[Federal Register Volume 67, Number 16 (Thursday, January 24, 2002)]
[Notices]
[Pages 3524-3525]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-1700]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-45295; File No. SR-Phlx-2002-03]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by the Philadelphia Stock 
Exchange, Inc. To Extend a PACE Order Execution and Price Protection 
Pilot Program

January 16, 2002.
    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 8, 2002, 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 
Exchange field this proposal under section 19(b)(3)(A) of the Act,\3\ 
and Rule 19b-4(f)(6) \4\ thereunder, which renders the proposal 
effective upon filing with the Commission. 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.
    \3\ 15 U.S.C. 78s(b)(3)(A).
    \4\ 17 CFR 240.19b-4(f)(6). The Phlx requested that the 
Commission waive the 5-day prefiling notice requirement, and the 30-
day operative delay.
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I. Self-Regulatory Organization's Statement of the Terms of 
Substance of the Proposed Rule Change

    The Exchange proposes to extend through April 15, 2002 its PACE 
(Philadelphia Stock Exchange Automated Communication and Execution 
System) \5\ order execution and price protection pilot program 
(``pilot''). The pilot, which is found in Supplementary Material .05 
and .07(c)(ii) to Phlx Rule 229, incorporates decimal pricing into two 
PACE provisions--immediate execution of certain market orders through 
the Public Order Exposure System (``POES'') and mandatory double-up/
double-down price protection for equities trading in decimals. The 
pilot has been in effect since August 25, 2000.\6\ The only substantive 
change proposed in this filing is to extend the date of effectiveness 
of the pilot through April 15, 2002. The text of the proposed rule 
change is available at the Phlx and at the Commission.
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    \5\ PACE is the Phlx's automated order routing, delivery, 
execution and reporting system for equities.
    \6\ The pilot was established in SR-Phlx-00-08. See Securities 
Exchange Act Release No. 43206 (August 25, 2000), 65 FR 53250 
(September 1, 2000). The pilot has been extended several times, most 
recently through January 14, 2002. See Securities Exchange Act 
Release Nos. 44185 (April 16, 2001), 66 FR 20511 (April 23, 
2001)(SR-Phlx-2001-20); 44818 (September 19, 2001), 66 FR 49240 
(September 26, 2001)(SR-Phlx-2001-81); and 45079 (November 19, 
2001), 66 FR 59292 (November 27, 2001)(SR-Phlx-2001-102). The price 
improvement portion of the pilot program (Supplementary Material 
.07(c)(i) to Rule 229) has been replaced by a price improvement 
pilot program with an automatic price improvement feature based on 
decimal trading, including a percentage of the spread between the 
bid and the offer. See Securities Exchange Act Release No. 43901 
(January 30, 2001), 66 FR 8988 (February 5, 2001)(SR-Phlx-2001-12).
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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 proposes to extend the pilot through April 15, 2002. 
No other substantive changes are proposed at this time.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with section 6 of the Act \7\ in general, and in particular, with 
section 6(b)(5),\8\ in that it is designed to promote just and 
equitable principles of trade, remove impediments to and perfect the 
mechanism of a free and open market and a national market system, and, 
in general, protect investors and the public interest.
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    \7\ 15 U.S.C. 78f.
    \8\ 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.

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

    Written comments were neither solicited nor received.

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

    Because the foregoing proposed rule change does not:
    (i) Significantly affect the protection of investors or the public 
interest;
    (ii) Impose any significant burden on competition; and
    (iii) Become operative for 30 days from the date on which it was 
filed, or such shorter time as the Commission may designate, it has 
become effective pursuant to section 19(b)(3)(A) of the Act \9\ and 
Rule 19b-4(f)(6) thereunder.\10\ 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.
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    \9\ 15 U.S.C. 78s(b)(3)(A).
    \10\ 17 CFR 240.19b-4(f)(6).
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    The Exchange has requested that the Commission waive the 5-day pre-
filing

[[Page 3525]]

notice requirement, and accelerate the operative date. The Commission 
finds good cause to waive the pre-filing notice requirement, and to 
designate the proposal to be both effective and operative upon filing 
because such designation is consistent with the protection of investors 
and the public interest. Waiver of these requirements will allow the 
pilot to continue uninterrupted through April 15, 2002. For these 
reasons, the Commission finds good cause to designate that the proposal 
is both effective and operative upon filing with the Commission.\11\
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    \11\ For purposes only of accelerating the operative date of 
this proposal, the Commission has considered the proposed rule's 
impact on efficiency, competition, and capital formation. 15 U.S.C. 
78c(f).
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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 proposal 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 Exchange. All 
submissions should refer to the file number SR-Phlx-2002-03, and should 
be submitted by February 14, 2002.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\12\
Margaret H. McFarland,
Deputy Secretary.
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    \12\ 17 CFR 200.30-3(a)(12).
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[FR Doc. 02-1700 Filed 1-23-02; 8:45 am]
BILLING CODE 8010-01-M