[Federal Register Volume 59, Number 20 (Monday, January 31, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-2021]


[[Page Unknown]]

[Federal Register: January 31, 1994]


=======================================================================
-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-33486; File No. SR-Amex-93-31]

 

Self-Regulatory Organizations; American Stock Exchange, Inc.; 
Order Approving Proposed Rule Change Relating to Expansion of the Amex 
Options Switching System

January 18, 1994.

I. Introduction

    On May 20, 1993, the American Stock Exchange, Inc. (``Amex'' or 
``Exchange'') submitted to the Securities and Exchange Commission 
(``Commission''), 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 increase, from 30 to 50 contracts, the size of 
orders eligible for routing through the Amex Options Switching 
(``AMOS'') system.
---------------------------------------------------------------------------

    \1\15 U.S.C. 78s(b)(1) (1988).
    \2\17 CFR 240.19b-4 (1993).
---------------------------------------------------------------------------

    The proposed rule change was published for comment in Securities 
Exchange Act Release No. 32882 (September 14, 1993), 58 FR 49336 
(September 22, 1993). No comments were received on the proposed rule 
change.

II. Description of AMOS

    Amos is an electronic order routing system which provides member 
firms with the means to electronically transmit option orders directly 
to the trading floor of the Exchange.
    Specifically, AMOS transmits market and marketable limit orders and 
related administrative messages from member firms directly to the 
specialist on the Exchange floor via printers at each trading post. 
After arriving at the appropriate specialist's post, the order must be 
executed either automatically through AUTO-EX, or printed out and 
executed manually against an order on the book, the specialist 
principal, or one or more brokers or traders in the crowd. When the 
order is executed, the system transmits related execution reports and 
responses to administrative inquiries directly back to the member firm 
from the specialist via mark sense card input.
    The order size eligibility for the AMOS system is presently 30 
contracts.\3\
---------------------------------------------------------------------------

    \3\Although the order eligibility size for AMOS is 30 contracts, 
in certain limited options classes the order eligibility size has 
been expanded to enable the automatic execution through AUTO-Ex of 
larger orders in these classes. See e.g., Securities Exchange Act 
Release No. 33476 (January 13, 1994) (order approving an increase in 
the AUTO-EX eligibility size for Japan Index options to 99 
contracts).
---------------------------------------------------------------------------

III. Description of the Proposal

    The current proposal increases the AMOS order eligibility size from 
30 to 50 contracts. The Exchange believes that this increase in the 
AMOS order eligibility size enhances the effectiveness of AMOS, as its 
operation relates to the operation of the Amex's Post Execution 
Reporting (``PER'') system. Specifically, the Exchange notes that 
because each options contract represents 100 shares of an underlying 
security and the PER system order eligibility size is 5,000 contracts, 
an AMOS order eligibility size of 50 contracts makes the order 
eligibility size for both systems equivalent.

IV. Findings and Conclusions

    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, the requirements of Section 6 and Section 11A.\4\ The 
Commission believes that enhancing the AMOS system to provide for the 
routing of larger orders enhances the Exchange's ability to process 
transactions expeditiously and effectively. Further, the Commission 
believes that increasing the AMOS order eligibility size should 
increase overall AMOS order flow and extend the system's benefits, such 
as increased order routing efficiencies, to more Amex member firms and 
customers.
---------------------------------------------------------------------------

    \4\15 U.S.C. 78f and 78k-1 (1988).
---------------------------------------------------------------------------

    In addition, the Commission notes that a 50 contract AMOS 
eligibility size for options orders is equivalent to the current order 
size eligibility of 5,000 shares for the PER system. For this reason, 
the Commission believes that increasing the AMOS order size eligibility 
to 50 contracts allows the AMOS system to operate more effectively and 
efficiently in connection with the PER system. Accordingly, the 
Commission believes that increasing the AMOS order eligibility size to 
50 contracts facilitates transactions in securities and is, thus, 
consistent with the Act.
    Finally, the Commission believes that increasing the size of the 
orders eligible for routing through AMOS will not expose the Amex's 
options markets or equity markets to operational difficulties. 
Specifically, the Exchange represents that the increase in order size 
along with various enhancements to the Amex's overall systems will have 
a favorable impact on the ability of both member firms and options 
specialists to handle increases in volume and order flow. The Exchange 
further notes that because the capacity of the AMOS system is far in 
excess of what is currently needed, the increase in AMOS order flow 
resulting from this expansion is not expected to present any capacity 
problems. Thus, the Commission believes that the increase in order size 
eligibility will not have a negative impact on the capacity of the AMOS 
system.
    It Is Therefore Ordered, pursuant to Section 19(b)(2) of the 
Act,\5\ that the proposed rule change (SR-AMEX-93-21) is approved.

    \5\15 U.S.C. 78s(b)(2) (1988).
---------------------------------------------------------------------------

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\6\
---------------------------------------------------------------------------

    \6\17 CFR 200.30-3(a)(12) (1993).
---------------------------------------------------------------------------

Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 94-2021 Filed 1-28-94; 8:45 am]
BILLING CODE 8010-01-M