Self-Regulatory Organizations; Order Granting Approval to Proposed Rule Change by the Philadelphia Stock Exchange, Inc. Relating to Regulation 2 (Foods, Liquids and Beverages)

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-34249; File No. SR-Phlx-94-13]

Self-Regulatory Organizations; Order Granting Approval to

Proposed Rule Change by the Philadelphia Stock Exchange, Inc. Relating

to Regulation 2 (Foods, Liquids and Beverages)

June 23, 1994.

I. Introduction

On March 10, 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 amend Phlx Regulation 2

(Foods, Liquids and Beverages) to permit the respective floor standing

committees to waive the Regulation's prohibition against foods, liquids

and beverages on the trading floor.\3\

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\1\15 U.S.C. 78s(b)(1) (1988).

\2\17 CFR 240.19b-4 (1993).

\3\Regulation 2 is a regulation of order and decorum adopted

pursuant to Phlx Rule 60. Rule 60 permits Exchange officials and

Floor officials to assess fines not exceeding $1,000 for violations

of regulations pertaining to the administration of, and order,

decorum, health, safety and welfare on the Exchange, or to refer

such violations to the Exchange's Business Conduct Committee where

higher fines or other sanctions may be imposed, in accordance with

Phlx Rule 960.

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The proposed rule change was published for comment in Securities

Exchange Act Release No. 33815 (March 25, 1994), 59 FR 15474 (April 1,

1994). No comments were received on the proposal. This order approves

the proposed rule change.

II. Description of the Proposal

Currently, Regulation 2, which was adopted pursuant to Rule 60,

prohibits foods, liquids and beverages on the trading floor and the

lower level areas adjacent to the trading floor, except for the

lunchrooms. The first violation of Regulation 2 is punishable by an

official warning, with the second and third violations punishable by a

fine of $100 and $200, respectively. The fourth violation and any

violation thereafter is punishable by a sanction that is discretionary

with the Business Conduct Committee.

The Phlx proposes to add a provision to Regulation 2 (Foods,

Liquids and Beverages) stating that any provision of Regulation 2 may

be waived by the chairperson of the appropriate floor standing

committee or a designee thereof. Any waiver of the prohibition must be

for a specified period of time and would require prior notice to the

trading floor. In addition, reinstituting the prohibition would require

prior notice to the floor.

The Exchange states that the proposed rule change is consistent

with Section 6(b)(5) of the Act, in that it is designed to promote just

and equitable principles of trade and protect investors and the public

interest by fostering an orderly environment on the trading floor. The

Exchange also believes that the proposal is consistent with Section

6(b)(6) of the Act because it would continue to provide that members of

the Exchange be appropriately disciplined for violations of the rules

of the Exchange.

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)(5) of the Act.\4\

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\4\15 U.S.C. 78f (1988).

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The Commission believes that the ability to waive the prohibition

against foods, liquids and beverages on the trading floor and the lower

level areas adjacent to the trading floor\5\ is consistent with Section

6(b)(5) of the Act, which requires, among other things, that the rules

of an exchange be designed to promote just and equitable principles of

trade and protect investors and the public interest. The ability to

waive the prohibition against bringing foods, liquids and beverages on

the trading floor for a specific period of time would provide the

Exchange with the flexibility to permit floor personnel to bring foods

and beverages to the floor work area when necessary or prudent, such as

during periods of market volatility or high volume trading. As a

result, the ability to waive the restrictions in Regulation 2 should

enhance the members' ability to engage in transactions in securities

and, thereby, protect investors and the public interest.

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\5\The prohibitions in Regulation 2 do not apply to the Exchange

lunchrooms. See Regulation 2.

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It is therefore ordered, pursuant to Section 19(b)(2) of the

Act,\6\ that the proposed rule change (SR-Phlx-94-13) is approved.

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\6\15 U.S.C. 78s(b)(2) (1988).

For the Commission, by the Division of Market Regulation,

pursuant to delegated authority.\7\

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\7\17 CFR 200.30-3(a)(12) (1991).

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Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 94-15754 Filed 6-28-94; 8:45 am]

BILLING CODE 8010-01-M