[Federal Register: March 1, 1999 (Volume 64, Number 39)]
[Notices]               
[Page 10053-10054]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr01mr99-121]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-41081, File No. SR-Phlx-98-46]

 
Self-Regulatory Organizations; Philadelphia Stock Exchange, Inc., 
Order Approving Proposed Rule Change Amending Rule 229, Philadelphia 
Stock Exchange Automatic Communication and Execution System, Raising 
the Minimum Order Delivery Requirement for Specialists from 1099 Shares 
to 2099 Shares

February 22, 1999.

I. Introduction

    On November 12, 1998, the Philadelphia Stock Exchange, Inc. 
(``Phlx'' or ``Exchange'') submitted to the Securities and Exchange 
Commission (``Commission'' or ``SEC''), pursuant to section 19(b)(1) of 
the Securities Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 
thereunder,\2\ a proposed rule change to amend Phlx Rule 229 raising 
the minimum order delivery requirement for specialists from 1099 shares 
to 2099 shares on the Exchange Automatic Communication and Execution 
System (``PACE'').\3\ Notice of the proposed rule change appeared in 
the Federal Register on January 7, 1999.\4\ The Commission received no 
comments on the proposal. This order approves the proposed rule change.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ PACE is the Exchange's automatic order routing and execution 
system for securities on the equity trading floor. See Phlx. Rule 
229.
    \4\ See Securities Exchange Act Release No. 40842 (December 28, 
1998), 64 FR 1061.
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II. Description of the Proposal

    Specialists are required to accept orders sent by members for 
automatic execution on the PACE system up to the minimum order delivery 
requirement set forth in Phlx Rule 229. The Exchange proposed to amend 
Phlx Rule 229 to raise the minimum order delivery requirement for 
specialists from 1099 shares to 2099 on the PACE system. Thus, 
specialists will be required to accept PACE orders of up to 2099 
shares.

[[Page 10054]]

    Phlx Rule 229, Supplementary Material .06 through .10 previously 
required specialists to accept orders of 1099 shares in the following 
situations: (i) Section 229.06--market orders entered before the New 
York market opening; (ii) Section 229.07(b)--market orders entered 
after the New York market opens; and (iii) Sections 229.10(b)-(c)--the 
method of execution given to PACE orders. The Exchange proposed to 
increase the minimums contained in these sections to 2099 shares. Under 
the proposal, specialists will continue to be able to raise their own 
minimum delivery requirements for individual stocks to level higher 
than the proposed minimum of 2099 shares.

III. Discussion

    After careful review, the Commission finds that the proposed rule 
change is consistent with the requirements of the Act and the rules and 
regulations thereunder applicable to a national securities exchange.\5\ 
In particular, the Commission believes the proposal is consistent with 
Section 6(b)(5), which requires that the rules of an exchange be 
designed to promote just and equitable principles of trade, to remove 
impediments and to perfect the mechanism of a free and open market and 
a national market system, and, in general, to protect investors and the 
public interest.\6\ The Commission believes that the proposed 2099 
share minimum guaranteed order delivery size is reasonable and may 
benefit investors by providing them with the flexibility to deliver 
large sized orders to the specialist for automatic execution through 
PACE. The Commission further notes that specialists may voluntarily 
increase the minimum guaranteed order delivery size on an issue by 
issue basis.
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    \5\ In approving this rule, the Commission has considered the 
proposed rule's impact on efficiency, competition, and capital 
formation. 15 U.S.C. 78c(f).
    \6\ 15 U.S.C. 78f(b)(5).
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IV. Conclusion

    For the foregoing reasons, the Commission believes that the 
proposed rule change is consistent with the Act and the rules and 
regulations thereunder applicable to a national securities exchange, 
and, in particular, with section 6(b)(5).\7\
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    \7\ 15 U.S.C. 78f(b)(5).
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    It is therefore ordered, pursuant to Section 19(b)(2) of the Act, 
that the proposed rule change (SR-Phlx-98-46) is approved.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 99-4956 Filed 2-26-99; 8:45 am]
BILLING CODE 8010-01-M