44160 Federal Register / Vol. 62, No. 160 / Tuesday, August 19, 1997 / Notices

6Cf. CBOE Rule 6.6(e).

7Proposed subsection (d)(1), Floor-Wide POETS

System Malfunction.

8Proposed subsection (d)(2), Non-Floor-Wide

POETS System Malfunction. Proposed subsection

(d)(3) (‘‘Other Unusual Conditions’’) further

provides that if there are other unusual market

conditions not involving a POETS System

malfunction, two Floor Officials may suspend AutoEX in accordance with Rule 6.28(b).

9Cf. CBOE Rule 6.8, Interpretation and Policy .03.

10 17 CFR 200.30–3(a)(12).

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

Auto-Ex may be continued, or its

operation resumed for a longer period

following determination by two Options

Floor Officials and one Floor Governor

(or a senior operations officer if no Floor

Governor is available) determine that

such action is appropriate. In the event

that the three officials do not agree, a 2⁄3

majority prevails.6 Upon suspension of

the Auto-Ex system, all market and

marketable limit orders thereafter

entered through the Exchange’s Member

Firm Interface will be routed to a booth

on the Floor designated by the firm that

entered the order. The order can then be

taken to the crowd manually and

represented by a floor broker.

The Exchange is also proposing to

amend Rule 6.37 (‘‘Obligations of

Market Makers’’) by adding a new

subsection (b)(4), which provides that if

the interest of maintaining a fair and

orderly market so requires, two Floor

Officials may declare a fast market and

allow Market Makers in an issue to

make bids and offers with spread

differentials of up to two times, or in

exceptional circumstances, up to three

times, the legal limits permitted under

Rule 6.37(b)(1). The rule further directs

such Floor Officials to consider the

following factors in making the

determination to allow wider markets,:

(A) whether there is an extreme influx

of option orders due to pending news,

a news announcement or other special

events; (B) whether there is an

imbalance of option orders in one series

or on one side of the market; (C)

whether the underlying security is

trading outside the bid or offer in such

security then being disseminated; (D)

whether Floor Members receive no

response to orders placed to buy or sell

the underlying security; and (E) whether

a vendor quote feed for POETS is clearly

stale or unreliable.

The Exchange is also proposing to

amend its Rule 6.87 (‘‘Automatic

Execution System’’), by adding three

new subsections relating to suspensions

of Auto-Ex. Whenever a POETS system

or vendor quote feed malfunction affects

the Exchange’s ability to disseminate or

update market quotes on a floor-wide

basis, the senior person then in charge

of the Exchange’s Control Room will be

able to halt Auto-Ex on a floor-wide

basis, upon declaration of a ‘‘fast

market’’ by two Floor Officials.7

Similarly, if a POETS malfunction

occurs and Market Makers are

physically unable to update their

quotations in an issue or issues at the

same trading post or trading quad, two

Floor Officials may declare a ‘‘fast

market’’ and direct the order book

official (‘‘OBO’’) to turn off the Auto-Ex

system in only the affected issue or

issues.8 Under either scenario, once the

system malfunction has been corrected

that the market quotes have been

updated, two Floor Officials (or the

senior person then in charge of the

Control Room in the event of a floorwide malfunction) may re-start AutoEx.9

Statutory Basis

The proposal is consistent with

Section 6(b) of the Act, in general, and

Section 6(b)(5), in particular, in that it

is designed to promote just and

equitable principles of trade and to

protect investors and the public interest.

Relation to Rule of Other SelfRegulatory Organizations

The proposed rule change is based, in

part, on Rules 6.6(e) and 6.8.03 of the

Rules of the Chicago Board Options

Exchange (‘‘CBOE’’).

B. Self-Regulatory Organization’s

Statement on Burden on Competition

The Exchange does not believe that

the proposed rule change will impose

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

Written comments on the proposed

rule change 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 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 such 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

Room, 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 the Exchange. All submissions

should refer to File No. SR–PCX–97–21

and should be submitted by September

9, 1997.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.10

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 97–21908 Filed 8–18–97; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–38924; File No. SR–Phlx–

97–36]

Self-Regulatory Organizations; Notice

of Filing and Immediate Effectiveness

of Proposed Rule Change by the

Philadelphia Stock Exchange, Inc.

Extending the Pilot Program for Equity

and Index Option Specialist Enhanced

Parity Split Participants

August 11, 1997.

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

Securities Exchange Act of 1934

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

July 24, 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 selfregulatory organization. The

Commission is publishing this notice to
Federal Register / Vol. 62, No. 160 / Tuesday, August 19, 1997 / Notices 44161

2Securities Exchange Act Release No. 34606

(Aug. 26, 1994), 59 FR 45741 (Sept. 2, 1994) (order

approving File No. SR–PHLX–94–12).

3Securities Exchange Act Release No. 35028

(Nov. 30, 1994), 59 FR 45741 (Dec. 7, 1994) (notice

of filing and immediate effectiveness of File No.

SR–PHLX–94–57).

4A controlled account is defined as ‘‘any account

controlled by or under common control with a

member broker-dealer.’’ Customer accounts, which

include discretionary accounts, are defined as all

accounts other than controlled accounts and

specialist accounts. See Exchange Rule 1014(g).

5Securities Exchange Act Release No. 35429

(Mar. 1, 1995), 60 FR 12802 (Mar. 8, 1995) (order

approving File No. SR–PHLX–94–59).

6Securities Exchange Act Release No. 36122

(Aug. 18, 1995), 60 FR 44530 (Aug. 28, 1995) (notice

of filing and immediate effectiveness of File No.

SR–PHLX–95–54).

7Securities Exchange Act Release No. 37524

(Aug. 5, 1996), 61 FR 42080 (Aug. 13, 1996) (notice

of filing and immediate effectiveness of File No.

SR–PHLX–96–29).

8Securities Exchange Act Release No. 34109 (May

25, 1994), 59 FR 28570 (June 2, 1994) (order

approving File No. SR–PHLX–93–29).

9Release No. 34–37524, supra note 7, n.15.

10See letter from Michele R. Weisbaum, Vice

President and Associate General Counsel, PHLX, to

George Villasana, Office of Market Supervision,

Division of Market Regulation, Commission, dated

July 31, 1997.

11Release No. 34–35429, supra note 5.

12According to the Exchange, its Matched Order

Ticket System requires trade participants to submit

matched tickets to the appropriate person at the

specialist post immediately upon effecting a

transaction in order to assure, among other things,

that the party agrees with each contra-party’s claim

as to his or her level of participation. See Release

No. 37524, supra note 7 (referencing telephone

conversation on August 2, 1996 between Michelle

R. Weisbaum, Vice President and Associate General

Counsel, PHLX, and George A. Villasana, Attorney,

Division of Market Regulation, SEC).

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 PHLX proposes to extend until

December 31, 1997, the Exchange’s

enhanced parity participation

(‘‘Enhanced Parity Split’’) pilot program

for equity and index option specialists

(‘‘Pilot Program’’). Revisions to

Exchange Rule 1014(g)(ii) and its

corollary Option Floor Procedure

Advice B–6 (‘‘Advice B–6’’) are

proposed only to change the expiration

date of the Pilot Program. The text of the

proposed rule change is available at the

Office of the Secretary, the PHLX, and

at the Commission.

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

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 test 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

On August 26, 1994, the Commission

approved, as a one-year pilot program,

the Exchange’s proposal to adopt an

enhanced specialist participation in

parity equity option trades.2 On

November 30, 1994, the Commission

approved the Exchange’s request to

expand the Enhanced Parity Split to

include index option specialists as well

as equity option specialists.3 The

Enhanced Parity Split was again

amended on March 1, 1995 to modify

the Pilot Program with respect to

situations where less than three

controlled accounts 4 are on parity with

the specialist.5 At the termination of the

first year of the pilot, the Exchange

determined to renew the pilot for an

additional year until August 26, 1996.6

The Exchange again determined to

renew the pilot until August 26, 1997.7

The program works as follows: When

an equity or index option specialist is

on parity with one controlled account

and the order is for more than five

contracts, the specialist will receive

60% of the contracts and the controlled

account will receive 40%. When the

specialist is on parity with two

controlled accounts and the order is for

more than five contracts, the specialist

will receive 40% of the contracts and

each controlled account will receive

30%. When the specialist is on parity

with three or more controlled accounts

and the order is for more than five

contracts, the specialist will be counted

as two crowd participants when

dividing up the contracts. In any of

these situations, if a customer is on

parity, he will not be disadvantaged by

receiving a lesser allotment than any

other crowd participant, including the

specialist.

This enhanced split is not applicable

to all equity and index options traded

on the Exchange. It is only applicable to

50% of each specialist unit’s issues

listed as of the renewal date of the pilot

each year and all option classes listed

after that date. The Exchange also has a

different enhanced split program in

place for ‘‘new’’ option specialist units

trading newly listed options classes

where the specialist is on parity with

two or more registered options traders

(‘‘ROTs’’).8 That program was approved

on a permanent basis and, therefore, is

not included in the subject of this filing.

Accordingly, the PHLX requests that

the two-for-one specialist enhanced

parity split pilot be extended until

December 31, 1997.

In the Commission’s most recent

Approval Order,9 it was noted that prior

to granting another extension or

permanent approval of the pilot

program, the Commission would require

the Exchange to submit a report

(‘‘Report’’) discussing: (1) Whether the

Pilot Program has generated any

evidence of any adverse effect on

competition or investors, in particular,

or the market for equity or index

options, in general; (2) whether the

Exchange has received any complaints,

either written or otherwise, concerning

the operation of the Pilot Program; and

(3) whether the Exchange has taken any

disciplinary action against, or

commenced any investigations,

examinations, or inquiries concerning

the operation of the Pilot Program, as

well as the outcome of any such matter.

On July 31, 1997, the Exchange

submitted the report, which is

summarized below.10

As to the issue of competition, the

Exchange found that the split as

originally proposed was overly

burdensome when only one or two

controlled accounts were on parity with

the specialist, so the rule was amended

in March of 1995 in order to make the

split more equitable in those

situations.11 Subsequently, the

Exchange established a subcommittee

composed of four specialists, four ROTs,

and one floor broker who represents

customers. The subcommittee has met

on numerous occasions since that time

to analyze the program and its effect on

competition, investors and the market in

general. The members of the

subcommittee which represent all of the

different interests on the trading floor

and in the market, discussed the

operation of the program and concluded

that there was no evidence of any

adverse effects on competition or

investors or the market for equity or

index options.

As to the second issue, the provision

requiring the specialist to assure that the

customer is not disadvantaged has been

strictly enforced without incident and

the Exchange has not received any

complaints either orally or in writing

from investors regarding inequitable

splits or the program in general.12
44162 Federal Register / Vol. 62, No. 160 / Tuesday, August 19, 1997 / Notices

13Enforcement No. 95–12, Business Conduct

Committee, PHLX.

14The Commission again notes that in connection

with any future request by the Exchange for the

Commission to either further extend or permanently

approve the Pilot Program, the Exchange will be

required to submit a report discussing 1) whether

the Pilot Program has generated any evidence of any

adverse effect on competition or investors, in

particular, or the market for equity or index options,

in general, 2) whether the Exchange has received

any complaints, either written or otherwise,

concerning the operation of the Pilot Program, and

3) whether the Exchange has taken any disciplinary

action against, or commenced any investigations,

examinations, or inquiries concerning the operation

of the Pilot Program, as well as the outcome of any

such matter.

15 15 U.S.C. 78f(b).

16 15 U.S.C. 78f(b)(5). 17 17 CFR 240.19b–4(e)(6). 18 17 CFR 200.30–3(a)(12).

Finally, as to the third point, the

Exchange took one disciplinary case

against an equity option specialist for

making an inequitable split among

himself and the ROTs in the crowd in

1996.13 In that instance, the specialist

was censured and suspended for one

week as part of a settlement. The

specialist has since left the Exchange.

Since January 1, 1997, the Exchange has

not commenced any investigations

relating to the operation of the Pilot

program.14

2. Statutory Basis

The proposed rule change is

consistent with Section 6(b) of the Act 15

in general and in particular, with

Section 6(b)(5),16 in that it is designed

to promote just and equitable principles

of trade, prevent fraudulent and

manipulative acts and practices, to

foster cooperation and coordination

with persons engaged in regulating,

clearing, settling, processing

information with respect to, and

facilitating transactions in securities, to

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. Specifically, the proposal

balances the competing interests of

specialists and market makers while

assisting the specialist in making tight

and liquid markets in its assigned issues

and protects the public interest by

requiring quarterly reviews and assuring

that the customers’ participation is

never disadvantaged by the enhanced

split.

B. Self-Regulatory Organization’s

Statement on Burden on Competition

The proposed rule change does not

impose 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.

III. Date of Effectiveness of the

Proposed Rule Change and Timing for

Commission Action

Because the foregoing proposed rule

change: (1) Does not significantly affect

the protection of investors or the public

interest; (2) does not impose any

significant burden on competition; (3)

does not become operative for 30 days

from July 24, 1997, the date on which

it was filed, and the Exchange provided

the Commission with written notice of

its intent to file the proposed rule

change at least five business days prior

to the filing date, it has become effective

pursuant to Section 19(b)(3)(A) of the

Act and Rule 19b–4(e)(6) thereunder.17

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.

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

Station, 450 Fifth Street NW.,

Washington, DC 20549. Copies of such

filing also will be available for

inspection and copying at the principal

office of the Philadelphia Stock

Exchange. All submissions should refer

to File No. SR–PHLX–97–36 and should

be submitted by September 9, 1997.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.18

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 97–21848 Filed 8–18–97; 8:45 am]

BILLING CODE 8010–01–M

SMALL BUSINESS ADMINISTRATION

Data Collection Available for Public

Comments and Recommendations

ACTION: Notice and request for

comments.

SUMMARY: In accordance with the

Paperwork Reduction Act of 1995, this

notice announces the Small Business

Administration’s intentions to request

approval on a new, and/or currently

approved information collection.

DATES: Comments should be submitted

on or before October 20, 1997.

FOR FURTHER INFORMATION CONTACT:

Curtis B. Rich, Management Analyst,

Small Business Administration, 409 3rd

Street, S.W., Suite 5000, Washington,

D.C. 20416. Phone Number: 202–205–

6629.

SUPPLEMENTARY INFORMATION:

Title: ‘‘Mentor Information Survey’’.

Type of Request: New Collection.

Form No: N/A.

Description of Respondents:

Organizations which foster the growth

of Women’s Business Ownership.

Annual Responses: 10,000.

Annual Burden: 2,000.

Title: ‘‘Prote ́ge ́ Information Survey’’.

Type of Request: New Information

Collection.

Form No: N/A.

Description of Respondents:

Organizations which foster the growth

of Women’s Business Ownership.

Annual Responses: 10,000.

Annual Burden: 2,000.

Title: ‘‘WNET Program Quarterly

Report’’

Type of Request: New Information

Collection.

Form No: N/A

Description of Respondents:

Organizations which foster the growth

of Women’s Business Ownership.

Annual Responses: 10,000

Annual Burden: 2,000

Title: ‘‘WNET Program Final Report’’

Type of Respondents: New

Information Collection.

Form No: N/A

Description of Respondents:

Organizations which foster the growth

of Women’s Business Ownership.