Federal Register / Vol. 63, No. 110 /Tuesday, June 9, 1998 / Notices 31543

12 17 CFR 200.30–3(a)(12).

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

2 17 CFR 240.19b–4.

3See Phlx Rule 1101A(b)(iii). Long term options

are also known as LEAPs.

4The Exchange submitted a pre-filing on April

30, 1998 in accordance with the Generic Index

Approval Order. See Generic Index Approval Order,

infra note 7. Since the pre-filing the Exchange has

changed the name of the Index from the ‘‘Over-TheCounter Most Active Index’’ to the ‘‘Over-TheCounter Prime Index’’ and the trading symbols have

changed. However, the Exchange represents that

none of the other contract specifications have been

modified since the pre-filing.

5Since the pre-filing on April 30, 1998, the

Exchange added three stocks to the Index increasing

the number of components in the Index from 12 to

15 in order to alleviate concerns regarding the

concentration of the five highest-weighted

securities.

6Most active is defined as those underlying

securities which had the largest trading volume in

the previous year.

7See Securities Exchange Act Release No. 34157

(June 3, 1994) 59 FR 30062 (June 10, 1994) (order

approving File Nos. SR–Amex–92–35; SR–CBOE–

93–59; SR–NYSE–94–17; SR–PSE–94–07; and SR–

Phlx–94–10). The Generic Index Approval Order

established generic listing standards for options on

narrow-based indexes and adopted streamlined

procedures for introducing trading in options

satisfying the generic listing standards.

III. Date of Effectiveness of the

Proposed Rule Change and Timing for

Commission Action

Within thirty-five days of the date of

publication of this notice in the Federal

Register or within such longer period (i)

as the Commission may designate up to

ninety 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 such 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,

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, 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 GSCC. All submissions should

refer to File No. SR–GSCC–98–02 and

should be submitted by June 30, 1998.

For the Commission by the Division of

Market Regulation, pursuant to delegated

authority.12

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 98–15214 Filed 6–8–98; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–40058; File No. SR–Phlx–

98–21]

Self-Regulatory Organizations; Notice

of Filing and Immediate Effectiveness

of Proposed Rule Change by the

Philadelphia Stock Exchange, Inc.

Relating to the Listing and Trading of

Options on the Over-The-Counter

Prime Index

June 2, 1998.

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 May 15,

1998, the Philadelphia Stock Exchange,

Inc. (‘‘Phlx’’ or ‘‘Exchange’’) filed with

the Securities and Exchange

Commission (‘‘SEC’’ or ‘‘Commission’’)

the proposed rule change as described

in Items I, II, and III below, which Items

have been prepared by the Phlx. 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 Phlx proposes to list and trade

European style, cash-settled options,

including long term options,3 on the

Over-The-Counter Prime Index 4 (‘‘OTC

Prime Index’’ or ‘‘Index’’), a price

weighted, A.M. settled index composed

of fifteen 5 stocks which are considered

the ‘‘most active’’ 6 stocks traded on the

Nasdaq market.

The Exchange is filing this proposal

pursuant to Phlx 1009A(b) which

provides for the commencement of

trading of options on the Index thirty

(30) days after the date of this filing. The

Exchange believes the proposal is in

compliance with Rule 1009A(b) and the

standards approved in the Generic

Index Option Approval Order (‘‘Generic

Index Approval Order’’).7

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

1. Purpose

The purpose of the proposed rule

change is to list for trading European

style, cash-settled options on the OTC

Prime Index, a new index developed by

the Exchange pursuant to Rule 1009A(b)

in accordance with the Generic Index

Approval Order for the listing and

trading of narrow-based index options.

Options on this Index will provide a

hedging vehicle for a group of some of

the most active securities traded on the

Nasdaq market. In order to assure that

the Index reflects the most active

securities traded on the Nasdaq market,

the Index will be rebalanced annually to

reflect the previous year’s fifteen most

actively traded issues.

Pursuant to Rule 1009A, (1) the

options on the Index will be A.M.

settled; (2) the Index is price weighted;

(3) no one component security will

represent more than 25% of the weight

of the Index, and the five highest

weighted component securities in the

Index do not in the aggregate account

for more than 60% of the weight of the

Index; (4) each of the component

securities has a minimum market

capitalization of a least $75 million and

has a trading volume in each of last six

months of not less than 1,000,000

shares; (5) all of the components of the

Index meet the current criteria for

standardized options trading set forth in

Exchange Rule 1009 and are currently

the subject of listed options on U.S.
31544 Federal Register / Vol. 63, No. 110 /Tuesday, June 9, 1998 / Notices

8 17 CFR 240.11Aa3–1.

9As a back-up to Bridge Data Inc., the Phlx will

utilize its own internal index calculation system

called the Index Calculation Engine (‘‘ICE’’) System.

10See Letter from Joe Corrigan, Executive

Director, Options Price Reporting Authority to

Michael Walinskas, Senior Special Counsel,

Division, Commission, dated May 4, 1998.

11 17 CFR 240.11Aa3–1.

12 If the concentration of the five highestweighted securities increase to above 60%, then the

Exchange warrants that it will increase the number

of components in the Index to 16 components. The

Exchange will monitor the concentration of the top

five components in the Index on a monthly basis.

13See Phlx Rule 1009A.

14See Phlx Rule 1010

15See e.g., OCC Article XVII, Section 4 and

Securities Exchange Act Release No. 37315 (June

17, 1996) 61 FR 32471 (June 24, 1996) (order

approving File No. SR–OCC–95–19).

options exchanges; (6) the Index

contains no American Depositary

Receipts (‘‘ADRs’’); and (7) all

component stocks are listed on the

Nasdaq and are reported National

Market System securities pursuant to

Rule 11Aa3–1 of the Act.8

The OTC Prime Index value will be

disseminated every 15 seconds during

the trading day. The Phlx has retained

Bridge Data Inc. to compute and do all

necessary maintenance of the Index.9

Pursuant to Phlx Rule 1100A, updated

Index values will be disseminated and

displayed by means of primary market

prints reported by the Consolidated

Tape Association and over the facilities

of the Options Price Reporting

Authority. The Index value will also be

available on broker-dealer interrogation

devices to subscribers of options

information. The Exchange represents

that both the Exchange and the Options

Price Reporting Authority 10 have the

necessary systems capacity to handle

the additional traffic of the OTC Prime

Index.

As of May 13, 1998, the market

capitalization of all the stocks in the

Index exceeded $680 billion and such

individual capitalizations ranged from

$3 billion (Quantum Corporation) to

$214 billion (Microsoft Corporation). All

fifteen component issues in the Index

had average daily trading volumes in

excess of one million shares over the

past six months. The Exchange believes

the component issues are some of the

most widely-held and highly-capitalized

common stocks.

Ticker Symbol: OTX.

Settlement Symbol: OTS.

Index Calculation: The Index is a

price weighted index. To compute the

Index value, the following formula

would be used:

SP SP SP 1 2 15

4

100

+ +

× ....

Where: SP=current stock price

The Initial divisor in an arbitrary

number set to achieve a certain index

value. The divisor for this Index will be

4.0 will result in an Index value of

188.70 on May 13, 1998. Index

Maintenance: To maintain the

continuity of the Index, the divisor will

be adjusted to reflect non-market

changes in the price of the component

securities as well as changes in the

composition of the Index. Changes

which may result in divisor adjustments

include, but are not limited to, stock

splits, dividends, spin-offs, mergers and

acquisitions. In accordance with Rule

1009A, if any change in the nature of

any component (e.g., delisting, merger,

acquisition or otherwise) in the Index

will change the overall market character

of the Index, the Exchange will take

appropriate steps to remove the stock or

replace it with another stock that the

Exchange believes would be compatible

with the intended character of the

Index. Any replacement components

will be reported securities as defined in

Rule 11Aa3–1 of the Act.11 The Index

will be rebalanced on an annual basis to

reflect the previous year’s fifteen most

active issues traded on the over-thecounter market.

Pursuant to Rule 1009(c)(2), the

Exchange will not increase to more than

20 or decrease to less than 10, the

number of components comprising the

Index during the year. However, at the

end of the calendar year the Index will

be rebalanced in order to reflect fifteen

of the most actively traded issues from

the previous year. The Exchange

maintains that the component stocks

comprising the top 90% of the Index, by

weight, will each maintain a minimum

market capitalization of $75 million.

The remaining 10%, by weight, will

each maintain a minimum market

capitalization of $50 million. The

component stocks comprising the top

90% of the Index, by weight, will

maintain a trading volume of at least

500,000 shares per month. The trading

volume for each of the component

stocks constituting the bottom 10% of

the Index, by weight, will maintain an

average trading volume of at least

400,000 shares per month. No fewer

than 90% of the component issues by

weight or fewer than 80% of the total

number of the components qualify as

stocks eligible for options trading. In

addition to the maintenance criteria

above, no single component of the Index

shall account for more than 25% of the

Index and the five highest weighted

component securities shall not account

for more than 60% of the Index.12

If the Index fails at any time to satisfy

one or more of the required

maintenance criteria, the Exchange will

notify the Commission staff

immediately of that fact and will not

open for trading any additional series of

options on the Index, unless the above

is determined by the Exchange not to be

significant and the Commission concurs

in that determination, or unless the

continued listing of options on the OTC

Prime Index has been approved by the

Commission under Section 19(b)(2) of

the Act.13 In addition to not opening for

trading any additional series, the

Exchange may, in consultation with the

Commission, prohibit opening purchase

transactions in series of options

previously opened for trading to the

extent that the Exchange deems such

action necessary or appropriate.14 The

components which are substituted in

the Index will comply with the

maintenance requirements above.

Unit of Trading: Each options contract

will represent $100, the Index

multiplier, times the Index value. For

example, an Index value of 200 will

result in an option contract value of

$20,000 (100 × 200).

Excercise Price: The exercise prices

will be set in accordance with Phlx Rule

1101A(a).

Settlement Value: Because all of the

components are national Market

Securities traded through Nasdaq, the

first reported sale price will be used for

the final settlement value for expiring

Index option contracts. In the event that

a component security does not open for

trading on the last day before the

expiration of a series of Index options,

the previous day’s first reported sale

price for that security will be used in

calculating the Index value. However, in

the event that the Options Clearing

Corporation (‘‘OCC’’) determines that

the current Index value is unreported or

otherwise unavailable (including

instances where the primary market for

securities representing a substantial part

of the value of the Index is not open for

trading at the time when the current

Index value used for exercise settlement

purposes would be determined), the

OCC shall determine an exercise

settlement amount for the Index in

accordance with Article XVII, Section 4

of the OCC By-laws.15

Last Trading Day: The last business

day prior to the third Friday of the

month for options which expire on the

Saturday following the third Friday of

that month.

Trading Hours: 9:30 a.m. to 4:02 p.m.

EST.

Position and Exercise Limits: Pursuant

to Phlx Rules 1001A(b)(i) and 1002A,
Federal Register / Vol. 63, No. 110 /Tuesday, June 9, 1998 / Notices 31545

16See, Phlx Rule 722, Phlx Rules 1000A through

1102A and generally Phlx rules 1000 through 1072.

17 15 U.S.C. 78f.

18 15 U.S.C. 78f(b)(5).

19 15 U.S.C. 78S(b)(3)(A).

20 17 CFR 240.19b–4.

21 17 CFR 200.30–3(a)(12).

the position and exercise limits will be

12,000 contracts.

Expiration Cycles: Three months from

the March, June, September, December

cycle plus at least two additional nearterm months. LEAPs may also be traded

on the Index pursuant to Phlx Rule

1101A(b)(iii).

Exercise Style: European.

Premium Quotations: Premiums will

be expressed in terms of dollars and

fractions of dollars pursuant to Phlx

Rule 1033A. For example, a bid or offer

of 11⁄2 will represent a premium per

options contract of $150 (11⁄2 × 100).

The options will be traded pursuant

to current Phlx rules governing the

trading of index options including

provisions addressing sales practices,

floor trading procedures, position and

exercise limits, margin requirements

and trading halts and suspensions.16

The Exchange also represents that

surveillance procedures currently used

to monitor trading in index options will

be applicable to this Index. These

procedures include having complete

access to trading activity in the

underlying securities which are all

traded on Nasdaq. In addition, the

Intermarket Surveillance Group (‘‘ISG’’)

Agreement dated July 14, 1983, as

amended on January 29, 1990, will be

applicable to the trading of options on

the Index.

2. Statutory Basis

The Exchange believes that the

proposed rule change is consistent with

Section 6 of the Act 17 in general, and

in particular with Section 6(b)(5),18 in

that it is designed to promote just and

equitable principles of trade, prevent

fraudulent and manipulative acts and

practices, 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 providing a hedging vehicle

for the group of 15 of the most activelytraded securities on the Nasdaq 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.

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 foregoing rule change constitutes

a stated policy, practice, or

interpretation with respect to the

meaning, administration, or

enforcement of an existing rule of the

Exchange, and therefore, has become

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

of the Act 19 and paragraph (e) of Rule

19b–4 thereunder.20 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, NW,

Washington, DC 20549. Copies of the

submissions, 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, 450 Fifth Street, NW,

Washington, DC 20549. Copies of such

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–98–21

and should be submitted by June 30,

1998.

For the Commission by the Division of

Market Regulation, pursuant to delegated

authority.21

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 98–15278 Filed 6–8–98; 8:45 am]

BILLING CODE 8010–01–M

SOCIAL SECURITY ADMINISTRATION

Agency Information Collection

Activities; Request for Emergency

Review by the Office of Management

and Budget

The Social Security Administration

publishes a list of information collection

packages that will require clearance by

OMB in compliance with P.L. 104–13

effective October 1, 1995, The

Paperwork Reduction Act of 1995. The

information collection listed below has

been submitted to OMB for emergency

clearance. OMB approval has been

requested by June 18, 1998: 0960–NEW.

Survey of Widows(ers) Eligible for

Higher Retirement Benefits. The Social

Security Administration will survey a

sample of widow(er) beneficiaries over

the age of 70 to determine whether they

would file for the higher retirement

benefit for which they appear eligible, if

the opportunity to file for this benefit

was explained in a person contact. Two

attempts to contact the beneficiaries by

letter have already been made, but the

beneficiaries have not filed for the

additional benefits, which could be a

substantial increase. The information

collected from this sample population

will provide the empirical basis for

reaching a decision regarding whether

some or all of the approximately 23,000

beneficiaries in the entire population

should be personally contacted. The

respondents are a sample of over age 70

SSA title II beneficiaries who are

eligible to receive a higher retirement

benefit.

Number of Respondents: 390.

Frequencey of Response: 1.

Average Burden Per Response: 10

Minutes.

Estimated Annual Burden: 65 hours.

To receive a copy of the form or

clearance packages, call the SSA

Reports Clearance Officer on (410) 965–

4145 or write to him at the address

listed below. Written comments and

recommendations regarding the

information collection (s) should be

directed 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,

DC 20503

(SSA) Social Security Administration,

DCFAM, Attn: Frederick W.