[Federal Register Volume 63, Number 141 (Thursday, July 23, 1998)]
[Notices]
[Pages 39608-39609]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-19572]
[[Page 39608]]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-40201; File No. SR-AMEX-98-20]
Self-Regulatory Organizations; Notice of Filing of Proposed Rule
Change by the American Stock Exchange, Inc., Relating to the Permanent
Approval of the Exchange's Pilot Program for Specialists in Portfolio
Depositary Receipts, Investments Trust Securities, and Index Fund
Shares To Participate In the After-Hours Trading Facility
July 15, 1998.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on June 9, 1998, the American Stock Exchange, Inc. (``Amex'' or
``Exchange''), filed with the Securities and Exchange Commission
(``Commission'' or ``SEC'') the proposed rule change as described in
Items I, II and III below, which items have been prepared by the
Exchange. 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).
\2\ 17 CFR 240.19b-4.
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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 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 Exchange included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments if received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The Exchange 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 permanent approval of the pilot program
permitting specialists in Portfolio Depository Receipts \3\ (``PDRs''),
investment trust securities, and Index Fund Shares to participate in
the after-hours trading (``AHT'') facility to ``clean-up'' order
imbalances and to effect closing price coupled orders.\4\
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\3\ The Exchange currently lists three Portfolio Depositary
Receipts, viz., Depositary Receipts on the Standard and Poor's
500 and MidCap Indexes, and Depositary Receipts
on the Dow Jones Industrial AverageTM. The Exchange also
lists 17 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 Canada 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.)
\4\ The Commission originally approved the pilot program in
Securities Exchange Act Release No. 34611 (Aug. 29, 1994), 59 FR
45739 (Sept. 2, 1994) (``Original Pilot Approval''). The pilot was
scheduled to expire on August 29, 1995, but was extended for three
successive one-year periods in Securities Exchange Act Release Nos.
36123 (Aug. 18, 1995), 60 FR 44519 (Aug. 28, 1995); 37529 (Aug. 6,
1996), 61 FR 41814 (Aug. 12, 1996); and 38986 (Aug. 17, 1997), 62 FR
46785 (Sept. 4, 1997). In the Original Pilot Approval and in each
extension, the Commission requested that the Exchange submit a
report and analysis regarding the operation of the pilot program.
The Exchange did not submit a report until 1997, as specialists made
little or no use of the pilot program until the period September 3,
1996 to May 30, 1997. The 1997 report stated that during that
period, there were two trades for a total of 600 shares of PDRs in
the AHT session for PDRs, index trust securities, and Index Funds
Shares. See letter dated August 5, 1997, from William Floyd-Jones,
Jr., Assistant General Counsel, Amex, to Michael Walinskas, Senior
Special Counsel, SEC. The 1998 report stated that during the period
June 1, 1997 to April 30, 1998, there were 12 trades for a total of
56,320 PDRs in the AHT session for PDRs, index fund securities, and
Index Fund Shares. See letter dated June 8, 1998, from William
Floyd-Jones, Jr., Assistant General Counsel, Amex, to Michael
Walinskas, Senior Special Counsel, SEC.
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The Exchange believes that permanent approval of the Exchange pilot
program to permit specialists in PDR's, 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 Amex maintains that investor interest in these securities
is rapidly increasing, and specialist participation in the AHT session
provides necessary liquidity after the close of the regular trading
session. In addition, the market price of these exchange-trading funds
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 securities 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 on a pilot basis does not raise
any market integrity issues. 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 AHT session.) A customer, therefore, has
approximately 40 minutes to determine if an execution at the closing
price suits its need and may cancel its order if it believes that the
closing price does not suit its objectives.
2. Basis
The Exchange believes the proposed rule change is consistent with
Section 6(b) of the Act, \5\ in general, and furthers the objectives of
Section 6(b)(5), \6\ in particular, in that it is designed to prevent
fraudulent 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.
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\5\ 15 U.S.C. 78f(b).
\6\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange believes that proposed permanent approval of the pilot
program would impose no 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
Within 35 days of the date of publication of this notice in the
Federal Register or within such longer period (i) as the Commission may
designate up to
[[Page 39609]]
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
Exchange consents, the Commission will:
(A) By order approve such 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, 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, 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 in the
Commission's Public Reference Room, 450 Fifth Street, N.W., 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-98-20 and should be submitted by August 24,
1998.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\7\
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\7\ 17 CFR 200.30-3(a)(12).
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Jonathan G. Katz,
Secretary.
[FR Doc. 98-19572 Filed 7-22-98; 8:45am]
BILLING CODE 8010-01-M