[Federal Register Volume 62, Number 26 (Friday, February 7, 1997)]
[Notices]
[Pages 5875-5876]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-3066]


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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-38225; File No. SR-NYSE-96-32]

Self-Regulatory Organizations; New York Stock Exchange, 
Incorporated; Approval of Proposed Rule Change Relating to the 
Exchange's Policy on Tape Indications
January 31, 1997.
I. Introduction
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ notice is hereby given that on November 26, 1996, the New 
York Stock Exchange, Inc. (``NYSE'' or ``Exchange'') filed with the 
Securities and Exchange Commission (``SEC'' or ``Commission'') a 
proposed rule change relating to the Exchange's policy on tape 
indications. The proposal was published for comment in the Federal 
Register on December 10, 1996.\2\ No comments were received on the 
proposed rule change. The Commission is approving the proposed rule 
change.
    \1\ 15 U.S.C. 78s(b)(1).
    \2\ Securities Exchange Act Release No. 38015 (December 3, 
1996), 61 FR 65099 (December 10, 1996).
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II. Description of the Proposal
    The NYSE proposed to amend the Exchange Policy on Indications, 
Openings and Reopenings, which will be issued as an Information 
Memorandum. Indications are price ranges published on the tape before 
or during a trading halt to display the probable price range in which a 
stock will open or reopen.
    The Exchange's policy on dissemination of tape indications 
currently requires a minimum of 15 minutes elapse between the first 
indication and the opening or reopening of a stock. In addition, when 
multiple indications are used, a minimum of 10 minutes must elapse 
after the last indication when it does not overlap the prior 
indication; a minimum of 5 minutes must elapse after the last 
indication when it overlaps the prior indication. In all cases, a 
minimum of 15 minutes must elapse between the first indication and the 
opening or reopening of a stock.
    The Exchange proposed that these minimum time periods before 
opening or reopening a stock be compressed from 15 to 10 minutes after 
the first indication; and to 5 minutes after the last indication, 
regardless of whether it overlaps the prior indication, provided that a 
minimum of 10 minutes elapse between the first indication and the 
opening or reopening of a stock. The Exchange indicated that it 
believes that a minimum time period of 10 minutes for dissemination has 
proven sufficient in other contexts, such as the publication of 
imbalances of 50,000 shares or more of market-on-close orders on 
trading days other than expiration days.
    The Exchange stated that over the years, in developing procedures 
for openings, it has focused on providing a balance between timeless 
and appropriateness of price, i.e., achieving a price that reflects an 
appropriate equilibrium of buying and selling interest at the time. The 
Exchange noted that since current procedures were formulated, the speed 
of communications has increased, meaning that relevant market 
information can be disseminated and responded to very quickly. The 
Exchange believes that the proposed rule change would shorten the time 
period for indications, thereby allowing the opening or reopening of a 
stock in a more expeditious fashion, while still providing sufficient 
time for appropriate pricing of orders.
    The Exchange believes that the revised procedures for tape 
indications strike an appropriate balance between preserving the price 
discovery process while providing timely opportunities for investors to 
participate in the market.

III. Discussion

    After careful review, 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 Section 6(b)(5) of the Act.\3\ 
The proposed rule change is designed to promote just an equitable 
principles of trade, to remove impediments to, and perfect the 
mechanism of a free and open market,

[[Page 5876]]

and, in general, to protect investors and the public interest.
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    \3\ 15 U.S.C. 78f(b)(5).
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    Specifically, the Exchange proposed that minimum time periods 
before opening or reopening a stock be compressed from 15 to 10 minutes 
after the first indication; and to 5 minutes after the last indication, 
regardless of whether it overlaps the prior indication, provided that a 
minimum of 10 minutes elapse between the first indication and the 
opening or reopening of a stock. For example, if only 3 minutes had 
elapsed from the time of the first indication to the second indication, 
the minimum waiting period after the second indication would be 7 
minutes.
    The Commission agrees with the Exchange that due to increases in 
the speed of communications, relevant market information can be 
disseminated and responded to very quickly. The Commission finds 
reasonable the Exchange's determination that the proposed rule change 
will allow the opening or reopening of a stock in more expeditious 
fashion while still providing sufficient time for appropriate pricing 
of orders. The Commission finds that in the rule change, the Exchange 
has made a reasonable determination that balances the preservation of 
the price discovery process while providing timely opportunities for 
investors to participate in the market. Exchange staff has represented 
that the change in the timing of tape indications is consistent with 
Intermarket Trading System re-opening procedures.\4\
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    \4\ Telephone Conversation between Don Siemer, Director of Rule 
Development, Market Surveillance Division, NYSE, and Janet W. 
Russell-Hunter, Special Counsel, Office of Market Supervision, 
Division of Market Regulation, SEC, on January 23, 1997. See Plan 
for the Purpose of Creating and Operating an Intermarket 
Communications Linkage Pursuant to Section 11A(a)(3)(B) of the 
Securities Exchange Act of 1934 [Composite: Amendments Through May 
21, 1991].
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IV. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\5\ that the proposed rule change (File No. SR-NYSE-96-32) is 
approved.

    \5\ 15 U.S.C. 78s(b)(2).
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    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\6\
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    \6\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 97-3066 Filed 2-6-97; 8:45 am]
BILLING CODE 8010-01-M