Self-Regulatory Organizations; Notice of Filing of Proposed Rule Change by New York Stock Exchange, Inc., Relating to Amendments to Rule 127 (Block Positioning) and Rule 72(b) (``Clean'' Agency Crosses)

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-34302; File No. SR-NYSE-94-10]

Self-Regulatory Organizations; Notice of Filing of Proposed Rule

Change by New York Stock Exchange, Inc., Relating to Amendments to Rule

127 (Block Positioning) and Rule 72(b) (``Clean'' Agency Crosses)

July 1, 1994.

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

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

17, 1994, the New York Stock Exchange, Inc. (``NYSE'' or ``Exchange'')

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

proposed rule change as described in Items I, II and III below, which

Items have been prepared by the self-regulatory organization. The

Commission is publishing this notice to solicit comments on the

proposed rule change from interested persons.

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

of the Proposed Rule Change

The proposed rule change consists of amendments to Exchange Rule

127 on Block Positioning and 72(b) on ``clean'' agency crosses.

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

Rule 127, which governs procedures for handling block crosses

outside the prevailing quotation, was originally adopted in June 1972

and amended in February 1976. The Exchange recently undertook a review

of the Rule and determined that, due to changes in trading rules and

practices since the Rule was first adopted, it should be revised to

simplify the language and eliminate a number of provisions that the

Exchange believes are no longer appropriate.

Specifically, the Exchange has determined:

To eliminate the requirement that a member affecting an

agency cross outside of the prevailing quotation give up the greater of

5% of 1,000 shares of the amount crossed to orders on the specialist

book limited to the cross (clean-up) price;

To eliminate the reference to the block positioner's

responsibility for maintaining the after market when the block

positioner has not satisfied the reasonable needs of the specialist;

To require documentation on the Floor when an agency block

cross outside the prevailing quotation is effected and the specialist's

book does not participate. This may be done after the trade has been

completed. The Exchange expects these procedures to include

notification of a Floor Official.

In addition, Rule 72(b) will be amended to include the same

documentation requirements for agency crosses under the Rule as those

proposed for agency block crosses under Rule 127.

The Exchange believes that the deletion of the requirements to give

the greater of 5% or 1,000 shares of the cross to orders on the

specialist's book in agency cross transactions is appropriate to

conform the agency cross principles of Rule 127 with the agency cross

principles of Rule 72(b). Under both rules, a member may still

participate in the cross transaction by providing price improvement to

one side of the cross. The Exchange is not proposing to amend the

requirement in Rule 127 that a member organization that is establishing

or increasing a position must fill, at the clean-up price, public

orders limited to the clean-up price or better before retaining any

stock for its proprietary account.

The Exchange believes that it is appropriate to place

responsibility for the after-market on the specialist rather than the

block positioner, as the specialist is otherwise responsible under

Exchange rules for the maintenance of a fair and orderly market.\1\ The

Exchange believes that the proposed Floor documentation requirement

will help ensure appropriate regulatory oversight with respect to

agency cross transactions.

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\1\See NYSE Rule 104 (Dealings by Specialists).

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2. Statutory Basis

The basis under the Act for the proposed rule change is the

requirement under Section 6(b)(5) that an Exchange have rules that are

designed to promote just and equitable principles of trade, to remove

impediments to, and perfect their mechanism of a free and open market

and, in general, to protect investors and the public interest.

B. Self-Regulatory Organization's Statement on Burden on Competition

The Exchange does not believe that the proposed rule change will

impose any burden on competition that is not necessary or appropriate

in furtherance of the purposes of the Act.

C. Self-Regulatory Organization's Statement on Comments on the Proposed

Rule Change Received From Members, Participants or Others

The Exchange has neither solicited nor received written comments on

the proposed rule change.

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. 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 NYSE. All

submissions should refer to File No. SR-NYSE-94-10 and should be

submitted by July 29, 1994.

For the Commission, by the Division of Market Regulation,

pursuant to delegated authority.

Jonathan G. Katz,

Secretary.

[FR Doc. 94-16571 Filed 7-7-94; 8:45 am]

BILLING CODE 8010-01-M