[Federal Register Volume 59, Number 66 (Wednesday, April 6, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-8164]


[[Page Unknown]]

[Federal Register: April 6, 1994]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-33835; File No. SR-Amex-92-41]

 

Self-Regulatory Organizations; Notice of Filing of Proposed Rule 
Change by American Stock Exchange, Inc. Relating to Priority of Agency 
Orders to Cross Blocks of 25,000 Shares or More

March 30, 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 November 
23, 1992, the American Stock Exchange, Inc. (``Amex'' or ``Exchange'') 
filed with the Securities and Exchange Commission (``Commission'' or 
``SEC'') the proposed rule change as described in Items I, II and III 
below, which Items have been prepared by the self-regulatory 
organization. On March 30, 1994, the Exchange submitted to the 
Commission Amendment No. 1 to the proposed rule change in order to 
increase the minimum size of agency crosses that would be entitled to 
priority under this proposal from 10,000 to 25,000 shares.\1\ The 
Commission is publishing this notice to solicit comments on the 
proposed rule change from interested persons.
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    \1\See letter from Geraldine M. Brindisi, Corporate Secretary, 
Amex, to Diana Luka-Hopson, Branch Chief, Division of Market 
Regulation, SEC, dated March 28, 1994 (``Amendment No. 1'').
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Amex proposes to add Commentary .02 to Rule 126(g) to provide 
for priority of agency orders to cross 25,000 shares or more; and to 
amend existing Commentary .01 to Rule 126(g) (size precedence for 
orders to cross 25,000 shares or more) to limit it to circumstances 
where one or both sides of a cross is for the account of a member or 
member organization. The text of the proposed rule change is available 
at the Office of the Secretary, Amex, and at the Commission.

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 places 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
    The Exchange proposes to add new Commentary .02 to Rule 126(g), to 
allow a member who has an order to buy and an order to sell 25,000 
shares or more of the same security, where neither order is for the 
account of a member or a member organization, to cross those orders at 
a price that is at or within the prevailing quotation without the 
transaction being broken up at the cross price. Thus, the member's bid 
or offer would be entitled to priority at such cross price, 
irrespective of pre-existing bids or offers at that price. The 
proposal, therefore, is intended to facilitate execution of agency 
cross transactions on the Exchange. In addition, confining the proposed 
size priority threshold to block size orders of 25,000 shares or more 
would limit the effects of the rule primarily to actively traded, 
liquid securities.
    The member would be required to follow the crossing procedures of 
Rule 151 and make a public bid and offer on behalf of both sides of the 
cross. However, unlike existing block cross procedures under Rule 
126(g), Commentary .01,\2\ such an order would not be required to be on 
parity with other orders on the Floor; that is, it would not be 
required that the priority of earlier bids and offers first be removed, 
by means of a sale, before effecting the cross.
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    \2\See infra, note 3.
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    The proposal furthers the important auction market principle of 
price improvement by allowing another member to trade with either the 
bid or offer side of the cross transaction to provide a price that is 
better than the proposed cross price; however, the other member could 
not trade with the cross bid or offer at a price which is the same as 
the cross price. The member who is providing a better price to one side 
of the cross transaction would be required to trade with all other 
market interest having priority at that price before trading with any 
part of the cross transaction. A transaction effected at the cross 
price in reliance on Commentary .02 would be printed as ``stopped 
stock.''
    To avoid conflict with the proposed agency cross rule, Commentary 
.01 of Rule 126(g) would be amended so as to afford size precedence to 
orders to cross 25,000 shares or more only when members or member 
organizations are involved as principal on one or both sides of the 
cross. As is currently the case, such orders to cross would be entitled 
to precedence only when they are on parity with other orders on the 
Floor.\3\
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    \3\Specifically, the Amex proposal would clarify that, in order 
to claim size precedence, both sides of the cross must be 
represented at the specialist's post when a sale clearing the Floor 
takes place.
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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 objective(s) of Section 6(b)(5) in 
particular in that it is designed to prevent fraudulent and 
manipulative acts and practices, to promote just and equitable 
principles of trade, to foster cooperation and coordination with 
persons engaged in regulating, clearing, settling, processing 
information with respect to, and facilitating transactions in 
securities, and, in general, to 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-92-41 and should be 
submitted by April 27, 1994.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 94-8164 Filed 4-5-94; 8:45 am]
BILLING CODE 8010-01-M