[Federal Register Volume 60, Number 50 (Wednesday, March 15, 1995)]
[Notices]
[Pages 14043-14044]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-6352]



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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-35464; International Series Release No. 791; File No. 
SR-Phlx-95-03]


Self-Regulatory Organizations; Order Approving a Proposed Rule 
Change by the Philadelphia Stock Exchange, Inc., Relating to Customized 
Foreign Currency Options Transaction Size

March 9, 1995.
    On January 17, 1995, the Philadelphia Stock Exchange, Inc. 
(``Phlx'' or ``Exchange'') filed with 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 minimum transaction 
size for customized foreign currency options (``Customized FCOs'') from 
300 to 200 contracts. Notice of the proposed rule change appeared in 
the Federal Register on January 30, 1995.\3\ No comment letters were 
received on the proposed rule change. This order approves the 
Exchange's proposal.

    \1\15 U.S.C. 78s(b)(1) (1988).
    \2\17 CFR 240.19b-4 (1992).
    \3\See Securities Exchange Act Release No. 35261 (January 23, 
1995), 60 FR 5745 (January 30, 1995).
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    On November 1, 1994, the Commission approved the Exchange's 
proposal to trade Customized FCOs.\4\ Presently, Phlx Rule 1069(a)(6) 
imposes a 300 contract minimum for opening Customized FCO transactions. 
The Exchange represents that a number of midsized corporations and 
institutions have told the Exchange that the current minimum contract 
value is too large for their purposes. The Exchange, therefore, 
proposed to reduce the minimum opening transaction size for Customized 
FCO transactions to 200 contracts.\5\

    \4\See Securities Exchange Act Release No. 34925 (November 1, 
1994), 59 FR 55720 (November 8, 1994) (``Exchange Act Release No. 
34925'').
    \5\The Exchange represents that the average value of a 300 
contract Customized FCO transaction, at prevailing exchange rates, 
is approximately $15 million. Reducing the minimum opening 
transaction size to 200 contracts would still result in an average 
minimum transaction value of approximately $10 million.
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    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, the requirements of Section 6(b)(5)\6\ in that the proposal 
is designed to promote just and equitable principles of trade, to 
prevent fraudulent and manipulative acts and practices, and to protect 
investors and the public interest. Specifically, the Commission 
believes that the proposed rule change is designed to make the 
Customized FCO market accessible to smaller corporate FCO users while 
maintaining the focus of this market towards institutional investors. 
As a result, the Commission believes that the proposal may serve to add 
liquidity to this market which would benefit all users of Customized 
FCO's.

    \6\15 U.S.C. 78(b)(5) (1988).
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    Moreover, even with lowering the minimum opening transaction size 
to 200 contracts, the average value of an opening Customized FCO 
transaction will be approximately $10 million.\7\ The Commission 
believes that this level is sufficient to ensure that Customized FCO 
market continues to be used almost exclusively by institutional 
investors. The Commission also notes that this dollar value is 
equivalent to the minimum opening transaction size that the Commission 
required in approving proposals by the American Stock Exchange,\8\ the 
Chicago Board Options Exchange,\9\ and the Pacific Stock Exchange\10\ 
for trading flexible exchange options (``FLEX Options''). As a result, 
the Commission believes that this proposal does not raise any 
regulatory concerns that were not adequately addressed by the Exchange 
when the [[Page 14044]] Commission approved the trading of Customized 
FCOs.\11\

    \7\See supra note 5.
    \8\See Securities Exchange Act Release No. 32781 (August 20, 
1993), 58 FR 45360 (August 27, 1993).
    \9\See Securities Exchange Act Release Nos. 32694 (July 29, 
1993), 58 FR 41814 (August 5, 1993), and 31920 (February 24, 1993), 
58 FR 12280 (March 3, 1993).
    \10\See Securities Exchange Act Release No. 34364 (July 13, 
1994), 59 FR 36813 (July 19, 1994).
    \11\See Exchange Act Release No. 34925, supra note 4.
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    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\12\ that the proposed rule change (SR-Phlx-95-03) is hereby 
approved.

    \12\15 U.S.C. 78s(b)(2) (1988).
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    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\13\

    \13\17 CFR 200.30-3(a)(12) (1994).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 95-6352 Filed 3-14-95; 8:45 am]
BILLING CODE 8010-01-M