26836 Federal Register / Vol. 63, No. 93 /Thursday, May 14, 1998 / Notices

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

2 17 CFR 240.19b–4.

3See Letter from Linda S. Christie, Counsel,

PHLX, to Yvonne Fraticelli, Attorney, Division of

Market Regulation (‘‘Division’’), Commission, dated

March 3, 1998 (‘‘Amendment No. 1’’). Amendment

No. 1 revises the text of PHLX Rule 124 to make

the rule consistent with the Advices. Specifically,

Amendment No. 1 modifies the text of PHLX Rule

124 to indicate that two options floor officials

(rather than one floor official) may nullify a

transaction if they determine that the transaction

violated any of the following PHLX Rules: 1014,

‘‘Obligations and Restrictions Applicable to

Specialists and ROTs;’’ 1015, ‘‘Quotation

Guarantees;’’ 1017, ‘‘Priority and Parity at Openings

in Options;’’ 1033, ‘‘Bids and Offers—Premium;’’ or

1080, ‘‘PHLX Automated Options Market (AUTOM)

and Automatic Execution System (AUTO-X).’’ In

addition, Amendment No. 1 indicates that two

equity floor officials (rather than one floor official)

may nullify a transaction if they determine that the

transaction violated any of the following PHLX

Rules: 110, ‘‘Bids and Offers—Precedence;’’ 111.

‘‘Bids and Offers Binding;’’ 118. ‘‘Bids and Offers

Outside Best Bid and Offer;’’ 119. ‘‘Precedence of

Highest Bid;’’ 120, ‘‘Precedence of Offers at Same

Price;’’ 126, ‘‘ ‘Crossing’ Orders;’’ 203, ‘‘Agreement

of Specialist;’’ 218, ‘‘Customer’s Order Receives

Priority;’’ 229, ‘‘Philadelphia Stock Exchange

Automated Communication and Execution System

(PACE);’’ 232, ‘‘Handling Orders When the Primary

Market is Not Open for Free Trading (EXP, PPS,

GTX Orders);’’ or 455, ‘‘Short Sales.’’

4See Securities Exchange Act Release No. 39741

(March 11, 1998), 63 FR 13087.

5Currently, PHLX Rule 124 states that ‘‘[d]isputes

arising on bids or offers, if not settled by agreement

between the members interested, shall be settled, if

practicable, by vote of the members knowing of the

transaction in question; if not so settled, they shall

be settled by the Committee.’’ The ‘‘Committee’’ is

the applicable floor standing committee. The

applicable standing committees are the Floor

Procedure Committee for the equity floor; the

Options Committee for the equity option floor and

the index option floor; and the Foreign Currency

Options (‘‘FCO’’) Committee for the FCO floor.

6See Amendment No. 1, supra note 3.

7See note 5, supra, for a description of the

jurisdiction of the standing committee.

8The review panel will try to meet as soon as

practicable after notice of a request for a review of

a floor official’s rulings. The PHLX notes, however,

that this time frame will apply to the extent

practicable under the circumstances, particularly if

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–39975; File No. SR-PHLX98–03]

Self-Regulatory Organizations; Order

Approving Proposed Rule Change by

the Philadelphia Stock Exchange, Inc.,

Relating to Trading Disputes and Floor

Official Rulings

May 7, 1998.

I. Introduction

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

Securities Exchange Act of 1934

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

the Philadelphia Stock Exchange, Inc.

(‘‘PHLX’’ or ‘‘Exchange’’) filed with the

Securities and Exchange Commission

(‘‘SEC’’ or ‘‘Commission’’) a proposal to

replace the current text of PHLX Rule

124, ‘‘Disputes,’’ with new text. In the

filing, the PHLX also proposed to adopt

Floor Procedure Advice (‘‘Advice’’) F–

27, ‘‘Floor Official Rulings—Options’’

and F–27, ‘‘Floor Official Rulings—

Equity’’ (together, the ‘‘Advices’’),

which incorporate and expand upon the

provisions of PHLX Rule 124. On March

3, 1998, the PHLX amended its

proposal.3 Notice of the proposed rule

change and Amendment No. 1 to the

proposed rule change were published

for comment in the Federal Register on

March 17, 1998.4 No comments were

received regarding the proposal. This

order approves the proposed rule

change, as amended.

II. Description of the Proposal

The PHLX proposes to codify its

current procedures regarding floor

officials’ rulings by replacing the text of

PHLX Rule 124 5 with new text and

adopting two Advices. The Advices will

be published in the PHLX’s Floor

Procedure Advice handbook. According

to the PHLX, the proposal will

incorporate expressly into the PHLX’s

rules the Exchange’s current procedures

for resolving trading disputes and the

role of floor officials in resolving trading

disputes.

New PHLX Rule 124 also

acknowledges that, in addition to

resolving trading disputes, floor officials

may issue citations for violations of

Floor Procedure Advices pursuant to

PHLX Rule 970, ‘‘Floor Procedure

Advices: Violations, Penalties, and

Procedures,’’ and for violations of the

PHLX’s order and decorum regulations,

pursuant to PHLX Rule 60,

‘‘Assessments for Breach of

Regulations.’’ The PHLX’s proposal

contains two provisions applicable to all

rulings by floor officials. First, the

Advices set forth a conflict of interest

provision which states that a floor

official should not render a decision or

authorize a citation where the floor

official was involved in or affected by

the dispute, or in any situation where

the floor official is not able to

objectively and fairly render a decision.

Second, PHLX Rule 124(b) states that all

rulings by floor officials are effective

immediately and must be complied with

promptly. Failure to comply promptly

with a ruling concerning a trading

dispute may result in a referral to the

PHLX’s Business Conduct Committee

(‘‘BCC’’). Failure to comply with a floor

official’s ruling issued pursuant to

PHLX Rule 60 or PHLX Rule 970 may

result in an additional violation of those

rules. For example, a first violation for

disorderly conduct that does not cease

promptly after the floor official issues

the violation will result in a second

violation, also for disorderly conduct.

The remaining provisions of new

PHLX Rule 124 concern trading

disputes. Specifically, new PHLX Rule

124(a) states that disputes occurring on

and relating to the trading floor, if not

settled by agreement between the

interested members, shall be settled, if

practicable, by vote of the members

knowing of the transaction; if not so

settled, the disputes shall be settled by

a floor official summoned to the trading

crowd. In resolving trading disputes,

floor officials may institute the course of

action deemed to be most fair to all

parties under the circumstances at the

time. A floor official may direct the

execution of an order on the floor or

adjust the transaction terms or

participants to an executed order. In

addition, two floor officials may nullify

a transaction if they determine that the

transaction violated certain enumerated

PHLX rules.6 The Advices state that

floor officials need not render decisions

unless the request for a ruling is made

within a reasonable period of time.

PHLX Rule 124(c) identifies the

procedures for review of floor officials’

rulings. Specifically, PHLX Rule 124(c)

states that floor officials’ rulings issued

under the PHLX’s order and decorum

regulations are reviewable pursuant to

PHLX Rule 60, and that floor officials’

rulings issued under Floor Procedure

Advices are reviewable pursuant to

PHLX Rule 970. Floor officials’ rulings

in connection with trading disputes are

reviewable pursuant to the procedures

established in new PHLX Rule 124(d).

Under PHLX Rule 124(d), floor

officials’ rulings for options and FCO

trading are reviewable by a minimum of

three members of the applicable

Subcommittee on Rules and Rulings or

by the Chairperson of the applicable

standing committee 7 (or his or her

designee) if three Subcommittee

members cannot be convened promptly.

With respect to equity trading, floor

officials’ rulings are reviewable by a

minimum of three members of the Floor

Procedure Committee, or the

Chairperson of the Floor Procedure

Committee (or his or her designee) if

three members cannot be convened

promptly. This will be the designated

review panel for floor officials’ rulings.

The Advices state that a member must

submit a request for review of a floor

official’s ruling to the Director of the

PHLX’s Market Surveillance Department

(or his or her designee) within 15

minutes from the time the contested

ruling was rendered.8 Floor officials’
Federal Register / Vol. 63, No. 93 /Thursday, May 14, 1998 / Notices 26837

convening a review panel proves to be difficult due

to the time of day, heavy trading volume, or

scheduling conflicts. In addition, the PHLX notes

that, in connection with options trading, the

obligations to maintain a fair and orderly market or

the due diligence requirements of PHLX Rule 1063

may prevail over the obligation of a floor official to

provide a ruling or attend a review.

9See PHLX rule 124(d).

10See PHLX Rule 950, ‘‘Arbitration.’’

11See 15 U.S.C. 78f(b)(5). In approving this rule

change, the Commission has considered the

proposal’s impact on efficiency, competition, and

capital formation. 15 U.S.C. 78c(f).

12See e.g., NYSE Rule 75, ‘‘Disputes as to Bids

and Offers’’ (allowing a floor official to settle

disputes concerning bids or offers that are not

settled by agreement between the interested

members); and Amex Rule 22(c) (allowing a floor

official to resolve market disputes submitted to him

by members).

13As noted above, the conflict of interest

provision applies to floor officials’ actions pursuant

to PHLX Rules 60 and 970, as well as to floor

officials’ rulings pursuant to PHLX Rule 124.

14See Amendment No. 1, supra note 3.

15The Commission notes that the rules of the

Chicago Board Options Exchange, Inc. (‘‘CBOE’’)

also permit two floor officials to nullify a

transaction. Specifically, Interpretation and Policy

.05 to CBOE Rule 6.20, ‘‘Admission to and Conduct

on the Trading Floor,’’ allows two floor officials to

nullify a transaction or adjust its terms if they

determine that the transaction violated any of the

following CBOE rules: (1) 6.43 (manner of bidding

and offering); (2) 6.45 (priority of bids and offers);

(3) 6.46 (transactions outside the book’s last quoted

range); (4) 6.47 (priority on split price transactions);

or (5) 8.51 (trading crowd firm disseminated market

quotes).

16Floor officials’ rulings issued pursuant to the

PHLX’s order and decorum regulations are

reviewable pursuant to PHLX Rule 60; floor

officials’ rulings issued pursuant to Floor Procedure

Advices are reviewable pursuant to PHLX Rule 970.

See PHLX Rule 124(c).

rulings may be sustained, overturned, or

modified by a majority vote of the

review panel members present.9 In

making the determination, the review

panel may consider facts and

circumstances not available to the ruling

floor official as well as actions taken by

the parties in reliance on the floor

official’s ruling (e.g., cover, hedge, and

related trading activity). Decisions of the

review panel are final and may be

appealed to the PHLX’s Board of

Governors as a final decision of the

standing floor committee pursuant to

PHLX By-Law Article XI, ‘‘Appeals.’’

The PHLX notes that neither floor

officials’ rulings or reviews of floor

officials’ rulings preclude a person from

seeking redress through the PHLX’s

arbitration facilities.10

The Advices reiterate the provisions

in PHLX Rule 124 and provide

additional details regarding the

operation of PHLX Rule 124. Among

other things, the Advices state that floor

officials shall try to be prompt in

rendering decisions. However, a floor

official may delay rendering a ruling

until discovery is completed if the floor

official determines that the benefits of

further discovery as to the facts and

circumstances of the matter under

review outweigh the monetary risks of

a delayed ruling.

III. Discussion

The Commission finds that the

proposed rule change is consistent with

the Act and, in particular, with Section

6(b)(5) of the Act, in that the proposed

rule change is designed to prevent

fraudulent and manipulative acts and

practices, to promote just and equitable

principles of trade, and, in general, to

protect investors and the public

interest.11 According to the PHLX, the

proposal codifies the Exchange’s

existing procedures for resolving trading

disputes, including the role and

authority of floor officials in resolving

trading disputes and the means for

appealing floor officials’ decisions. By

codifying the Exchange’s procedures for

resolving trading disputes, the

Commission believes that the proposal

will help to ensure that PHLX members

are aware of the PHLX’s rules governing

the resolution of trading disputes and

will facilitate compliance with those

rules. In addition, the Commission

believes that the trading dispute

resolution procedures in PHLX Rule 124

and the Advices will help to ensure that

the PHLX’s markets function in a fair,

orderly, and efficient manner.

PHLX Rule 124(a) allows a member to

summon a floor official to settle a

dispute on the trading floor if neither

the interested members or members

with knowledge of the transaction are

able to resolve the dispute. The

Commission notes that the trading

dispute resolution authority granted to

floor officials under PHLX Rule 124 and

the accompanying Advices is similar to

the authority granted to floor officials

under the rules of other securities

exchanges.12

In addition, the Commission believes

that several requirements in PHLX Rule

124 and the Advices will provide

members and floor officials with

guidance concerning the resolution of

trading disputes and help to enhance

the fairness, accuracy, and integrity of

floor officials’ decisions. In this regard,

PHLX Rule 124(a) and the Advices

require a floor official resolving a

trading dispute to institute the course of

action he or she deems to be most fair

to all parties under the circumstances at

the time. In addition, the Advices allow

a floor official to delay rendering a

ruling if the floor official believes that

the benefits of further discovery

concerning the facts and circumstances

of a matter outweigh the monetary risks

of a delayed ruling. The Advices also

establish a conflict of interest provision

applicable to all ruling by floor

officials.13 Specifically, the Advices

state that a floor official should not

render a decision or authorize a citation

when the floor official was involved in

or affected by dispute, or in any

situation where the floor official is not

able to objectively and fairly render a

decision.

The Commission believes that the

proposal will provide additional clarity

to the process of resolving trading

disputes by specifying the remedies

available to floor officials resolving such

disputes. In this regard, PHLX Rule

124(a) and the Advices state that a floor

official resolving a trading dispute may

direct the execution of an order on the

floor or adjust the transaction terms or

participants to an executed order. In

addition, two floor officials may nullify

a transaction if they conclude that the

transaction violated any of the PHLX

rules enumerated in PHLX Rule

124(a) 14 and in the Advices. The

Commission believes that permitting

floor officials to nullify transactions

only for violations of these enumerated

rules will provide guidance to floor

officials concerning the circumstances

under which it may be appropriate to

nullify a trade. In addition, requiring the

approval of two floor officials to nullify

a transaction will help to ensure that

this remedy is used appropriately.15

The Commission believes that several

provisions in new PHLX Rule 124(b)

and in the Advices will facilitate the

enforcement of floor officials’ rulings. In

this regard, PHLX Rule 124(b) and the

Advices indicate that all rulings by floor

officials are effective immediately and

must be complied with promptly.

Moreover, PHLX Rule 124(b) and the

Advices note that failure to comply with

a floor official’s ruling in a trading

dispute may result in a referral to the

PHLX’s BCC, and failure to comply with

rulings issued pursuant to PHLX Rule

60 or to Floor Procedure Advices may

result in the finding of an additional

violation of those rules.

PHLX Rule 124 and the Advices also

specify the procedures for requesting a

ruling from a floor official and for

appealing a floor official’s ruling in

connection with a trading dispute.16 As

noted above, PHLX Rule 124(a) allows

a member to summon a floor official to

resolve a trading dispute. The Advices

state that floor officials need not render

a decision unless the request for a ruling

was made within a reasonable period of

time. In addition, the Advices indicate

that a member must submit a request for

review of a floor official’s ruling to the

PHLX’s Director of Market Surveillance
26838 Federal Register / Vol. 63, No. 93 /Thursday, May 14, 1998 / Notices

17According to the PHLX, a ‘‘reasonable period

of time’’ will depend on market and trading floor

conditions (e.g., volume, systems functioning, and

quotation updating). Floor officials will determine

what constitutes a reasonable period of time for

requesting a ruling. The PHLX believes that it is

necessary to provide floor officials with flexibility

in making this determination. Telephone

conversation between Linda S. Christie, Counsel,

PHLX, and Yvonne Fraticelli, Attorney, Division,

Commission, on April 27, 1998.

18 If three committee members cannot be

convened promptly, the Chairperson of the

applicable committee, or his or her designee, may

review the ruling. See PHLX Rule 124(d).

19 15 U.S.C. 78s(b)(2).

20 17 CFR 200.30–3(a)(12).

(or his or her designee) within 15

minutes from the time the contested

ruling was rendered.17 The Commission

believes that these provisions will

facilitate the prompt resolution of

trading disputes while providing

members with an adequate opportunity

to obtain a ruling from a floor official or

to appeal a floor official’s ruling. In

addition, the Commission notes that

these procedures are described in the

Advises, which will be readily available

to members in the PHLX’s Floor

Procedure Handbook. Accordingly, the

Commission believes that PHLX

members will have sufficient notice of

the Exchange’s procedures for obtaining

a ruling from a floor official and

appealing a floor official’s decision.

Under PHLX Rule 124(d), a review

panel, consisting of either three

members of the applicable

Subcommittee on Rules and Rulings (in

the case of options trading) or three

members of the Floor Procedure

Committee (in the case of equity

trading),18 may sustain, overturn or

modify a floor official’s ruling. In

making its decision, the review panel

may consider facts and circumstances

not available to the ruling floor official

and action taken by the parties in

reliance on the floor official’s ruling

(e.g., cover, hedge, and related trading

activity). A member may appeal the

review panel’s decision to the

Exchange’s Board of Governors pursuant

to PHLX By-law Article XI. The

Commission believes that these

procedures will provide for prompt and

effective review of floor officials’ rulings

in trading disputes and help to ensure

that trading disputes are resolved fairly.

IV. Conclusion

It is therefore ordered, pursuant to

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

proposed rule change (SR–PHLX–98–

03) is approved.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.20

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 98–12809 Filed 5–13–98; 8:45 am]

BILLING CODE 8010–01–M

SOCIAL SECURITY ADMINISTRATION

Agency Information Collection

Activities; Submissions for OMB

Review

This notice lists information

collection packages that have been sent

to the Office of Management and Budget

(OMB) for clearance, in compliance

with Public Law 104–13 effective

October 1, 1995, The Paperwork

Reduction Act of 1995.

Wage Reports and Pension

Information—0960–0547. The

information obtained through

Regulation OR–418P, found in 20 CFR,

section 422.122(b), is used by SSA to

identify the requester of pension plan

information and to confirm that the

individual is entitled to the data we

provide. The respondents are requesters

of pension plan information.

Number of Respondents: 1,211.

Frequency of Response: 1.

Average Burden Per Response: 30

minutes.

Estimated Annual Burden: 606 hours.

Written comments and

recommendations regarding the

information collection(s) should be

directed within 30 days to the OMB

Desk Officer and SSA Reports Clearance

Officer at the following addresses:

(OMB) Office of Management and

Budget, OIRA, Attn: Laura Oliven,

New Executive Office Building, Room

10230, 725 17th St., NW, Washington,

D.C. 20503

(SSA) Social Security Administration,

DCFAM, Attn: Nicholas E. Tagliareni,

1-A–21 Operations Bldg., 6401

Security Blvd., Baltimore, MD 21235.

To receive a copy of any of the forms

or clearance packages, call the SSA

Reports Clearance Officer on (410) 965–

4125 or write to him at the address

listed above.

Dated: May 8, 1998.

Nicholas E. Tagliareni,

Reports Clearance Officer, Social Security

Administration.

[FR Doc. 98–12834 Filed 5–13–98; 8:45 am]

BILLING CODE 4190–29–P

DEPARTMENT OF STATE

Office of the Secretary

[Public Notice 2812]

Determination and Certification Under

Section 40A of the Arms Export

Control Act

Pursuant to Section 40A of the Arms

Export Control Act (Pub. L. 90–629), as

added by the Antiterrorism and

Effective Death Penalty Act of 1996

(Pub. L. 104–132) (22 U.S.C. 2771 et.

seq.,) and Executive Order 11958, as

amended, I hereby determine and certify

to the Congress that the following

countries are not cooperating fully with

United States antiterrorism efforts:

Afghanistan;

Cuba;

Iran;

Iraq;

Libya;

North Korea;

Sudan; and

Syria.

This determination and certification

shall be transmitted to the Congress and

published in the Federal Register.

Dated: May 4, 1998.

Strobe Talbott,

Acting Secretary of State.

[FR Doc. 98–12795 Filed 5–13–98; 8:45 am]

BILLING CODE 4710–10–M

DEPARTMENT OF STATE

Bureau of Oceans and International

Environmental and Scientific Affairs

[Public Notice 2813]

Government Activities on International

Harmonization of Chemical

Classification and Labeling Systems;

Public Meeting

AGENCY: Bureau of Oceans and

International Environmental and

Scientific Affairs (OES), Department of

State.

ACTION: Notice of a public meeting

regarding Government Activities on

International Harmonization of

Chemical Classification and Labeling

Systems.

SUMMARY: This public meeting will

provide an update on current activities

related to international harmonization

since the previous public meeting,

conducted January 23, 1998. (See

Department of State Public Notice 2708,

on page 1987 of the Federal Register of

January 13, 1998.) The meeting will also

offer interested organizations and

individuals the opportunity to provide