[Federal Register Volume 63, Number 26 (Monday, February 9, 1998)]
[Notices]
[Pages 6587-6588]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-3187]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-39607; File No. SR-Amex-98-04]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by the American Stock Exchange, 
Inc., Relating to Designation of Portfolio Depositary Receipts Under 
Rule 154

February 2, 1998.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ and Rule 19b-4 \2\ thereunder, notice is hereby given 
that on January 21, 1998, the American Stock Exchange, Inc. (``Amex'' 
or ``Exchange'') filed with the Securities and exchange Commission 
(``SEC'' or ``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.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to designate Portfolio Depository Receipts as 
eligible for stop and stop limit orders to be elected by quotation, 
pursuant to Amex Rule 154, Commentary .04(c). The text of the proposed 
rule change is available at the Office of the Secretary, the Amex and 
at the Commission.

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

[[Page 6588]]

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
    Exchange Rules 131 and 154 allow stop and stop limit orders \3\ in 
selected derivative securities to be elected by a quotation,\4\ 
provided the prior approval of a Floor Official is obtained.\5\ Absent 
this provision, such orders could only be elected when a transaction in 
the security occurred at or through the stop price, notwithstanding the 
fact that the quoted market had moved through the stop price as a 
result of trading in the underlying security.
---------------------------------------------------------------------------

    \3\ Stop sell orders generally are entered in a stock whose 
price has increased substantially to protect the investor's profits 
should the stock price decline. Similarly, stop buy order generally 
are entered by investors with short positions to limit losses should 
the stock price increase.
    \4\ A stop or stop limit order in a derivative security is 
elected, i.e., becomes a market or limit order, respectively, when 
the quoted market for the derivative security reaches the 
appropriate stop or stop limit price. Once elected, the specialist 
treats the orders like any other market or limit order. The 
specialist must execute the market order at the next best market 
price, and must execute the limit order at the limit price or hold 
the order on his limit order book until the limit price is 
available.
    \5\ See Securities Exchange Act Release No. 29063 (April 10, 
1991), 56 FR 15652 (April 17, 1991) (File No. SR-Amex-90-31), 
regarding election of stop and stop limit orders by quotation for 
certain derivative equity securities.
---------------------------------------------------------------------------

    Under Exchange Rule 154, Commentary .04(c)(v), provisions regarding 
the election of stop and stop limit orders are only applicable to such 
derivative securities as are designated by the Exchange as eligible for 
this treatment. The Exchange has previously designated Standard & 
Poor's Depositary Reciepts (``SPDRs'') as 
eligible for such treatment.\6\
---------------------------------------------------------------------------

    \6\ See Securities Exchange Act Release No. 34877 (October 21, 
1994), 59 FR 54015 (October 27, 1994) (File No. SR-Amex-94-41). 
``Standard & Poor's Depositary Receipts,'' 
``SPDRs,'' and ``MidCap SPDRsTM'' are 
trademarks of The McGraw-Hill Companies, Inc. PDR Services 
Corporation and the Exchange are permitted to use these trademarks 
pursuant to a License Agreement with Standard & Poor's (``S & P'') a 
division of The McGraw-Hill Companies, Inc. The SPDR and MidCap SPDR 
Trusts, however are not sponsored by or affiliated with Standard & 
Poor's or The McGraw-Hill Companies, Inc., and S & P makes no 
representation regarding the advisability of investing in SPDRs or 
MidCap SPDRs.
---------------------------------------------------------------------------

    The Exchange proposes to designate Portfolio Depositary Receipts 
(``PDRsSM''),\7\ pursuant to Exchange Rule 154, Commentary 
.04(c), as eligible for stop and stop limit orders to be elected by 
quotation. In addition to SPDRs, other PDRs currently approved for 
trading on the Exchange include MidCap SPDRsTM and 
DIAMONDSSM.\8\ As derivative equity securities, PDRs can be 
expected to fluctuate in price based on changes in an underlying stock 
index or portfolio, and are therefore appropriately designated as 
eligible for election of stop and stop limit orders by quotation.
---------------------------------------------------------------------------

    \7\ ``PDRSM'' is a service mark of PDR Services 
Corporation, a wholly-owned subsidiary of Amex.
    \8\ Amex's listing and trading of DIAMONDSSM was 
approved by the Commission in Securities Exchange Act Release No. 
39525 (January 8, 1998), 63 FR 2438 (January 15, 1998) (File No. SR-
Amex-97-29). ``DIAMONDSSM'' is a trademark and service 
mark of Dow Jones and Company,Inc. (``Dow Jones'') and has been 
licensed for use for certain purposes by the Exchange and PDR 
Services Corp., the Trust Sponsor. DIAMONDS are not sponsored, 
endorsed, sold or promoted by Dow Jones, and Dow Jones makes no 
representation regarding the advisability of investing in such 
product.
---------------------------------------------------------------------------

(2) Statutory Basis
    The proposed rule change is consistent with Section 6(b) of the Act 
\9\ in general and furthers the objectives of Section 6(b)(5) \10\ 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.
---------------------------------------------------------------------------

    \9\ 15 U.S.C. 78f(b)
    \10\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

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

    The proposed rule change will impose no 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 solicited or received with respect to the 
proposed rule change.

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

    The foregoing rule change constitutes a stated policy, practice, or 
interpretation with respect to the meaning, administration, or 
enforcement of Exchange Rule 154, and, therefore, has become effective 
pursuant to Section 19(b)(3)(A) \11\ of the Act and subparagraph (e)(1) 
of Rule 19b-4 \12\ thereunder. At any time within 60 days of the filing 
of such proposed rule change, the Commission may summarily abrogate 
such proposed 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.
---------------------------------------------------------------------------

    \11\ 15 U.S.C. 78s(b)(3)(A).
    \12\ 17 CFR 240.19b-4(e))1).
---------------------------------------------------------------------------

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. 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 in the 
Commission's Public Reference Room, 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-98-04 and should be submitted by March 2, 
1998.

    For the Commission by the Division of Market Regulation, 
pursuant to delegated authority.\13\
---------------------------------------------------------------------------

    \13\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 98-3187 Filed 2-6-98; 8:45 am]
BILLING CODE 8010-01-M