[Federal Register Volume 66, Number 133 (Wednesday, July 11, 2001)]
[Notices]
[Pages 36355-36357]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-17303]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-44505; File No. SR-Phlx-2001-54]


Self-Regulatory Organizations; Notice of Filing of Proposed Rule 
Change by the Philadelphia Stock Exchange, Inc. To Eliminate the 
Requirement That the Three Core Members of the Equity and Options 
Allocation, Evaluation, and Securities Committees Who Conduct a Public 
Securities Business Be the Same People for Both Committees

July 3, 2001.
    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 16, 2001, the Philadelphia Stock Exchange, Inc. (``Phlx'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``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 Phlx proposes to amend Phlx rule 500(a)(iii), Equity 
Allocation, Evaluation and Securities Committee and Options Allocation, 
Evaluation and Securities Committee (the ``Committee'' or 
``Committees''), which establishes the composition of the Committees, 
to eliminate the requirement that the three core members of the 
Committees who conduct a public securities business be the same people 
for both Committees.\3\ The following is the text of the proposed rule 
change. Proposed additions are italicized and proposed deletions are in 
brackets.
* * * * *
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    \3\ On July 5, 2000, the Commission approved a proposed rule 
change, which divided the Phlx Allocation, Evaluation and Securities 
Committee into two separate committees, one for equities and one for 
options. See Securities Exchange Act Release No. 43011 (July 5, 
2000), 65 FR 34521 (May 30, 2000).
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    Rule 500. Equity Allocation, Evaluation and Securities Committee 
and Options Allocation, Evaluation and Securities Committee.
    The Equity Allocation, Evaluation and Securities Committee and the 
Options Allocation, Evaluation and Securities Committee, respectively, 
shall administer Rules 500 through 599, where applicable, and unless 
indicated otherwise, these rules shall apply to both option and equity 
specialist evaluations and allocations. For the purpose of Rules 500 
through 599, the term ``Committee'' shall mean either the Equity 
Allocation, Evaluation and Securities Committee or the Options 
Allocation, Evaluation and Securities Committee, where applicable.
    (a) Composition.
    (i) The core members of the Equity Allocation, Evaluation and 
Securities Committee shall be three persons who conduct a public 
securities business, and two persons who are active on the equity 
trading floor as a specialist or floor broker. The annual members of 
the Equity Allocation, Evaluation and Securities Committee shall be two 
persons who are active on the equity trading floor as a specialist or 
floor broker, one public Governor and one non-industry Governor.
    (ii) The core members of the Options Allocation, Evaluation and 
Securities Committee shall be three persons who conduct a public 
securities business, one person who is active on the options trading 
floor as a floor broker, and one person who is active on the options 
trading floor as a specialist, registered options trader, or floor 
broker. The

[[Page 36356]]

annual members of the Options Allocation, Evaluation and Securities 
Committee shall be two persons who are active on the options trading 
floor as a specialist, registered options trader, or floor broker, one 
public Governor and one non-industry Governor.
    (iii) [The three persons who conduct a public securities business 
and t]The public Governor and non-industry Governor, as set forth in 
Sections (i) and (ii) above shall be the same persons, and shall be 
members of both the Equity Allocation, Evaluation and Securities 
Committee and the Options Allocation, Evaluation and Securities 
Committee.
    (b) Where circumstances warrant, the Committee may determine to 
consult with the Floor Procedure Committee, Options Committee or 
Foreign Currency Options Committee.
* * * * *

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 received on the proposed rule change. The 
text of these statements may be examined at the places specified in 
Item IV below. The Phlx has prepared summaries, set forth in sections 
A, B, and C below, of the most significant aspects of such statement.

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 eliminate the 
requirement that the three core members of the Committees who conduct a 
public securities business be the same people for both Committees. Rule 
500 requires that the three core members of both Committees who conduct 
a public securities business be the same people. The proposed amendment 
to Rule 500 would eliminate this requirement and thereby permit the 
Committees to have core members who conduct a public securities 
business in options or equities to serve only on the Committee in which 
they conduct their particular type of securities business.
    Each Committee is responsible for appointment of specialist units 
on the floor; \4\ for approving the transfer of equities or options 
among specialist units on each floor; \5\ for allocating equities or 
options to applicant specialist units on each floor; \6\ for evaluating 
the performance of specialist units on each floor; \7\ for reallocating 
equities or options when warranted due to performance issues from one 
specialist unit to another; \8\ and for supervising over questions 
pertaining to securities admitted to dealings on the Exchange.\9\
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    \4\ See Phlx Rule 510.
    \5\ See Phlx Rule 508.
    \6\ See Phlx Rule 511(b).
    \7\ See Phlx Rules 511(c)-(d) and 515.
    \8\ See Phlx Rules 511(b)-(e) and 515.
    \9\ See Phlx Rules 800-899.
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    The Exchange believes that by permitting the three core members of 
both Committees who conduct public securities business to be different 
people, both Committees should benefit from the specific options or 
equities industry expertise and experience that those members possess 
and can bring to each committee. This would serve to provide added 
expertise on each committee in allocating securities to, and evaluating 
performance of, specialist units on the trading floor on which the 
Committee member works and has experience. Currently, the three core 
members who conduct a public securities business are the same on each 
Committee regardless of whether their particular experience is limited 
to either equities or options. Under the proposal, the three core 
members who conduct a public securities business on the Committees 
would consist of members with experience specific to the type of 
securities to be allocated, and in the type of specialists to be 
evaluated.
2. Statutory Basis
    The Exchange believes the proposed rule change is consistent with 
Section 6 of the Act \10\ in general, and with Sections 6(b)(5) \11\ of 
the Act in particular, because it is designed to perfect the mechanisms 
of a free and open market and a national market system, to promote just 
and equitable principles of trade, and to protect investors and the 
public interest, by organizing the Committees to have core members who 
conduct a public securities business in options or equities to serve 
only on the Committee in which they conduct their particular type of 
securities business, thereby, permitting members with specific industry 
expertise to be a member of only that particular Committee.
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    \10\ 15 U.S.C. 78f.
    \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 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 Phlx has 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. 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-2001-54 and 
should be submitted by August 1, 2001.
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    \12\ 17 CFR 200.30-3(a)(12).


[[Page 36357]]


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    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\12\
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 01-17303 Filed 7-10-01; 8:45 am]
BILLING CODE 8010-01-M