Self-Regulatory Organizations; Notice of Filing of Proposed Rule Change by the Philadelphia Stock Exchange, Inc. (``Phlx'') Relating to Regulation 2 (Foods, Liquids and Beverages)

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-33815; File No. SR-Phlx-94-13]

Self-Regulatory Organizations; Notice of Filing of Proposed Rule

Change by the Philadelphia Stock Exchange, Inc. (``Phlx'') Relating to

Regulation 2 (Foods, Liquids and Beverages)

March 25, 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

10, 1994, the Philadelphia Stock Exchange, Inc. (``Phlx'' or

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

(``Commission'' or ``S.E.C.'') 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 Phlx, pursuant to Rule 19b-4 of the Act, proposes to amend Phlx

Regulation 2 (Foods, Liquids and Beverages) to permit the ability of

the respective standing floor committees to relax prohibitions

contained in this Regulation without filing a proposed rule change

pursuant to section 19(b)(2) of the Act. The Exchange proposes to amend

Regulation 2 as follows:\1\

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\1\With respect to the following amendment, italicizing

indicates new material.

Regulation 2--Foods, Liquids and Beverages Foods, liquids and

beverages are prohibited on the trading floor and the lower level

areas adjacent to the trading floor, except for the lunchrooms.

Any provision of this rule may be waived for a specific period

of time by the chairperson of the appropriate floor standing

committee or his designee.

1st Occurrence..................... Official Warning.

2nd Occurrence..................... $100.00

3rd Occurrence..................... $200.00

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

Business Conduct Committee

session.

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

Regulation 2 (Food, Liquids and Beverages) is a regulation of order

and decorum adopted pursuant to Phlx Rule 60.\2\ Rule 60 (Assessments

for Breach of Regulations) 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. Rule

60 also enumerates the procedural aspects of order and decorum fines,

including the ability to contest a fine and request a hearing. The

Exchange has adopted seven regulations of order and decorum pursuant to

Rule 60, including Regulation 2.

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\2\Regulation 2 prohibits food, liquids and beverages on the

trading floor and the lower level areas adjacent to the trading

floor (except for the lunchrooms).

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As originally adopted, Regulation 2 governs eating and drinking on

the floor. As conditions respecting Exchange facilities, the number of

member organizations' personnel employed on the trading floor and order

flow patterns continually change, the Exchange believes that a

procedure for waiving the prohibitions contained in Regulation 2 is

necessary. Eating and drinking, under this proposal, would be permitted

on any trading floor, upon determination by the chairperson, or his

designee, of the appropriate floor standing committee. Any waiver of

the prohibition must be for a specified period of time and would

require prior notice to the trading floor; reinstituting the

prohibition would also require prior notice.

The Exchange believes that incorporating a waiver procedure into

Regulation 2 is more efficient than continually amending Regulation 2,

which requires a filing with the Commission pursuant to section 19(b)

of the Act. Such a filing would not raise new issues, because it would

merely be specifying which floors, or parts thereof, prohibit eating or

drinking. Often, the Exchange's reasons for either permitting or

prohibiting eating on a particular trading floor may be time-sensitive

such that the delay inherent in the preparation and filing of a 19(b)

proposal may obviate the need for the change. The Exchange believes

that the proposed language is preferable to permitting eating and

drinking floor-wide, because eating and drinking may affect order and

decorum on the trading floor, and thus, trading. The Exchange also

believes that this proposal is preferable to filing repeated proposed

rule changes, which would be repetitive and expend staff time. Because

the impact of the proposal is limited to floor personnel, the Exchange

does not believe that notice other than to the trading floor would be

necessary.

2. Statutory Basis

The Exchange believes that the proposed rule change is consistent

with Phlx Rule 60, because the regulation of eating and drinking on the

trading floor is necessary to ensure health, safety and decorum. The

Exchange also believes that the proposed rule change is consistent with

section 6 of the Act in general, and in particular, with section

6(b)(5), 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. In addition, 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.

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

The Exchange 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 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-94-13 and should be submitted by April 22,

1994.

For the Commission, by the Division of Market Regulation,

pursuant to delegated authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 94-7766 Filed 3-31-94; 8:45 am]

BILLING CODE 8010-01-M