[Federal Register Volume 60, Number 30 (Tuesday, February 14, 1995)]
[Notices]
[Pages 8432-8433]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-3568]



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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-35338; File No. SR-Amex-95-02]


Self-Regulatory Organizations; Notice of Filing of Proposed Rule 
Change by American Stock Exchange, Inc. Relating to Minimum Fractional 
Changes

February 7, 1995.
    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 January 
31, 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 Amex proposes to amend Amex Rule 127 to increase from $5 to $10 
the price level below which equity securities are traded in sixteenths.

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
    In August 1992, the Commission approved amendments to Amex Rule 127 
to provide that securities selling under $5 and above $.25 may be 
traded in fractions of \1/16\ of $1.00 per share.\1\ Prior to the 
amendment, Rule 127 provided for trading in sixteenths for securities 
selling under $1 and above $.25, whereas trading in securities selling 
above $1 were subject to a minimum trading fraction of one-eighth of 
$1. In expanding the number of securities eligible for trading in 
sixteenths, the Exchange intended to promote greater liquidity in lower 
priced stocks by allowing quotations between the then-current one-
eighth minimum trading fraction, thereby providing possible improved 
pricing of orders to the benefit of both public customers and market 
professionals.

    \1\See Securities Exchange Act Release No. 31118 (August 28, 
1992), 57 FR 40484 (September 3, 1992).
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    The Exchange proposes to increase significantly the number of Amex-
listed securities traded in sixteenths by amending Rule 127 to provide 
for sixteenths trading in securities selling under $10.\2\ The Exchange 
believes that trading in sixteenths will improve the market for 
securities trading under $10 by promoting greater liquidity and 
providing for superior executions of retail and professional orders. In 
addition, the proposal is responsible to the recommendations of the 
Division of Market Regulation, in its Market 2000 Study,\3\ that the 
exchanges and Nasdaq convert to a minimum variation of one-sixteenth as 
soon as possible.

    \2\The Amex estimates that the rule change will increase the 
number of securities traded in sixteenths from 362 securities 
(approximately 37% of Amex-listed securities) to 589 securities 
(approximately 60% of Amex-listed securities). These estimates were 
made by the Exchange as of February 3, 1995.
    \3\Division of Market Regulation, SEC, Market 2000: An 
Examination of Current Equity Market Developments (January 1994), at 
18 (``Market 2000 Study'').
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    The proposed amendments to Rule 127 do not pertain to bond issues, 
which will continue to be dealt in at one-eighth of $1. In addition, 
the Exchange will retain its authority to fix different minimum 
fractional changes where appropriate.
    Prior to implementing expanded sixteenths trading in 1992, the Amex 
discussed the need for systems enhancements to the Intermarket Trading 
System (``ITS'')\4\ with all ITS participants\5\ in order to permit the 
transmittal of commitments to trade Amex securities priced under $5 via 
ITS in fractions of one-sixteenth, which enhancements were implemented 
by the Securities Industry Automation Corporation (``SIAC'').\6\ Prior 
to the proposed expansion of trading in sixteenths, the Amex will 
consult with all ITS participants to permit them to make any required 
modifications to their individual systems to accommodate trading 
through ITS in Amex securities priced under $10.

    \4\ITS is a subsystem of the National Market System approved by 
the Commission pursuant to Section 11A of the Act, 15 U.S.C. 78k-1 
(1988). ITS facilitates intermarket trading in exchange-listed 
equity securities based on the current quotation information 
emanating from the linked markets. For a discussion of ITS, see 
Market 2000 Study, supra note 3, at Appendix II.
    \5\Participants to the ITS Plan include the Amex, the Boston 
Stock Exchange, the Chicago Board Options Exchange, the Chicago 
Stock Exchange, the Cincinnati Stock Exchange, the New York Stock 
Exchange, the Pacific Stock Exchange, the Philadelphia Stock 
Exchange, and the National Association of Securities Dealers.
    \6\SIAC is a jointly owned subsidiary of the New York Stock 
Exchange and the Amex, which does, among other things, the automated 
processing for ITS.
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2. Statutory Basis
    Thr proposed rule change is consistent with Section 6(b) of the Act 
in general and furthers the objectives of Section 6(b) in particular in 
that it is intended to promote just and equitable principles of trade, 
to facilitate [[Page 8433]] transactions in securities, and to protect 
investors and the public.

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

    The proposed rule change will remove or lessen existing burdens on 
competition in that it will enhance the liquidity of and provide for 
greater price competition in Amex securities trading under $10.

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-95-02 and should be 
submitted by March 7, 1995.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 95-3568 Filed 2-13-95; 8:45 am]
BILLING CODE 8010-01-M