2422 Federal Register / Vol. 60, No. 5 / Monday, January 9, 1995 / Notices

1993; in connection with the last extension of the

pilot program. See Exchange Act Release No. 33405,

supra note 4. The Phlx has filed the required

reports in connection with the current request for

an extension of the pilot program. See Letter from

Gerald O’Connell, First Vice President, Market

Regulation and Trading Operations, Phlx, to

Michael Walinskas, Branch Chief, OMS, Division,

Commission, dated December 14, 1994, and letter

from Jack McCarthy, Vice President, Equity Options

Trading Systems, Phlx, to Michael Walinskas,

Branch Chief, OMS, Division, Commission, dated

December 21, 1994 (‘‘December 21 Letter’’).

10See supra note 5.

11Before granting permanent approval of the pilot

program, the Commission expects the Phlx to

submit a full report, on or before November 1, 1995,

describing the operation of AUTOM during this

extension and the effect of any modifications made

to AUTOM system implemented during the

extension. Additionally, the Phlx’s AUTOM pilot

report should include: (1) a description of the

benefits provided by AUTOM; (2) the degree of

AUTOM usage, including the number and size of

the orders routed through AUTOM and the number

and size of the orders executed automatically

through the AUTO–X system; (3) the system

capacity of AUTOM and AUTO–X; and (4) any

problems the Exchange has encountered with the

routing and execution features. The Commission

also requests that the Phlx submit its request for

either an extension or permanent approval of the

pilot program on or before November 1, 1995.

12See Exchange Act Release No. 33405, supra

note 4.

13Telephone conversation between Edith

Hallahan, Special Counsel, Phlx, and Brad Ritter,

Senior Counsel, OMS, Division, Commission, on

December 29, 1994.

14The Commission expects the Phlx to

immediately notify the Commission of any and all

developments during this extension of the pilot

program having a material effect on the capacity of

the Phlx’s automated systems. See also, December

21 Letter, supra note 9.

15 15 U.S.C. § 78s(b)(2) (1982).

16 17 CFR 200.30–3(a)(12) (1993).

1 15 U.S.C. § 78s(b)(1) (1988).

2 17 CFR 240.19b–4 (1991).

3See letter from Gerald D. O’Connell, Vice

President, Market Surveillance, Phlx, to Glen

Barrentine, Senior Counsel, Commission, dated

November 23, 1994.

4 ‘‘Regular’’ hours of trading excludes the after

hours trading facility for GTX orders permissible

pursuant to Phlx Rule 232(c). This Rule defines a

‘‘GTX’’ order as one that is good until cancelled,

eligible for primary market protection based on

volume that prints on the New York Stock

Exchange (‘‘NYSE’’) or American Stock Exchange

(‘‘Amex’’) after-hours trading session.

believes that the extension of the pilot

program until December 31, 1995, will

provide the Exchange with a better

opportunity to further study the

operation and effectiveness of the pilot

program, and the proposed

modifications to be implemented during

the extension,10 prior to either a further

extension or permanent approval of the

pilot program.11

The Commission further notes that

the Exchange has represented that since

the last extension of the pilot program,12

AUTOM has functioned properly and

efficiently, that no material problems

have been reported by Phlx members or

AUTOM users, and that AUTOM has

not had significant malfunctions or

operational failures.13 Finally, because

the pilot program is being extended

without expansion of the scope of the

pilot, the Commission does not believe

that the capacity of the Exchange’s

automated systems will be adversely

effected by this extension.14

The Commission finds good cause for

approving the proposed rule change and

Amendment No. 1 thereto prior to the

thirtieth day after the date of

publication of notice of filing thereof in

the Federal Register in order to permit

the Phlx to continue the AUTOM pilot

program on an uninterrupted basis.

Specifically, the Commission believes

that the Phlx’s proposal to extend the

AUTOM pilot program does not raise

any new issues because it merely

extends the pilot program as it is

currently operating. Further, the

Commission continues to believe that

the pilot program is beneficial to

maintaining the quality and efficiency

of the Phlx’s market. Finally, the

Commission notes that there have been

no adverse comments concerning the

pilot program since its implementation.

Accordingly, the Commission believes

that granting accelerated approval of the

proposed rule change is appropriate and

consistent with Sections 6 and 11A of

the Act.

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

Phlx. All submissions should refer to

File No. SR–Phlx–94–41 and should be

submitted by January 30, 1995.

It is therefore ordered, pursuant to

Section 19(b)(2) of the Act,15 that the

proposed rule change (SR–Phlx–94–41),

as amended, is approved through

December 31, 1995.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.16

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 95–384 Filed 1–6–95; 8:45 am]

BILLING CODE 8010–01–M

[Release No. 34–35188; File No. SR–Phlx–

94–46]

Self-Regulatory Organizations;

Philadelphia Stock Exchange, Inc.;

Order Granting Approval to Proposed

Rule Change Regarding a Post Primary

Trading Session

January 3, 1995.

I. Introduction

On October 3, 1994 the Philadelphia

Stock Exchange, Inc. (‘‘Phlx’’ or

‘‘Exchange’’) submitted to 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

extend the close of trading on the

Exchange’s equity trading floor from

4:00 to 4:15 p.m., creating a new Post

Primary Session (‘‘PPS’’). On November

25, 1994, the Phlx submitted

Amendment No. 1 to the proposed rule

change.3

The proposed rule change, as

amended, was published for comment

in Securities Exchange Act Release No.

35007 (November 25, 1994), 59 FR

61915 (December 2, 1994). No

comments were received on the

proposal.

Pursuant to the current Phlx Rule 101

(Hours of Business), trading in any

equity security on the Exchange’s equity

floor ends at 4:00 p.m. The PPS,

however, will extend these hours for an

additional fifteen minutes. Thus, the

hours of the Phlx’s auction trading

market will be extended from the

current hours of 9:30 a.m. to 4:00 p.m.

to the new hours of 9:30 a.m. to 4:15

p.m.

Under the Phlx’s proposal to extend

its trading hours, all Exchange rules

applicable to floor trading during the

Exchange’s regular hours 4 will continue

to apply to floor trading during the PPS,

except that during the PPS, (1) orders

that are designated ‘‘PPS’’ are eligible

for execution, and (2) GTX orders are

executable after the close of the PPS

(i.e., GTX orders are executable after

4:15 p.m. instead of 4:00 p.m.). In order

to facilitate the extension of trading, the
Federal Register / Vol. 60, No. 5 / Monday, January 9, 1995 / Notices 2423

5Orders received by 4:00 p.m. Eastern Time as

determined electronically by the PACE system are

eligible for execution during regular trading hours

(i.e., before the PPS). See Phlx Rule 229

Commentary .17.

6With respect to equities, ‘‘free’’ trading is that

which occurs after the initial opening of a security,

but not during a trading halt.

7For example, pursuant to Phlx Rule 207, a ‘‘GTC

PPS’’ (such an order is good ’til cancelled but

executable during PPS, and differs from a GTX

order in that the later is eligible for execution after

the close of the Exchange) order will be eligible for

PPS execution, and, if not executed, will be eligible

for execution during ensuing days because of the

GTC designation.

8The Phlx is also making a few minor changes

to clarify that the Phlx may not be open for free

trading during a regulatory trading halt on the

primary market, and to reword the three-year cycle

for imposing fines (i.e., the fine schedule is

structured such that successive violations

committed during a three-year time span result in

successive increased fines).

9 15 U.S.C. § 78f(b) (1988).

10See Securities Exchange Act Release No. 29631

(August 30, 1991), 56 FR 46025 (September 9,

1991).

11See letter from Gerald O’Connell, First Vice

President, Phlx, to Amy Bilbija, Attorney,

Commission, dated December 28, 1994.

12 15 U.S.C. § 78s(b)(2) (1988).

13 17 CFR 200.30–3(a)(12) (1991).

Exchange is amending the following

Phlx rules: Rule 101—Hours of

Business; Rule 229—Philadelphia Stock

Exchange Automated Communication

and Execution System (‘‘PACE’’); Rule

232—Handling Orders When the

Primary Market is Not Open for Free

Trading (EXP, PPS, GTX Orders); and

Equity Floor Procedure Advice EF–1—

Designating Orders for Execution in

Instances Where the Primary Market is

Not Open in an Issue for which the Phlx

is Open for Free Trading.

As indicated above, Phlx Rule 101

will be amended to reflect the extension

of the hours of business. Second, the

Exchange is amending Phlx Rule 229,

governing the operation of PACE, to

designate PACE as an eligible order

routing system for PPS eligible orders.

PACE will not, however, be available as

an order execution mechanism during

PPS.5

Third, Phlx Rule 232 currently only

governs after-hours trading (crossing

session) of GTX orders. The Exchange is

amending it, however, so that it will

specify that GTX orders are executable

after the PPS close, and also encompass

(1) PPS, and (2) rules governing trading

on the Phlx when the primary market is

not open for free trading in an issue at

a time that the Phlx is open for free

trading. Rather than assigning PPS a

new rule number, the applicable PPS

provision is being added to Phlx Rule

232 in order to group into a single rule

the three Exchange provisions relating

to trading on the Phlx during periods

when the primary market is not open for

free trading.6

With respect to the PPS provision,

Rule 232 will: require that orders be

designated PPS to be eligible for

execution during the PPS; and specify

that since PPS is merely an extension of

the Exchange’s auction market, whereby

bids and offers are dynamically updated

for trading under normal auction market

principles, that Exchange rules

applicable to floor trading during the

‘‘regular’’ session will continue to

apply. In this regard, market, limit and

contingent order types currently

acceptable under Exchange rules will be

accepted for PPS if so designated.7

Finally, the GTX provisions will be

renumbered as paragraph (c) of Phlx

Rule 232.

With respect to the situation

addressed in Equity Floor Procedure

Advice EF–1—where the Phlx is open

for trading before the primary market is

open, or during a non-regulatory halt in

trading on the primary market—this will

be codified into Phlx Rule 232(a). In

addition, the use of the yellow ticket,

designating orders eligible for execution

when the Phlx is open for trading in

such a circumstance, will be replaced

with the use of the designator ‘‘EXP’’

(meaning ex-primary) to parallel the

designators ‘‘PPS’’ and ‘‘GTX’’ in Rule

232.8

The Commission finds that the

proposed rule change to extend the

Phlx’s auction market trading session to

4:15 p.m. 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).9 In particular, 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, in that it is reasonably

designed to promote just and equitable

principles of trade, and, in general,

perfect the mechanism of a free and

open national market system.

The Commission believes that the

decision to change the Exchange’s

trading hours does not raise any new

regulatory concerns. Currently, auction

market trading after 4:00 p.m. (EST)

occurs on the Pacific Stock Exchange

(‘‘PSE’’).10 The Phlx system will operate

in a substantially similar manner and

enable the Phlx to compete with the PSE

for after hours volume. Specifically, the

Phlx PPS will continue to provide full

transparency by disseminating quotes

through the Consolidated Quotation

System and reporting trades to the

consolidated tape. In addition, there

will continue to be complete access to

the Phlx market during PPS and the

usual auction market rules will continue

to apply. Moreover, in order to preserve

the execution quality of limit orders

placed on the specialists’ books during

‘‘regular’’ trading hours, such orders

will not automatically migrate to the

PPS, but rather will do so only if the

order is so designated (i.e., with an EXP

indicator on the ticket). Finally, the

Commission has not received any

comment letters from the public or Phlx

members raising any regulatory issues

in connection with the extension of the

Phlx auction market hours to 4:15 p.m.

The Commission notes, however, that

during the proposed extension of

trading hours, the PSE is the only other

national securities exchange that will be

operating an auction market. In this

regard, the Phlx has represented to the

Commission that the Intermarket

Trading System (‘‘ITS’’) will be in

operation as a link between the two

exchanges during the PPS.11 Thus, ITS

commitments will be able to be routed

back and forth, just as during the regular

trading hours.

Although the NYSE is operating its

Off-Hours Trading (‘‘OHT’’) facility and

the Amex is operating its after-hours

trading session during this time period,

these sessions are limited to accepting

single stock orders priced at either the

NYSE or Amex closing price,

respectively, or effecting portfolio

trades. Because the PPS trading session

will not overlap the 5:00 p.m.

executions in Crossing Session I of the

NYSE’s OHT facility or the Amex’s

after-hours trading facility, the proposal

being approved today does not raise

market structure issues regarding the

interaction between the PPS and these

two after-hours systems.

Accordingly, the Commission does

not believe that an extension of the

Phlx’s auction market trading hours to

4:15 p.m. will have an adverse effect on

the maintenance of fair and orderly

markets or disadvantage public

customers.

It is therefore ordered, pursuant to

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

proposed rule change (SR–Phlx–94–46)

is approved.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.13

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 95–386 Filed 1–6–95; 8:45 am]

BILLING CODE 8010–01–M