[Federal Register Volume 60, Number 2 (Wednesday, January 4, 1995)]
[Notices]
[Pages 516-517]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-26]



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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-35146; File No. SR-Amex-94-50]


Self-Regulatory Organizations; Notice of Filing of Proposed Rule 
Change by the American Stock Exchange, Inc. Relating to Proposed 
Commentary .02 to Rule 60

December 23, 1994.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''), 15 U.S.C. Sec. 78s(b)(1), notice is hereby given that on 
November 14, 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 text of the proposed rule change is as follows: italics 
indicate words to be added.

Rule 60 Commentary

.01 Electronic Display Book--NYSE Disclaimer

    No Change.

.02 On-Line Comparison System and Other NYSE Facilities

    The Amex has entered into an agreement with the New York Stock 
Exchange under which Amex members and member organizations will be 
utilizing the NYSE's On-Line Comparison System (``OCS'') for the 
comparison of Amex equity and bond transactions. The Amex may enter 
into additional agreements with the NYSE in the future relating to 
the use of other NYSE systems, services, or facilities by Amex 
members and member organizations. In connection with member or 
member organization use of OCS or any such other NYSE system, 
service, or facility, the New York Stock Exchange shall not be 
liable for any damages sustained by a member or member organization 
growing out of the use or enjoyment thereof by the member or member 
organization.

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 Amex has reached agreement with the New York Stock Exchange to 
integrate the Amex's Equity Intra-Day Comparison System (``IDC'') into 
the NYSE's On-Line Comparison System (``OCS''), so that Amex equity and 
bond transactions can be compared through OCS. This will enable members 
to utilize the same computer terminal for the comparison of both Amex 
and NYSE securities and thus lessen the cost to the member firm 
community. The integration is being accomplished in two steps. Amex 
listed corporate bonds began to be compared through OCS on October 21, 
1994 and equities are expected to be phased in by the end of the first 
quarter of 1995.
    The Amex Constitution (Article IV, Section 1(e)) currently provides 
that the Exchange shall not be liable for any damages incurred by a 
member firm growing out of its use of the facilities afforded by the 
Exchange for the conduct of its business (which includes the use of the 
Exchange's trading systems), except as the Exchange may otherwise 
provide. The NYSE Constitution has a similar provision regarding use of 
its facilities by its members. These provisions reflect the common 
understanding that exchanges should not bear the risk and liability 
associated with member firm use of their systems. In connection with 
the OCS agreement, the NYSE is requiring that, like the Amex, it be 
protected from liability with regard to Amex member firm use of OCS. 
This is similar to protection which the NYSE requested and obtained 
when the Amex licensed the NYSE's electronic equity display book for 
use on the Amex floor in 1992. At that time, the Exchange adopted a 
Commentary under Rule 60 providing the protection requested by the NYSE 
with respect to Amex member firm use of the display book.
    As the Exchange may enter into additional agreements with the NYSE 
in the future relating to the use of other NYSE systems, services, or 
facilities by Amex member firms, it is proposed that the Exchange adopt 
a liability disclaimer provision that covers not only the current 
situation involving the use of OCS, but also all future situations 
where Amex member firms are using other NYSE facilities in accordance 
with similar agreements with the NYSE.\1\ The new Commentary to Rule 60 
will be disseminated to the membership, upon SEC approval.

    \1\The NYSE acknowledges that under New York State Common Law, a 
liability disclaimer such as the instant one does not insulate the 
NYSE from loss due to gross negligence or willful misconduct. 
Conversation between Steve Abrams and Michael Simon, Milbank, Tweed, 
Hadley & McCloy, Counsel to NYSE, and Amy Bilbija, Attorney, 
Commission, dated December 2, 1994.
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2. Statutory Basis
    The Exchange believes 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 will foster cooperation and 
coordination with persons engaged in regulating, clearing, settling, 
processing information with respect to, and facilitating transactions 
in securities. The proposed rule change is also consistent with Section 
17A of the Act in that is fosters the accurate clearance and settlement 
of securities transactions.

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

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received from Members, Participants or Others

    The Exchange has neither solicited nor received written comments on 
the proposed rule change. [[Page 517]] 

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 longer 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, N.W., Washington, D.C. 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, N.W., 
Washington, D.C. 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-94-50 and should be 
submitted by January 25, 1995.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 95-26 Filed 1-3-95; 8:45 am]
BILLING CODE 8010-01-M