[Federal Register Volume 60, Number 54 (Tuesday, March 21, 1995)]
[Notices]
[Pages 14985-14986]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-6938]



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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-35492; File No. SR-Amex-95-09]


Self-Regulatory Organizations; Notice of Filing of Proposed Rule 
Change by the American Stock Exchange, Inc. Relating to the Entry of 
Market-at-the-Close Orders

March 15, 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 February 
22, 1995, 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 proposes to adopt new Commentary .02 to Exchange Rule 
109 to provide that members entering market-at-the-close (``MOC'') 
orders through the PER of AMOS systems must do so no later than 3:50 
p.m. The text of the proposed rule change is as follows [new text is 
italicized]:
Rule 109
Commentary
    .01  Each ``stopped'' transaction shall be reported for printing on 
the tape in the form and manner prescribed by the Exchange.
    .02  Members entering market-at-the-close orders through the PER or 
AMOS systems must do so no later than 3:50 p.m. The foregoing shall not 
limit or restrict the entry of market-at-the-close orders (or their 
cancellation) other than via such systems.

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
    Rule 109 sets forth the procedures to be followed in executing MOC 
orders. Paragraph (d) of the Rule provides that where there is an 
imbalance between MOC buy and sell orders, the imbalance of buy orders 
would be executed against the offer and an imbalance of sell orders 
would be executed against the bid. The remaining buy and sell orders 
are then paired off and executed at the price of [[Page 14986]] the 
immediately preceding last sale. The ``pair off'' transaction is 
reported to the consolidated last-sale reporting system as ``stopped 
stock.''\1\

    \1\A ``stopped stock'' transaction is one in which a floor 
broker or specialist pairs-off buy and sell market-at-the-close 
orders when holding those orders simultaneously in the same stock.

    Currently, members may enter MOC orders until 4:00 p.m. when 
trading closes. MOC orders that are entered through the Exchange's 
order routing systems, PER and AMOS, can have a disruptive effect on 
the market when they are entered very shortly before the close. Under 
these circumstances it can take several minutes for the specialist to 
ascertain whether an imbalance exists and to pair off buyers and 
sellers, with the result that the executed MOC transactions do not 
print until after the close. When this happens, it becomes difficult 
for market participants to ascertain the closing price of a security in 
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a timely fashion.\2\

    \2\The closing price is the price at which the MOC orders were 
executed. Telephone conversation with Stuart Diamond and Linda Tarr, 
Amex, and Glen Barrentine and Jennifer Choi, SEC, on March 7, 1995.
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    To address this concern, the Exchange is proposing an amendment to 
Commentary .02 to Exchange Rule 109 to provide for a 3:50 p.m. cut-off 
time for MOC orders entered through PER or AMOS on both expiration and 
non-expiration days. After this time, no MOC order could be entered or 
reduced in size via AMEX systems. MOC orders may still be entered, 
modified, or canceled until 4:00 p.m. other than through the automated 
systems. The Exchange expects that this proposed change will enable 
specialists to more efficiently execute and report MOC orders.

2. Statutory Basis

    The proposed rule change is consistent with Section 6(b)(5) of the 
Act in that it is designed to prevent fraudulent and manipulative acts 
and practices and to perfect the mechanism of a free and open market.

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

    The Exchange does not believe that the proposed rule change will 
impose any inappropriate 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 either solicited or received.

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 Exchange. All 
submissions should refer to File No. SR-Amex-95-09 and should be 
submitted by April 11, 1995.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 95-6938 Filed 3-20-95; 8:45 am]

BILLING CODE 8010-01-M