[Federal Register Volume 59, Number 207 (Thursday, October 27, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-26639]


[[Page Unknown]]

[Federal Register: October 27, 1994]


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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-34877; File No. SR-Amex-94-41]

 

Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by the American Stock Exchange, 
Inc. Relating to the Designation of Additional Equity Derivative 
Securities Pursuant to Exchange Rule 154, Commentary .04(c)

October 21, 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 October 
7, 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 Exchange is designating Standard & Poor's Depositary Receipts 
as eligible, pursuant to Exchange Rule 154, Commentary .04(c), for stop 
and stop limit orders to be elected by quotation.

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
    Exchange Rules 131 and 154 allow stop and stop limit orders\1\ in 
selected derivative securities to be elected by a quotation,\2\ 
provided the prior approval of a Floor Official is obtained. Absent 
this provision, such orders could only be elected when a transaction in 
the security occurred at or through the stop price, notwithstanding the 
fact that the quoted market had moved through the stop price as a 
result of trading in the underlying security.
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    \1\Stop sell orders generally are entered in a stock whose price 
has increased substantially to protect the investor's profits should 
the stock price decline. Similarly, stop buy orders generally are 
entered by investors with short positions to limit losses should the 
stock price increase.
    \2\A stop or stop limit order in a derivative security is 
elected, i.e., becomes a market or limit order, respectively, when 
the quoted market for the derivative security reaches the 
appropriate stop or stop limit price. Once elected, the specialist 
treats the orders like any other market or limit order. The 
specialist must execute the market order at the next best market 
price, and must execute the limit order at the limit price or hold 
the order on his limit order book until the limit price is 
available.
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    Under Exchange Rule 154, Commentary .04(c)(v), provisions regarding 
the election of stop and stop limit orders are only applicable to such 
derivative securities as are designated by the Exchange as eligible for 
this treatment. Currently, only index warrants have been so 
designated.\3\ The Exchange had previously designated Americus Trust 
Units, PRIMEs, and SCOREs as eligible as well, but all such securities 
have since expired and are no longer traded.
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    \3\See Securities Exchange Act Release No. 290673 (April 10, 
1991), 56 FR 15652 (April 17, 1994) (File No. SR-Amex-90-31).
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    Accordingly, the Exchange now designates, pursuant to Exchange Rule 
154, Commentary .04(c), Standard & Poor's Depositary Receipts\4\ as 
eligible for stop and stop limit orders to be elected by quotation. 
These derivative equity securities can be expected to fluctuate in 
price based on changes in an underlying stock index, and are therefore 
appropriately designated as eligible for election of stop and stop 
limit orders by quotation.
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    \4\The product, known as a ``SPDR,'' is a Portfolio Depositary 
Receipt (``PDR'') based upon the Standard & Poor's (``S&P'') 500 
Stock Index. The Commission approved the listing and trading of 
SPDRs in Securities Exchange Act Release No. 31591 (December 11, 
1992), 57 FR 60253 (December 18, 1992).
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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, to remove impediments to and perfect the mechanism of a free and 
open market, 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

    The foregoing rule change constitutes a stated policy, practice, or 
interpretation with respect to the meaning, administration, or 
enforcement of an existing rule of the Exchange and therefore has 
become effective pursuant to Section 19(b)(3)(A) of the Act and 
subparagraph (e) of Rule 19b-4 thereunder. At any time within 60 days 
of the filing of such proposed rule change, the Commission may 
summarily abrogate such rule change if it appears to the Commission 
that such action is necessary or appropriate in the public interest, 
for the protection of investors, or otherwise in furtherance of the 
purposes of the Act.

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. Sec. 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-94-41 and should be 
submitted by November 17, 1994.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.
Jonathan G. Katz,
Secretary.
[FR Doc. 94-26639 Filed 10-26-94; 8:45 am]
BILLING CODE 8010-01-M