Self-Regulatory Organizations; Notice of Filing of Proposed Rule Change and Amendment No. 1 to Proposed Rule Change by Philadelphia Stock Exchange, Inc. Relating to Equity Floor Procedure Advice E-A-1 Responsibility for Displaying Best Bid and Offer Prices

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-34342; File No SR-Phlx-91-20]

Self-Regulatory Organizations; Notice of Filing of Proposed Rule

Change and Amendment No. 1 to Proposed Rule Change by Philadelphia

Stock Exchange, Inc. Relating to Equity Floor Procedure Advice E-A-1--

Responsibility for Displaying Best Bid and Offer Prices

July 11, 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

July 15, 1991, the Philadelphia Stock Exchange, Inc. (``Phlyx'' of

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

(``Commission'') the proposed rule change and on June 23, 1994 filed

Amendment No. 1 to 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.

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

the Proposed Rule Change

The Phlx proposes to adopt Phlx Equity Floor Procedure Advice

(``EFPA'') E-A-1: Responsibility for Displaying Best Bid and Offer

Prices Established on the Equity Floor. The Text of the proposed new

advice is presented below:

E-A-1 Responsibility for Displaying Best Bid and Offer Prices

Established on the Equity Floor

(i) A Specialist shall use due diligence to ensure that the best

available bid price and offer price on the floor in each ``primary

stock issue'' assigned to him is properly and timely displayed for

dissemination purposes throughout the trading day.

(ii) A Specialist shall also use due diligence to ensure proper and

timely display of any bid or offer price of any order on the book in a

``secondary issue'' assigned to him for so long as such bid or offer is

equal or superior to the consolidated best bid or offer of those

disseminated by the national exchanges.

(iii) For the purposes of the above paragraphs, the fine schedule

below will apply in any instance of any exchange review which

identifies that five percent or more of such orders have not been

properly displayed in a timely fashion for the review period.

Fine Schedule

[Implemented on a three year running calendar basis]

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

E-A-1

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

1st Occurrence..................... $100.00

2nd Occurrence..................... 250.00

3rd Occurrence..................... 500.00

4th and Thereafter................. Sanction is discretionary with

Business Conduct Committee.

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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 land basis for the

proposed rule change and discussed any comments it received on the

proposed rule change. The test 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

This new equity floor procedure advice codifies the due diligence

requirement of equity specialists imposed pursuant to SEC Rule 11Ac1-1

to display the best bid and offer available on the floor in their

assigned issues. The specialists' responsibility will be different for

primary stock issues and secondary market issues.

For stocks that are primary to this Exchange, a specialist's

responsibility will be to ensure that the best bid and offer voiced on

the floor of the Exchange in one of his assigned specialist issues is

properly and timely displayed for dissemination purposes throughout the

trading day. A primary stock issue is any issue dually listed with

another exchange for which the Phlx has traded the majority of exchange

volume over the previous six months or any issue listed on the Phlx

which is not listed on any other national exchange.

For those stocks in which the Phlx specialist makes a secondary

market, his responsibility is to ensure proper and timely display of

the best bid (or offer) so long as such bid (or offer) is equal or

superior to all other bids (or offers) reflected and disseminated at

the time by the national exchanges.

The Exchange has provided a fine schedule to be applied when an

Exchange review identifies five percent or more of such orders reviewed

over a designated time period to have not been properly displayed in a

timely manner. If at any time, however, an Exchange review reveals that

the amount of orders not timely displayed exceeds five percent by an

amount whereby it would be unreasonable to still consider the

infraction as minor, the staff may bring the matter to the Business

Conduct Committee to authorize a Statement of Charges and impose more

severe sanctions pursuant to Exchange Rule 970.

2. Statutory Basis

The proposed rule change is consistent with Section 6(b)(5) of the

Act in that it is designed to prevent fraudulent and manipulative acts

and practices and to perfect the mechanism of a free and open market.

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-91-20 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. 94-17254 Filed 7-14-94; 8:45 am]

BILLING CODE 8010-01-M