[Federal Register Volume 60, Number 127 (Monday, July 3, 1995)]
[Notices]
[Pages 34562-34563]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-16399]



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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-35909; File No. SR-Amex-95-14]


Self-Regulatory Organizations; Notice of Filing of Proposed Rule 
Change by the American Stock Exchange, Inc. Relating to Permanent 
Approval of Its Pilot Program That Permits Specialists to Grant Stops 
in a Minimum Fractional Change Market

June 28, 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 March 
23, 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 requests permanent approval of the pilot program that 
amended Exchange Rule 109 to permit a specialist, upon request, to 
grant stops in a minimum fractional change market.\1\ The text of the 
proposed rule change is available at the Office of the Secretary, Amex, 
and at the Commission.

    \1\ The Amex received approval to amend Rule 109, on a pilot 
basis, in Securities Exchange Act Release No. 30603 (Apr. 17, 1992), 
57 FR 15340 (Apr. 27, 1992) (File No. SR-Amex-91-05) (``1992 
Approval Order''). The Commission subsequently extended the Amex's 
pilot program in Securities Exchange Act Release Nos. 32185 (Apr. 
21, 1993), 58 FR 25681 (Apr. 27, 1993) (File No. SR-Amex-93-10) 
(``April 1993 Approval Order''); 32664 (July 21, 1993) 58 FR 40171 
(July 27, 1993) (File No. SR-Amex-93-22) (``July 1993 Approval 
Order''); 33791 (Mar. 21, 1994), 59 FR 14432 (Mar. 28, 1994) (File 
No. SR-Amex-93-47) (``1994 Approval Order''); and 35310 (Jan. 31, 
1995) 60 FR 7236 (Feb. 7, 1995) (File No. SR-Amex-95-01) (January 
1995 Approval Order'').
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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
    On January 31, 1995, the Commission extended its pilot approval of 
amendments to Exchange Rule 109 until July 21, 1995.\2\ The amendments 
permit a specialist, upon request, to grant a stop \3\ in a minimum 
fractional change market \4\ for any order of 2,000 shares or less, up 
to a total of 5,000 shares for all stopped orders, provided there is an 
order imbalance, without obtaining prior Floor Official approval. A 
Floor Official, however, must authorize a greater order size or 
aggregate share threshold.

    \2\ See January 1995 Approval Order, supra, note 1.
    \3\ An agreement to ``stop'' stock at a specified price 
constitutes a guarantee by the member who grants the stop that the 
order of the member who accepts the stop will be executed at the 
stop price or better. See Amex Rule 109(a).
    \4\ Amex Rule 127 sets forth the minimum fractional changes for 
securities traded on the Exchange.
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    During the course of the pilot program, the Exchange has closely 
monitored compliance with the rule's requirements, as well as analyzed 
the impact on orders on the specialist's book resulting from the 
execution of stopped orders at a price that is better than the stop 
price, and reviewed 

[[Page 34563]]
market depth in a stock when a stop is granted in a minimum fractional 
change market. The Exchange believes that the amendments to Rule 109 
have provided a benefit to investors by providing an opportunity for 
price improvement, while increasing market depth and continuity without 
adversely affecting orders on the specialist's book.\5\

    \5\ The Exchange has prepared periodic monitoring reports 
regarding these matters which have been provided to the Commission 
during the course of the pilot program.
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    The Exchange is therefore proposing permanent approval of the 
amendments to Rule 109.
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. The Exchange believes that the proposed amendments to Rule 
109 are consistent with these objectives in that they are designed to 
allow stops, in minimum fractional markets, under limited circumstances 
that provide for the possibility of price improvement to customers 
whose orders are granted stops.

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, 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. 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-95-14 and should be 
submitted by July 24, 1995.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 95-16399 Filed 6-30-95; 8:45 am]
BILLING CODE 8010-01-M