[Federal Register Volume 65, Number 81 (Wednesday, April 26, 2000)]
[Notices]
[Pages 24529-24530]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-10370]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-42701; File No. SR-Phlx-00-26]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by the Philadelphia Stock 
Exchange, Inc. Amending PHLX Rule 237 To Extend the Pilot Program for 
VTS Until November 1, 2000

April 19, 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 March 24, 2000, the Philadelphia Stock Exchange, Inc. (``PHLX'' or 
``Exchange''), filed a proposed rule change with the Securities and 
Exchange Commission (``SEC'' or ``Commission''). The proposed rule 
change is described in Items I, II, and III below, which Items have 
been prepared by Exchange. On April 12, 2000, the Exchange filed 
Amendment No. 1 to the proposed rule change.\3\ The Exchange filed the 
proposed rule change, as amended, pursuant to section 19(b)(3)(A) of 
the Act,\4\ and Rule 19b-4(f)(6) thereunder,\5\ which renders the 
proposed rule change effective upon filing with the Commission. The 
Commission is publishing this notice to solicit comment son the 
proposed rule change, as amended, from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See April 12, 2000 letter from Nandita Yagnik, Exchange, to 
Rebekah Liu, Special Counsel, Division of Market Regulation, SEC 
(``Amendment No. 1''). In Amendment No. 1, the Exchange requested 
that the proposed rule change be filed under Section 19(b)(3)(A) of 
the Act and Rule 19b-4(f)(6) thereunder. 15 U.S.C. 78s(b)(3)(A) and 
17 CFR 240.19b-4(f)(6). The Exchange also requested that the 
Commission waive the 5-day notice of its intent to file the proposal 
by treating the original proposed rule change as the prefiling 
notice required under Rule 19b-4(f)(6); and requested that the 
Commission waive the 30-day period before the proposal becomes 
effective to permit the proposed rule change to become immediately 
effective.
    \4\ 15 U.S.C. 78s(b)(3)(A).
    \5\ 17 CFR 240.19B-4(F)(6).
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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 the pilot program for the Volume 
Weighted Average Price (``VWAP'') Trading System (``VTS'' or 
``System'') \6\ under November 1, 2000.
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    \6\ The Exchange has filed a proposed rule change to change the 
name of VTS to ``eVWAP.'' See SR-Phlx-00-19.
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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
    VTS is a pre-opening order matching session for the electronic 
execution of large-sized stock orders at the volume weighted average 
price (``VWAP''). The Exchange received Commission approval to operate 
VTS as a one year pilot on March 24, 1999.\7\ The VTS became 
operational on August 27, 1999. As a condition to the pilot program, 
the Commission requested that the Exchange prepare a comprehensive 
report pertaining to the operation and effectiveness of the VTS.\8\
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    \7\ See Securities Exchange Act Release No. 41210 (March 24, 
1999), 64 FR 15857 (April 1, 1999)(SR-Phlx-96-14).
    \8\ The Commission requested that the Exchange provide a report 
that: (i) Addresses the overall reliability of the System and 
identifies any System outages or other technical problems; (ii) 
provides a summary of the Exchange's surveillance efforts; (iii) 
discusses the strategies employed by the users and committers and 
evaluates whether the system is useful to market participants; (iv) 
provides feedback from Exchange members and non-members regarding 
their experience with the system; and (v) measures the system's 
impact and effect on the primary market of eligible securities. The 
Exchange proposes to submit its report by September 1, 2000.
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    The Exchange now proposes to extend the current pilot program until 
November 1, 2000 in order to have a complete year of trading 
information through the VTS. This will allow the Exchange to issue the 
required report based on a full year of trading which should provide a 
more comprehensive assessment of the VTS.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with section 6(b)(5) of the Act \9\ in that it is designed to prevent 
fraudulent and manipulative acts and practices, to promote just and 
equitable principles of trade, to remove impediments to and

[[Page 24530]]

perfect the mechanism of a free and open market and a national market 
system, and, in general, to protect investors and the public interest. 
By extending the period of time that VTS is operational, the Exchange 
can evaluate the VTS for its impact on investors as well as the market 
as a whole as it prepares the Commission's requested report.
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    \9\ 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, as 
amended, will result in 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 Exchange has neither solicited nor received written comments on 
the proposed rule change, as amended.

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

    The foregoing rule change has become effective upon filing pursuant 
to section 19(b)(3)(A)(iii) of the Act \10\ and Rule 19b-4(f)(6) \11\ 
thereunder because the 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 the proposed rule change was filed, or 
such shorter time as the Commission may designate. At any time within 
60 days of the filing of such 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 furthernance of the 
purposes of the Act.
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    \10\ 15 U.S.C. 78s(b)(3)(A).
    \11\ 17 CFR 240.19b-4(f)(6).
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    The Commission finds that it is appropriate to accelerate the 
effective date of the proposed rule change and to permit the proposed 
rule change to become immediately effective because the proposal simply 
extends a previously approved pilot program. By extending the pilot 
program, the Commission will enable the Exchange to continue to offer 
the System without interruption, and will allow the Exchange to collect 
and analyze the information necessary to produce the report requested 
by the Commission. In addition, the Commission finds that the Exchange 
provided the required prefiling written notice of its intent to file 
this proposed rule change when it filed the original proposed rule 
change.\12\
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    \12\ In reviewing this proposal, the Commission has considered 
its 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 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 
Exchange. All submissions should refer to File No. SR-Phlx-00-26 and 
should be submitted by May 17, 2000.

    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).
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Margaret M. McFarland,
Deputy Secretary.
[FR Doc. 00-10370 Filed 4-25-00; 8:45 am]
BILLING CODE 8010-01-M