Self-Regulatory Organizations; Filing of Proposed Rule Change by the Philadelphia Stock Exchange, Inc. (``Phlx'') Relating to Its Off- Hours Trading Pilot Program

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-33801; File No. SR-Phlx-94-8]

Self-Regulatory Organizations; Filing of Proposed Rule Change by

the Philadelphia Stock Exchange, Inc. (``Phlx'') Relating to Its Off-

Hours Trading Pilot Program

March 22, 1994.

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

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

January 21, 1994, the Philadelphia Stock Exchange, Inc. (``Phlx'' 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.\1\

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\1\Concurrently with this notice, the Commission is also

publishing for comment proposals submitted by the New York Stock

Exchange, Inc., the American Stock Exchange Inc., the Chicago Stock

Exchange, Inc., the Boston Stock Exchange, Inc. and the Pacific

Stock Exchange, Inc., to request permanent approval for their

respective programs which provide for executions of securities after

regular trading hours. See File Nos. SR-NYSE-93-50; SR-CHX-93-23;

SR-Amex-93-15; SR-BSE-93-24; and SR-PSE-94-2.

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

Substance of the Proposed Rule Change

The Phlx requests permanent approval of its Off-Hours Trading

(``OHT'') pilot program. The rule change requires Exchange specialists

to provide primary market protection for limit orders entered during

the Exchange's regular 9:30 a.m. to 4 p.m. trading session that the

customer designates as ``GTX'' orders (executable after the Phlx close

based on the primary market's volume).\2\ On February 1, 1994, the

Phlx's pilot program was extended until April 30, 1994.\3\

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\2\On June 13, 1991, the Commission approved, on a pilot basis,

File No. SR-Phlx-91-26, which adopted Phlx Rule 232. See Securities

Exchange Act Release No. 29300 (June 13, 1991), 56 FR 28212 (June

19, 1991) (order approving File No. SR-Phlx-91-26) (Phlx Approval

Order). The Exchange's procedures provide primary market protection

for customer GTX orders (good until canceled, executable in the

afternoon session) in securities listed on the NYSE and on the Amex

and traded during the after-hours sessions of those Exchanges. The

New York Stock Exchange (``NYSE'') initiated its Off-Hours trading

(``OHT'') sessions in June 1991. See Securities Exchange Act Release

No. 29237 (May 24, 1991), 56 FR 24853 (May 31, 1991) (approving File

Nos. SR-NYSE-90-52 and NYSE-90-53). The American Stock Exchange,

Inc. (``Amex'') established an after-hours trading facility in

August 1991. See Securities Exchange Act Release No. 29515 (August

2, 1991), 56 FR 37736 (August 8, 1991) (approving File No. SR-Amex-

91-15). The Commission approved extensions of the NYSE, Amex and

Phlx pilots, as well as pilots by the other regional exchanges until

January 31, 1994 and further extended the pilots until April 30,

1994. See Securities Exchange Act Release Nos. 32364 (May 25, 1993),

58 FR 31574 (June 3, 1993) and 33562 (February 8, 1994), 59 FR 5792

(February 8, 1994).

\3\See Securities Exchange Act Release No. 33562, supra note 2.

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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 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 purpose of the proposed rule change is to request permanent

approval of the Exchange's price protection of limit orders based on

after-hours prints in a primary market. On May 30, 1991, the Commission

approved the NYSE's proposed rule change which established the NYSE's

OHT sessions,\4\ and, thereafter, on June 13, 1991, granted temporary

approval to Phlx rule 232 through May 24, 1993, which required Phlx

specialists to provide primary market protection for limit orders

entered during the Exchange's regular 9:30 a.m. to 4 p.m. trading

session that the customer designated as executable after the close of

the regular Exchange auction market trading session, known as ``GTX''

orders (``good until cancelled, executable in the afternoon session'').

Exchange rule 232 continues to govern the foregoing.

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\4\See Securities Exchange Act Release No. 29257, supra note 2.

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If the specialist does not execute these orders during regular Phlx

trading hours, the Phlx GTX orders will be eligible for execution after

the Phlx close based on volume that prints in Crossing Session I of the

primary market's OHT session. Since the original filing, this procedure

remains equally unchanged.\5\ On February 1, 1994, the Commission

approved an extension of the pilot program until April 30, 1994.\6\ The

Exchange now seeks permanent approval of the pilot program.

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\5\However, the Phlx later added the Amex's volume to the

definition of the primary market (in addition to the NYSE's volume)

for the purposes of GTX orders. See Securities Exchange Act Release

No. 29749 (September 27, 1991) 56 FR 50405.

\6\See supra note 2.

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The Commission requested in its order extending the pilot until

April 30, 1994, that the Exchange submit to the Commission by March 15,

1994, an updated report concerning the pilot activity through February

28, 1994. This updated report will assist the Commission in considering

the Exchange's request for permanent approval prior to the April 30,

1994, expiration of the pilot program.

Although Phlx OHT business remains de minimis, the Phlx

nevertheless, must continue the GTX order guarantees for competitive

reasons. The Phlx, therefore, requests approval for its OHT GTX

guarantee program on a permanent basis.

2. Statutory Basis

The proposed rule change is consistent with Section 6(b)(5) and 11A

of the Act in that it is designed to promote just and equitable

principles of trade, perfect the mechanism of a free and open national

market system, and, in general, further investor protection and the

public interest in fair and orderly markets on national securities

exchanges.

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

The Exchange believes that no burdens will be placed on competition

as a result of the proposed rule change.

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

Rule Change Received From Members, Participants or Others

No comments were received on the proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing

for Commission Action

Within 35 days of the date of 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 Room, 450 Fifth Street, NW., Washington,

DC 20549. Copies of the 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-94-8 and should be submitted by April 19,

1994.

For the Commission, by the Division of Market Regulation,

pursuant to delegated authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 94-7282 Filed 3-28-94; 8:45 am]

BILLING CODE 8010-01-M