[Federal Register Volume 59, Number 51 (Wednesday, March 16, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-6116]


[[Page Unknown]]

[Federal Register: March 16, 1994]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-33750; File No. SR-Amex-94-02.]

 

Self-Regulatory Organizations; Notice of Filing of Proposed Rule 
Change by American Stock Exchange, Inc. Relating to Rescission of Rules 
560 and 570 and Amendment of Rule 550, Commentary .02

March 10, 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 February 
16, 1994, the American Stock Exchange, Inc. (``Amex'' 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 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 Amex is proposing to rescind Rule 560 which regulates special 
offerings and bids, rescind Rule 570 which regulates Exchange 
distributions and acquisitions and amend Commentary .02 to Rule 550 to 
delete its reference to Rules 560 and 570.

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 placed 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
    In April 1993, the Commission rescinded its Rule 10b-2, an early 
anti-fraud rule dating from 1937.\1\ The rule's purpose was to prevent 
persons participating in the distribution of a security from 
stimulating the purchase of the security on an exchange by paying 
compensation to any person for soliciting such purchases. The rule 
permitted an exemption for ``special offerings'' with a ``plan'' filed 
with the Commission by an exchange.\2\ The Exchange's plan is found in 
Amex Rules 560 and 570, which are on-Floor procedures for distributing 
or acquiring blocks of stock when the regular market cannot absorb or 
supply the selling or buying interest within a reasonable time and at a 
reasonable price.\3\.
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    \1\See Securities Exchange Act Release No. 32100 (April 2, 
1993), 58 FR 18145 (April 8, 1993) (File No. S7-37-92) (``Rule 10b-2 
Rescission Order'').
    \2\The Commission amended Rule 10b-2 in 1942 to permit an 
exemption for special offerings under a plan filed with the 
Commission by an exchange. See Securities Exchange Act Release No. 
3146 (February 6, 1942).
    \3\The Commission notes that Amex Rule 560 specifies a minimum 
share size of 1,000 with a value of $25,000. In today's market, 
1,000 shares with a value of $25,000 is not a quantity of stock that 
cannot readily be absorbed in the regular auction market. In 
addition, Rule 560 predates Amex block trading rules, such as Amex 
Rule 24, which defines a block of stock as 10,000 shares or more.
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    In rescinding Rule 10b-2, the Commission indicated that the Rule 
was no longer necessary, given the current capacity of the markets and 
the existence of other anti-fraud provisions of the federal securities 
laws (e.g., Rules 10b-5 and 10b-6);\4\ and in fact, Amex Rules 560 and 
570 have not been utilized for more than eleven years.\5\ With the 
rescission of Commission Rule 10b-2, Amex Rules 560 and 570 have become 
obsolete. Further, the Securities Industry Automation Corporation 
(``SIAC'') still reserves two ``condition codes'' to identify exchange 
acquisitions and exchange distributions on its high speed vendor line 
and low speed ticker, which it would like to utilize for other 
conditions. Accordingly, the Exchange is proposing to rescind Amex 
Rules 560 and 570 and amend Rule 550, Commentary .02 to delete its 
reference to these rules.\6\
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    \4\17 CFR 240.10b-5 and 240.10b-6 (1993).
    \5\The Commission stated in its order rescinding Rule 10b-2 that 
Rule 10b-2 was obsolete and that the activities with which the Rule 
was concerned were sufficiently addressed by the general antifraud 
and anti-manipulation provisions of the federal securities laws. See 
Rule 10b-2 Rescission Order, supra note 1, at 18146. In addition, 
the Commission noted that there have been no special offerings and 
exchange distributions of the Amex since 1982. Id. at 18145.
    \6\The New York Stock Exchange has made similar changes to its 
analogous rules. See Securities Exchange Act Release No. 32822 
(August 31, 1993), 58 FR 47484 (September 9, 1993).
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2. Statutory Basis
    The proposed rule change is consistent with Section 6(b) of the Act 
in general and furthers the objectives of Section 6(b)(5) in particular 
in that it is designed to promote just and equitable principles of 
trade, remove impediments to, and perfect the mechanism of a free and 
open market and protect investors and the public interest.

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

    The proposed rule change will impose no 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 solicited or received with respect to the 
proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Within 35 days of the publication of this notice in the Federal 
Register or within such other 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 Section, 450 Fifth Street, NW., 
Washington, DC 20549. Copies of such filing will also be available for 
inspection and copying at the principal office of the Amex. All 
submissions should refer to File No. SR-Amex-94-02 and should be 
submitted by April 6, 1994.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 94-6116 Filed 3-15-94; 8:45 am]
BILLING CODE 8010-01-M