Self-Regulatory Organizations; Notice of Filing of Proposed Rule Change by the New York Stock Exchange, Inc. Relating to the Adoption of New Rule 123A.46

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-34343; File No. SR-NYSE-94-3]

Self-Regulatory Organizations; Notice of Filing of Proposed Rule

Change by the New York Stock Exchange, Inc. Relating to the Adoption of

New Rule 123A.46

July 11, 1994.

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

(``Act''),\1\ notice is hereby given that on February 22, 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.

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

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

of the Proposed Rule Change

The proposed rule change consists of a new Rule 123A.46 pertaining

to members' representation of multiple orders. Rule 123A.46 would

require members and member organizations (including ``upstairs''

trading personnel) to inform customers if they are representing orders

for more than one customer at the same time, on the same side of the

market, if the orders may not receive an execution in time priority of

receipt, or may not receive an equal or proportional split.

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. The text of these statements may be examined at

the places specified in Item IV below and is set forth in Sections (A),

(B) and (C) below.

A. Self-Regulatory Organization's Statement of the Purpose of, and

Statutory Basis for, the Proposed Rule Change

1. Purpose

The Exchange is proposing adoption of new Rule 123A.46 to ensure

that customers are informed, in a timely manner, of the circumstances

under which their orders are being represented. Under this rule,

members and member organizations (including ``upstairs'' trading

personnel) would be required to inform each customer if they are

representing orders for more than one customer at the same time, on the

same side of the market, if the orders may not receive an execution in

time priority of receipt, or may not receive an equal or strictly

proportional split based upon the size of the orders. For example, if a

broker was representing three not held orders to buy stock, one for

100,000 shares, and two for 50,000 shares each, and the broker executed

a trade for 12,000 shares, the broker would be permitted to (1)

allocate all 12,000 shares to the customer who entered the order first

(time priority), (2) split the trade equally by giving 4,000 shares to

each customer, or (3) split the trade proportionally to the customer

orders, i.e., 6,000 shares, 3,000 shares and 3,000 shares. Under these

circumstances, no disclosures would be required. However, if the

execution would be split in any other manner, this information would

have to be disclosed to customers prior to multiple orders being

represented.

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 the mechanism of a free and open market,

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

proposed adoption of Rule 123A.46 is consistent with these objectives

in that it will ensure that customers are informed in a timely manner

of the circumstances under which their orders are being represented.

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 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 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-94-3 and should be

submitted by August 5, 1994.

For the Commission, by the Division of Market Regulation,

pursuant to delegated authority.

Jonathan G. Katz,

Secretary.

[FR Doc. 94-17253 Filed 7-14-94; 8:45 am]

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