42848 Federal Register / Vol. 62, No. 153 / Friday, August 8, 1997 / Notices

5The Exchange previously only allowed quotes in

eighths for equity securities that are above $1.00,

sixteenths for equity securities that are below $1.00

but above $0.50, and thirty-seconds in stocks below

$0.50. NYSE Rule 62.

6 15 U.S.C. 78f(b) and 78k–1. In approving this

rule change, the Commission notes that it has

considered the proposal’s impact on efficiency,

competition, and capital formation, consistent with

Section 3 of the Act. Id. § 78c(f).

7Securities Exchange Act Release No. 38571 (May

5, 1997), 62 FR 25682 (May 9, 1997) (approving an

Amex proposal to reduce the minimum trading

increment to 1⁄16 for certain Amex-listed equity

securities); Securities Exchange Act Release No.

38678 (May 27, 1997), 62 FR 30363 (June 6, 1997)

(approving a Nasdaq rule change to reduce the

minimum quotation increment to 1⁄16 for certain

Nasdaq-listed securities).

8These changes, however, may become effective

upon filing if they meet certain statutory

requirements. See 15 U.S.C. 78s(b)(3)(A)(i) and 17

CFR 240.19b–4(e).

9The rule change is consistent with the

recommendation of the Division of Market

Regulation (‘‘Division’’) in its Market 2000 Study,

in which the Division noted that the 1⁄8 minimum

variation can cause artificially wide spreads and

hinder quote competition by preventing offers to

buy or sell at prices inside the prevailing quote. See

SEC, Division of Market Regulation, Market 2000:

An Examination of Current Equity Market

Developments 18–19 (Jan. 1994).

10A study that analyzed the reduction in the

minimum tick size from 1⁄8 to 1⁄16 for securities

listed on the Amex priced between $1.00 and $5.00

found that, in general, the spreads for those

securities decreased significantly while trading

activity and market depth were relatively

unaffected. See Hee-Joon Ahn, Charles Q. Chao, and

Hyuk Choe, Tick Size, Spread, and Volume, 5 J.

Fin. Intermediation 2 (1996).

11 15 U.S.C. 78s(b)(2).

12 17 CFR 200.30–3(a)(12).

1 15 U.S.C. 78s(b)(1).

2Letter from Nandita Yagnick, New Product

Development, Phlx, to Margaret Blake, Division of

Market Regulation, Commission (July 29, 1997).

3The prices, weightings and the divisor change

for the Index are attached as Exhibit B to File No.

SR–Phlx–97–30.

4See Securities Exchange Act Release No. 38207

(January 27, 1997), 62 FR 5268 (order approving the

listing and trading of options and LEAPS on the

Phlx Oil Service Index).

5Amendment No. 1 indicates that the index value

was set at $75.00 as an experiment to attract order

flow from the retail investment community.

minimum variation for most stocks at

one-sixteenth of a dollar.5

In addition to Rule 62, several other

Exchange rules incorporate specific

references to minimum trading

variations. The Exchange proposes to

make conforming changes to these rules

(Rule 95.30, Rule 118, Rule 127, and

Rule 440B) by removing references to

specific minimum trading variations of

one-eighth of a dollar.

The Commission finds that the

proposed rule change is consistent with

the requirements of the Act and the

rules and regulations thereunder

applicable to a national securities

exchange. In particular, the Commission

believes the proposal comports with the

requirements of Section 6 and Section

11A of the Act.6

Recently, there has been a movement

within the industry to reduce the

minimum trading and quotation

increments imposed by the various selfregulatory organizations (‘‘SROs’’). Both

the American Stock Exchange (‘‘Amex’’)

and The Nasdaq Stock Market

(‘‘Nasdaq’’) have recently reduced their

minimum increments.7 In addition,

several third market makers have begun

quoting securities in increments smaller

than the primary markets. The proposed

rule change will allow the NYSE the

flexibility it needs to address this

development and remain competitive

with these markets. Nevertheless, the

Commission notes that any further

change in the minimum increments

constitutes (1) a change in a stated

policy, practice, or interpretation with

respect to the meaning, administration,

or enforcement of an existing rule of the

NYSE, or (2) a change in an existing

order-entry or trading system of an SRO,

or (3) both. Therefore, the Exchange is

still obligated to file such proposed

changes with the Commission.8

The Commission also believes the

proposed rule change will likely

enhance the quality of the market for the

affected NYSE-listed securities.

Allowing the NYSE to permanently

quote all securities in finer increments

will facilitate quote competition.9 This

should help produce more accurate

pricing of such securities and can result

in tighter quotations.10 In addition, if

the quoted markets are improved by

reducing the minimum increment, the

change could result in added benefits to

the market such as reduced transaction

costs.

It Is Therefore Ordered, pursuant to

Section 19(b)(2) of the Act,11 that the

proposed rule change (SR–NYSE–97–

21) is approved.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.12

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 97–20828 Filed 8–6–97; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–38894; File No. SR–Phlx–

97–30]

Self-Regulatory Organizations;

Philadelphia Stock Exchange, Inc.;

Notice of Filing of Proposed Rule

Change Relating to Doubling the Value

for the Phlx Oil Service Index

August 1, 1997.

Pursuant to Section 19(b)(1) of the

Securities Exchange Act of 1934

(‘‘Act’’),1 notice is hereby given that on

June 27, 1997, 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 Phlx. On July 29,

1997, Phlx amended the proposed rule

change (‘‘Amendment No. 1’’).2 The

Commission is publishing this notice to

solicit comments on the proposed rule

change from interested persons.

I. Self-Regulatory Organization’s

Statement of the Terms of Substance of

the Proposed Rule Change

Phlx proposes to change the index

value for the Phlx Oil Service Index

(‘‘OSX’’) by reducing the base market

divisor to half of its current value.3

Options trading with the new index

value (‘‘new index options’’) will trade

with the current symbol OSX. The

Exchange will convert the existing

index options (‘‘existing index options’’

or ‘‘OSB Options’’) to the symbol OSB.

The existing index options using the old

index value will continue to trade until

expiration or until no open interest

remains, at which time the series will be

delisted. The Exchange will not open

any new series in the existing index

options after the new index options

begin trading.

II. Self-Regulatory Organization’s

Statement of the Purpose of, Statutory

Basis for, the Proposed Rule Change

In its filing with the Commission,

Phlx included statements concerning

the purpose of an basis for the proposed

rule change. The text of these statements

may be examined at the places specified

in Item IV below. Phlx 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

The Exchange began trading the OSX

on February 24, 1997.4 The Index is a

price-weighted industry index

composed of 15 stocks involved in the

oil service industry. In an effort to

enhance the trading activity, OSX was

initially indexed to a Value of $75.00 on

December 31, 1996.5 Since the

commencement of trading, the OSX has

traded an average of 1000 contracts

daily garnering steady volume and open

interest. However, the exchange has

received numerous comments from OSX
Federal Register / Vol. 62, No. 153 / Friday, August 8, 1997 / Notices 42849

6Amendment No. 1 indicates that while doubling

the price of the Index will not impact the volatility

of the Index, it will serve to increase the absolute

price movements of the Index.

7Phlx will issue a circular to its membership one

week prior to the effective date of the change,

which will advise members of the increase in value

of the OSX. Telephone conversation with Nandita

Yagnick, Phlx, and Margaret Blake, Division of

Market Regulation, Commission (July 31, 1997).

8 15 U.S.C. 78f.

9 15 U.S.C. 78f(b)(5). 10 17 CFR 200.30–3(a)(12).

investors regarding the value of the

existing index options. Phlx notes that

OSX investors believe the value of the

index ($101.46 as of July 16, 1997) is a

detriment to attracting order flow,

because, (1) hedgers are required to

purchase (or sell) a larger number of

options against a lower priced index

thereby increasing transaction costs, and

(2) given that the Index was priced to

resemble a share of common stock,

order flow is being lost to equity options

on these individual issues due to their

higher reflection of volatility.

The purpose of this proposal is to

allow the Exchange to offer for trading

options on the Phlx Oil Service Index

which has an index value twice the

value of the current index. The

proposed new index options would

have the same contract specifications as

the existing index options with the

exception that the index value would be

doubled.6 The new index options would

trade under the current symbol OSX.

The symbol for the existing index

options would be changed to OSB. The

new index would be subject to the same

maintenance standards that were

approved for the existing index in

accordance with the generic

maintenance standards set forth in Phlx

Rule 1009A.

The Exchange will allow the OSB

options to continue to trade until the

listed series expire or no longer have

open interest but trading will be limited

to closing only transactions. No new

options series of OSB options will be

opened after the new index options

begin trading. Options on OSX and

options on OSB will not be fungible,

however, positions will be aggregated

for position limit and exercise limit

purposes. The Exchange will provide

notice to its membership and the public

prior to the effectiveness of this filing by

way of memoranda.7

Phlx believes that the proposed rule

change is consistent with Section 6 of

the Act 8 in general, and in particular,

with Section 6(b)(5),9 in that it is

designed to promote just and equitable

principles of trade, facilitate

transactions in securities while

protecting investors and the public

interest. Specifically, the Exchange

believes that providing a higher valued

index will allow option traders and

investors to take advantage of the higher

volatility. In addition the Exchange

believes that current OSX investors will

not be disadvantaged by this proposal,

because the Exchange will provide

adequate notice and an orderly

procedure, in order to phase out the

existing index options which are

currently trading.

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

Comments were neither solicited nor

received.

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 or such date if it finds such

longer period to be appropriate and

publishes its reasons for so finding or

(ii) as to which the Phlx 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.

Persons making written submissions

should file six copies thereof with the

Secretary, Securities and Exchange

Commission, 450 Fifth Street, N.W.,

Washington, D.C. 20549. 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

Section, 450 Fifth Street, N.W.,

Washington, D.C. 20549. Copies of such

filing will also be available for

inspection and copying at the principal

office of Phlx. All submissions should

refer to File No. SR–Phlx–97–30 and

should be submitted by August 29,

1997.

For the Commission by the Division of

Market Regulation, pursuant to delegated

authority.10

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 97–20911 Filed 8–7–97; 8:45 am]

BILLING CODE 8010–01–M

SMALL BUSINESS ADMINISTRATION

Reporting and Recordkeeping

Requirements Under OMB Review

ACTION: Notice of reporting requirements

submitted for review.

SUMMARY: Under the provisions of the

Paperwork Reduction Act (44 U.S.C.

Chapter 35), agencies are required to

submit proposed reporting and

recordkeeping requirements to OMB for

review and approval, and to publish a

notice in the Federal Register notifying

the public that the agency has made

such a submission.

DATES: Comments should be submitted

on or before September 8, 1997. If you

intend to comment but cannot prepare

comments promptly, please advise the

OMB Reviewer and the Agency

Clearance Officer before the deadline.

COPIES: Request for clearance (OMB 83–

1), supporting statement, and other

documents submitted to OMB for

review may be obtained from the

Agency Clearance Officer. Submit

comments to the Agency Clearance

Officer and the OMB Reviewer.

FOR FURTHER INFORMATION CONTACT:

Agency Clearance Officer: Jacqueline

White, Small Business Administration,

409 3rd Street, S.W., 5th Floor,

Washington, D.C. 20416, Telephone:

(202) 205–6629.

Omb Reviewer: Victoria Wassmer,

Office of Information and Regulatory

Affairs, Office of Management and

Budget, New Executive Office Building,

Washington, D.C. 20503.

Title: Voluntary Customer Surveys in

Accordance with E.O. 12862.

Form No: N/A.

Frequency: On Occasion.

Description of Respondents: SBA

Participants.

Annual Responses: 85,614.

Annual Burden: 13,102.

Dated: August 4, 1997.

Jacqueline White,

Chief, Administrative Information Branch.

[FR Doc. 97–20924 Filed 8–7–97; 8:45 am]

BILLING CODE 8025–01–M