[Federal Register Volume 61, Number 95 (Wednesday, May 15, 1996)]
[Notices]
[Pages 24525-24526]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-12175]



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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-37180; File No. SR-Phlx-96-04]


Self-Regulatory Organizations; Philadelphia Stock Exchange, Inc.; 
Order Granting Approval to Proposed Rule Change and Notice of Filing 
and Order Granting Accelerated Approval to Amendment No. 1 Relating to 
Amendment of Its By-Laws To Require That the Chairman of Each Standing 
Committee Must Be a Member of the Board of Governors

May 9, 1996.

I. Introduction

    On January 22, 1996, 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 require that the Chairman of 
each Standing Committee of the Exchange's Board of Governors must be a 
member of the Board of Governors.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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    The proposed rule change was published for comment in Securities 
Exchange Act Release No. 36832 (February 12, 1996), 61 FR 6280 
(February 16, 1996). No comments were received on the proposal. On May 
9, 1996, the Exchange submitted to the Commission Amendment No. 1 to 
the proposed rule change.\3\ This order approves the proposal, 
including Amendment No. 1 on an accelerated basis.
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    \3\ See Letter from Murray L. Ross, Secretary, Phlx, to Jon 
Kroeper, Attorney, SEC, dated May 8, 1996 (``Amendment No. 1''). 
Amendment No. 1 amends the text of the proposed rule change to delay 
the implementation of the proposed rule change until March 26, 1997, 
which is the organizational meeting of the Phlx Board of Governors 
after the next scheduled annual election of governors. In its April 
17, 1996 meeting, the Board resolved by consensus to retain for the 
1996-97 governance year recently appointed Chairmen of Standing 
Committees that are not members of the Board. Amendment No. 1 also 
contains representations by the Exchange as to the application of 
its conflict of interest policy to Standing Committees of the Board 
and the Chairmen thereof. See infra note 7 for a description of such 
representations.
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II. Description

    The proposed rule change to Article X, Section 10-1(a) of the 
Exchange's By-Laws mandates that, effective March 26, 1997, the 
Chairman of each Standing Committee of the Phlx's Board of Governors 
shall be a member of the Board of Governors. The proposed rule change 
is intended to update the structural composition of the Standing 
Committees and make them more directly responsive to the Board of 
Governors.

III. Discussion

    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).\4\ Specifically, the 
Commission believes that the proposed rule change is consistent with 
the Section 6(b)(1) \5\ requirement that an exchange be organized to 
carry out the purposes of the Act and to enforce compliance by its 
members and persons associated with its members with the provisions of 
the Act and the rules and regulations thereunder.
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    \4\ 15 U.S.C. 78f(b).
    \5\ 15 U.S.C. 78f(b)(1).
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    By requiring that the Chairman of each Standing Committee of the 
Board of Governors \6\ must be a member of the Board of Governors, the 
proposed rule change will enable the Board to more closely oversee the 
exercise of the authority it has delegated to the Standing Committees 
and increase the responsiveness of the Committees to the Board's 
concerns therewith. As a result, the proposed rule change may enhance 
the Board's ability to perform its responsibilities under the By-Laws 
and Rules of the Exchange and, in turn, the

[[Page 24526]]

Exchange's performance of its obligations under the Act.\7\
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    \6\ Presently, the Standing Committees of the Phlx Board of 
Governors consist of the following: an Admissions Committee, an 
Allocation, Evaluation and Securities Committee, an Arbitration 
Committee, an Audit Committee, a Business Conduct Committee, an 
Elections Committee, an Executive Committee, a Finance Committee, a 
Foreign Currency Options Committee, a Marketing Committee, a 
Nominating Committee, and an Options Committee. See Phlx By-Laws, 
Art. X, Sec. 10-1(a).
    \7\ In Amendment No. 1 the Exchange has represented that Art. 
IV, Sec. 4-8 of the Phlx By-Laws, which provides that ``no person 
shall participate in the adjudication of a matter in which he is 
personally interested,'' specifically applies to members of the 
Board of Governors acting as such. The Exchange also has represented 
that it has applied this conflict of interest provision to the 
conduct of all Standing Committee, subcommittee, hearing panel and 
panel members. Moreover, in the context of the proposed rule change, 
the Exchange has represented that no Chairman of a Standing 
Committee may participate in the deliberation or voting on any 
matter in which such member or his or her affiliated firm may have 
an interest in the outcome. See Amendment No. 1, supra note 3.
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    The Commission finds good cause for approving Amendment No. 1 prior 
to the thirtieth day after the date of publication of notice thereof in 
the Federal Register. Amendment No. 1 merely delays the implementation 
of the rule until the 1997-98 governance year, and does not propose new 
substantive provisions to the proposed rule change. Accordingly, the 
Commission believes that consistent with Section 19(b)(2), good cause 
exists to accelerate approval of Amendment No. 1.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views and 
arguments concerning Amendment No. 1 to the proposed rule change. 
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 rules 
change that are filed with the Commission, and all written 
communications relating to Amendment No. 1 between the Commission and 
any persons, 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. 20549. Copies of such filing 
will also be available at the principal office of the Phlx. All 
submissions should refer to File No. SR-Phlx-96-04 and should be 
submitted by [insert date 21 days from date of publication].

V. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\8\ that the proposed rule change (SR-Phlx-96-04), as amended, is 
approved.

    \8\ 15 U.S.C. 78s(b)(2).
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    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\9\
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    \9\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 96-12175 Filed 5-14-96; 8:45 am]
BILLING CODE 8010-01-M