39622 Federal Register / Vol. 63, No. 141 /Thursday, July 23, 1998 / Notices

2The Commission has modified parts of these

statements.

3Securities Exchange Act Release No. 37315

(June 17, 1996), 61 FR 32471 (ordering approving

proposed rule change.)

4 15 U.S.C. 78q-1.

5 15 U.S.C. 78q–1(b)(3)(F).

6 17 CFR 200.30–3(a)(12).

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

2 17 CFR 240.19b–4.

and (C) below, of the most significant

aspects of such statements.2

A. Self-Regulatory Organization’s

Statement of the Purpose of, and

Statutory Basis for, the Proposed Rule

Change

OCC’s current by-laws relating to the

unavailability or inaccuracy of current

index values for stock index options and

for flexibly structured index options

denominated in foreign currencies (‘‘FX

flex index options’’) were instituted as

a result of a 1994 incident when a

delayed National Association of

Securities Dealers Automated Quote

System opening made it unclear when

or if OCC would be able to obtain

current index values for options valued

at the opening.3 OCC is now authorized

to delay exercise settlements until either

(i) the required current index value

becomes available or (ii) OCC fixes an

exercise settlement amount, which may

be based on the closing index value for

the preceding trading day.

These provisions were intended to

apply where the required index value,

whether opening or closing, was

unavailable to OCC either because the

market did not open on the relevant

date or because the reporting authority

had problems calculating or

disseminating the required value.

However, these provisions can be

misinterpreted as authorizing OCC to fix

an exercise settlement amount for index

options valued at the close when the

market closes early. OCC interprets the

current language of the by-laws as

referring to the actual close of trading,

not the scheduled close. There is no

reliable basis for estimating what the

current index value would have been if

the market had remained open until the

normal closing time. Even when OCC

has no alternative but to fix an exercise

settlement amount, the by-laws

expressly authorize it to base that

amount on the reported index level at

the close of trading on the last preceding

trading day for which a closing index

level was reported.

OCC believes that it is inappropriate

for OCC to fix an exercise settlement

amount if normal trading takes place

with opening and closing current index

values for a given day so long as it is

possible to obtain the required value

from the designated reporting authority.

The proposed rule change eliminates

any implications that the provisions

give OCC the authority to fix an exercise

settlement amount in such

circumstances.

OCC believes that the proposed rule

change is consistent with Section 17A of

the Act and the rules and regulations

promulgated thereunder because it will

facilitate the prompt and accurate

settlement of transactions in index

options and in FX flex index options.4

B. Self-Regulatory Organization’s

Statement on Burden on Competition

OCC does not believe that the

proposed rule change will impose any

burden on competition.

C. Self-Regulatory Organization’s

Statement on Comments on the

Proposed Rule Change Received from

Members, Participants, or Others

Written comments relating to the

proposed rule change have not been

solicited or received.

III. Date of Effectiveness of the

Proposed Rule Change and Timing for

Commission Action

Section 17A(b)(3)(F) 5 requires that

the rules of a clearing agency be

designed to promote the prompt and

accurate clearance and settlement of

securities transactions. The Commission

believes that OCC’s proposed rule

change is consistent with OCC’s

obligations under Section 17A(b)(3)(F)

because the proposal will clarify the

application of OCC’s by-laws relating to

the unavailability or inaccuracy of

current index values where there is an

early closing of the primary market for

the securities underlying an index

option valued at the close. The

Commission believes that this

clarification should add more certainty

to the settlement of index options.

Therefore, this proposed rule change

should facilitate the prompt and

accurate clearance and settlement of

securities transactions.

The Commission finds good cause for

approving the proposed rule change

prior to the thirtieth day after the date

of publication of notice of filing because

accelerated approval will allow OCC to

clarify its by-laws relating to exercise

settlement procedures in an expedient

fashion.

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

Section, 450 Fifth Street, N.W.,

Washington, D.C. 20549. Copies of such

filing will also be available for

inspection and copying at the principal

office of OCC. All submissions should

refer to the File No. SR–OCC–98–02 and

should be submitted by August 24,

1998.

It is therefore ordered, pursuant to

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

proposed rule change (File No. SR–

OCC–98–02) be and hereby is approved

on an accelerated basis.

For the Commission by the Division of

Market Regulation, pursuant to delegated

authority.6

Jonathan G. Katz,

Secretary.

[FR Doc. 98–19570 Filed 7–22–98; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–40222; File No. SR–Phlx–

98–19]

Self-Regulatory Organizations;

Philadelphia Stock Exchange, Inc.;

Order Approving Proposed Rule

Change Relating to When a Security is

Considered Open For Trading

July 16, 1998.

I. Introduction

On May 1, 1998, the Philadelphia

Stock Exchange, Inc. (‘‘Phlx’’ or

‘‘Exchange’’) filed with 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

clarify when a security is considered

open for trading. On May 26, 1998, the

Phlx filed Amendment No. 1 to the
Federal Register / Vol. 63, No. 141 /Thursday, July 23, 1998 / Notices 39623

3See Letter from Linda S. Christie, Counsel, Phlx,

to Yvonne Fraticelli, Attorney, Division of Market

Regulation (‘‘Division’’), Commission (May 22,

1998) (‘‘Amendment No. 1’’). In Amendment No. 1,

Phlx replaces the phrase ‘‘principal exchange’’ in

Rule 1047 with the phrase ‘‘primary market’’ to

provide consistency with the language in the

proposed amendments to Phlx Rule 1047A and

Options Floor Procedure Advice G–2.

Corresponding with Amendment No. 1, the word

‘‘exchange’’ should be replaced by the word

‘‘market’’ in the amended portion of Phlx Rule

1047. Telephone conversation between Linda S.

Christie, Counsel, Phlx, and Marc McKayle,

Attorney, Division, Commission (May 26, 1998).

4See Securities Exchange Act Release No. 40082

(June 10, 1998), 63 FR 33430 (June 18, 1998).

5Phlx Rule 1047 applies to equity options and to

foreign currency options.

6Phlx Rule 1047A applies to index options.

7See Amendment No. 1, supra note 3.

8 15 U.S.C. 78f.

9 15 U.S.C. 78f(b)(5).

10See American Stock Exchange Rule 918(a)(1);

Chicago Board Options Exchange Rule 6.2,

Interpretation and Policy .01; and Pacific Exchange

Rule 6.64, Commentary .01.

11See Securities Exchange Act Release Nos.

33494 (January 19, 1994), 59 FR 3889 (January 27,

1994) (order approving proposed rule change SR–

CBOE–93–41 amending CBOE Rule 6.62,

Interpretation and Policy .01 relating to opening

transactions in Exchange-traded options); and

29652 (September 4, 1991), 56 FR 46454 (September

12, 1991) (order approving proposed rule change

SR–CBOE–91–29 adding interpretation to CBOE

Rule 6.1 relating to the posting of pre-opening

market quote indications in designated options

classes).

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

13 17 CFR 200.30–3(a)(12).

proposal.3 The proposed rule change

and Amendment No. 1 were published

for comment in the Federal Register on

June 18, 1998.4 No comments were

received regarding the proposal.

II. Description of the Proposal

The Phlx proposes to amend Phlx

Rules 1047 (Trading Rotations, Halts

and Suspensions),5 1047A (Trading

Rotations, Halts or Reopenings),6 and

Options Floor Procedure Advice G–2

(‘‘Advice G–2’’) (Trading Rotations,

Halts or Reopenings) to clarify when a

security is open for trading. Currently,

Commentary .01(a) of Rule 1047 states

the opening rotation in each class of

options shall be held promptly

following the opening of the underlying

security on the principal market where

it is traded. However, neither

Commentary .01 of Phlx Rule 1047, Phlx

Rule 1047A, or Advice G–2 specifies

when a security is considered open for

trading. To clarify its rules, the Phlx

proposes to amend Phlx Rule 1047,

Commentary .01(a), Phlx Rule 1047A,7

and Advice G–2 to indicate that an

underlying security shall be deemed to

have opened on the primary market

where it is traded if such market has

either (1) reported a transaction in the

underlying security, or (2) disseminated

an opening quotation for the underlying

security and given no indication of a

delayed opening. Thus, the proposal is

intended to correct an ambiguity and

expressly provide in Exchange rules that

an opening quote may signal the

opening of a security.

III. Discussion

After careful review, 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. The Commission

believes that the proposed rule change

is consistent with Section 6 of the Act,

in general,8 and Section 6(b)(5),9 in

particular, in that it is designed to

promote just and equitable principles of

trade, to prevent fraudulent and

manipulative acts and practices, to

foster cooperation and coordination

with persons engaged in regulating and

facilitating transactions in securities, to

remove impediments to and perfect the

mechanism of a free and open market

and a national market system, and, in

general, to protect investors and the

public interest. The Commission

believes that the proposed rule change

is consistent with the Act in that it

conforms the Phlx’s rules to the rules of

the other options exchanges,10 thereby

contributing to a fair and orderly

market. Specifically, the Phlx’s proposal

will permit options opening rotations to

commence upon the earlier of either a

reported transaction in the underlying

security or a reported market quote for

the security, provided that the primary

market has not indicated a delayed

opening. Accordingly, the proposal will

allow the Phlx to commence opening

rotations after the primary market

disseminates opening quotations for the

underlying security, rather than waiting

for an opening transaction in the

underlying security.

The Commission believes that the

proposed rule change should help to

alleviate the risk of pricing disparities

among the options exchanges and

should allow the Phlx to compete

effectively with the other options

exchanges for order flow. In addition, by

allowing the Phlx to commence opening

rotations after the opening of the

underlying security on the primary

market where it is traded, the

Commission believes that the proposal

should decrease the time required to

obtain opening market quotations and

should allow free trading to commence

as quickly as possible after the opening.

As the Commission has noted

previously, expedited free trading

allows market makers to engage in

hedging strategies as soon as possible

after the opening and should promote

the prompt execution of customer

orders.11

IV. Conclusion

It is therefore ordered, pursuant to

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

proposed rule change (SR–Phlx–98–19)

is approved.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.13

Jonathan G. Katz,

Secretary.

[FR Doc. 98–19569 Filed 7–22–98; 8:45 am]

BILLING CODE 8010–01–M

DEPARTMENT OF TRANSPORTATION

Office of the Secretary

Reports, Forms and Recordkeeping

Requirements; Agency Information

Collection Activity Under OMB Review

AGENCY: Office of the Secretary, DOT.

ACTION: Notice.

SUMMARY: In compliance with the

Paperwork Reduction Act (44 U.S.C.

3501 et seq.), this notice announces that

the Information Collection Requests

(ICRs) abstracted below have been

forwarded to the Office of Management

and Budget (OMB) for review and

comment. The ICRs describes the nature

of the information collection and their

expected burden. The Federal Register

Notice with a 60-day comment period

soliciting comments on (1) Title: 49 CFR

Part 580, Odometer Disclosure

Statement, OMB No.: 2127–0047, was

published on April 28, 1998 (63 FR

23336) and (2). Title: Upper Interior

Component Head Impact Protection

Phase-in Reporting Requirements, OMB

Control Number: 2127–0581 was

published on April 6, 1998 (63 FR

16856).

DATES: Comments must be submitted on

or before August 24, 1998.

FOR FURTHER INFORMATION CONTACT:

Michael Robinson, NHTSA Information

Collection Clearance Officer at (202)

366–9456.

SUPPLEMENTARY INFORMATION:

National Highway Traffic Safety

Administration

(1) Title: 49 CFR Part 580, Odometer

Disclosure Statement.

OMB No.: 2127–0047.

Type of Request: Extension of a

currently approved collection.

Affected Public: Individuals,

Households, Business, other for-profit,