26754 Federal Register / Vol. 60, No. 96 / Thursday, May 18, 1995 / Notices

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

2 17 CFR 240.19b–4.

3 In Amendment No. 1, the Exchange proposes to

require Phlx ROTs to execute at least 75% of their

quarterly trades in-assigned options for purposes of

receiving market maker margin treatment for offfloor orders. The Exchange originally proposed to

require an ROT to trade at least 50% of his quarterly

contract volume in-assigned options. In addition,

Amendment No. 1 states that Phlx proposes to

delete the fine schedules under the minor rule plan

originally proposed to address violations of the

heightened trading requirements, because violations

of this program are to be reviewed directly by the

Business Conduct Committee and are not to be

treated as minor rule plan violations. Finally, Phlx

proposes to clarify that the phrase ‘‘may exempt one

or more classes of options from this calculation’’ in

Commentary .01 to Phlx Rule 1014, is intended to

mean that certain options may not be eligible for

off-floor market maker treatment, consistent with

the approved provisions of the other exchanges. See

Letter from Gerald O’Connell, First Vice President,

Phlx, to Michael Walinskas, Branch Chief, Office of

Market Supervision (‘‘OMS‘‘), Division of Market

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

dated March 29, 1995 (‘‘Amendment No. 1’’).

4See Amendment No. 1, supra note 3.

5The Phlx’s minor rule violation enforcement

and reporting plan (‘‘minor rule plan’’), codified in

Phlx Rule 970, contains floor procedure advices

with accompanying fine schedules. Rule 19d–

1(c)(2) 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 actions. However, minor

rule violations not exceeding $2,500 are deemed not

final, thereby permitting periodic, as opposed to

immediate reporting. Although the Exchange is

proposing to amend several advices, only Advice

C–3 will contain a minor rule plan fine; hence, the

Exchange hereby proposes to amend its minor rule

plan by incorporating the proposed changes to

Advice C–3.

the Commission’s Public Reference

Room. Copies of such filing will also be

available for inspection and copying at

the principal office of the NASD. All

submissions should refer to the file

number in the caption above and should

be submitted by June 8, 1995.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority, 17 CFR 200.30–3(a)(12).

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 95–12258 Filed 5–17–95; 8:45 am]

BILLING CODE 8010–01–M

[Release No. 34–35710; File No. SR–Phlx–

95–14]

Self-Regulatory Organizations; Notice

of Filing of Proposed Rule Change and

Amendment No. 1 of Proposed Rule

Change by the Philadelphia Stock

Exchange, Inc., Relating to Extension

of Market Marker Margin Treatment to

Certain Market Marker Orders Entered

From Off the Trading Floor

May 12, 1995.

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 March 1,

1995, 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

Exchange subsequently filed

Amendment No. 1 on April 3, 1995.3

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 of the Act, proposes to amend Phlx

Rule 1014, Commentary .01, to extend

market maker margin treatment to

opening orders entered by Phlx

Registered Options Traders (‘‘ROTs’’)

from off the Exchange floor, provided

that the greater of 1,000 contracts or

80% of ROT’s total transactions on the

Exchange in a calendar quarter are

executed in person, and not through the

use of orders. Phlx ROTs would also be

required to execute at least 75% of their

quarterly contract volume in assigned

options.4 In addition, the proposal

requires that all off-floor orders for

which an ROT receives market maker

treatment be consistent with such ROT’s

duty to maintain fair and orderly

markets, and, in general, be effected for

the purposes of hedging, reducing risk

of, or rebalancing open positions of the

ROT.

Corresponding amendments to five

Floor Procedure Advices (‘‘Advices’’),

which are administered pursuant to the

Exchange’s minor rule violation

enforcement and reporting plan,5 are

also proposed: B–3, Trading

Requirements; B–4, Phlx ROTs Entering

Orders from On-Floor and Off-Floor for

Execution of the Exchange; B–8, Use of

Floor Brokers; B–12, Phlx ROTs and

Specialist Entering Orders for Execution

on Other Exchanges in Multiply Traded

Options; and C–3, Handling Orders of

Phlx ROTs and Other Registered

Options Market Makers.

First, a new paragraph (b) to Advice

B–3, with a separate fine schedule for

violations, would contain the

heightened trading requirement to

receive limited market maker margin

treatment for off-floor orders. Violations

of Advice B–3(b) would not be subject

to a minor rule plan citation and fine,

but would be reviewed directly by the

Exchange’s Business Conduct

Committee pursuant to Phlx Rule 960

governing disciplinary proceedings.

In addition, an exception from the

general prohibition against placing offfloor orders in market maker accounts

would be added to Advice B–4 to permit

the proposed treatment for off-floor

orders. In order to incorporate this

proposal into the Floor Procedure

Advice handbook, Advice B–4 would

generally parallel the proposed

provision in Commentary .01. In

addition, Advice B–4 would require an

ROT to disclose to a Floor Broker,

among other things, that he is entering

an off-floor order for his market maker

account. Entering an off-floor order in

violation of the proposed new paragraph

in Advice B–4 would be subject to full

disciplinary proceedings and reviewed

by the Exchange’s Business Conduct

Committee.

Advice B–8 is proposed to be

amended by limiting its application to

the use of floor brokers while an ROT

is on the trading floor. Otherwise, an

ROT entering an order from off-floor

could not comply with the requirement

to initial the order ticket.

Advice B–12 governs Phlx traders

entering orders in multiply traded

options onto another exchange,

currently requiring such orders to be

entered while the trader is on the Phlx

floor. Because off-floor orders for a

market maker account will become

permissible, Advice B–12 is proposed to

be amended to permit the entry of offfloor orders for execution on another

exchange in multiply traded options.

Such orders, entered pursuant to Rule

1014, Commentary .01, must otherwise

comply with the requirements of Advice

B–12, including ‘‘clearing the Phlx

crowd.’’

Lastly, Advice C–3 would be

amended to require Floor Brokers to

mark an order ticket with the letter ‘‘P’’

if an ROT indicates that an off-floor

order is to be entered into his market

maker account. Fines for violations of

Advice C–3 would be administered

pursuant to the Exchange’s minor rule

plan. This proposal would apply to

ROTs on both the options floor (equity

options and index options) as well as

the foreign currency options floor. 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
Federal Register / Vol. 60, No. 96 / Thursday, May 18, 1995 / Notices 26755

6Regulation T of the Federal Reserve Board,

Section 220.12.

7SEC Rule 15c3–1(b)(1).

8See e.g., Phlx Rule 1014 (a) and (c).

9Closing transactions do not give rise to issues of

margin and capital treatment, because such

positions merely reduce or eliminate existing

positions.

10Certain off-floor orders may be considered onfloor orders. see Phlx Rule 1014, Commentary .08. 11See Amendment No. 1, supra note 3.

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 Section (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

Generally, a trade for the account of

a specialist or ROT receives market

maker, or good faith, margin,6 as well as

favorable capital treatment,7 due to the

affirmative and negative market making

obligations 8 imposed on such floor

traders by Exchange and Commission

rules. Further, Rule 1014, Commentary

.01 states that ROTs are considered

‘‘specialists’’ for the purposes of the Act

and the rules thereunder, which

includes capital and margin rules,

respecting option transactions initiated

and effected by the ROT on the floor in

the capacity of an ROT. Accordingly,

transactions initiated on-floor by Phlx

ROTs receive this favorable margin

treatment. Off-floor opening 9 market

maker transactions currently may not

qualify for favorable margin treatment

under Exchange rules, even if such

orders are entered to adjust or hedge the

risk of an ROT’s positions resulting from

on-floor market making activity.

The purpose of the proposed rule

change is to extend market maker

margin treatment to certain off-floor

orders in all Phlx options. A new

provision in Rule 1014, Commentary .01

is required, as well as amendments to

various advices impacted by the

proposal.

The Exchange believes that because

an ROT cannot effectively adjust his

positions, or hedge and otherwise

reduce the risk of his opening

transactions, from off the Phlx trading

floor without incurring a significant

economic penalty, such ROTs must

either be physically present on the

Exchange floor or face significant risks

of adverse market movements when

they must necessarily be absent from the

trading floor.10 Because of these costs

and risks, the Exchange believes that

Phlx ROTs may be prevented from

effectively discharging their market

making obligations and may be exposed

to unacceptable levels of risk.

Accordingly, the proposed rule

change is intended to accommodate the

occasional needs of ROTs to adjust or

hedge positions in their market maker

accounts at times when they are not

physically present on the trading floor.

The Phlx believes the proposed rule

change does so without diluting the

requirement that such ROT’s trading

activity must nevertheless fulfill their

market making obligations, including

contributing to the maintenance of a fair

and orderly market on the Exchange.

Phlx Rule 1014, Commentary .03 and

Floor Procedure Advice (‘‘Advice’’) B–3

currently require ROTs to effect at least

50% of their quarterly contract volume

in assigned options. Further, ROTs are

required to execute in person and not

through the use of orders the greater of

1,000 contracts or 50% of their quarterly

contract volume, pursuant to Advice B–

3 and Rule 1014(b), Commentary .13. At

this time, the Exchange is proposing to

amend Rule 1014 to allow ROTs who

meet a more stringent in-person, and inassigned options requirement to receive

market maker margin and capital

treatment for opening off-floor orders.

This proposal does not affect the abovereferenced requirement that,

notwithstanding an ROT’s desire to

qualify for favorable margin treatment

for off-floor trading, an ROT remains

obligated pursuant to Advice B–3 to

trade (1) in-person, and not through the

use of orders, the greater of 1,000

contracts or 50% of their total

transactions each quarter, and (2) at

least 50% of their quarterly contract

volume in assigned options.

Under the proposal, Phlx ROTs would

receive market maker margin treatment

for orders entered from off-floor in

limited circumstances. Such ROTs

would be required to execute in person,

and not through the use of orders, the

greater of 1,000 contracts or 80% of

such ROT’s total transactions that

quarter. In addition, such off-floor

orders must be effected for the purpose

of hedging, reducing risk of, rebalancing

or liquidating open positions of the

ROT. Phlx ROTs would also be required

to execute at least 75% of his quarterly

contract volume in assigned options.11

The Exchange notes that ROTs who fail

to comply with the proposed

requirements in Rule 1014, Commentary

.01, shall be subject to disciplinary

proceedings under Phlx Rule 960.

In addition to the proposed

amendment to Commentary .01 of Rule

1014, the Exchange proposes to amend

five Phlx floor procedure advices to

cover such off-floor market maker

orders. First, new paragraph (b) of

Advice B–3 would effectuate the

proposed provisions of Commentary .01

by referencing the heightened trading

requirement in order to receive

favorable margin treatment for off-floor

orders. Accordingly, entering an offfloor order for a market maker account

without compliance with the ‘‘1,000

contracts or 80%’’ requirement shall

result in a Rule 960 disciplinary

proceeding, which is separate from any

violation of Advice B–3(a), which is

administered pursuant to the

Exchange’s minor rule plan.

Second, Advice B–4 is proposed to be

amended to create an exception to the

prohibition against entering off-floor

orders into a market maker account.

Generally, Advice B–4 would restate the

provisions of Commentary .01 to Rule

1014 that an ROT who has executed the

greater of 1,000 contracts or 80% of his

total transactions in a calendar quarter

in person may enter opening

transactions from off the floor on

limited occasions for his market maker

account if such transactions are for the

purpose of hedging, reducing risk of,

rebalancing, or liquidating open

positions.

Third, by amending the title of Advice

B–8, the Phlx intends to limit its effect

to situations where an ROT uses a Floor

Broker while the ROT is on the Phlx

Floor. Because ROTs cannot currently

enter off-floor opening orders into a

market maker account, the language of

this advice presumes that the ROT is on

the floor, and, hence, able to comply

with the requirements of initialing the

order ticket. Because this proposal

would permit entering opening orders

from off-floor and because an ROT who

is off-floor cannot initial and time stamp

a ticket, Advice B–8 would now

expressly apply, as reflected in the new

title, only to on-floor situations.

Nevertheless, the requirement that an

ROT state whether an order is opening

or closing appears in Advice B–4, and

the Floor Broker must time stamp the

order pursuant to Advice C–2. Thus, offfloor orders should be appropriately

designated and handled, despite the

inapplicability of Advice B–8.

Fourth, Advice B–12 is proposed to be

amended to clarify the margin treatment

of orders sent to another exchange in a

multiply traded option. Although such

orders must currently be initiated from

the Phlx floor and must clear the Phlx

crowd, the proposed changes would

permit off-floor orders to be sent to

another exchange. Such orders must

nevertheless clear the Phlx crowd. The

purpose of this change is to treat orders

in multiply traded options, whether
26756 Federal Register / Vol. 60, No. 96 / Thursday, May 18, 1995 / Notices

12 17 CFR 200.30–3(a)(12).

originating from on or off-floor, the

same way for margin purposes,

extending limited market maker

treatment.

Lastly, Advice C–3 is proposed to be

amended to incorporate this extension

of specialist margin treatment into the

advice enumerating Floor Broker

responsibilities. Specifically, Floor

Brokers would be required to mark floor

tickets where an ROT has indicated that

the order is for his market maker

account with the letter ‘‘P’’. A fine for

violations would be administered

pursuant to the Exchange’s minor rule

plan. The Exchange believes that this

should assist its surveillance efforts

respecting market maker margin for offfloor orders.

The Phlx 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 and to protect

investors and the public interest.

Specifically, the Phlx believes that the

proposal should increase the extent to

which ROT trades contribute to

liquidity and to the maintenance of the

fair and orderly market on the Exchange

by providing for a greater degree of inperson trading by ROTs and by enabling

such ROTs to better manage the risk of

their market making activities. Likewise,

the Phlx believes that the corresponding

amendments to Phlx advices are

intended to incorporate specialist

margin treatment for off-floor orders

into the provisions governing trading

requirements, ROTs entering orders, and

Floor Broker responsibilities, consistent

with Section 6(b)(5).

(B) Self-Regulatory Organization’s

Statement on Burden on Competition

The Exchange 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

No written comments were solicited

or received with respect to the proposed

rule change.

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 reasons for so finding or

(ii) as to which the Phlx 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, 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 at

the Commission’s Public Reference

Section, 450 Fifth Street NW.,

Washington, D.C. 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–95–14

and should be submitted by June 8,

1995.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.12

[FR Doc. 95–12259 Filed 5–17–95; 8:45 am]

BILLING CODE 8010–01–M

[File No. 1–11254]

Issuer Delisting; Notice of Application

to Withdraw From Listing and

Registration; (Vermont Pure Holdings,

Ltd., Common Stock, $.001 Par Value)

May 12, 1995.

Vermont Pure Holdings, Ltd.

(‘‘Company’’) has filed an application

with the Securities and Exchange

Commission (‘‘Commission’’), pursuant

to Section 12(d) of the Securities

Exchange Act of 1934 (‘‘Act’’) and Rule

12d2–2(d) promulgated thereunder, to

withdraw the above specified security

(‘‘Security’’) from listing and

registration on the Boston Stock

Exchange, Inc. (‘‘BSE’’).

The reasons alleged in the application

for withdrawing this Security from

listing and registration on the Boston

Stock Exchange, Inc. (‘‘BSE’’).

The reasons alleged in the application

for withdrawing this Security from

listing and registration include the

following:

According to the Company, the

Company originally decided to list the

Security on the BSE in connection with

the initial public offering by the

Company of the Security. The decision

to list on the BSE at that time was based

on the Company’s desire to expedite the

formation of an active public market for

the Security. However, the Board of

Directors has determined that the

Company should now withdraw its

Security from listing on the BSE. This

decision is based on the limited and

sporadic trading activity of the Security

on the BSE since the date the Security

was first listed. The Company’s primary

trading market has been and continues

to be the Nasdaq SmallCap Market. The

Company believes that the benefits of

remaining listed on the BSE do not

outweigh the costs involved in

maintaining such listing, since the

Nasdaq SmallCap Market represents the

primary trading market for the Security.

Any interested person may, on or

before June 5, 1995 submit by letter to

the Secretary of the Securities and

Exchange Commission, 450 Fifth Street,

N.W., Washington, D.C. 20549, facts

bearing upon whether the application

has been made in accordance with the

rules of the exchange and what terms,

if any, should be imposed by the

Commission for the protection of

investors. The Commission, based on

the information submitted to it, will

issue an order granting the application

after the date mentioned above, unless

the Commission determines to order a

hearing on the matter.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.

Jonathan G. Katz,

Secretary.

[FR Doc. 95–12187 Filed 5–17–95; 8:45 am]

BILLING CODE 8010–01–M

DEPARTMENT OF STATE

[Public Notice 2209]

United States International

Telecommunications Advisory

Committee; Standardization Sector

(ITAC–T) Study Group; Meeting Notice

The Department of State announces

that the United States International

Telecommunications Advisory

Committee Standardization Sector

(ITAC–T) Study Group (formerly the

USNC) will meet on June 6, 1995, 9:30

a.m. to 3 p.m., room 1207 at the U.S.