[Federal Register Volume 61, Number 156 (Monday, August 12, 1996)]
[Notices]
[Pages 41814-41816]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-20456]


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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-37529; File No. SR-Amex-96-30]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by the American Stock Exchange, 
Inc., Relating to a One-Year Extension of the Exchange's Pilot Program 
for Specialists in Portfolio Depositary Receipts and Investment Trust 
Securities to Participate in the After-Hours Trading Facility and to 
Extend the Pilot Program to Index Fund Shares

August 6, 1996.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ notice is hereby given that on July 31, 1996, 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 and II 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.
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    \1\ 15 U.S.C. 78s(b)(1).
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I. Self-Regulatory Organization's Statement of the Terms of 
Substance of the Proposed Rule Change

    The text of the proposed rule change is available at the Amex and 
at the Commission.

[[Page 41815]]

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 Exchange seeks a one year extension of the pilot program 
permitting specialists in Portfolio Depositary Receipts (``PDRs'') and 
investment trust securities listed pursuant to Section 118B of the 
Exchange's Company Guide \2\ to participate in the After-Hours Trading 
(``AHT'') facility to ``clean-up'' order imbalances and to effect 
closing price coupled orders.\3\ The Exchange also seeks to extend the 
pilot program to Index Fund Shares.\4\
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    \2\ The Exchange currently lists two Portfolio Depositary 
Receipts, viz., Standard and Poor's Depositary Receipts on the S&P 
500 and MidCap Indexes (``SPDRs''); and two investment trust 
securities pursuant to Section 118B of the Exchange's Listing 
Guidelines: LOR Index Trust SuperUnits and LOR Money Market 
SuperUnits.
    \3\ According to the Exchange, there was no trading volume in 
the AHT for SPDRs and investment trust securities from June 1995 to 
June 1996. The Exchange, nevertheless, is optimistic that there 
could be after hours trading in these securities (particularly if 
SPDRs could be used as the cash component of an exchange for 
physical transaction). The Commission notes that in the last 
approval order extending the pilot, the Commission requested that 
the Exchange submit a report describing its experience with the 
pilot program. See Securities Exchange Act Release No. 36123 (Aug. 
18, 1995), 60 FR 44519 (Aug. 28, 1995) (extending Amex's pilot 
program permitting specialists to participate in the After-Hours 
Trading Facility in PDRs and investment trust securities until 
August 29, 1996). According to the Exchange, it has not submitted 
such a report because there has been no trading in the AHT for SPDRs 
and investment trust securities.
    \4\ The Exchange currently lists 16 Index Fund Shares, which are 
commonly referred to as WEBSsm. WEBS are shares issued by an 
open-end management investment company that seek to provide 
investment results that correspond generally to the price and yield 
performance of a specified foreign or domestic equity market index. 
The Exchange currently lists WEBS based on the following Morgan 
Stanley Capital International (``MSCI'') indices: MSCI Australia 
Index; MSCI Austria Index; MSCI Belgium Index; MSCI Canda Index; 
MSCI France Index; MSCI Germany Index; MSCI Hong Kong Index; MSCI 
Italy Index; MSCI Japan Index; MSCI Malaysia Index; MSCI Mexico 
Index; MSCI Netherlands Index; MSCI Singapore (Free) Index; MSCI 
Spain Index; MSCI Sweden Index; MSCI Switzerland Index; and MSCI 
United Kingdom Index. (See SR-AMEX-95-43.)
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    The Exchange believes that extension of the Exchange's pilot 
program to permit specialists in PDRs, investment trust securities and 
Index Fund Shares to participate in the AHT facility in order to 
``clean-up'' order imbalances and effect closing price coupled orders 
would benefit investors by providing additional liquidity to the listed 
cash market for derivative securities based upon well known market 
indexes. The market price of these securities is based upon 
transactions largely effected in markets other than the Amex. (In the 
case of Index Fund Shares, the market price of these securities is 
based exclusively on transactions occurring outside the Amex.) The 
specialist in the Amex listed derivatives has no unique access to 
market sensitive information regarding the market for the underlying 
securities or closing index values. The Exchange, therefore, believes 
that specialist participation in the AHT facility in PDRs, investment 
trust securities and Index Fund Shares in the manner previously 
approved by the Commission does not raise any market integrity 
issues.\5\ In addition, should a customer not care for an execution at 
the closing price, the rules of the Exchange's AHT facility permit 
cancellation of an order up to the close of the AHT session at 5:00 
p.m. (Orders in the AHT facility are not executed until the 5:00 p.m. 
close of the After-Hours session.) A customer, therefore, has 
approximately 40 minutes to determine if an execution at the closing 
price suits its needs, and may cancel its order if it believes that the 
closing price does not suit it objectives.
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    \5\ The Commission notes that as in the original pilot program, 
specialists in PDRs, investment trust securities, and Index Fund 
Shares may participate in a coupled closing price order as long as 
the other side of the order is not for an account in which a member 
or member organization has a direct or indirect interest. Moreover, 
as with the original pilot program, the limit orders for PDRs, 
investment trust securities, and Index Fund Shares may not migrate 
from the specialist's limit order book to the AHT facility in order 
to help prevent manipulation or misuse of specialists' information 
regarding which limit orders are eligible for execution in the AHT 
facility. See Securities Exchange Act Release No,. 36123, supra note 
3.
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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) in particular in 
that it is designed to prevent fraudulent manipulative acts and 
practices, promote just and equitable principles of trade, remove 
impediments to and perfect the mechanism of a free and open market and 
a national market system, and, in general, protect investors and the 
public interest.

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

    The proposed rule change does not impose any burden on competition 
that is not necessary or appropriate in furtherance of the purposes of 
the Act.

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.

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

    Because the foregoing proposed rule change: (1) Does not 
significantly affect the protection of investors or the public 
interest; (2) does not impose any significant burden on competition; 
(3) does not become operative for 30 days from July 31, 1996, the date 
on which it was filed, and the Exchange provided the Commission with 
written notice of its intent to file the proposed rule change at least 
five business days prior to the filing date, it has become effective 
pursuant to Section 19(b)(3)(A) of the Act \6\ and Rule 19b-4(e)(6) 
thereunder.\7\ Therefore, the pilot program will be extended until 
August 29, 1997.
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    \6\ 15 U.S.C. 78s(b)(3)(A).
    \7\ 17 CFR 240.19b-4(e)(6).
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    At any time within 60 days of the filing of the proposed rule 
change, the Commission may summarily abrogate such rule change if it 
appears to the Commission that such action is necessary or appropriate 
in the public interest, for the protection of investors, or otherwise 
in furtherance of the purposes of the Act.

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

[[Page 41816]]

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, N.W., Washington, D.C. 20549. 
Copies of such filing also will be available for inspection and copying 
at the principal office of the Exchange. All submissions should refer 
to File No. SR-Amex-96-30 and should be submitted by September 3, 1996.

    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).
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Jonathan G. Katz,
Secretary.
[FR Doc. 96-20456 Filed 8-9-96; 8:45 am]
BILLING CODE 8010-01-M