[Federal Register Volume 63, Number 246 (Wednesday, December 23, 1998)]
[Notices]
[Pages 71183-71185]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-33983]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-40802; File No. SR-Phlx-98-42]
Self-Regulatory Organizations; Notice of Filing of Proposed Rule
Change by the Philadelphia Stock Exchange, Inc. Increasing Maximum OTX
AUTO-X Order Size Eligibility
December 17, 1998.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on October 6, 1998, 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
[[Page 71184]]
have been prepared by the Phlx. The Commission is publishing this
notice to solicit comments on the proposed rule change from interested
persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of
Substance of the Proposed Rule Change
The Exchange proposes to amend Phlx Rule 1080 to increase the
maximum order size for eligibility for public customer market and
marketable limit orders for OTC Prime Index (``OTX'') \3\ options
contracts to be executed on AUTO-X, the automatic execution feature of
the Phlx's Automated Options Market (``AUTOM'') system. Currently,
public customer orders of up to 50 contracts are eligible for execution
via AUTO-X. The Phlx is proposing to increase the maximum order size to
100 contracts.
---------------------------------------------------------------------------
\3\ The OTC Prime Index is composed of the fifteen stocks which
had the largest trading volume on the Nasdaq during the preceding
year. See Securities Exchange Act Release No. 40058 (June 2, 1998),
63 FR 31543 (June 9, 1998).
---------------------------------------------------------------------------
Proposed new language is italicized; proposed deletions are
bracketed.
Rule 1080(a) No Change
(b) No change.
(c) AUTO-X.--AUTO-X is a feature of AUTOM that automatically
executes public customer market and marketable limit orders up to the
number of contracts permitted by the Exchange for certain strike prices
and expiration months in equity options and index options, unless the
Options Committee determines otherwise. AUTO-X automatically executes
eligible orders using the Exchange disseminated quotation and then
automatically routes execution reports to the originating member
organization. AUTOM orders not eligible for AUTO-X are executed
manually in accordance with Exchange rules. Manual execution may also
occur when AUTO-X is not engaged.
The Options Committee may for any period restrict the use of AUTO-X
on the Exchange in any option or series. Currently, orders up to 50
contracts, subject to the approval of the Options Committee, are
eligible for AUTO-X. With respect to OTC Prime Index (``OTX'') options,
orders of up to 100 contracts are eligible for AUTO-X.
The Options Committee may, in its discretion, increase the size of
orders in one or more classes of multiply-traded equity options
eligible for AUTO-X to the extent necessary to match the size of orders
in the same options eligible for entry into the automated execution
system of any other options exchange, provided that the effectiveness
of any such increase shall be conditioned upon its having been filed
with the Securities and Exchange Commission pursuant to Section
19(b)(3)(A) of the Securities Exchange Act of 1934.
(d) No Change
(e) No Change
(f) No Change
(g) No Change
(h) No Change
. . Commentary . . No Change
II. Self-Regulatory Organization's Statements of the Purpose of and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the Phlx 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 Phlx 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
The purpose of the proposed rule change is to increase the maximum
OTX AUTO-X option order size from 50 to 100 contracts. AUTO-X is the
automatic execution feature of AUTOM, the Phlx's electronic order
routing, delivery, and reporting system for options, Orders are routed
from member firms directly to the appropriate specialist on the Phlx's
trading floor. Certain orders are eligible for AUTOM's automatic
execution feature, AUTO-X. These AUTO-X orders are automatically
executed at the disseminated quotation price on the Exchange and
reported to the originating firm. Those orders not eligible for AUTO-X
are manually handled by the specialist. Currently, up to 50 contracts,
subject to the approval of the Options Committee, are eligible for
AUTO-X.\4\
---------------------------------------------------------------------------
\4\ See Securities Exchange Act Release No. 38792 (June 30,
1997), 62 FR 36602 (July 8, 1997) (SR-Phlx-97-24).
---------------------------------------------------------------------------
The Exchange notes that this limited expansion of AUTO-X order size
should not impose significant burdens on the operation and capacity of
the AUTOM system; rather, AUTOM's effectiveness may be enhanced by the
instant proposal by increasing the number of orders eligible for
automatic execution, thereby reducing the need for manual processing.
The proposed rule change is consistent with Section 6(b)
5 of the Act in general, and in particular, with Section
6(b)(5),6 in that it is designed to promote just and
equitable principles of trade, as well as to protect investors and the
public interest by extending the benefits of automatic execution via
AUTO-X to customers with OTX option orders for up to 100 contracts.
---------------------------------------------------------------------------
\5\ 15 U.S.C. 78f(b).
\6\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
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 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 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, including whether the proposal is
consistent with the Act. 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 in the Commission's
Public Reference Room, 450 Fifth Street, NW, Washington, DC 20549.
Copies of such filing will also be available for inspection and copying
at the principal
[[Page 71185]]
office of the Phlx. All submissions should refer to File No. SR-Phlx-
98-42 and should be submitted by January 13, 1999.
For the Commission by the Division of Market Regulation,
pursuant to delegated authority.\7\
---------------------------------------------------------------------------
\7\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 98-33983 Filed 12-22-98; 8:45 am]
BILLING CODE 8010-01-M