Federal Register / Vol. 60, No. 25 / Tuesday, February 7, 1995 / Notices 7253

sanction discretionary with the Exchange’s

Business Conduct Committee for the fourth and

subsequent occurrences.

3The PHLX’s minor rule plan, codified in PHLX

Rule 970, contains floor procedure advices with

accompanying fine schedules. Rule 19d–1(c)(2)

under the Act authorizes national securities

exchanges to adopt minor rule violation plans for

summary discipline and abbreviated reporting; Rule

19d–1(c)(1) requires prompt filing with the

Commission of any final disciplinary action.

However, minor rule violations not exceeding

$2,500 are deemded not final, thereby permitting

periodic, as opposed to immediate, reporting.

4See Securities Exchange Act Release No. 26899

(June 7, 1989), 54 FR 25526 (June 15, 1989) (order

approving File No. SR–PHLX–89–20). 5See November 30 Letter, supra note 1. 6 17 CFR 200.30–3(a)(12) (1994).

the proposed rule change is available at

the Office of the Secretary, PHLX, 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

self-regulatory organization 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 self-regulatory organization 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

Currently, Advice F–8 requires

cooperation with requests for

information made by the Exchange’s

Market Surveillance Department and

contains a fine schedule for violations.

The Advice is administered under the

Exchange’s minor rule violation

enforcement and reporting plan (‘‘minor

rule plan’’),3 which the PHLX also

proposes to amend. Advice F–8 serves

as an important tool in the Exchange’s

effort to conduct investigations

expeditiously, requiring members to

respond promptly to such requests.

Prompt compliance with Market

Surveillance requests is currently

defined as ten business days. This

Advice was adopted in order to expedite

the Exchange’s investigation process by

enabling the Exchange to summarily

reprimand any failure to respond to

such requests.4

The PHLX proposes to extend the

requirements of Advice F–8 to include

Examinations Department requests, for

which compliance will be required

within two business days, as well as

other regulatory inquiries. The purpose

of this change is to facilitate the

Exchange’s ability to promptly collect

regulatory information, with the

deterrent of a preset fine schedule.

With respect to the fine schedule

accompanying Advice F–8, the

proposed language regarding separate

occurrences is intended to deter delays

in compliance with an Exchange request

by counting a repeat request for

information as a separate occurrence. If

each successive request for the same

information is treated as a separate

occurrence and thus as a successive

violation subject to the next highest

fine, the Exchange believes that prompt

compliance is encouraged. The PHLX

also proposes to reduce the fine for a

first occurrence from $500 to $200 to

reflect the potential for increased

application of such fines.

The Exchange believes that the

proposed changes to Advice F–8 are

consistent with the types of provisions

currently included in the Exchange’s

minor rule plan. Moreover, extending

the requirements of Advice F–8

regarding prompt compliance with

Exchange inquiries to include

Examinations Department and other

regulatory requests should enhance the

Exchange’s ability to meet its regulatory

obligations expeditiously. For example,

under Advice F–8, as amended, a

member will be required to comply with

an Examinations Department request for

books and records within two business

days from the date of the original

request.5

For the above reasons, the Exchange

believes that 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

promote just and equitable principles of

trade, prevent fraudulent and

manipulative acts and practices, as well

as to protect investors and the public

interest, by bolstering the Exchange’s

ability to receive certain information

from its members promptly.

(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

received or requested.

III. Date of Effectiveness of the

Proposed Rule Change and Timing for

Commission Action

Within 35 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

90 days of such date if it finds such

longer period to be appropriate and

publishes its reason 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.

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 at

the Commission’s Public Reference

Section, 450 Fifth Street, NW.,

Washington, DC. Copies of such filing

will also be available for inspection and

copying at the principal office of the

above-mentioned self-regulatory

organization. All submissions should

refer to the file number in the caption

above and should be submitted by

February 28, 1995.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.6

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 95–2970 Filed 2–6–95; 8:45 am]

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