Federal Register / Vol. 62, No. 206 / Friday, October 24, 1997 / Notices 55447

1 15 U.S.C. § 78s(b)(1). 2 15 U.S.C. § 78f(b)(5).

3 15 U.S.C. § 78f.

4 15 U.S.C. § 78f(b)(5).

5Securities Exchange Act Release Nos. 38571

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

(approving an AMEX proposal to reduce the

minimum trading variation from 1⁄8 to 1⁄16); 38744

Continued

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 97–28180 Filed 10–23–97; 8:45 am]

BILLING CODE 8010–10–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–39259; File No. SR–CHX–

22]

Self-Regulatory Organizations; Notice

of Filing and Order Granting

Accelerated Approval of Proposed

Rule Change by the Chicago Stock

Exchange, Incorporated Relating to the

Exchange’s Automated Execution

System

October 20, 1997.

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

Securities Exchange Act of 1934

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

September 12, 1997, the Chicago Stock

Exchange, Incorporated (‘‘CHX’’ or

‘‘Exchange’’) filed with the Securities

and Exchange Commission

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

rule change, as described in Items I and

II below, which Items have been

prepared by the Exchange. 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 proposed to amend

Rule 37(b)(6) of Article XX of the

Exchange’s Rules, relating to the

Exchange’s automated execution

system, the ‘‘MAX System.’’ The

modification provides for a fifteen

second delay before a MAX execution

except where the spread between the

ITS Best Bid and ITS Best Offer is equal

to the minimum price variation in the

relevant issue.

The text of the proposed rule change

is available at the Office of the

Secretary, the Exchange, 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

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 III 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

Article XX, Rule 37(b)(6) currently

provides that, when using the

Exchange’s MAX System in the

execution of Dual Trading System

issues, there will generally be a fifteen

second delay between the time a market

order is entered into MAX and the time

it is automatically executed. This delay

allows opportunity for price

improvement. However, Rule 37(b)(6)

also currently provides that where the

spread between the ITS Best Bid and

ITS Best Offer is 1⁄8 point, on order will

immediately be executed (because of the

lack of opportunity for price

improvement).

Certain Dual Trading System issues

have recently begun trading in

minimum variations less than 1⁄8 point

(e.g., 1⁄16 point). In recognition of this

change, the proposed rule change

provides for a fifteen second delay

before a MAX execution except where

the spread between the ITS Best Bid and

ITS Best Offer is equal to the minimum

variation in the relevant issue. The

Exchange believes this modification will

allow customers the maximum

opportunity for price improvement.

2. Statutory Basis

The Exchange represents that the

proposed rule change is consistent with

Section 6(b)(5) 2 of the Act in that it is

designed to promote just and equitable

principles of trade, to remove

impediments to and perfect the

mechanism of a free and open market

and a national market system, and, in

general, to protect investors and the

public interest.

B. Self-Regulatory Organization’s

Statement on Burden on Competition

The Exchange 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

The Exchange did not solicit or

receive written comments with respect

to the proposed rule change.

III. 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

submissions, all subsequent

amendments, all 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 persons, other

than those that may be withheld from

the public in accordance with the

provisions of 5 U.S.C. § 522, will be

available for inspection and copying at

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 the Exchange. All submissions

should refer to File No. SR–CHX–97–22

and should be submitted by November

21, 1997.

IV. Commission’s Findings and Order

Granting Accelerated Approval of

Proposed Rule Change

The Commission has reviewed

carefully the Exchange’s proposed rule

change and believes, for the reasons set

forth below, the proposal is consistent

with the requirements of Section 6 of

the Act 3 and the rules and regulations

thereunder applicable to a national

securities exchange. Specifically, the

Commission believes the proposal is

consistent with Section 6(b)(5) 4 of the

Act because it will facilitate transactions

in securities by providing investors with

the opportunity for price improvement,

promote just and equitable principles of

trade, remove impediments to, and

perfect the mechanism of a free and

open market.

The proposed rule change modifies

the Exchange’s rule relating to its MAX

System so that automatic execution is

delayed to provide the opportunity for

price improvement in stocks trading in

minimum increments of less than 1⁄8.

This modification comports with the

movement towards smaller trading and

quotation increments for equity

securities traded on securities

exchanges.5 Furthermore, it establishes
55448 Federal Register / Vol. 62, No. 206 / Friday, October 24, 1997 / Notices

(June 18, 1997), 62 FR 34334 (June 25, 1997)

(approving a NYSE proposal to reduce the

minimum trading variation from 1⁄8 to 1⁄16).

6 15 U.S.C. § 78s(b)(2).

7 17 CFR 200.30–3(a)(12).

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

2 17 CFR 240.19b–4.

3On the day following an Exchange holiday such

as the Friday following Thanksgiving or the day

after Christmas day, trading commences at 8:00 a.m.

rather than 2:30 a.m.

4See Securities Exchange Act Release No. 37732

(September 26, 1996). The proposed rule change

adjusted the trading hours for all customized

options such that all customized options would

cease trading on expiration day at 8:00 a.m. eastern

time and would expire at 10:15 a.m. eastern time.

5 17 CFR 240.19b–4(e)(6).

equal price improvement opportunities

for all investors and removes the

mechanism that currently deprives

those investors who trade securities

priced in less than 1⁄8 increments from

potentially obtaining a better price. In

addition, the language of the

modification obviates the need for

similar technical rule adjustments in the

future as the minimum trading and

quoting increments are further reduced.

The Commission finds good cause for

approving the proposed rule change

prior to the thirtieth day after the date

of publication of notice thereof in the

Federal Register. The Commission notes

that the AMEX and NYSE recently

reduced the minimum trading and

quotation variations for securities traded

through their facilities. As a result,

equity securities that previously traded

in minimum variations of 1⁄8 now trade

in minimum variations of 1⁄16. It is

important, therefore, that the Rules of

the MAX system be conformed to allow

customers the maximum opportunity for

price improvement in the MAX System

as soon as possible.

It is therefore ordered, pursuant to

Section 19(b)(2) 6 of the Act, that the

proposed rule change, SR–CHX–97–22,

is hereby approved on an accelerated

basis.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.7

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 97–28238 Filed 10–23–97; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–39254; File No. SR–Phlx–

97–47]

Self-Regulatory Organizations; Notice

of Filing and Immediate Effectiveness

of Proposed Rule Change by the

Philadelphia Stock Exchange, Inc.

Proposing to Amend its Foreign

Currency Option Trading Hours

Respecting Customized Foreign

Currency Options

October 17, 1997.

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

Securities Exchange Act of 1934,1 notice

is hereby given that on October 7, 1997,

the Philadelphia Stock Exchange Inc.

filed with the Securities and Exchange

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 Philadelphia Stock Exchange,

Inc. (‘‘Phlx’’ or the ‘‘Exchange’’)

pursuant to Rule 19b–4 of the Securities

Exchange Act of 1934 (‘‘Act’’) 2 proposes

to cease trading for expiring customized

currency options at 8:10 a.m. eastern

time on business days in which the

Foreign Currency Floor of the Exchange

opens for trading at 8:00 a.m. eastern

time. The text of the proposed rule

change is available at the Office of the

Secretary, the Phlx, and 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

1. Purpose

The Foreign Currency floor is open

from 2:30 a.m. eastern time to 2:30 p.m.

eastern time every business day.

However, the Exchange may open the

foreign currency floor at 8:00 a.m. on

some business days, usually on business

days following a holiday.3 The

Exchange modified the trading hours for

all customized options such that an all

expiring customized option contract

cease trading at 8:00 a.m. and expires at

10:15 a.m. eastern time.4 However, this

practice prevents the holder of an

expiring customized currency option to

offset an expiring position on days in

which trading begins at 8:00 a.m. on the

Foreign Currency floor. Therefore, the

Exchange proposes to cease trading in

expiring customized contracts at 8:10

a.m. on business days in which the

Exchange opens at 8:00 a.m. and thereby

provides a 10 minute window for a

participant to offset an expiring option.

The Phlx will provide notification of the

change in trading hours for these

expiring options by means of

memoranda to the membership.

2. Statutory Basis

The Exchange believes that the

proposed rule change is consistent with

Section 6(b)(5) of the Act in that it is

designed to remove impediments to and

perfect the mechanism of a free and

open market by providing the

participants with the ability to offset

their position prior to expiration on

those business days in which the

Foreign Currency floor opens at 8:00

a.m. eastern time.

B. Self-Regulatory Organization’s

Statement on the 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 solicited

or received at the time of the filing.

III. Date of Effectiveness of the

Proposed Rule Change and Timing for

Commission Action

The Exchange has asserted that the

proposed rule change (i) will not

significantly affect the protection of

investors or the public interest, (ii) will

not impose any significant burden on

competition, and (iii) will not become

operative for 30 days after the date of

this filing. For the foregoing reasons and

because the Exchange provided at least

five business days notice to the

Commission of its intent to file this

proposed rule change, the rule filing

will become operative as a ‘‘noncontroversial’’ rule change pursuant to

Rule 19b–4(e)(6) under the Act.5

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