[Federal Register Volume 59, Number 228 (Tuesday, November 29, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-29359]


[[Page Unknown]]

[Federal Register: November 29, 1994]


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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-34992; File No. SR-Amex-94-48]

 

Self-Regulatory Organizations; Notice of Filing and Order 
Granting Accelerated Approval of Proposed Rule Change by the American 
Stock Exchange, Inc. Relating to the Exercise of Expiring Equity Option 
Contracts

November 21, 1994.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ notice is hereby given that on November 2, 1994, the 
American Stock Exchange, Inc. (``Amex'' or ``Exchange'') filed with the 
Securities and Exchange Commission (``SEC'' or ``Commission'') the 
proposed rule change as described in Items I and II below, which Items 
have been prepared by the Amex. The Commission is publishing this 
notice to solicit comments on the proposed rule change from interested 
persons.
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    \1\15 U.S.C. 70s(b)(1) (1988).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Amex proposes to amend Rule 980(c) to correct recently approved 
rule language relating to the exercise of expiring equity option 
contracts. The proposed rule change deletes the last sentence from Amex 
Rule 980(c)\2\ and inserts the following sentence in its place:
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    \2\The sentence being deleted reads as follows: ``OCC rules may 
require submission of an affirmative exercise notice even in 
circumstances where a Contrary Exercise Advice is not required.''
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    In cases where the Exercise by Exception procedure has been 
waived for an options class, OCC rules require that members and 
member organizations wishing to exercise such options must submit an 
affirmative Exercise Notice to OCC, whether or not a Contrary 
Exercise Advice has been filed.

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 Amex 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 Amex 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 
the Statutory Basis for, the Proposed Rule Change

    On October 7, 1994, the Commission approved amendments to Amex Rule 
980 requiring members and member organizations to advise the Exchange 
of their final exercise decisions for expiring equity option contracts 
prior to the Exchange's exercise cut-off time, i.e., 5:30 p.m. (New 
York time) (``Exercise Cut-Off Time'').\3\ Specifically, when the 
revised rule is implemented, the Exchange will require that on the 
business day immediately prior to the expiration date of expiring 
equity options that any determination to exercise or not exercise such 
an option that does not meet the parameters for the OCC's ``Exercise-
by-Exception'' procedures\4\ must be indicated to the Exchange, prior 
to the Exercise Cut-Off Time, either by submitted a ``Contrary Exercise 
Advice Form'' to a designated place on the Exchange's trading floor or 
by transmitting the Contrary Exercise Advice Form electronically to the 
Exchange through the OCC. The amendment proposed herein does not affect 
procedures for expiring equity options that fall within the parameters 
of the Exercise-by-Exception procedures and which are to be exercised 
or not exercised in reliance on those procedures.
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    \3\See Securities Exchange Act Release No. 34808 (October 7, 
1994), 59 FR 52324 (October 17, 1994). The Commission notes that the 
amended procedures regarding the exercise of expiring equity options 
will not be implemented until the Commission receives written 
confirmation from The Options Clearing Corporation (``OCC'') that 
the necessary computer systems have been modified to allow members 
to submit exercise decisions to the Exchange through the C/MACS 
computer system. Id. at note 15. Implementation is expected to be 
complete in time for the February expirations. Telephone conference 
between Gerald O'Connell, First Vice President, Regulation and 
Trading Operations, Phlx, and Brad Ritter, Senior Counsel, Office of 
Market Supervision, Division, Commission, on November 7, 1994.
    \4\See OCC Rule 805.
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    The Exchange proposes to amend subparagraph (c) of Rule 980 to 
clarify the rule language regarding procedures members and member 
organizations must follow when the Exercise-by-Exception procedure has 
been waived for a particular options class. The proposed rule language 
reflects that in such circumstances, members and member organizations 
desiring to exercise such options must submit an affirmative exercise 
notice to the OCC, whether or not a contrary exercise advice has been 
filed with the Exchange.
    The Amex believes that the proposed rule change is consistent with 
the Section 6(b) of the Act in general and furthers the objectives of 
Section 6(b)(5) of the Act 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 facilitating transactions in 
securities, and to remove impediments to and perfect the mechanism of a 
free and open market and a national market system.

(B) Self-Regulatory Organization's Statement on Burden on Competition

    The Amex does not believe that the proposed rule change will impose 
a 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 respect to the 
proposed rule change.

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

    The Exchange has requested that the proposed rule change be given 
accelerated effectiveness pursuant to Section 19(b)(2) of the Act.
    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(b)(5).\5\ Specifically, the 
Commission finds that the Amex proposed is merely a language 
clarification of a certain provision in Exchange Rule 980. The revised 
text is consistent with the Commission's approval of the amendments to 
Rule 980 and the intent of that rule.
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    \5\15 U.S.C. 78f(b)(5) (1988).
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    The Commission finds good cause for approving the proposed rule 
change prior to the thirtieth day after the date of publication of 
notice of filing thereof in the Federal Register in order to permit the 
Exchange to make this clarification to its rules prior to the 
implementation of the new exercise procedures for expiring equity 
options.\6\ Additionally, as stated above, the proposal is merely a 
clarification, not a substantive amendment to Rule 980(c). Accordingly, 
the Commission believes it is consistent with Sections 6(b)(5) and 
19(b)(2) of the Act to approve the proposed rule change on an 
accelerated basis.
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    \6\See supra note 3.
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IV. Solicitation of Comments

    Interested persons are invited to submit written data, views and 
arguments concerning the proposed rule change. 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 in the Commission's Public Reference Section, 450 Fifth Street, 
NW., Washington, DC. 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-94-48 and should be 
submitted by December 20, 1994.
    It is therefore ordered, pursuant to Section 19(b)(2) of the Act\7\ 
that the proposed rule change (SR-Amex-94-48), as amended, is hereby 
approved.

    \7\15 U.S.C. 78s(b)(2) (1988).
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    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\8\
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    \8\17 CFR 200.30-3(a)(12) (1993).
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Jonathan G. Katz,
Secretary.
[FR Doc. 94-29359 Filed 11-28-94; 8:45 am]
BILLING CODE 8010-01-M