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Notice

Self-Regulatory Organizations; Notice of Filing of Proposed Rule Change by the Philadelphia Stock Exchange, Inc. Relating to Primary Trading Session Hours for Equities Whose Primary Market Is Not the Exchange

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Start Preamble March 20, 2001.

Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”) [1] and Rule 19b-4 [2] thereunder, notice is hereby given that on March 16, 2001, 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 Exchange. 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 Exchange proposes to amend Phlx Rule 101 to establish the Primary Trading Session hours of securities whose primary market is not the Exchange. Under the proposal, the first trading session (“Primary Trading Session”) would be conducted on the floor of the Exchange during the same hours the security is trading on its primary market, if the Exchange is not the primary market for such security, provided, however, that if the primary market for such security is PCX Equities, Inc., the Primary Trading Session for such security shall end no later than 4 p.m. Eastern Time.

The text of the proposed rule change appears below. New text is in italics; deletions are in brackets.

Rule 101—Hours of Business

* * * * *

Supplementary Material:

* * * * *

.02 Equity Trading Hours. Unless otherwise announced by the Exchange:

(i) The first trading session (the “Primary Trading Session”) will be conducted on the floor of the Exchange (1) during the same hours the security is traded on its primary market, if the Exchange is not the primary market for such security, provided, however, if the primary market for such security is PCX Equities, Inc.,[3] the Primary Trading Session for that security shall end no later than 4 p.m. Eastern time; or (2) from 9:30 a.m. to 4 p.m. Eastern time, Monday through Friday, if the Exchange is the primary market for such security. [Trading in any equity security on the Exchange's equity trading floor—Start Printed Page 16967shall commence at 9:30 a.m. and end at 4 p.m., each business day, unless otherwise announced by the Exchange, except that:]

(i i) [t]T he Post-Primary session (“PPS”) will operate from 4 to 4:15 p.m. , for PPS-designated orders pursuant to Rule 232(b) for the purchase and sale of securities traded on the Primary Trading Session until 4 p.m.[;]

(ii i) [t]T he after hours trading facility for GTX orders will operate pursuant to Rule 232(c) . [;and

(iii) Transactions in Nasdaq-100 Index Tracking Stock may be effected on the Exchange until 4:15 p.m. each business day as well as pursuant to Rule 232(c).]

* * * * *

II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change

In its filing with the Commission, Phlx 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. Phlx 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

I. Purpose

The purpose of the proposed rule change is to establish in Phlx Rule 101 the Primary Trading Session hours for equities whose primary market is not Phlx. Phlx Rule 101 is a general provision dealing with hours of business on the Exchange. Supplementary Material .02 to Rule 101 provides that “[t]rading in any equity security on the Exchange's equity trading floor shall commence at 9:30 a.m. and end at 4 p.m. each business day, unless otherwise announced by the Exchange * * *” This broad provision is applicable to all equities. However, subsection (iii) of Supplementary Material .02 states that trading in Nasdaq 100 Index Tracking stock sm will take place until 4:15 p.m.

The proposed rule defines “Primary Trading Session” to track the hours of trading of each security on its primary market. Proposed Supplementary Material .02 states that the Primary Trading Session will be conducted during the same hours as the primary trading session on the security's primary market. The proposed rule change provides that, if the primary market for such security is PCX Equities, Inc., the Primary Trading Session shall end no later than 4 p.m. Eastern Time. Since the proposed rule change set forth trading hours of all the equities traded primarily on other exchanges (including Nasdaq 100 Index Tracking Stock sm, the Exchange proposes to delete subsection (iii).

The proposed amendment's general definition should help to accommodate future changes in the trading hours of the equities at their primary market, without the need of periodic amendments. Furthermore, as the number of products traded on the Exchange on an Unlisted Trading Privileges (“UTP”) basis grows, so will the need for rules establishing trading parameters for these products. Proposed Supplementary Material .02 should be broad enough to address the trading hours of all UTP equity products that will be traded on Phlx in the future, without requiring additional rule amendments stating the specific trading hours of each new product.

In practice, the proposed rule change will not effect a change in the current trading hours of the equities traded on Phlx. All equity trading on Phlx is conducted between the hours of 9:30 a.m. and 4 p.m. (the Primary Trading Session hours), except for the Post Primary Session (“PPS”) and other specific cases stated in Phlx Rule 101. Under the proposed rule change, for equities traded on the Primary Trading Session until 4 p.m., PPS would continue to take place from 4 p.m. and 4:15 p.m. Equities whose Primary Trading Session ends after PPS began cannot be traded on PPS. The proposed rule change does not change the PPS trading hours.

2. Statutory Basis

Phlx believes the proposed rule change is consistent with Section 6 of the Act [4] in general, and furthers the objectives of Section 6(b)(5) [5] in particular, in that it provides investors and the public as a whole with an alternative forum for trading, which operates during the same hours as the primary market. Phlx asserts that the proposed amendment should result in greater liquidity and more competitive pricing for the equities traded both on Phlx and on the primary market during the same hours.

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

Phlx does not believe that the proposed rule change would 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 with 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 Exchange consents, the Commission will:

(A) By order approve such 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, including whether the proposed rule change is consistent with the Act. Persons making written submissions should file six copies thereof with the Secretary, Securities and Exchange Commission, 450 Fifth Street, NW., 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 filings will also be available for inspection and copying at the principal office of the Phlx. All submissions should refer to File No. SR-Phlx-01-21 and should be submitted by April 18, 2001.

Start Signature
Start Printed Page 16968

For the Commission, by the Division of Market Regulation, pursuant to delegated authority.[6]

Margaret H. McFarland,

Deputy Secretary.

End Signature End Preamble

Footnotes

3.  In the original proposed rule text, Phlx identified this entity as the “Pacific Stock Exchange.” The final rule text will, as shown here, use the term “PCX Equities, Inc.” Telephone conversation between Diana Tenenbaum, Counsel, Phlx, and Michael Gaw, Special Counsel, Division of Market Regulation, Commission, on March 19, 2001. Conforming changes have been made to the draft Federal Register notice provided by Phlx.

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[FR Doc. 01-7598 Filed 3-27-01; 8:45 am]

BILLING CODE 8010-01-M