Self-Regulatory Organizations; Notice of Filing of Proposed Rule Change by Philadelphia Stock Exchange, Inc. to Adopt Equity Floor Procedure Advice A-2, Stopping Orders

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-34216; File No. SR-Phlx-93-41]

Self-Regulatory Organizations; Notice of Filing of Proposed Rule

Change by Philadelphia Stock Exchange, Inc. to Adopt Equity Floor

Procedure Advice A-2, Stopping Orders

June 15, 1994.

Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934

(``Act''), 15 U.S.C. Sec. 78s(b)(1), notice is hereby given that on

November 2, 1993, the Philadelphia Stock Exchange, Inc. (``Phlx'' or

``Exchange'') filed with the Securities and Exchange Commission

(``Commission'' or ``SEC``) the proposed rule change as described in

Items I, II and III below, which Items have been prepared by the self-

regulatory organization. On June 1, 1994, the Exchange submitted to the

Commission Amendment No. 1 to the proposed rule change in order to

narrow the scope of its original filing, to revise certain language

used therein and to request approval to amend its Minor Rule Violation

Enforcement and Reporting Plan (``Plan'').\1\ The Commission is

publishing this notice to solicit comments on the proposed rule change

from interested persons.

---------------------------------------------------------------------------

\1\See letter from Gerald D. O'Connell, First Vice President,

Phlx, to Sharon Lawson, Assistant Director, Division of Market

Regulation, SEC, dated May 31, 1994 (``Amendment No. 1'').

---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance

of the Proposed Rule Change

The Phlx proposes to adopt Equity Floor Procedure Advice

(``Advice'') A-2, Stopping Orders, which would require that any order

on the book that is stopped by the specialist be displayed at its price

or better if not executed immediately after being stopped. Moreover,

the proposed advice would prohibit the specialist from trading for the

specialist's own account with any order that specialist stopped, while

the specialist is in possession of an order at that price or better. In

this regard, the specialist must exercise due diligence to match the

stopped order with the other order pursuant to Phlx Rules 119 and 120.

Proposed Advice A-2(E) is followed by the designator ``(E)'' to

identify it as an equity floor advice, applicable only to the

Exchange's equity floor. In this regard, the Exchange's Plan would be

amended to include this Advice. Accordingly, violations of proposed

Advice A-2(E) would be subject to a fine schedule, which results in a

$250 fine for the first occurrence, a $500 fine for the second

occurrence and a sanction discretionary with the Exchange's Business

Conduct Committee for any violations thereafter.

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 self-regulatory organization

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 self-regulatory organization

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

The Phlx proposed to adopt Advice A-2(E) to govern stopping orders

on the equity trading floor. The purpose of the proposal is to codify

stopping policies into an advice as a ready reminder to the equity

floor and also to establish that minor violations may result in the

issuance of pre-established fines. The advice is also intended to

contribute to the standardization of trading floor rules among the

Intermarket Trading System (``ITS'') participant exchanges.

With respect to stopped orders on the book, the proposed text is

consistent with the specialist's requirements to engage in a course of

dealings to assist in the maintenance of a fair and orderly market,

pursuant to Phlx Rule 203. Specifically, the first requirement is that

a stopped order on the book must be displayed at its price or better if

not executed immediately after being stopped. The second requirement of

this Advice prohibits a specialist from trading with a stopped order

for his own account, while in possession of another order at an equal

or better price. Instead, the specialist would be required to exercise

due diligence to ``match'' the stopped order with the other order,

consistent with Phlx Rule 218.

2. Statutory Basis

The proposed rule is consistent with Section 6 of the Act, in

general, and, in particular, with Section 6(b)(5), in that it is

designed to promote just and equitable principles of trade and prevent

fraudulent and manipulative acts and practices, by furthering the

purposes of Rule 203, which in turn, should foster a fair and orderly

market in Exchange traded securities.

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 publication of this notice in the Federal

Register or within such other 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, 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. Sec. 552, will be available for inspection and copying at

the Commission's Public Reference Section, 450 Fifth Street, NW.,

Washington, DC 20549. 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-93-41 and should be

submitted by July 12, 1994.

For the Commission, by the Division of Market Regulation,

pursuant to delegated authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 94-15041 Filed 6-20-94; 8:45 am]

BILLING CODE 8010-01-M