[Federal Register Volume 59, Number 129 (Thursday, July 7, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-16420]


[[Page Unknown]]

[Federal Register: July 7, 1994]


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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-34291; File No. SR-Amex-94-11]

 

Self-Regulatory Organizations; American Stock Exchange, Inc.; 
Order Approving Proposed Rule Change Relating to the Floor Official 
Zone System

June 30, 1994.
    On April 18, 1994, the American Stock Exchange, Inc. (``Amex'' 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'')\1\ and Rule 19b-4 
thereunder,\2\ a proposed rule change to amend Exchange Rule 22 
(``Authority of Floor Officials'') to delete references to the Floor 
Official zone system.
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    \1\15 U.S.C. 78s(b)(1) (1988).
    \2\17 CFR 240.19b-4 (1991).
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    The proposed rule change was published for comment in Securities 
Exchange Act Release No. 33980 (April 28, 1994), 59 FR 23241 (May 5, 
1994). No comments were received on the proposal. This order approves 
the proposed rule change.
    The Exchange Floor currently is divided into zones comprised of 
designated trading posts. As set forth in Commentary .01 to Amex Rule 
22, each Floor Official is assigned to a specific zone and may render 
rulings only in that zone. Among other things, Rule 22(c) authorizes a 
Floor Official to supervise openings and reopenings of securities; to 
halt or reopen trading in a security; to resolve market disputes 
submitted to him or her by members; and to regulate and supervise 
unusual situations which may arise in connection with the making of 
bids, offers or transactions. Finally, a majority of the available 
Floor Officials assigned to a zone may (1) restrict or ban trading by 
Registered Traders; (2) restrict or ban transactions pursuant to off-
Floor orders in which members or member organizations have an interest; 
(3) prohibit specialists from accepting stop or stop limit orders; or 
(4) restrict or ban the use of hand signals.\3\
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    \3\See Amex Rule 22(c).
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    The Exchange proposes to amend Rule 22 to delete references to the 
zone system for purposes of establishing the authority of Floor 
Officials, and to permit a Floor Official to render rulings anywhere on 
the Floor. In addition, the Amex proposal will provide that those 
matters which currently require the approval of a majority of the Floor 
Officials in a zone\4\ may be determined by a Floor Official with the 
concurrence of a Senior Floor Official.\5\
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    \4\See supra, note 3 and accompanying text.
    \5\Pursuant to Amex Rule 21(a), Senior Floor Officials include 
the Floor Governors and those Exchange Officials who were previously 
Floor Governors and continue to be active on the Floor.
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    The Amex states that 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 and remove impediments to and perfect 
the mechanism of a free and open market.
    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).\6\ In particular, 
the Commission believes the proposal is consistent with the Section 
6(b)(5) requirements that the rules of an exchange be designed to 
promote just and equitable principles of trade, to prevent fraudulent 
and manipulative acts, and, in general, to protect investors and the 
public interest.
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    \6\15 U.S.C. 78f(b) (1988).
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    After careful review, the Commission agrees with the Amex that the 
Floor Official zone system may not be appropriate for today's market 
environment. According to the Amex, its system of assigning Floor 
Officials to specific zones was adopted in 1965, before the Exchange 
Floor was expanded and reconfigured. The Amex also notes that, since 
that time, new securities products and improved technologies have been 
developed, and trading (particularly for options and other derivatives) 
generally proceeds at a faster pace. Given these changes in market 
conditions, the Commission finds that requiring members to deal only 
with the assigned Floor Officials may be unduly time-consuming and 
burdensome.
    Accordingly, the Commission believes that the proposed rule change 
should facilitate quicker resolution of trading questions. By 
eliminating the zone system for assignment of Floor Officials, the Amex 
proposal will enable members to seek guidance from any Floor Official. 
In the Commission's opinion, this flexibility should reduce unnecessary 
delays and encourage compliance with Exchange rules, the Act and the 
regulations thereunder. For those matters which previously required the 
approval of a majority of the Floor Officials in a zone,\7\ the 
Commission believes that the Amex proposal contains sufficient 
safeguards to ensure accurate and consistent decisionmaking. 
Specifically, the Floor official who determines the matter will be 
required to consult with, and obtain the agreement of, a Senior Floor 
Official (i.e., a Floor Governor or an Exchange Official who was 
previously a Floor Governor).\8\ According to Amex staff, these 
individuals are among the most experienced and knowledgeable members of 
Exchange.
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    \7\See supra, note 3 and accompanying text.
    \8\See Amex Rule 21(a).
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    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\9\ that the proposed rule change (SR-Amex-94-11) is approved.
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    \9\15 U.S.C. 78s(b)(2) (1988).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\10\
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    \10\17 CFR 200.30-3(a)(12) (1991).
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Jonathan G. Katz,
Secretary.
[FR Doc. 94-16420 Filed 7-6-94; 8:45 am]
BILLING CODE 8010-01-M