65704 Federal Register / Vol. 60, No. 244 / Wednesday, December 20, 1995 / Notices

October 13, 1995. Amendment No. 1 corrected the

text of Exhibit A to the filing, which sets forth the

text of the proposed rule change, by adding a

sentence that had been inadvertently omitted from

Exhibit A as initially filed.

5For purposes of this rule, an ‘‘agency cross’’ is

defined as a cross where neither the order to buy

or sell is for the account of any member or member

organization.

6See Securities Exchange Act Release No. 33708

(Mar. 3, 1994), 59 FR 11339 (File No. SR–MSE–93–

05) (approving a proposed rule change to require

that the CHX specialist refrain from interfering with

a floor-brokered agency cross of 10,000 share or

more at a cross price between the disseminated

Exchange market).

7This requirement is to ensure that in situations

where a limit order on the book has not been

displayed in the quote, the specialist would be

obligated to satisfy such limit orders with priority

at the cross price.

8 15 U.S.C. § 78f(b).

9 15 U.S.C. § 78k(a).

10Several exchanges have similar rules

prohibiting specialists from interfering with agency

crosses when the cross is at a price inside the

disseminated exchange market without regard to

size. See, e.g., Pacific Stock Exchange Rule 5.14(b)

and Philadelphia Stock Exchange Rule 126.

11 15 U.S.C. 78s(b)(2).

12 17 CFR 200.30–3(a)(12).

The proposed rule change and

Amendment No. 1 were published for

comment in Securities Exchange Act

Release No. 36432 (Oct. 27, 1995), 60 FR

55873 (Nov. 3, 1995). No comments

were received on the proposal. Currently, Interpretation .01 to CHX

Rule 23, Article XX, requires a CHX

specialist to refrain from interfering

with a floor-brokered agency cross 5 of

10,000 shares or greater that is to be

effected at a price between the

disseminated Exchange market.6 The

exchange proposes to amend this rule to

require a CHX specialist to refrain from

interfering with all floor-brokered

agency crosses, regardless of size, at a

cross price between the disseminated

Exchange market. Under the Exchange’s

proposal, the specialist will continue to

be obligated to satisfy all orders on the

book with priority at the cross price.7

Moreover, the proposed rule change will

continue to permit the specialist to

participate at the cross price if the

specialist is willing to provide one side

of the cross with a better price or if the

member presenting the cross previously

solicited the specialist’s assistance in

consummating any part of the

transaction.

The Exchange believes that the

proposed rule change will increase the

possibility of immediate execution for

agency crosses on the Exchange, which

in turn will improve the Exchange’s

ability to compete for order flow and

enhance the depth and liquidity of the

Exchange market. Moreover, the

Exchange believes that the proposed

rule change strikes an appropriate

balance between the competing needs of

various customer orders represented for

execution on the Exchange and the

proprietary trading operations of

Exchange members and member

organizations, including specialists. 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, and, in particular, with the

requirements of section 6(b) 8 and

Section 11(a).9 The Commission

believes the proposal is consistent with

the Section 6(b)(5) requirements that the

rules of an exchange be designed to

promote just and equitable principles of

trade, to prevent fraudulent and

manipulative acts, and, in general, to

protect investors and the public interest.

The Commission also believes that the

proposed rule change is not inconsistent

with the traditional auction market

principle of customer priority as

embodied in Section 11(a) of the Act.

The Commission believes that the

proposed rule change should further

competition among the exchanges,10 as

well as between the exchanges and

other markets, and should increase the

opportunities for the efficient execution

of cross transactions without operating

in a manner inconsistent with

traditional auction market principles.

The proposal only restricts specialists

from interfering with crosses between

the disseminated Exchange market

under certain circumstances and

continues to allow another member,

including an order for the principal

account of a member, to break up the

cross.

The Commission believes that the

proposal is not inconsistent with the

auction market principles of time and

price priority. As before, a member

effecting a cross transaction at the

prevailing bid or offer will continue to

be required to obtain priority over all

existing limit orders at that price and

specialists will continue to be required

to fill limit orders at the cross price,

which have not been displayed in the

quote. Moreover, the Commission

believes that the proposal does not alter

the safeguards provided in the current

rule, which ensure that public

customers are not disadvantaged. For

example, the Commission notes that the

proposed rule change does not change

the opportunity for customer orders to

receive price improvement: the

specialist will continue to be allowed to

participate at a better price. Finally, the Commission does not

believe that the proposed rule change

will significantly reduce order

interaction on the floor of the Exchange.

Only a CHX specialist who does not

have a displayed bid or offer at the cross

price must refrain from participating in

a cross transaction at that price. The

proposed rule change does not affect the

ability of specialists to participate at a

better price or the ability of other

interest in the trading crowd to

participate. The Commission does not

expect the proposed rule change to

substantially impair price discovery or

market liquidity.

It is therefore ordered, pursuant to

section 19(b)(2) of the Act,11 that the

proposed rule change (SR–CHX–95–24)

is approved.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.12

Jonathan G. Katz,

Secretary.

[FR Doc. 95–30910 Filed 12–19–95; 8:45 am]

BILLING CODE 8010–01–M

[Release No. 34–36581; File No. SR–NYSE–

95–39]

Self-Regulatory Organizations; Notice

of Filing of Proposed Rule Change by

the New York Stock Exchange, Inc.

Relating to Revised Listing Standards

for Equity-Linked Debt Securities

December 13, 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 29,

1995, the New York Stock Exchange,

Inc. (‘‘Amex’’ 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 selfregulatory organization. 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 NYSE proposes to amend its

listing standards for Equity-Linked Debt

Securities (‘‘ELDS’’). These listing

standards are contained in Para. 703.21

of its Listed Company Manual. The

amendments would allow the Exchange

to list ELDS on securities, as described

below, that have a market capitalization

of $1.5 billion or $500 million, if such

securities have annual trading volume

of 10 million and 15 million shares,

respectively.

The text of the proposed rule change

is available at the Office of the

Secretary, NYSE and at the Commission.
Federal Register / Vol. 60, No. 244 / Wednesday, December 20, 1995 / Notices 65705

1See Securities Exchange Act Release No. 33468

(Jan. 13, 1994). These listing standards were

subsequently revised in Securities Exchange Act

Release Nos. 33841 (March 31, 1994) and 34985

(Nov. 18, 1995).

2 17 CFR 200.30–3(a)(12) (1994).

1 15 U.S.C. 78s(b)(1) (1988).

2 17 CFR 240.19b–4 (1994).

3The Exchange will accomplish this reduction in

value by doubling the divisor used in calculating

the Index.

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

NYSE 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 NYSE 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

ELDS are non-convertible debt

securities of an issuer where the value

of the debt is based, at least in part, on

the value of another issuer’s common

stock or non-convertible preferred

stock.1 The purpose of the proposed

rule change is to amend the trading

volume criteria for the linked security,

that is, the security on which the value

of the ELDS is based. Currently, under

Section 703.21 of the Listed Company

Manual, in order to list an ELDS

product, the linked security must meet

one of the following criteria:

Market

capitalization

Annual trading

volume

$3 billion .............. and 2.5 million shares.

$1.5 billion ........... and 20 million shares.

$500 million ......... and 80 million shares.

The proposed rule change will lower

the trading volume requirements criteria

such that an ELDS may be listed

provided the linked security meets one

of these revised criteria:

Market

capitalization

Annual trading

volume

$3 billion ............ and 2.5 million

shares.

$1.5 billion ......... and 10 million

shares.

$500 million ....... and 15 million

shares.

The Exchange believes the new

criteria will provide it with greater

flexibility to list these types of

securities. The rule change will also

delete the current provision of the rule

that allows the Exchange to list ELDS

that do not meet these criteria if the

Division of Market Regulation of the

SEC concurs. With the increased

flexibility that the new numerical listing

criteria will supply, it will no longer be

necessary to conduct such a case-bycase review of ELDS listings.

2. Statutory Basis

The basis under the Act for this

proposed rule change is the requirement

under Section 6(b)(5) that an exchange

have rules that are designed to prevent

fraudulent and manipulative acts and

practices, to promote just and equitable

principles of trade, 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, and, in general, to protect

investors and the public interest.

B. Self-Regulatory Organization’s

Statement on Burden on Competition

The Exchange believes the proposed

rule change will impose no burden on

competition that is not necessary or

appropriate in furtherance of the

purposes of the Act.

C. Self-Regulatory Organization’s

Statement on Comments on the

Proposed Rule Change Received From

Members, Participants or Others

The Exchange has not solicited, and

does not intend to solicit, comments on

this proposed rule change. The

Exchange has not received any

unsolicited written comments from

members or other interested parties.

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 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 self-regulatory organization

consents, the Commission will:

(A) By order approve the 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 at

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 the NYSE. All submissions

should refer to File No. SR–NYSE–95–

39 and should be submitted by January

10, 1996.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.2

Jonathan G. Katz,

Secretary.

[FR Doc. 95–30912 Filed 12–19–95; 8:45 am]

BILLING CODE 8010–01–M

[Release No. 34–36577; File No. SR-Phlx–

95–61]

Self-Regulatory Organizations; Order

Granting Approval to Proposed Rule

Change by the Philadelphia Stock

Exchange, Inc., Relating to a

Reduction of the Value of the Phlx

National Over-the-Counter Index

December 12, 1995.

I. Introduction

On September 22, 1995, the

Philadelphia Stock Exchange, Inc.

(‘‘Phlx’’ or ‘‘Exchange’’) submitted to the

Securities and Exchange Commission

(‘‘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

reduce the value of the Phlx’s National

Over-the-Counter Index (‘’Index’’)

option (‘‘XOC’’) to one-half of its present

value.3 The Index is a capitalizationweighted market index composed of the

100 largest capitalized stocks trading

over-the-counter. The other contract