40882 Federal Register / Vol. 62, No. 146 / Wednesday, July 30, 1997 / Notices

11 In approving this rule, the Commission has

considered the proposed rule’s impact on

efficiency, competition, and capital formation. 15

U.S.C. 78c(f).

12Telephone conversation between Agnes

Gautier, Vice President, Market Surveillance, NYSE

and David Sieradzki, Attorney, Division of Market

Regulation, SEC (July 16, 1997).

13 15 U.S.C. 78s(b)(2).

14 17 C.F.R. 200.30–3(a)(12).

1 17 CFR 240.19b–4.

impediments to, and perfect the

mechanism of a free and open market

and, in general, to protect investors and

the public interest.11

This pilot program is part of an effort

by the Exchange to institute safeguards

to minimize excess market volatility

that may arise from the liquidation of

stock positions related to trading

strategies involving index derivative

products. For instance, since 1986, the

NYSE has utilized auxiliary closing

procedures on expiration days. These

procedures allow NYSE specialists to

obtain an indication of the buying and

selling interest in MOC orders at

expiration and, if there is a substantial

imbalance on one side of the market, to

provide the investing public with timely

and reliable notice thereof and with an

opportunity to make appropriate

investment decisions in response.

The NYSE auxiliary closing

procedures have worked relatively well

and may have resulted in more orderly

markets on expiration days.

Nevertheless, both the Commission and

the NYSE remain concerned about the

potential for excess market volatility,

particularly at the close on expiration

days. Although, to date, the NYSE has

been able to attract sufficient contra-side

interest to effectuate an orderly closing,

adverse market conditions could

converge on an expiration day to create

a situation in which member firms and

their customers would be unwilling to

acquire significant positions.

The Commission continues to believe

preliminarily that LOC orders should

provide the NYSE with an additional

means of attracting contra-side interest

to help alleviate MOC order imbalances

both on expiration and non-expiration

days. As a practical matter, the

Commission believes that LOC orders

will appeal to certain market

participants who otherwise might be

reluctant to commit capital at the close.

Specifically, unlike a MOC order, which

results in significant exposure to

adverse price movements, a LOC order

will allow each investor to determine

the maximum/minimum price at which

he or she is willing to buy/sell. To the

extent that such risk management

benefits encourage NYSE member firms

and their customers to enter orders to

offset MOC order imbalances of 50,000

shares or more, thereby adding liquidity

to the market, the Commission agrees

with the NYSE that LOC orders could

become a useful investment vehicle for

curbing excess price volatility at the

close.

The Commission also finds that the

NYSE has established appropriate

procedures for the balancing of LOC

orders and that the NYSE’s existing

surveillance should be adequate to

monitor compliance with those

procedures. Because LOC orders will be

required to yield priority to

conventional limit orders at the same

price, the Commission is satisfied that

public customer orders on the

specialist’s book will not be

disadvantaged by this proposal. In the

Commission’s opinion, the prohibition

on cancelling LOC orders is consistent

with the Exchange’s auxiliary closing

procedures and, like those procedures,

should allow specialists to make a

timely and reliable assessment of order

flow and its potential impact on the

closing price.

The Commission notes that the LOC

order pilot program has been ongoing

since 1994 and the NYSE has submitted

detailed reports describing its

experience with the pilot program. The

Exchange represents that LOC orders

have not been widely used and that the

Exchange requires an additional year to

educate members about LOC orders and

to observe the use of LOC orders on the

Exchange.12 The Commission expects

the Exchange to seek permanent

approval of the procedures or to

determine to discontinue the program,

after the Exchange analyzes the data for

the report due on May 31, 1998. If the

Exchange decides to seek permanent

approval of the pilot procedures, any

such request should also be submitted

to the Commission by May 31, 1998, as

a proposed rule change pursuant to

Section 19(b) of the Act.

The Commission finds good cause for

approving the proposed rule change

prior to the thirtieth day after the date

of publication of notice of filing thereof

in the Federal Register because there

are no changes being made to the

current provisions, which originally

were subject to the full notice and

comment procedures. In addition,

accelerated approval would enable the

Exchange to continue the program on an

uninterrupted basis.

It is therefore ordered, pursuant to

Section 19(b)(2) of the Act,13 that the

proposed rule change (SR–NYSE–97–

19) is approved, and accordingly, that

the LOC pilot program is extended until

July 31, 1998.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.14

Jonathan G. Katz,

Secretary.

[FR Doc. 97–20050 Filed 7–29–97; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–38864; File No. SR–Phlx–

97–32]

Self-Regulatory Organizations; Notice

of Filing of Proposed Rule Change by

the Philadelphia Stock Exchange, Inc.

Respecting the Public Order Exposure

System for PACE Orders

July 23, 1997.

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

Securities Exchange Act of 1934

(‘‘Act’’), 15 U.S.C. 78s(b)(1), notice is

hereby given that on June 30, 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 the self-regulatory

organization. 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

The Exchange, pursuant to Rule 19b–

4 under the Act,1 proposes to amend

Supplementary Material .05 of Rule 229,

to reflect a 30 second order exposure

time period, or ‘‘widow,’’ in lieu of 15

seconds, and to title Supplementary

Material .05 as the ‘‘Public Order

Exposure System’’ or ‘‘POES,’’ as it is

known at the Exchange. The operation

of the Philadelphia Stock Exchange

Automatic Communications and

Execution (‘‘PACE’’) System is governed

by Phlx Rule 229 (‘‘PACE Rule’’). PACE

is the Exchange’s automatic order

routing and execution system for

securities on the equity trading floor.

Currently, Supplementary Material .05

to the PACE Rule provides that market

orders are stopped for 15 seconds to

provide an opportunity for price

improvement, except where the market
Federal Register / Vol. 62, No. 146 / Wednesday, July 30, 1997 / Notices 40883

2The Exchange recently has proposed additional

amendments to both Supplementary Material .05

and other portions of Rule 229. See Securities

Exchange Act Release No. 38544 (July April 24,

1997), 62 FR 24525 (May 5, 1997) (File No. SR–

Phlx–97–11) (notice of proposed rule change).

3The PACE Quote consists of the best bid/offer

among the American, Boston, Cincinnati, Chicago,

New York, Pacific and Philadelphia Stock

Exchanges as well as the Intermarket Trading

System/Computer Assisted Execution System

(‘‘ITS/CAES’’) See PACE Rule.

4See Supplementary Material .05 to the PACE

Rule (‘‘subject to these prodcedures’’).

5Securities Exchange Act Release No. 35283

(January 26, 1995), 60 FR 6333 (February 1, 1995)

(File No. SR–Phlx–94–58).

6By Exchange oversight, this change was not filed

with the SEC as a proposed rule change pursuant

to Section 19(b) of the Act, 15 U.S.C. 78s(b), and

Rule 19b–4 thereunder prior to its implementation.

Upon its discovery in the course of drafting changes

to the PACE Rule, the change was promptly filed

with the Commission. See Securities Exchange Act

Release No. 37479 (July 25, 1996), 61 FR 40276

(August 1, 1996) (File No. SR–Phlx–96–25). It is

now being re-filed as a separate proposed rule

change due to the withdrawal of File No. SR–Phlx–

96–25. To date, the Exchange has not distributed

marketing material reflecting an order exposure

window of 30 seconds.

7The Exchange previously had stated the

reasoning behind the expansion of the POES

window, in an amendment letter respecting File No.

SR–Phlx–96–25. See Letter from Gerald D.

O’Connell, Senior Vice President, Phlx, to Jennifer

Choi, Attorney, SEC, dated July 19, 1996.

Specifically, the Exchange stated that the FPC

recognized that 15 seconds was often too short of

a time period for the specialist to act. Specialists

indicated that by the time they noticed an order was

stopped, it had been automatically executed. The

Exchange’s decision to expand the POES window

to 30 seconds is rooted in the logical principle that

more time means more opportunity for price

improvement.

8 15 U.S.C. 78f.

for the security is quoted at 1⁄8 point or

less.2

II. Self-Regulatory Organization’s

Statement of the Purpose of, and

Statutory Basis for, Proposed Rule

Change

In its filing with the Commission, the

self-regulatory organization 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 self-regulatory organization 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

Generally, the PACE Rule governs the

operation of the PACE system and

defines its objectives and parameters.

PACE accepts orders for automatic or

manual execution in accordance with

the provisions of the PACE Rule. The

PACE Rule establishes execution

parameters for orders depending in type

(market or limit) and size.

With respect to market orders,

currently, Supplementary Material .05

to the PACE Rule provides that roundlot market orders up to 500 shares and

partial round-lot (‘‘PRL’’) market orders

up to 599 shares, which combine a

round-lot with an odd-lot order, are

stopped at the PACE 3 at the time of

their entry into PACE (‘‘stop price’’) for

15 seconds to provide the Phlx

specialist with the opportunity to effect

price improvement when the spread

between PACE Quote exceeds an 1⁄8 of

a point. Market orders greater than 599

shares that a specialist voluntary agrees

to automatically execute also are

entitled to participation in POES.4

POES ensures that stopped orders are

automatically executed at the stop price

after the time expires. Thus, although

these orders are executable immediately

upon their entry into PACE at the PACE

Quote, POES allows an opportunity for

price improvement, but guarantees that

the order receive at least the stop price.

The purpose of stopping an order is to

permit the specialist to seek a better

price for the order, by probing the

market further or facilitating the order

in the specialist’s proprietary account at

a better price.

POES was adopted in early 1995;5

thereafter, following Floor Procedure

Committee (‘‘FPC’’) approval in

December 1995, the POES order

exposure time period, or ‘‘window,’’

was increased from 15 to 30 seconds.6

At this time, the Exchange proposes to

codify the 30 second time period into

Supplementary Material .05, which

currently reflects the prior 15 second

window. The Exchange believes that

extending the POES window to 30

seconds enables the specialist to better

gauge the market and thus, improves the

likelihood of price improvement. The

Exchange has learned, in its two years

of experience with POES, that

additional time is needed for a

meaningful opportunity for price

improvement to be afforded to such

orders. The 30 second window enables

the specialist to better locate betweenthe-market interest and probe other

market centers.7

2. Statutory Basis

The Exchange believes that the

proposed rule change is consistent with

Section 6 of the Act in general,8 and in

particular, with Section 6(b)(5), 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, as well as

to protect investors and the public

interest by codifying the extension of

the POES order exposure window to 30

seconds. The Exchange believes that a

30 second POES window is appropriate,

as automatically executed orders

continue to receive the important

benefits of speedy execution and

reporting, while also receiving a more

meaningful opportunity for price

improvement.

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

No written comments were either

solicited or received.

III. Date of Effectiveness of the

Proposed Rule Change and Timing for

Commission Action

Within 35 days of the 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 self-regulatory organization

consents, the Commission will:

(A) By order approve the 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, NW.,

Washington, DC 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 at

the Commission’s Public Reference

Section, 450 Fifth Street, NW.,
40884 Federal Register / Vol. 62, No. 146 / Wednesday, July 30, 1997 / Notices

Washington, DC 20549. 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–97–32

and should be submitted by August 20,

1997.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.

Jonathan G. Katz,

Secretary.

[FR Doc. 97–20051 Filed 7–29–97; 8:45 am]

BILLING CODE 8010–01–M

SOCIAL SECURITY ADMINISTRATION

Statement of Organization, Functions

and Delegations of Authority

This statement amends part T of the

Statement of the Organization,

Functions and Delegations of Authority

which covers the Social Security

Administration (SSA). Chapter TA

covers the Deputy Commissioner for

Programs and Policy. Notice is given

that Subchapter TAS, the Office of

Program Support (OPS) is being

reissued in its entirety to reflect the

establishment of subordinate

components within the office. The

reprinted chapter reads as follows:

Chapter TAS

Office of the Associate Commissioner,

Program Support

TAS.00 Mission

TAS.10 Organization

TAS.20 Functions

Section TAS.00 The Office of the

Associate Commissioner, Program

Support—(Mission)

The Office of Program Support (OPS)

serves as a focal point within OPP for

program-related activities which cross

component lines and activities which

support Agency-level or Deputy

Commissioner-level initiatives. OPS

oversees the Agency’s Regulatory

Program including development of

SSA’s Regulatory Plan and the Agency’s

portion of the Unified Agenda of

Federal Regulations. Provides

leadership in overseeing the Agency’s

system of programmatic instructions

and notices to the public by developing

and maintaining standards governing

the translation of strategic policy

decisions into operational policies,

procedures and notices. Directs the

development and evaluation of Agency

policies which utilize technologies in

providing service to the public.

Develops and interprets SSA policy

governing requests for disclosure of

information from Agency records under

the provisions of the Privacy Act and

the Freedom of Information Act.

Oversees the implementation of the

provisions of the Computer Matching

and Privacy Protection Act of 1988 by

directing matching activities, including

establishment of matching policies and

operating guidelines, evaluation of

matches and development of evaluation

guidelines. Develops, implements and

maintains automated information and

communications systems for OPP

components. Oversees OPP’s strategic

planning activities and management of

the OPP ITS budget. Directs the OPP

programs supporting reengineering/

redesign initiatives and change

management activities.

Section TAS.10 The Office of Program

Support—(Organization)

The Office of Program Support, under

the leadership of the Associate

Commissioner for Program Support

includes:

A. The Associate Commissioner for

Program Support (TAS).

B. The Deputy Associate

Commissioner for Program Support

(TAS).

C. The Immediate Office of the

Associate Commissioner for Program

Support (TAS).

1. The Electronic Services Staff (TAS–

1).

D. The Office of Policy Technology

Management (TASA).

1. Center for Policy Management

(TASA1).

2. Center for Technology Management

(TASA2).

E. The Office of Process and

Innovation Management (TASB).

1. Center for Process Management

(TASB1).

2. Center for Innovation Management

(TASB2).

F. The Office of Disclosure Policy

(TASC).

1.–2. Disclosure Team 1 and 2 (TASC

1 & 2).

3. Computer Matching Program and

Policy Team (TASC3).

Section TAS.20 The Office of Program

Support—(Functions)

A. The Associate Commissioner for

Program Support (TAS) is directly

responsible to the Deputy

Commissioner, Programs and Policy for

carrying out OPS’ mission and

providing managerial direction to OPS.

B. The Deputy Associate

Commissioner for Program Support

(TAS) assists the Associate

Commissioner in carrying out his/her

responsibilities and performs other

duties as the Associate Commissioner

may prescribe.

C. The Immediate Office of the

Associate Commissioner for Program

Support (TAS) provides the Associate

Commissioner with staff assistance on

the full range of his/her responsibilities.

1. The Electronic Services Staff (TAS–

1).

a. Provides leadership to the

development and implementation of the

Agency’s policies governing electronic

service delivery, including SSA’s online (Internet) services.

b. Directs initiatives to identify

policies that can be changed and

emerging technologies that can be used

to improve SSA’s service to the public.

c. Directs the analysis and evaluation

of electronic service delivery issues as

they relate to the Agency’s core business

processes.

d. Fosters partnerships with public

and private entities to solve global

electronic service delivery issues and

develop a global electronic service

delivery infrastructure supportive of

SSA’s service delivery goals.

e. Represents SSA on boards and

committees charged with exploring the

use of technology in providing service

to the public.

D. The Office of Policy Technology

Management (TASA).

1. Center for Policy Management

(TASA1).

a. Directs the management of all

activities supporting production and

delivery of SSA’s program operational

instructions system.

b. Oversees the production and

nationwide distribution of the electronic

and paper instructions to users

throughout the Agency.

c. Directs technical research into

improved methods of delivering

complex policy knowledge.

d. Directs the ongoing coordination of

publication, distribution, indexing and

warehousing of paper program

instructional material.

e. Oversees SSA’s Policy Repository

which supports Agency policy

development and the delivery of

regulations, notices and instructions.

f. Oversees maintenance of SSA’s

technical documents including the

Compilation of the Social Security Act.

2. Center for Technology Management

(TASA2).

a. Directs OPP’s systems support

program.

b. Develops, recommends, negotiates,

implements, integrates and then

supports broad automated systems

strategies for OPP components which

take into account current and emerging

technologies, Agency systems policies

and standards and their impact on the

OPP environment.

c. Directs the preparation and

management of OPP’s ITS budget,