Federal Register / Vol. 62, No. 36 / Monday, February 24, 1997 / Notices 8291

spread in the security over the course of any full

calendar month exceeds 150 percent of the average

of all dealer spreads in such issue for the month.

See Securities Exchange Act Release No. 38180

(January 16, 1997), 62 FR 3725. Although the

Commission approved the proposed rule change on

a temporary basis to facilitate compliance with the

Commission’s Order Handling Rules, the

Commission stated that during this time period, the

NASD should monitor the effects of the pilot, as

well as study alternative methods that would

enhance market making performance while

completely fulfilling the NASD’s obligation

regarding the excess spread rule before the August

8, 1997, deadline contained in the Commission’s

Order Instituting Public Proceedings Pursuant to

Section 19(h)(1) of the Securities Exchange Act of

1934, Making Findings and Imposing Remedial

Sanctions, Securities Exchange Act Release No.

37538 (August 8, 1996).

6The Division of Market Regulation issued an

interim no-action letter to the NASD and Nasdaq

with respect to the enforcement of the NASD’s

primary market maker standards during the

consideration of this proposed rule change. The

approval of this rule change supersedes that noaction position. See Letter from Howard Kramer,

Associate Director, Division of Market Regulation,

SEC, to Eugene A. Lopez, Assistant General

Counsel, Nasdaq, dated February 3, 1997.

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

8 17 U.S.C. 200.30–3(a)(12).

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

2 17 CFR 240.19b–4.

3Securities Exchange Act Release No. 37782 (Oct.

3, 1996), 61 FR 53254.

4See Letter from Theresa McCloskey, Vice

President, Regulatory Services, Phlx, to Sharon

Lawson, Senior Special Counsel, Division of Market

Regulation, Office of Market Supervision, SEC,

dated January 23, 1997, and letter from Theresa

McCloskey, Vice President, Regulatory Services,

Phlx, to Sharon Lawson, Senior Special Counsel,

Division of Market Regulation, Office of Market

Supervision, SEC, dated January 29, 1997

(collectively ‘‘Amendment No. 1’’). Amendment No.

1 withdraws that portion of the proposal seeking

‘‘interim authority’’ to utilize the ICE system value.

Interim authority, in this case, refers to the

Exchange’s ability to continue to utilize the ICE

system during that interim time period after a

temporary operational problem at the designated

reporting authority is corrected, but before receiving

Commission approval to appoint a different

reporting authority. In addition, Amendment No. 1

clarifies that designation of ICE as the reporting

authority for a particular options product must be

filed pursuant to Section 19(b) of the Act and that

the Phlx’s request for using ICE as the reporting

authority for FLEX options will be incorporated

into the FLEX options proposal (SR-Phlx–96–38).

5Any request to utilize ICE as the permanent

reporting authority for a particular options product

will have to be submitted to the Commission for

approval under Section 19(b) of the Act. See

Amendment No. 1, supra note 4.

new primary market maker standards

well before the expiration of the pilot.

Nasdaq has requested that the

Commission find good cause pursuant

to Section 19(b)(2) for approving the

proposed rule change prior to the 30th

day after publication in the Federal

Register. The Commission finds good

cause for approving the proposed rule

change prior to the 30th day after the

date of publication of notice of filing

thereof in that accelerated approval will

accommodate the Order Handling Rules,

which went into effect January 20,

1997.6

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

Room. Copies of such filing will also be

available for inspection and copying at

the principal office of the NASD. All

submissions should refer to File No.

SR–NASD–97–07 and should be

submitted by March 17, 1997.

It is therefore ordered, pursuant to

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

proposed rule change be, and hereby is,

approved on an accelerated basis,

effective February 14, 1997 through

October 1, 1997.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.8

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 97–4445 Filed 2–21–97; 8:45 am]

BILLING CODE 8010–01–M

[Release No. 34–38292; File No. SR–Phlx–

96–36]

Self-Regulatory Organizations;

Philadelphia Stock Exchange, Inc.;

Order Granting Approval to Proposed

Rule Change and Notice of Filing of,

and Order Granting Accelerated

Approval to, Amendment No. 1 to the

Proposed Rule Change Relating to

Index Value Calculations by the Index

Calculation Engine (‘‘ICE’’) System

February 14, 1997.

On October 3, 1996, the Philadelphia

Stock Exchange, Inc. (‘‘Phlx’’ or

‘‘Exchange’’) submitted to the Securities

and Exchange Commission (‘‘SEC’’ or

‘‘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

permit the Phlx to act as the reporting

authority for its index options under

certain circumstances.

The proposed rule change was

published for comment in the Federal

Register on October 10, 1996.3 No

comments were received on the

proposal. Subsequently, the Phlx

amended the proposed rule change.4

This order approves the proposal,

including Amendment No. 1 on an

accelerated basis.

Currently, three market (broad-based)

index options, seven industry (narrowbased or sector) index options, and the

Super Cap Index option trade on the

Exchange. The reporting authority for

each index option is currently Bridge

Data. For each index option listed on

the Exchange, the specifications and

descriptions filed with the Commission

detail how the index value is calculated

and that the calculation is conducted by

Bridge.

In the course of reviewing

inconsistencies in index value

calculations, as well as the disaster

recovery implications of using a single,

outside reporting authority, the

Exchange decided to create its own

internal system for the calculation and

dissemination of index values—the

Index Calculation Engine (‘‘ICE’’)

system. Recently, this system was

completed, tested, and implemented as

a surveillance tool for Phlx Regulatory

Services and Market Surveillance staff

monitoring Exchange index options

trading. In an effort to make use of the

capabilities of the ICE system, the Phlx

proposes to utilize the ICE system value

as the official index value in two

situations.

First, the ICE system value would act

as the official index value in the event

the reporting authority designated by

the Phlx is experiencing difficulties in

disseminating an accurate value (e.g.,

computer failure, line problem). Under

these circumstances, the Exchange

would automatically switch to using the

ICE system value as the official index

value, but only for the time period that

is necessary for the designated agent to

correct its problem.

Second, the Phlx, when determining

which entity to utilize as the permanent

reporting authority for its index options,

would like to be able to select the ICE

system as the designated reporting

authority.5 Economic and efficiency

considerations are the impetus for this

request.

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
8292 Federal Register / Vol. 62, No. 36 / Monday, February 24, 1997 / Notices

6 15 U.S.C. 78f(b).

7 15 U.S.C. 78f(b)(5).

8 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).

9See letter from Thomas A. Wittman, Vice

President, Trading Systems Development, Phlx, to

George Jenkins, Division of Market Regulation, SEC,

dated November 20, 1996; telephone conversation

between Thomas A. Wittman, Vice President,

Trading Systems Development, Phlx, and Anthony

P. Pecora, Attorney, Division of Market Regulation,

SEC, November 22, 1996 (representing that ICE is

capable of acting as a primary system despite the

fact that it originally was designed as a backup

system).

10The proposal allows the Phlx to utilize the ICE

system as the official reporting authority whenever

the designated reporting authority is experiencing

operating difficulties, but only until such

difficulties are resolved. As soon as the problem is

corrected, the Phlx must switch back to the

designated reporting authority. If the reporting

authority’s problems occur on a regular basis, the

Phlx can designate a different reporting authority,

including ICE, by submitting a filing with the

Commission pursuant to Section 19(b)(1) of the Act

and Rule 19b–4 thereunder.

11 15 U.S.C. 78f, 78s(b)(2).

12 15 U.S.C. 78s(b)(2).

13 17 CFR 200.30–3(a)(12).

requirements of Section 6(b).6

Specifically, the Commission believes

the proposal is consistent with the

Section 6(b)(5) 7 requirements that the

rules of an exchange be designated to

promote just and equitable principles of

trade, to facilitate transactions in

securities, to prevent fraudulent and

manipulative acts, and, in general, to

protect investors and the public

interest.8

The Commission believes it is

appropriate to allow the temporary use

of the ICE system value as the official

index value when the designated

reporting authority is experiencing

operating difficulties. Utilizing the ICE

system as a backup in such situations

will add stability to the affected options

market because it will ensure the

continued availability of current index

values, which are essential to

investment decisions in index options,

while the designated reporting authority

identifies and corrects the problems

prohibiting the dissemination of an

accurate index value.

The Commission also believes it is

appropriate to provide the Phlx with the

option of designating the ICE system as

the reporting authority for its

proprietary index options as long as

prior Commission approval pursuant to

Section 19 of the Act is obtained.

Permitting the Phlx to act as the

reporting authority for its proprietary

index options should benefit investors

by reducing the response time needed in

the event there is a problem

disseminating index values. Moreover,

the Phlx has represented that the ICE

system has been tested fully and that

this system is capable of handling the

proposed tasks.9

The Commission finds good cause for

approving Amendment No. 1 prior to

the thirtieth day after the date of

publication of notice thereof in the

Federal Register. Amendment No. 1

simply clarifies that designation of ICE

as the reporting authority must be filed

pursuant to Section 19(b) of the Act,

explains that the Phlx’s request for

using ICE as the reporting authority for

FLEX options will be proposed in the

FLEX options proposal (SR–Phlx–96–

38), and removes the previous request

for interim authority to utilize ICE

which was deemed to be unnecessary

given the Exchange’s ability to use ICE

until a problem in the designated

reporting authority has been corrected.10

Therefore, the Commission believes

that granting accelerated approval to

Amendment No. 1 is appropriate and

consistent with Section 6 and Section

19(b)(2) of the Act.11

Interested persons are invited to

submit written data, views and

arguments concerning Amendment No.

1 to the proposed rule change. 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

rules change that are filed with the

Commission, and all written

communications relating to Amendment

No. 1 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. § 552,

will be available for inspection and

copying in the Commission’s Public

Reference Room. Copies of such filing

will also be available at the principal

office of the Phlx. All submissions

should refer to File No. SR–Phlx–96–36

and should be submitted by March 17,

1997.

It is therefore ordered, pursuant to

Section 19(b)(2) of the Act,12 that the

proposed rule change (SR–Phlx–96–36),

as amended by Amendment No. 1, is

approved.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.13

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 97–4447 Filed 2–21–97; 8:45 am]

BILLING CODE 8010–01–M

SMALL BUSINESS ADMINISTRATION

[Declaration of Economic Injury Disaster

Loan Area Number 9378]

North Dakota (And Contiguous

Counties in Minnesota, South Dakota &

Montana); Declaration of Disaster Loan

Area

All counties in the State of North

Dakota except Billings, Bowman,

Golden Valley, and Slope; Clay, Kittson,

Marshall, Norman, Polk, Traverse, and

Wilkin Counties in Minnesota; Brown,

Campbell, Corson, Marshall,

McPherson, Perkins, and Roberts

Counties in South Dakota; and

Richland, Roosevelt, and Sheridan

Counties in Montana constitute an

economic injury disaster loan area as a

result of severe winter storms and

blizzard conditions during the period of

January 3 through January 31, 1997.

Eligible small businesses without credit

available elsewhere and small

agricultural cooperatives without credit

available elsewhere may file

applications for economic injury

assistance until the close of business on

November 12, 1997 at the address listed

below: U.S. Small Business

Administration, Disaster Area 3 Office,

4400 Amon Carter Blvd., Suite 102, Fort

Worth, TX 76155, or other locally

announced locations. The interest rate

for eligible small businesses and small

agricultural cooperatives is 4 percent.

(Catalog of Federal Domestic Assistance

Program No. 59002)

Dated: February 11, 1997.

Philip Lader,

Administrator.

[FR Doc. 97–4431 Filed 2–21–97; 8:45 am]

BILLING CODE 8025–01–P

[Declaration of Economic Injury Disaster

Loan Area # 9382]

Commonwealth of Pennsylvania;

Declaration of Disaster Loan Area

Allegheny County and the contiguous

counties of Armstrong, Beaver, Butler,

Washington, and Westmoreland in the

Commonwealth of Pennsylvania

constitute an economic injury disaster

loan area as a result of damages caused

by a fire which occurred on January 31,

1997 in the Glassport Industrial Park.

Eligible small businesses without credit

available elsewhere and small

agricultural cooperatives without credit

available elsewhere may file

applications for economic injury

assistance until the close of business on

November 14, 1997 at the address listed

below: U.S. Small Business

Administration, Disaster Area 1 Office,