26666 Federal Register / Vol. 63, No. 92 /Wednesday, May 13, 1998 / Notices

37 15 U.S.C. 78s(b)(2).

38 17 CFR 200.30–3(a)(12).

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

Exchange’s proposal on an accelerated

basis.

IV. Solicitation of Comments

Interested persons are invited to

submit written data, views and

arguments concerning Amendment No.

2 including whether the proposed rule

change is consistent with the Act.

Persons making written submissions

should file six copies thereof with the

Secretary, Securities and Exchange

Commission, 450 Fifth Street, N.W.,

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 at

the Commission’s Public Reference

Room. Copies of such filing will also be

available for inspection and copying at

the principal office of the abovementioned self-regulatory organization.

All submissions should refer to File No.

SR–PCX–97–28 and should be

submitted by June 3, 1998.

V. Conclusion

It is therefore ordered, pursuant to

Section 19(b)(2) of the Act,37 that the

proposed rule change (SR–PCX–97–28)

is approved as amended.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.38

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 98–12702 Filed 5–12–98; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–39972; File No. SR–PHLX–

98–20]

Self-Regulatory Organizations; Notice

of Filing and Immediate Effectiveness

of Proposed Rule Change By the

Philadelphia Stock Exchange, Inc. To

Adopt, on a Pilot Basis, a System

Enhancement to the X-Station

Electronic Book

May 7, 1998.

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

Securities Exchange Act of 1934 (‘‘Act),1

notice is hereby given that on April 24,

1998, 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.

I. Self-Regulatory Organization’s

Statement of the Terms of Substance of

the Proposed Rule Change

The Exchange, pursuant to Rule 19b–

4 under the Act, proposes, as a six

month pilot, to adopt a system

enhancement to the X-Station electronic

book on the options floor which

matches incoming Automatic Execution

System (‘‘AUTO–X’’) orders with orders

residing on the specialist’s book.

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

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

As described in Phlx Rule 1080,

Comment .02, the electronic order book

is an automated mechanism for

specialists to hold and display orders

based on price/time priority. The

Exchange is currently preparing floorwide deployment of the new X-Station

electronic book on the options floor.

The new X-Station provides certain

improvements such as expedited nonAUTO–X order execution as well as

expedited cancel replacement

processing.

AUTO–X is the automatic execution

feature of the Automated Options

Market (‘‘AUTOM’’) System, the

electronic order delivery and routing

system for options orders. Currently,

AUTO–X orders are executed against a

‘‘shadow account’’ for which the

specialist is ultimately responsible. The

execution is immediately reported back

to the sending firm, and then, the

specialist must manually input the

contra-side interest representing the

booked order that becomes due as a

result of the AUTO–X trade.

At this time, the Phlx proposes to

adopt, as a six month pilot, a system

enhancement to the electronic book that

matches incoming AUTO–X orders with

booked orders. The proposed matching

ability would allow the specialist to

match these two participants directly,

without the specialist participating in

the trade, by dropping the order to

manual status. The match would not be

automatic, as the specialist must ensure

that crowd participation under current

parity/priority rules is not due before

executing the trade; thus, the specialist

must ‘‘select’’ the orders to execute the

trade. Since the AUTO–X order has

dropped to manual, the sending firm

will not receive an execution report

until the specialist selects and executes

the trade.

The proposed enhancement affords

specialists relief from the manual

burden of inserting trade participant

and clearing information by writing an

order ticket for the booked order.

Without the X-Station itself, the booked

order appears on an actual order ticket,

which the specialist submits for key

punch entry. Thus, implementing the XStation without the matching feature is

more burdensome than the process

required without the X-Station itself

because it requires more ticket-writing.

The proposed enhancement should

reduce the amount of paper processed

on the options floor. This in turn should

reduce handling and processing time,

including the likelihood of errors,

thereby facilitating more prompt and

accurate trade reporting.

For these reasons, the proposed rule

change is consistent with Section 6 of

the Act in general, and in particular,

with Section 6(b)(5), in that it is

designed to foster cooperation and

coordination with persons engaged in

regulating, clearing, settling, processing

information with respect to, and

facilitating transactions in securities, 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 by enhancing efficiency through

automation in the market.

B. Self-Regulatory Organization’s

Statement on Burden on Competition

The Phlx does not believe that the

proposed rule change will impose any

inappropriate burden on competition.
Federal Register / Vol. 63, No. 92 /Wednesday, May 13, 1998 / Notices 26667

2 15 U.S.C. 78s(b)(3)(A).

3 17 CFR 240.19b–4(e)(5).

4 In reviewing this rule, the Commission has

considered the proposed rule’s impact on

efficiency, competition, and capital formation. 15

U.S.C. 78c(f).

5 17 CFR 200.30–3(a)(12).

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

C. Self-Regulatory Organization’s

Statement on Comments on the

Proposed Rule Change Received From

Members, Participants, or Others

No written comments were either

solicited or received.

III. Date of Effectiveness of the

Proposed Rule Change and Timing for

Commission Action

The proposed rule change has become

effective pursuant to Section 19(b)(3)(A)

of the Act 2 and Rule 19b–4(e)(5) 3

thereunder. The proposal effects a

change in an existing order-entry or

trading system of a self-regulatory

organization that: (i) does not

significantly affect the protection of

investors or the public interest; (ii) does

not impose any significant burden on

competition; and (iii) does not have the

effect of limiting the access to or

availability of the system.4

At any time within 60 days of the

filing of the proposed 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,

including whether the proposed rule

change is consistent with the Act.

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 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 Phlx. All

submissions should refer to the File No.

SR–PHLX–98–20 and should be

submitted by June 3, 1998.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.5

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 98–12704 Filed 5–12–98; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–39964; File No. SR–Phlx–

98–09]

Self-Regulatory Organizations; Notice

of Filing of Proposed Rule Change by

the Philadelphia Stock Exchange, Inc.

To Revise Exchange Rule 1101A

Relating To Index Options Strike Price

Intervals

May 6, 1998.

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

Securities Exchange Act of 1934

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

February 5, 1998, the Philadelphia

Stock Exchange, Inc. (‘‘Exchange’’ or

‘‘Phlx’’) 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.

I. Self-Regulatory Organization’s

Statement of the Terms of Substance of

the Proposed rule Change

The Exchange seeks to amend

Exchange rule 1101A(a), ‘‘Terms of

Option Contracts,’’ to revise the strike

(exercise) price intervals for index

options. The proposal would change the

intervals between index option strike

prices to facilitate the prompt

dissemination of quote information and

to more accurately reflect the strike

prices currently being listed.

Currently, Rule 1101A(a) establishes

the strike price interval at $5, except: (i)

where the strike price exceeds $500, the

strike price interval may be $10; and (ii)

where the strike price exceeds $1,000,

the interval may be $20. The Exchange

may also determine to list strike prices

at wider intervals in ‘‘out-of-the-money’’

or far term series, generally $25, except:

(i) where the strike price exceeds $500,

the interval may be $50; and (ii) where

the strike price exceeds $1,000, the

interval may be $100. Also, where strike

price intervals would be greater than $5,

the Exchange may list alternative strike

prices at $5 intervals in response to

demonstrated customer interest or

specialist request.

At this time, the Exchange is

proposing an index option strike price

interval of $5 for the three consecutive

near-term months, $10 for the fourth

month, and $30 for the fifth month.

However, the Exchange will retain the

ability to list alternative strike prices at

$5 intervals in response to demonstrated

customer interest or specialist request.

The text of the proposed rule change

is available at the Office of the

Secretary, the Exchange, and at the

Commission.

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

Exchange 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

Exchange 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

During recent years, the number of

new option products and total series

listed by the national securities

exchanges has increased dramatically,

thereby increasing the number of

continuous quote changes disseminated

by the exchanges to the Options Price

Reporting Authority (‘‘OPRA’’), and by

OPRA to securities information vendors.

In an effort to curb the growth of strike

price dissemination and to more

accurately reflect the strike prices

currently being listed, the Exchange

proposes to amend Exchange rule

1101A(a) to change the intervals

between index option strike prices.

Currently, Exchange Rule 1101A(a)

establishes a formula for strike price

intervals which takes into consideration

the index value and time remaining

until expiration. The Rule establishes a

strike price interval at $5, except: (i)

where the strike price exceeds $500, the

strike price interval may be $10; and (ii)

where the strike price exceeds $1,000,

the interval may be $20. The Exchange

may also determine to list strike prices

at wider intervals in ‘‘out-of-the-money’’