[Federal Register Volume 62, Number 53 (Wednesday, March 19, 1997)]
[Notices]
[Pages 13203-13204]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-6893]


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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-38383; File No. SR-Phlx-97-12]


Self-Regulatory Organizations; Notice of Filing of Proposed Rule 
Change by the Philadelphia Stock Exchange, Inc. Relating to the 
Maintenance Criteria for the PHLX Phone Index

March 11, 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 March 5, 1997, 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 Exchange. The 
Commission is publishing this notice to solicit comments on the 
proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of 
Substance of the Proposed Rule Change.

    The Phlx, pursuant to Rule 19b-4 of the Act, proposes to amend the 
maintenance standards applicable to the PHLX Phone Index (``Index'') to 
allow the number of stocks in the index to decline to six stocks 
without having to delist the index.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
the Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the Phlx 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 Phlx 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 Index is a capitalization weighted index composed of eight 
widely held U.S. companies created as a result of the divestiture of 
American Telephone and Telegraph Co. (``AT&T'') in 1983. The Index 
includes seven regional telephone companies spun off from AT&T and AT&T 
itself.\3\ Currently, the Index would not meet the maintenance 
standards if less than 90% of the component stocks in the Index, by 
weight, are eligible for Exchange options trading or if the number of 
stocks in the index ever decreases to less than eight or increases to 
more than ten. In such case, the Exchange is required to wind down the 
Index by restricting trading to closing only transactions and not 
opening any new series of options on the Index unless a new Rule 19b-4 
filing is submitted to the Commission and approved.
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    \3\ Securities Exchange Act Release No. 34345 (July 11, 1994), 
59 FR 36245 (July 15, 1994) (approval for index options on the Phone 
Index).
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    The Exchange is proposing, herein, to amend the maintenance 
standards to allow the number of component stocks in the index to 
decrease to six without having to wind down the Index. Thus, if the 
number of stocks in the index decreases to less than six or increases 
to more than ten, the Exchange would restrict trading to closing only 
transactions and not open any new series of options on the Index until 
it seeks and gains approval for such a revised index. The 90% Exchange 
options eligibility maintenance standard will still apply.
    The Exchange expects that in the near future, two separate mergers 
involving four of the components may occur. NYNEX and Bell Atlantic are 
proposing a merger with Bell Atlantic as the survivor and SBC 
Communications is proposing to merge with Pacific Telesis with SBC 
Communications as the survivor. If these two mergers are consummated, 
the Index would only have six component issues which would still pass 
the new proposed maintenance criteria.
2. Basis
    The Phlx believes that the proposed rule change is consistent with 
Section 6 of the Act in general and furthers the objective of Section 
6(b)(5) in particular \4\, in that it is designed to promote just and 
equitable principles of trade, to prevent fraudulent and manipulative 
acts and practices, and to remove impediments to and perfect the 
mechanism of a free and open market and a national market system, as 
well as to protect investors and the public interest.
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    \4\ 15 U.S.C. 78f(b)(5).
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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 with respect to the 
proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing 
for Commission Action

    Within 35 days of the date 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 agency 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. Copies of such

[[Page 13204]]

filing will also be available for inspection and copying at the 
principal office of the PHLX. All submissions should refer to File No. 
SR-PHLX-97-12, and should be submitted by April 9, 1997.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 97-6893 Filed 3-18-97; 8:45 am]
BILLING CODE 8010-01-M