7488 Federal Register / Vol. 62, No. 33 / Wednesday, February 19, 1997 / Notices

4 15 U.S.C. 78s(b)(3)(A)(iii).

5 17 CFR 240.19b–4(e)(3).

6 17 CFR 200.30–3(a)(12). 1 15 U.S.C. 78s(b)(1).

2See NYSE Rule 124.60 (detailing the

circumstances when the ITS best bid or offer will

not be utilized).

3These uncodified guidelines currently provide

for the following valid spread ranges:

Common stock: for prices less than or equal to

$50, the valid spread is 1 point; for prices between

$50 1⁄64 and $100, the valid spread is 13⁄4 points;

for prices greater than $100, the valid spread is 21⁄2

points.

Preferred stock: for prices less than or equal to

$50, the valid spread is 2 points; for prices between

50 1⁄64 and 100, the valid spread is 21⁄4 points; for

prices greater than $100, the valid spread is 21⁄2

points.

Spread between quote and last sale must not

exceed: prices less than or equal to $10, the valid

spread is 3/8 point; prices between 101⁄8 and $25,

the valid spread is 1⁄2 point; prices between 251⁄8

and $40, the valid spread is 5⁄8 point; prices greater

than $40, the valid spread is 21⁄2 points.

(B) Self-Regulatory Organization’s

Statement on Burden on Competition

DTC does not believe that the

proposed rule change will have an

impact or impose a 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 on the proposed

rule change were solicited or received.

III. Date of Effectiveness of the

Proposed Rule Change and Timing for

Commission Action

The foregoing rule change has become

effective pursuant to Section

19(b)(3)(A)(iii) 4 of the Act and pursuant

to Rule 19b–4(e)(3) 5 promulgated

thereunder in that the proposed rule

change is concerned solely with the

administration of DTC. At any time

within sixty days of the filing of such

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 in

the Commission’s Public Reference

Section, 450 Fifth Street, NW.,

Washington, DC 20549. Copies of such

filing also will be available for

inspection and copying at the principal

office of DTC. All submissions should

refer to File No. SR–DTC–96–25 and

should be submitted by March 12, 1997.

For the Commission by the Division of

Market Regulation, pursuant to delegated

authority.6

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 97–4053 Filed 2–18–97; 8:45 am]

BILLING CODE 8010–01–M

[Release No. 34–38267; File No. SR–NYSE–

96–33]

Self-Regulatory Organizations; Notice

of Filing of Proposed Rule Change by

the New York Stock Exchange, Inc.

Relating to the Execution of Odd-Lot

Orders

February 11, 1997.

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

Securities Exchange Act of 1934

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

November 25, 1996, the New York Stock

Exchange, Inc. (‘‘NYSE’’ or ‘‘Exchange’’)

filed with the Securities and Exchange

Commission (‘‘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

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 proposed rule change consists of

an amendment to Exchange Rule 124

with respect to the manner in which

odd-lot market orders are priced for

execution when quotation information

in a stock is not available.

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

Currently, odd-lot market orders are

executed in the odd-lot system against

the specialist in that stock at a price

based on the ‘‘best pricing quote.’’ This

is either the NYSE quote or the best

quote from another ITS market center.

(A buy odd-lot market order is executed

at the offer price, and a sell odd-lot

market order is executed at the bid

price.) However, in situations where the

quote for a stock does not qualify as a

valid quote, either because it is

designated as a non-firm quote, or it

fails a system validation check because

it exceeds certain parameters, the

current procedure prices odd-lot

executions using the last sale price in

the round lot market.2 The Exchange

believes, however, that this may not

reflect the current market for the stock,

since the quote condition (i.e. either

non-firm or a gapped quote) suggests

strongly that the market is likely to

move away from that last price. In these

situations, the Exchange believes the

current procedure may disadvantage

customers or the specialist.

The NYSE proposes that, when oddlot market orders are entered in a

situation where a quote is not available,

designated non-firm, or where the

spread in a quote or the difference

between the quote and the last round lot

sale exceeds odd-lot system validation

guidelines,3 that the next sale or next

valid quote on the NYSE be used to

price odd-lot market orders, rather than

the last sale price. If the next quote is

not firm, the next sale would be used to

execute quote priced market orders. The

Exchange believes this would provide

more appropriate pricing of odd-lot

orders as it would reflect actual roundlot market prices at the time the odd-lot

orders are executed. The Exchange

further believes investors and specialists

would benefit from this increased

pricing accuracy.

2. Statutory Basis

The Exchange believes the proposed

rule change is designed to provide more

efficient executions of standard off-lot

market orders. In addition, the Exchange
Federal Register / Vol. 62, No. 33 / Wednesday, February 19, 1997 / Notices 7489

4 15 U.S.C. 78f(b)(5).

5 17 C.F.R. 200.30–3(a) (12).

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

2 17 CFR 240.19b–4.

3The PSE filed an amendment (‘‘Amendment No.

1’’) clarifying the maximum number of Lead Market

Makers and options symbols that would participate

in the expanded Lead Market Maker Book Pilot

Program. See Letter from Michael D. Pierson, Senior

Attorney, Regulatory Policy, PSE, to Janet RussellHunter, Special Counsel, Office of Market

Supervision, Division of Market Regulation,

Commission, dated February 3, 1997.

4See Securities Exchange Act Release No. 37810

(October 11, 1996), 61 FR 54481 (‘‘Pilot Approval

Order’’).

5More specifically, under the rule changes

approved by the Commission, LMMs may perform

all functions of the Order Book Official (‘‘OBO’’) in

designated issues pursuant to rules 6.51 through

6.59. In that regard, the Exchange will allow the

LMM to utilize Exchange personnel to assist the

LMM in performing the OBO function, and the

Exchange will charge the LMM a reasonable fee for

such use of Exchange personnel, If the program is

made permanent, LMMs would be responsible for

hiring and maintaining their own employees, but

the Exchange would provide employees to assist

LMMs when necessary due to market conditions. In

all cases, however, employees working in the Book

operation will be subject to all rules, policies, and

procedures established by the Exchange. With

regard to their duties as market makers, LMMs

would be required to perform all obligations

provided in Rules 6.35 through 6.40 and 6.82.

6Each option issue typically has only one symbol

associated with it, unless LEAPs are traded on that

issue, in which case there usually would be two

additional symbols related to the issue, or unless a

contract adjustment is necessary due, for example,

Continued

believes implementation of the

proposed pricing procedures is

consistent with the provisions of

Section 6(b) (5) of the Act which, among

other things, requires that an exchange

have rules that are designed to remove

impediments to and perfect the

mechanism of a free and open market,

and, in general, to protect investors and

the public interest.4

B. Self-Regulatory Organization’s

Statement on Burden on Competition

The Exchange believes the proposed

rule change will impose no 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.

III. Date of Effectiveness of the

Proposed Rule Change and Timing for

Commission Action

Within 35 days of the 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 the 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.

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. Also, copies of

such filing will be available for

inspection and copying at the principal

office of the NYSE. All submissions

should refer to File No. SR–NYSE–96–

33 and should be submitted by March

12, 1997.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.5

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 97–4050 Filed 2–18–97; 8:45 am]

BILLING CODE 8010–01–M

[Release No. 34–38273; File No. SR–PSE–

96–45]

Self-Regulatory Organizations; Notice

of Filing of Proposed Rule Change and

Amendment Thereto by the Pacific

Stock Exchange Incorporated Relating

to the Exchange’s Lead Market Maker

Options Book Pilot Program

February 12, 1997.

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

Securities Exchange Act of 1934

(‘‘Act’’),1 and Rule 19b–4 thereunder 2

notice is hereby given that on December

10, 1996, the Pacific Stock Exchange

Incorporated (‘‘PSE’’ 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 Exchange

filed an amendment to the proposed

rule change on February 4, 1997.3 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 PSE is proposing to modify its

Lead Market Maker (‘‘LMM’’) Book Pilot

Program under which PSE LMMs may

assume operational responsibility for

the options public limit order book

(‘‘Book’’) in certain option issues. The

Exchange is proposing to expand the

scope of the program to allow for more

LMMs to participate, and to allow a

greater number of option issues to be

eligible under the Program.

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 examine 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

On October 11, 1996, the Commission

approved and Exchange proposal to

adopt a one-year pilot program under

which some LMMs are permitted to

manage the Book function in certain

designated issues.4 Under the pilot, the

approved LMMs manage the Book

function, take responsibility for trading

disputes and errors, set rates for Book

execution, and pay the Exchange a fee

for systems and services.5 The program

allows LMMs to have greater control

over their operations on the Exchange

floor by allowing them, among other

things, to set their own rates for

execution services provided to

customers.

Under the pilot as approved by the

Commission, the program is limited to

no more than three LMMs and no more

than forty option symbols in total,6