On February 11, 1998, the Philadelphia Stock Exchange, Inc. (“Phlx” or “Exchange”) submitted to the Securities and Exchange Commission (“SEC” or “Commission”), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”)  and Rule 19b-4 thereunder, a proposed rule change to amend the Exchange's By-Start Printed Page 59245Laws. On February 17, 1998, the Exchange filed Amendment No. 1 to the proposal with the Commission. The proposed rule change, including Amendment No. 1, was published for comment in the Federal Register on March 17, 1998. No comments were received on the proposal. On September 7, 1999, the Exchange filed Amendment No. 2 to the proposal with the Commission.
This order approves the proposal, as amended, and requests comment from interested persons regarding Amendment No. 2 to the proposal.
II. Description of the Proposal
The Exchange proposes to amend Article V, Section 5-5, of its By-Laws to provide a mechanism to designate the Chief Operating Officer or another senior officer to assume the duties of Chairman on an interim basis in circumstances of an extended absence or inability of the Chairman to serve. The Exchange also proposes to amend Article XXII, Section 22-1 to clarify the procedures with respect to the submission of amendments to the By-Laws. This proposed amendment to Section 22-1 would raise from fifty to seventy-five the number of Phlx members required to offer an amendment to the By-Laws; would lengthen from two weeks to four weeks the time period in which a vote on a proposed amendment must be held; and would establish the date of the submission of the proposed amendment as the record date for determining the eligibility of members to vote on the proposed amendment. The proposal also changes the requirement that the proposed amendment be submitted to the Board. Under the proposal, the proposed amendment will be submitted to the Secretary.
After careful consideration, 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, and, in particular, with the requirements of Section 6(b). In particular, the Commission believes that the proposal is consistent with the Section 6(b)(3)  requirements that the rules of an Exchange be designed to assure a fair representation of its members in the selection of its directors and administration of its affairs.
Under the proposed amendment to Article V, Section 5-5 of the Exchange's By-Laws, the Phlx board will be required to designate an acting Chairman if the Chairman of the Board is unable to fulfill his or her duties for more than four weeks. The Commission finds that the proposal may enable the Exchange to function more efficiently in the face of the extended absence or inability of the Chairman of the Board to act. By clarifying the circumstances under which the Chairman of the Phlx's board will be replaced on a temporary basis, the proposal strengthens existing provisions of the By-Laws, enabling the Exchange to better fulfill its responsibilities as a self-regulatory organization.
The Commission finds that the proposed amendments to Article XXII, Section 22-1 of the Phlx's By-Laws are designed to promote a fair and reasonable process for amending the Phlx's By-Laws that is consistent with the requirements of the Act. The Exchange represents that extending the period of time from two weeks to four weeks to conduct a vote on an amendment to the By-Laws will allow the Exchange sufficient time to send ballots to its membership while allowing the membership sufficient time to cast a reasoned and informed vote. In addition, the Commission believes that the proposal, by establishing the record date for determining which members will be entitled to vote on a particular amendment to the Exchange's By-Laws, should improve and clarify the process by which By-Laws are amended.
The Commission finds good cause for approving Amendment No. 2 prior to the thirtieth day after the date of publication of notice in the Federal Register. Amendment No. 2 removes the section of the proposal amending Article IV, Section 4-8 of the Exchange's By-Laws. As a result, the Amendment raises no new significant regulatory issues. Accordingly, the Commission finds good cause, consistent with Sections 6(b)(6)  and 19(b)(2)  of the Act, to approve Amendment No. 2 to the proposed rule change on an accelerated basis.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and arguments concerning Amendment No. 2, including whether Amendment No. 2 is consistent with the Act. Persons making written submissions should file six copies thereof with the Secretary, Securities and Exchange Commission, 450 Fifth Street, N.W., Washington, DC 20549-0609. 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 in the Commission's Public Reference Room. Copies of such filing will also be available for inspection and copying at the principal office of the NASD. All submissions should refer to File No. SR-PHLX-97-46 and should be submitted by October 25, 2000.
It Is Therefore Ordered, pursuant to Section 19(b)(2) of the Act, that the proposed rule change (SR-PHLX-97-46) is approved, as amended, and Amendment No. 2 is approved on an accelerated basis.Start Signature
For the Commission, by the Division of Market Regulation, pursuant to delegated authority.
Margaret H. McFarland,
1. The Phlx had originally submitted the filing on December 10, 1997; however, at that time, the filing was incomplete. At the Commission's request the Phlx made a complete filing on February 11, 1998.Back to Citation
4. See Letter from Murray L. Ross, Vice President and Secretary, Phlx, to Marie Ito, Special Counsel, Commission, dated February 13, 1998 (“Amendment No. 1”). In amendment No. 1, the Exchange made technical corrections to the language contained in Exhibit A to the proposal and provided support for the proposed changes to the By-Laws.Back to Citation
6. See Letter from Edith Hallahan, Deputy General Counsel, Phlx, to Michael Walinskas, Deputy Associate Director, SEC, dated September 3, 1999 (“Amendment No. 2”). In Amendment No. 2, the Exchange eliminated references in the proposal to By-Law Article IV, Section 4-8. The Exchange has filed the proposed changes to Section 4-8 in a separate proposal. See SR-PHLX-00-39.Back to Citation
7. The Exchange has defined “extended absence or inability to act” as an inability of the Chairman to fulfill his or her duties for a period longer than four weeks.Back to Citation
10. In approving this proposal, the Commission has considered the proposed rule's impact on efficiency, competition, and capital formation. 15 U.S.C. 78c(f).Back to Citation
11. Telephone conversation between Murray L. Ross, Vice President and Secretary, Phlx and David Sieradzki, Special Counsel, Commission, on July 20, 2000.Back to Citation
[FR Doc. 00-25440 Filed 10-3-00; 8:45 am]
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