[Federal Register Volume 66, Number 166 (Monday, August 27, 2001)]
[Notices]
[Pages 45069-45070]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-21559]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-44726; File No. SR-Phlx-2001-66]


Self-Regulatory Organizations; Notice of Filing of Proposed Rule 
Change and Amendment No. 1 by the Philadelphia Stock Exchange, Inc. To 
Extend the Hours During Which Certain Orders May Be Executed on PACE

August 20, 2001.
    Pursuant to section 19(b)(1) of the Securities Exchange Act of 
1934, (``Act'')\1\ and Rule 19b-4\2\ thereunder, notice is hereby given 
that on July 16, 2001, the Philadelphia Stock Exchange, Inc. (``Phlx'' 
or ``Exchange'') 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. On August 8, 2001, the Exchange amended the proposal.\3\ The 
Phlx filed the proposal pursuant to section 19(b)(3)(A) of the Act\4\ 
and Rule 19b-4(f)(5)\5\ thereunder, rendering the proposal effective 
upon filing with the Commission. The Commission is publishing this 
notice to solicit comments on the proposed rule change, as amended, 
from interested person.
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    \1\15 U.S.C. 78s(b)(1).
    \2\17 CFR 240.19b-4.
    \3\See August 7, 2001 letter from Carla Behnfeldt, Director, 
Legal Department, New Product Development Group, Phlx, to Nancy J. 
Sanow, Assistant Director, Division of Market Regulation 
(``Division''), SEC, and attachments (``Amendment No. 1''). 
Amendment No. 1 completely replaces and supersedes the original 
proposal. The Phlx made technical changes to the proposed rule 
language subsequent to filing Amendment No. 1. Telephone 
conversation between Edith Hallahan, Deputy General Counsel, Phlx, 
and Alton Harvey, Office Chief, Office of Market Watch, Division, 
SEC, August 20, 2001.
    \4\15 U.S.C. 78s(b)(3)(A).
    \5\17 CFR 240.19b-4(f)(5).
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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 Supplementary Material .17 to Phlx 
Rule 229 to extend the time period during which certain orders may be 
executed on the Philadelphia Stock Exchange Automated Communication and 
Execution System (``PACE''). The text of the proposed rule change is 
below. Additions are in italics; deletions are in brackets.

Rule 229. Philadelphia Stock Exchange Automated Communication and 
Execution System (PACE)

* * * * *

[[Page 45070]]

Supplementary Material:
* * * * *
.17  [Except for transactions in Nasdaq-100 Index Tracking Stock: (a) 
Orders received by 4:00 p.m. Eastern Time] Orders received by the end 
of the Primary Trading Session, as determined electronically by the 
PACE system, are eligible for execution. [(b)] Orders received after 
such time will be rejected and returned to the order entry firm.[, and 
(c)] From 4:00 to 4:15 p.m., Eastern Time, PACE may also be used as a 
routing system for PPS eligible orders. [Orders in Nasdaq-100 Index 
Tracking Stock received by 4:15 p.m. Eastern Time as determined 
electronically by the PACE system are eligible for execution.]
* * * * *

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 statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Phlx proposes to amend Supplementary Material .17 to Phlx Rule 
229 to provide for the eligibility for execution of PACE orders 
received during the Primary Trading Session for that equity security. 
The rule currently provides only that orders for transactions in 
Nasdaq-100 Index Tracking Stock (``QQQ'')\6\ received by 4:15 p.m. 
Eastern Time\7\ are eligible for execution. The proposed rule change 
would eliminate the existing specific reference to QQQ and would 
provide for eligibility for PACE execution of orders in any security if 
such order was received during the Primary Trading Session for that 
security. The rule is intended to accommodate unlisted trading 
privileges (``UTP'') trading in any securities for which primary market 
trading hours may extend beyond 4:00 p.m. without requiring specific 
references to the PACE rule for each such security. Various equity 
securities, such as QQQ, trade beyond 4:00 p.m.; QQQ, for example, 
trades until 4:15 p.m.
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    \6\The Nasdaq-100, Index, Nasdaq, 
The Nasdaq Stock Market, Nasdaq-100 SharesSM, 
Nasdaq-100 TrustSM, Nasdaq = 100 Index Tracking 
StockSM, and QQQSM, are trademarks or service 
marks of The Nasdaq Stock Market, Inc. (Nasdaq) and have been 
licensed for use for certain purposes by the Philadelphia Stock 
Exchange pursuant to a License Agreement with Nasdaq. The Nasdaq-100 
Index, (the Index) is determined, composed, and calculated 
by Nasdaq without regard to the Licensee, the Nasdaq-100 
TrustSM, or the beneficial owners of Nasdaq-100 
SharesTM. Nasdaq has complete control and sole discretion 
in determining, comprising, or calculating the Index or in modifying 
in any way its method for determining, comprising, or calculating 
the Index in the future.
    \7\All references to time in the proposal are Eastern Time.
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    Recently, the SEC approved SR-Phlx-2001-1,\8\ which amended Phlx 
Rule 101, Hours of Business. As revised, Phlx Rule 101 provides that 
the ``Primary Trading Session'' for equity securities on the floor of 
the Exchange will be the same hours as the primary market on which the 
security is traded. The revised rule accommodates the trading of new 
securities via unlisted trading privileges, which may trade beyond 4:00 
p.m. on the primary market. The current proposed rule accomplishes the 
same for those orders eligible for execution on PACE.
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    \8\Securities Exchange Act Release No. 44213 (April 23, 2001), 
66 FR 22058 (May 2, 2001).
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2. Statutory Basis
    the Phlx believes the proposed rule change is consistent with 
section 6 of the Act\9\ in general, and furthers the objectives of 
section 6(b)(5)\10\ 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 securities 
transactions, to remove impediments to and perfect the mechanism of a 
free and open market and a national market system, and protect 
investors and the public interest, by clarifying the hours that PACE is 
available for equity securities.
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    \9\15 U.S.C. 78f.
    \10\15 U.S.C. 78(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    the Phlx does not believe that the proposed rule change would 
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

    No written comments were either solicited or received.

III. Date of Effectiveness of the Proposed Rule Change and Timing 
for Commission Action

    The foregoing proposal has become effective pursuant to section 
19(b)(3)(A) of the Act,\11\ and Rule 19b-4)f)(5)\12\ thereunder, in 
that it effects a change in an existing order-entry or trading system 
of a self-regulatory organization that does not: (1) Significantly 
affect the protection of investors or the public interest, (2) impose 
any significant burden on competition, or (3) have the effect of 
limiting the access to or availability of the system.
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    \11\15 U.S.C. 78s(b)(A).
    \12\17 CFR 240.19b-4(f)(5).
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    At any time within 60 days of the filing of the proposed rule 
change, the Commission may summarily abrogate such rule change if it 
appears to the Commission that such action is necessary or appropriate 
in the public interest, for the protection of investors, or otherwise 
in furtherance of the purposes of the Act.

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 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 filings will also be 
available for inspection and copying at the principal office of the 
Phlx. All submissions should refer to File No. SR-Phlx-2001-66 and 
should be submitted by September 17, 2001.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\13\
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    \13\17 CFR 200.30-3(a)(12).

Jonathan G. Katz,
Secretary.
[FR Doc. 01-21559 Filed 8-24-01; 8:45 am]
BILLING CODE 8010-01-M