs'').The proposal would also 
make certain non-substantive stylistic changes to Floor Procedure 
Advices A-10 and C-1. The text of the proposed rule change is available 
at the principal office of 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 Phlx included statements 
concerning the purpose of and basis for the proposed rule change and 
discussed any comments it had received on the proposal. The text of 
these statements may be examined at the places specified in Item IV 
below. The self-regulatory organization has prepared summaries, set 
forth in section 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 Phlx is seeking approval of temporary amendments to Phlx Rule 
1063(a) (``Responsibilities of Floor Brokers''), Phlx Options Floor 
Procedure Advice A-10 (``Specialist Trading With Book''), and Phlx 
Options Floor Procedures Advice C-1 (``Ascertaining the Presence of 
ROTs in a Trading Crowd''), as discussed below. Phlx Rule 1063(a) 
currently provides Floor Brokers that at least one ROT is present at 
the trading post before representing an order for execution. Phlx 
Options Floor Procedure Advice A-10 currently provides that in any 
instance where a Specialist wishes to participate as principal in a 
trade with an order placed on that Specialist's book, the Specialist 
must ensure that at least one ROT is present in the trading crowd and 
is aware of the Specialist's intention to trade with the book both at 
the time of and immediately before the order's execution. Phlx Options 
Floor Procedure Advice C-1 currently provides that, before executing an 
options order, a Floor Broker representing the order shall ascertain 
that at least one ROT is present in the trading crowd at the post where 
the order is executed.
    The Phlx has been advised that as of January 3, 2001, no ROTs will 
be doing business on a regular basis on the Phlx's Foreign Currency 
Options Floor ``FCO floor''),\3\ although it is possible that, 
depending on the ROTs' business plans and objectives, a ROT may 
continue to do business on the FCO floor on a part-time basis during a 
transition period. The Phlx believes it is likely that there will be 
periods of time when FCO

[[Page 2470]]

Specialists and FCO Floor Brokers will be present on the FCO floor with 
no FCT ROTs present. The Phlx believes that compliance with Phlx Rule 
1063(a) and Phlx Options Floor Procedure Advices A-10 and C-1 would not 
be possible under those circumstances.
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    \3\ The Phlx's FCO trading floor is located in the same building 
as its equity options trading floor, but is in a different room.
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    The Phlx intends the proposed temporary rule change to provide an 
exception, effective until March 31, 2001, from the requirements in 
Phlx Rule 1063(a) and Phlx Options Floor Procedure Advices A-10 and C-1 
that an ROT be present at the trading post in certain circumstances.\4\ 
The Phlx represents that the exception would apply only if not ROT is 
present on the FCO floor when an FCO Specialist trades as principal 
with an order on the book, or when an FCO Floor Broker represents an 
order or executes a trade. The Phlx believes that the proposed 
temporary rule change would enable it to provide fair and orderly 
markets in FCOs in the event the FCO ROTs are absent from the FCO floor 
during the period that begins on the date of this Order and ends on 
March 31, 2001. The Phlx represents that, no later than January 12, 
2001, it will file a proposed rule change seeking permanently to amend 
Phlx Rule 1063 and Phlx Floor Options Procedure Advices A-10 and C-1.
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    \4\ The proposed temporary rule change also makes non-
substantive changes to Phlx Rule 1063(a) and Phlx Options Floor 
Procedure Advices A-10 and Commission-1 by replacing the shorthand 
term ``ROT'' with the term ``Registered Options Trader.''
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2. Statutory Basis
    The Phlx believes that the proposed rule change is consistent with 
section 6(b) of the Act in general, and furthers the objectives of 
section 6(b)(5) in particular, in that it is designed to promote just 
and equitable principles of trade, to foster cooperation and 
coordination with persons engaged in regulating, clearing, settling, 
and processing information with respect to transactions in securities, 
to remove impediments to and perfect the mechanism of a free and open 
market system, and, in general, to protect investors and the public 
interest. Moreover, the Phlx believes that the proposed rule change is 
not designed to permit unfair discrimination between customers, 
issuers, brokers, or dealers. In the Phlx's view, the proposed rule 
change will permit Phlx Specialists to continue to trade as principal 
with orders on the book, and will allow Phlx Floor Brokers to continue 
to represent and execute orders in FCOs in the event that no ROTs are 
present on the FCO floor at any time from the date of this Order until 
March 31, 2001.

B. Self-Regulatory Organization's Statement on Burden on competition

    The Phlx does not believe that the proposed rule change will impose 
any inappropriate burden on competition.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    The Phlx has neither solicited nor received written comments on the 
proposed rule change.

III. Commission's Findings and Order Granting Accelerated Approval 
of the Proposed Rule Change

    The Commission has reviewed the Phlx's proposed rule change 
carefully and finds, for the reasons set forth below, that the proposal 
is consistent with the requirements of Section 6 of the Act and the 
rules and regulations thereunder applicable to a national securities 
exchange, particularly section 6(b)(5) of the Act.\5\ The Commission 
believes that the proposed temporary rule change will enable the Phlx 
to provide fair and orderly markets in FCOs in the event that ROTs are 
absent from the FCO floor during the period beginning on the date of 
this Order and ending on March 31, 2001. Specifically, the Commission 
believes that, pursuant to the proposed temporary rule, Phlx 
Specialists will be able to trade as principals with FCO orders on the 
book and Phlx Floor Brokers will be able to represent and execute 
orders in FCOs at a time when the Phlx has been informed that ROTs no 
longer will be doing business on a regular basis on the FCO floor. In 
view of the foregoing, the Commission believes that the proposed rule 
change 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 a national market system, and, in general, to protect 
investors and the public interest. Accordingly, the Commission finds 
that the proposed temporary rule change furthers the objectives of the 
Act.
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    \5\ 15 U.S.C. 78f(b)(5).
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    The Phlx has requested that, pursuant to section 19(b)(2) of the 
act,\6\ the Commission grant accelerated approval of the proposed rule 
change prior to the thirtieth day after the date of publication of 
notice of this filing in the Federal Register. The Commission finds 
good cause to approve the proposed temporary rule change effective 
immediately, so that Phlx Specialists and Floor Brokers may continue to 
operate in accordance with Phlx rules in the event that no ROTs are 
present on the FCO floor beginning January 3, 2001. The Commission 
expects that, no later than January 12, 2001, the Phlx will file a 
proposed rule change seeking permanently to amend Phlx Rule 1063 and 
Phlx Floor Options Procedure Advices A-10 and C-1.
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    \6\ 15 U.S.C. 78fs(b)(2).
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IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
is consistent with the Act. 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 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. Copies of such filing will also be available for 
inspection and copying at the principal office of the Phlx. All 
submissions should refer to File No. SR-Phlx-00-111 and should be 
submitted by February 1, 2001.

V. Conclusion

    It Is Therefore Ordered, pursuant to section 19(b)(2) of the 
Act,\7\ that the proposed rule change (File No. SR-Phlx-00-111) is 
hereby approved on an accelerated basis and shall be in effect until 
March 31, 2001.\8\
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    \7\ 15 U.S.C. 78s(b)(2).
    \8\ In approving the proposal, the Commission has considered the 
rule's impact on efficiency, competition, and capital formation. 15 
U.S.C. 78c(f).

    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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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 01-791 Filed 1-10-01; 8:45 am]
BILLING CODE 8010-01-M