7252 Federal Register / Vol. 60, No. 25 / Tuesday, February 7, 1995 / Notices

1Although the PHLX believes that proposed

PHLX Rule 810(d) will apply primarily to

municipal securities, it may also apply to the debt

of issuers whose equities are not listed on the

Exchange. Telephone conversation between Murray

L. Ross, Secretary, PHLX, and Yvonne Fraticelli,

Staff Attorney, Options Branch, Division of Market

Regulation, Commission, on January 20, 1995.

2 In this regard, the Exchange intends to require

specialist units applying for appointment and

registration in municipal securities to be in

compliance with the Municipal Securities

Rulemaking Board (‘‘MSRB’’) G–3 regulations

regarding municipal securities principals and

representatives. The National Association of

Securities Dealers (‘‘NASD’’) has authority to

enforce MSRB rules for listed municipal securities.

The PHLX enforcement in this regard will not

preempt or limit in any manner the NASD’s

authority to act in this area. 3 17 CFR 200.30–3(a)(12) (1994).

1On November 30, 1994, the PHLX amended its

proposal to clarify that the proposed two-day period

for compliance with Exchange Examinations

Department requests would apply, for example, to

requests for books and records, rather than to

requests for financial information, which are

governed by PHLX Rule 703(e). See Letter from

Edith Hallahan, Special Counsel, PHLX, to Michael

Walinskas, Branch Chief, Office of Market

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

Regulation (‘‘Division’’), Commission, dated

November 30, 1994 (‘‘November 30 Letter’’). On

January 31, 1995, the PHLX amended its proposal

to delete references to foreign currency option

(‘‘FCO’’) participants and participant organizations

in Floor Procedure Advice (‘‘Advice’’) F–8, ‘‘Failure

to Comply with an Exchange Inquiry.’’ See Letter

from Edith Hallahan, Special Counsel, Regulatory

Services, PHLX, to Michael Walinskas, Branch

Chief, OMS, Division, Commission, dated January

30, 1995 (‘‘January 30 Letter’’). However, Advice F–

8 continues to apply to FCO participants and

participant organizations. Specifically, the PHLX

notes in its January 30 Letter that PHLX Rule 13,

‘‘Foreign Currency Options Participant’’ provides

that FCO participants are subject to the provisions

of the Exchange’s rules that are applicable to a

member of the Exchange and each reference to a

member of the Exchange in the PHLX’s rules is

deemed to pertain also to FCO participants.

2Under the Advice F–8’s fine schedule, as

amended, the Exchange will impose a fine of $200

for the first occurrence, $1,000 for the second

occurrence, $2,500 for the third occurrence, and a

beneficial owners of record or is no

longer investment grade rated by at least

one nationally recognized rating

service.1

The Exchange proposes to assign any

municipal security it lists to a

specialist 2 and to trade municipal

securities in accordance with all PHLX

regulations otherwise applicable to the

trading of securities on the equities

trading floor of the Exchange, except

that pursuant to proposed PHLX Rule

132(d)(17) municipal securities shall be

exempt from the provisions of the

Exchange’s off-board trading rule. Under

proposed PHLX Rule 309, municipal

securities will be compared, settled and

cleared in accordance with the

applicable regulations of the MSRB. The

PHLX believes that Exchange listing of

municipal securities will allow public

investors to have an alternative to the

over-the-counter market to trade

municipal debt securities.

The PHLX states that the proposed

rule change is based on Section 6(b)(5)

of the Act in that it is designed to

further promote the mechanism of a free

and open market and to protect

investors and the public interest.

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

Within 35 days of the publication of

this notice in the Federal Register or

within such other 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, 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. Copies of such filing

also will be available for inspection and

copying at the principal office of the

PHLX. All submissions should refer to

File No. SR–PHLX–94–69 and should be

submitted by February 28, 1995.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.3

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 95–2969 Filed 2–6–95; 8:45 am]

BILLING CODE 8010–01–M

[Release No. 34–35305; File No. SR–PHLX–

94–61]

Self-Regulatory Organizations; Notice

of Filing of Proposed Rule Change by

the Philadelphia Stock Exchange, Inc.,

Relating to Floor Procedure Advice F–

8, Failure To Comply With an

Exchange Inquiry

January 31, 1995.

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

Securities Exchange Act of 1934

(‘‘Act’’), 15 U.S.C. 78s(b)(1), notice is

hereby given that on November 21,

1994, 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 selfregulatory organization.1 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

Currently, Advice F–8 requires

Exchange members to comply promptly

with any request for information made

by the Exchange’s Market Surveillance

Department in connection with any

investigation within the Exchange’s

disciplinary jurisdiction. The Exchange

proposes to amend Advice F–8 to

require members to comply with

Exchange requests for information in

connection with any regulatory inquiry,

investigation, or examination relating to

the Exchange’s disciplinary jurisdiction

or regulatory obligations. The PHLX also

proposes to amend the Advice to require

that information requested by the

Exchange’s Examinations Department be

received within two business days from

the date of the original request in order

to satisfy the prompt compliance

requirement of Advice F–8. Finally, the

PHLX proposes to amend Advice F–8 to

reduce the fine for a first violation of the

Advice from $500 to $200, and to

provide that each additional request for

information not furnished within the

allotted time period may be considered

as a separate occurrence for purposes of

the Advice’s fine schedule.2 The text of
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]

BILLING CODE 8010–01–M