63592 Federal Register / Vol. 62, No. 230 / Monday, December 1, 1997 / Notices

6 17 CFR 200.30–3(a)(12).

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

2 17 CFR 240.19b–4.

3The Commission notes that it previously

approved the portion of the proposed rule filing

making permanent the Near Neighbor, Capital

Utilization and Rule 103A pilot programs for

measuring specialist performance. See Securities

Exchange Act Release No. 38150 (January 10, 1997),

62 FR 2704 (January 17, 1997). This order approves

the remaining portion of the proposed rule change

to adopt a new specialist performance measure,

‘‘adjusted stabilization.’’

4Amendment No. 1 states that the new

performance measure, adjusted stabilization, will be

solely for use by the Allocation Committee, and that

the information will be provided to the Allocation

Committee on a one-year pilot basis. See letter from

James E. Buck, Senior Vice President, NYSE, to

Michael Walinskas, Senior Special Counsel, Market

Regulation, Commission, dated October 22, 1997.

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 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. In

addition to any other issues that the

public may wish to address, the

Commission specifically requests

comments on the following questions:

General

Will the respective obligations

imposed on clearing and introducing

firms by the proposal help introducing

firms and regulators better address sales

practice problems?

To what extent would the proposal

discourage either introducing or

clearing firms from agreeing to enter

into new clearing relationships, or to

renew existing ones, or affect the degree

of care employed when entering into

such a relationship?

Customer Complaints

How quickly are customer complaints

that are directed to clearing firms and

that concern introducing firms or their

associated persons currently forwarded

to introducing firms? What proportion

of these complaints concerns matters

identified in NASD Rule 3070(a)(2), i.e.,

allegations of theft or misappropriation

of funds or securities, or of forgery?

What other types of complaints

typically are received?

Why in general are complaint letters

addressed to clearing firms rather than

introducing firms, when they concern

conduct of the introducing firms? Please

address the extent to which this occurs

because of confusion by customers over

the relative responsibilities of the firms

based on the contacts with the

customer, such as confirmations, or for

other reasons, e.g., the failure to receive

a response from the introducing firm?

Should the requirements of the

proposed rule regarding customer

complaints apply equally to complaints

against a clearing firm sent by a

customer to an introducing firm with

whom the clearing firm has a clearing

agreement?

Presently, copies of customer

complaints that are received by

securities firms are not required to be

forwarded to the SEC or any selfregulatory organization (‘‘SRO’’). Rather,

the firms are required to submit

summaries of complaints to their SRO.

To the extent that this requirement is

imposed, should clearing firms be

required to send summaries or actual

complaint letters to the SROs?

Will the requirement that, upon the

clearing firm’s receipt of a customer

complaint, the customer be notified by

the clearing firm that he or she has the

right to transfer his or her account to

another firm serve a useful purpose, in

informing customers that they are not

tied to the introducing broker in the

case of sales problems? Does it create an

unfair implication that each such

complaint would warrant the customer’s

transferring his account, or otherwise

unfairly tarnish the introducing firm?

To the extent that this type of

information is useful to investors, does

it make sense to provide this notice only

in the circumstances identified?

Exception Reports

What compliance or cost burdens

would result from the requirement that

clearing firms retain copies of exception

reports or data that is provided to

introducing firms? To what extent is

this data now stored, and for how long?

What are the relative costs and

benefits of the requirements for annual

reports to the executive and compliance

officers of introducing firms as to the

exception reports that were offered and

supplied? Is it feasible for the clearing

firm to provide reports to the DEAs that

the introducing firm did not request?

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. 20549. Copies of such

filing will also be available for

inspection and copying at the principal

office of the above-mentioned selfregulatory organization. All submissions

should refer to File No. SR–NASD–97–

76 and should be submitted by

December 22, 1997.

For the Commission, by the Division of

Market Regulations, pursuant to delegated

authority.6

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 97–31393 Filed 11–28–97; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–39344; File No. SR–NYSE–

96–34]

Self-Regulatory Organizations; New

York Stock Exchange, Inc.; Order

Granting Approval to Proposed Rule

Change and Notice of Filing and Order

Granting Accelerated Approval to

Amendment No. 1 to Proposed Rule

Change To Adopt a New Specialist

Performance Measure

November 21, 1997.

I. Introduction

On December 3, 1996, the New York

Stock Exchange, Inc. (‘‘NYSE’’ or

‘‘Exchange’’) submitted to the Securities

and Exchange Commission

(‘‘Commission’’), pursuant to Section

19(b)(1) of the Securities Exchange Act

of 1934 (‘‘Act’’)1 and Rule 19b–4

thereunder,2 a proposed rule change to

adopt a new specialist performance

measure.3

Notice of the proposed rule change,

together with the substance of the

proposal, was published for comment in

Securities Exchange Act Release No.

38150 (January 10, 1997), 62 FR 2704

(January 17, 1997). No comments were

received on the proposal. The Exchange

filed Amendment No. 1 to the proposed

rule change on October 23, 1997.4

II. Description

The Exchange proposes to add on a

one-year pilot basis, solely for use by

the Allocation Committee in evaluating

specialist performance, the concept of
Federal Register / Vol. 62, No. 230 / Monday, December 1, 1997 / Notices 63593

5 15 U.S.C. 78f(b).

6 In approving this rule, the Commission notes

that it has considered the proposed rule’s impact on

efficiency, competition, and capital formation. 15

U.S.C. 78c(f). 7 15 U.S.C. 78s (b) (2).

8The Commission notes that this order only

approves a portion of the proposed rule change. See

supra note 3.

9 17 CFR 200.30–3(a) (12).

1The Exchange filed Amendment No. 1 to the

proposed rule filing on November 4, 1997, the

substance of which is incorporated into this notice.

See letter from Philip H. Becker, Senior Vice

President, General Counsel and Chief Regulatory

Officer, Phlx, to Michael Walinskas, Senior Special

Counsel, Market Regulation, Commission, dated

November 4, 1997.

‘‘adjusted stabilization’’ rates.

Specialists are expected to stabilize

stock price movements by buying and

selling from their own accounts against

the prevailing trend of the market. The

current definition of stabilization is

dealer purchases on minus and zero

minus ticks, and sales on plus and zero

plus ticks. The Exchange believes that

certain trades outside of the definition

of stabilization are not necessarily

destabilizing. These would consist of

proprietary zero plus tick purchases on

the current bid (provided the current

bid is below the offer at the time of the

immediately preceding trade) and

proprietary zero minus tick sales on the

current offer (provided the current offer

is above the bid at the time of the

immediately preceding trade). Hence,

the Exchange is grouping these trades

with the trades within the current

definition of stabilization to form an

‘‘adjusted stabilization’’ category for

review by the Allocation Committee.

Adjusted stabilization rate information

would be provided, on a one-year pilot

basis, solely to the Allocation

Committee to assist it in assessing the

value added by specialists to the depth

and liquidity of stocks they currently

trade.

III. Discussion

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, with the

requirements of Section 6(b).5

Specifically, the Commission believes

the proposal is consistent with the

Section 6(b) (5) requirements that the

rules of an exchange be designed to

promote just and equitable principles of

trade, to prevent fraudulent and

manipulative acts, and, in general, to

protect investors and the public.6

The Commission believes that the

proposed rule change is reasonable

under the Act in that continuing to

further develop objective measures of

specialist performance, by adopting the

‘‘adjusted stabilization’’ measure,

should help perfect the mechanism of a

free and open market and protect

investors and the public interest. The

Commission believes that ‘‘adjusted

stabilization’’ is a useful concept

because it could reflect liquidity added

to the market by specialists that is not

otherwise captured by the current

definition of stabilization, by reflecting

the fact that on certain zero plus tick

purchases or zero minus tick sales the

specialist is not initiating either a

transaction or a price change, but is

adding depth to the market at prices at

which transactions have already

occurred.

The Commission finds good cause to

approve Amendment No. 1 to the

proposed rule change prior to the

thirtieth day after the date of

publication of notice of filing thereof in

the Federal Register. Specifically,

Amendment No. 1 will ensure that the

new measure of specialist performance

is used solely by the Allocation

Committee to help evaluate specialist

performance and the depth and

liquidity specialists add to the stocks

they trade. Also, by providing for the

new measure on a one-year pilot basis,

the Exchange will be able to monitor the

success of the new performance

measure in helping to evaluate

specialist performance. In addition, the

substance of the proposed rule change

was noticed for the full statutory period

and no comments were received.

Accordingly, the Commission believes

that it is consistent with Section 6(b)(5)

of the Act to approve Amendment No.

1 to the proposal on an accelerated

basis.

Interested persons are invited to

submit written data, views, and

arguments concerning Amendment No.

1 to the rule proposal. 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 on 5 U.S.C. 552, will be

available for inspection and copying at

the Commission’s Public Reference

Room. Copies of such filing also will be

available for inspection and copying at

the principal office of the Exchange. All

submissions should refer to File No.

SR–NYSE–96–34 and should be

submitted by December 22, 1997.

IV. Conclusion

It is therefore ordered, pursuant to

Section 19(b)(2) of the Act,7 that the

portion of the proposed rule change

(SR–NYSE–96–34) involving the

adoption of ‘‘adjusted stabilization’’ rate

information as a specialist performance

measure,8 as amended, is approved on

a one-year pilot basis through November

21, 1998.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.9

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 97–31389 Filed 11–28–97; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–39345; File No. SR–Phlx–

97–35]

Self-Regulatory Organizations; Notice

of Filing of Proposed Rule Change by

the Philadelphia Stock Exchange, Inc.

To Adopt a Contingency Market Maker

System for Foreign Currency Options

November 21, 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 July 17, 1997,1 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

Phlx proposes to adopt a contingency

plan to trade foreign currency options

(‘‘FCOs’’) pursuant to a Market Maker

System. The contingency Market Maker

System would provide a modified

trading system to ensure the continuity

of FCO trading in the situation where a

specialist unit is not available. In

summary, the contingency Market

Maker System would be contained in a

new provision, Rule 1014(j), which

states that assigned ROTs will be

responsible for making markets and

honoring the minimum guarantee (ten-