Federal Register / Vol. 62, No. 4 / Tuesday, January 7, 1997 / Notices 1017

1See Securities Exchange Act Release No. 36582

(December 13, 1995), 60 FR 65364 (December 19,

1995) (order approving File No. SR-PHLX–95–78)

(‘‘1996 AUTOM Order’’).

2See Securities Exchange Act Release No. 27599

(January 9, 1990), 55 FR 1751 (January 18, 1990)

(order approving File No. SR-PHLX–89–03).

3See Securities Exchange Act Release No. 25540

(March 31, 1988), 53 FR 11390 (April 6, 1988).

4See 1996 AUTOM Order, supra note 1. See also

Securities Exchange Act Release Nos. 25540 (March

31, 1988), 53 FR 11390 (April 6, 1988) (order

approving AUTOM on a pilot basis); 25868 (June

30, 1988), 53 FR 25563 (order approving File No.

SR-PHLX–88–22, extending pilot through December

31, 1988); 26354 (December 13, 1988), 53 FR 51185

(order approving File No. SR-PHLX–88–33,

extending pilot program through June 30, 1989);

26522 (February 3, 1989), 54 FR 6465 (order

approving File No. SR-PHLX–89–1, extending pilot

through December 31, 1989); 27599 (January 9,

1990), 55 FR 1751 (order approving File No. SRPHLX–89–03, extending pilot through June 30,

1990); 28625 (July 26, 1990), 55 FR 31274 (order

approving File No. SR-PHLX–90–16, extending

pilot through December 31, 1990); 28978 (March 15,

1991), 56 FR 12050 (order approving File No. SRPHLX–90–34), extending pilot through December

31, 1991); 29837 (October 18, 1991), 56 FR 36496

(order approving File No. SR-PHLX–90–03,

extending pilot through December 31, 1993); 33405

(December 30, 1993), 59 FR 790 (order approving

File No. SR-PHLX–93–57, extending pilot through

December 31, 1994); 35183 (December 30, 1994), 60

FR 2420 (January 9, 1995) (order approving File No.

SR-PHLX–94–41, extending pilot through December

31, 1995); 29662 (September 9, 1991), 56 FR 46816

(order approving File No. SR-PHLX–91–31,

permitting AUTO-X orders up to 20 contracts in

Duracell options only); 29782 (October 3, 1991), 56

FR 55146 (order approving File No. SR-PHLX–91–

33, permitting AUTO-X for all strike prices and

expiration months); 32906 (September 15, 1993), 58

FR 15168 (order approving File No. SR-PHLX–92–

38, permitting AUTO-X orders up to 25 contracts

in all options); and 33405 (December 30, 1993), 59

FR 790 (order approving File No. SR-PHLX–93–57,

extending pilot through December 31, 1994); 34920

(October 31, 1994), 59 FR 55510 (November 7, 1994)

(File No. SR-PHLX–94–40, codifying use of

AUTOM for index options); 35601 (April 13, 1995),

60 FR 19616 (File No. SR-PHLX–95–18, codifying

the use of AUTOM for certain order types); 35681

(May 30, 1995), 60 FR 30131 (June 7, 1995) (File

No. SR-PHLX–95–29, increasing AUTO-X for

USTOP 100 Index (‘‘TPX’’) options to 50 contracts);

35782 (May 30, 1995), 60 FR 30136 (June 7, 1995)

(File No. SR-PHLX–95–30, increasing the maximum

AUTOM order size from 100 to 500 contracts);

36429 (October 27, 1995), 60 FR 55874 (November

3, 1995) (File No. SR-PHLX–95–35, allowing brokerdealer TPX option orders to be routed through

AUTOM); and 36467 (November 8, 1995), 60 FR

57615 (November 16, 1995) (order approving File

No. SR-PHLX–95–33, limiting AUTO-X for National

Over-the-Counter Index options to series where the

bid is $10 or less).

5See 1996 AUTOM Order, supra note 1.

[Release No. 34–38104; File No. SR-PHLX–

96–51]

Self-Regulatory Organizations; Notice

of Filing and Order Granting

Accelerated Approval to a Proposed

Rule Change by the Philadelphia Stock

Exchange, Inc., Relating to an

Extension of the Automated Options

Market Pilot Program

December 31, 1996.

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 December 6, 1996,

the Philadelphia Stock Exchange, Inc.

(‘‘PHLX’’ or ‘‘Exchange’’) filed with the

Securities and Exchange Commission

(‘‘SEC’’ or ‘‘Commission’’) the proposed

rule change as described in Items I and

II below, which Items have been

prepared by the self-regulatory

organization. The Commission is

approving this proposal on an

accelerated basis.

I. Self-Regulatory Organization’s

Statement of the Terms of Substance of

the Proposed Rule Change

The PHLX proposes to extend the

Exchange’s Automated Options Market

(‘‘AUTOM’’) system pilot program for a

six month period ending June 30, 1997.

The text of the proposal 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 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

AUTOM, which has operated on a

pilot basis since 1988 and was most

recently extended through December 31,

1996,1 is the PHLX’s electronic order

routing, delivery, execution and

reporting system for equity and index

options. AUTOM is an on-line system

that allows electronic delivery of

options orders from member firms

directly to the appropriate specialist on

the Exchange’s trading floor.

Certain orders are eligible for

AUTOM’s automatic execution feature,

AUTO-X, which was approved as part of

the AUTOM pilot program in 1990.2

AUTO-X orders are executed

automatically at the disseminated

quotation price on the Exchange and

reported to the Options Price Reporting

Authority (‘‘OPRA’’) as well as the

originating firm. Orders that are not

eligible for AUTO-X are handled

manually by the specialist and, upon

execution of the order, are inputted into

Exchange systems for reporting to OPRA

and the delivering firm.

Originally, the AUTOM pilot program

was approved by the Commission for

market orders of up to five contracts for

12 PHLX near-month equity options.3

Since that time, AUTOM has been

amended and extended several times,

generally in one-year increments.4

In the most recent extension of the

pilot program until December 31, 1996,5

the Commission stated that the

Exchange’s request for permanent

approval should be accompanied by a

report covering the period between

January 1, 1996, and June 30, 1996,

describing: (1) the benefits provided by

AUTOM; (2) the degree of AUTOM

usage, including the number and size of

the orders routed through AUTOM and

the number and size of the orders

executed automatically through the

AUTO–X system; (3) the system

capacity of AUTOM and AUTO–X; and

(4) any problems the Exchange has

encountered with the routing and

execution features. Generally, the

Exchange believes that AUTOM has

functioned properly and efficiently

since the last extension of the pilot

program.

Thus, the PHLX proposes to extend

the AUTOM pilot program for a sixmonth period ending June 30, 1997. The

PHLX believes that this should provide

time for the Exchange to submit a

proposed rule change requesting

permanent approval of AUTOM as well

as an AUTOM rule to govern the system.

During this time, the PHLX can

continue to study the effectiveness of

AUTOM prior to permanent approval.

According to the PHLX, AUTOM

provides option orders with the benefits

of electronic delivery and reporting,

while AUTO–X provides automatic

executions. Accordingly, the Exchange

believes that AUTOM increases the

speed and efficiency of order delivery,

execution and reporting. This, in turn,

promotes liquidity as well as fair and

orderly markets. For these reasons, the

PHLX believes that extending the

AUTOM pilot program for six months

through June 30, 1997, is consistent

with Section 6 of the Act, in general,

and, in particular, with Section 6(b)(5),

in that it is designed to promote just and

equitable principles of trade, and to

protect investors and the public interest.

In addition, the Exchange believes that

the proposed rule change is consistent

with Section 11A(a)(1)(B) of the Act in

that AUTOM is intended to improve,
1018 Federal Register / Vol. 62, No. 4 / Tuesday, January 7, 1997 / Notices

6 15 U.S.C. § 78f and 78k–1 (1988).

7 In approving the rule, the Commission has

considered the proposed rule’s impact on

efficiency, competition, and capital formation. 15

U.S.C. § 78c(f).

8The PHLX will submit a request for permanent

approval of the program no later than May 1, 1997.

This request will be accompanied by a report

covering the period between June 30, 1996, and

January 1, 1997, that will include: (1) a description

of the benefits provided by AUTOM; (2) the degree

of AUTOM usage, including the number and size

of the orders routed through AUTOM and the

number and size of the orders executed

automatically through the AUTO–X system; (3) the

system capacity of AUTOM and AUTO–X; and (4)

any problems the Exchange has encountered with

the routing and execution features. 9 15 U.S.C. § 78s(b)(2) (1982).

10 17 CFR 200.30–3(a)(12) (1995).

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

2Securities Exchange Act Release Nos. 36875

(February 22, 1996), 61 FR 7846 [SR–SCCP–95–06]

and 36876 (February 22, 1996), 61 FR 7841 [SR–

Philadep–95–08] (orders granting partial permanent

and partial temporary approval through August 31,

1996, of proposed rule changes).

through the use of new data processing

and communications techniques, the

efficiency with which transactions in

PHLX equity and index options are

executed. Further, the Exchange

believes that AUTOM fosters

competition among options exchanges,

which have similar systems in place.

(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. Commission’s Findings and Order

Granting Accelerated Approval of

Proposed Rule Change

The Exchange has requested that the

proposed rule change be given

accelerated effectiveness pursuant to

Section 19(b)(2) of the Act.

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, and, in particular, the

requirements of Sections 6 and 11A.6

Specifically, the Commission continues

to believe that the development and

implementation of the AUTOM system

provides for more efficient handling and

reporting of orders in PHLX options

through the use of new data processing

and communications techniques,

thereby improving order processing and

turnaround time.7 The Commission

does not object to an extension of the

pilot program until June 30, 1997, in

response to the PHLX’s assertion that

continuation of the pilot will provide

the Exchange with an opportunity to

continue to study its effectiveness prior

to permanent approval of the program.8

The Commission notes further that

the Exchange has represented that from

January 1996 through November 1996,

no significant problems have been

reported with AUTOM’s routing or

execution functions, which have

functioned properly and efficiently.

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 in order to

permit the PHLX to continue the

AUTROM pilot program on an

uninterrupted basis. Specifically, the

Commission believes that the PHLX’s

proposal to extend the AUTOM pilot

program does not raise any new issues

since it merely extends the pilot

program as it is currently operating.

Further, the Commission believes that

the pilot is beneficial in maintaining the

quality and efficiency of the PHLX’s

market. In addition, the Commission

notes that there have been no adverse

comments concerning the pilot program

since its implementation. Accordingly,

the Commission believes that granting

accelerated approval of the proposed

rule change is appropriate and

consistent with Sections 6 and 11A 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, 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 at

the Commission’s Public Reference

Section, 450 Fifth Street, N.W.,

Washington, D.C. Copies of such filing

will also be available for inspection and

copying at the principal office of the

above-mentioned self-regulatory

organization. All submissions should

refer to the file number in the caption

above and should be submitted by

[insert date 21 days after the date of this

publication].

It is therefore ordered, pursuant to

Section 19(b)(2) of the Act,9 that the

proposed rule change (SR–PHLX–96–

51) is approved through June 30, 1997.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.10

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 97–235 Filed 1–6–97; 8:45 am]

BILLING CODE 8010–01–M

[Release No. 34–38100; File Nos. SR–

SCCP–96–10 and SR–Philadep–96–19]

Self-Regulatory Organizations; Stock

Clearing Corporation of Philadelphia;

Philadelphia Depository Trust

Company; Notice of Filing and Order

Granting Accelerated Approval on a

Temporary Basis of Proposed Rule

Changes Relating to Participants Fund

Formulas

December 30, 1996.

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

Securities Exchange Act of 1934

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

November 15, 1996, the Stock Clearing

Corporation of Philadelphia (‘‘SCCP’’)

and the Philadelphia Depository Trust

Company (‘‘Philadep’’) filed with the

Securities and Exchange Commission

(‘‘Commission’’) the proposed rule

changes (File Nos. SR–SCCP–96–10 and

SR–Philadep–96–19) as described in

Items I and II below, which items have

been prepared primarily by SCCP and

Philadep. The Commission is

publishing this notice and order to

solicit comments from interested

persons and to grant accelerated

approval on a temporary basis of the

proposed rule changes through June 30,

1997.

I. Self-Regulatory Organizations’

Statement of the Terms of Substance of

the Proposed Rule Changes

The proposed rule changes seek

permanent approval of SCCP’s and

Philadep’s participants fund formulas.

On February 22, 1996, the Commission

granted partial temporary approval to

proposed rule changes establishing

SCCP’s and Philadep’s participants fund

formulas in connection with the

industry conversion to same-day funds

settlement (‘‘SDFS’’).2 On August 29,

1996, the Commission extended the