[Federal Register Volume 64, Number 82 (Thursday, April 29, 1999)]
[Notices]
[Pages 23138-23142]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-10760]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-41322; International Series Release No. 1192; File No.
SR-Amex-98-49]
Self-Regulatory Organizations; Notice of Filing of Proposed Rule
Change and Amendment Nos. 1 and 2 Thereto by the American Stock
Exchange LLC. Relating to Listing Additional Series of World Equity
Benchmark SharesTM
April 22, 1999.
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 December 23, 1998, the American Stock Exchange LLC (``Amex'' or
``Exchange'') filed with the Securities and Exchange Commission
(``Commission'') the proposed rule change. The Exchange submitted
Amendment No. 1 to its proposal on February 24, 1999,\3\ and Amendment
No. 2 on April 9, 1999.\4\ The proposal rule change, as amended, is
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, as amended, from interested
persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ In Amendment No. 1, the Exchange generally added a new
Morgan Stanley Capital International (``MSCI'') Index based on the
European Economic and Monetary Union (``EMU''), added references to
Amex Rules 127 and 190, analogized the minimum number of shares per
Creation Unit for the proposed WEBS to the number needed for
Portfolio Depository Receipts and Index Fund Shares, and described
the Exchange's prospectus delivery requirements. See Restated 19b-4
Filing marked Amendment No. 1 (``Amendment No. 1'').
\4\ In Amendment No. 2, the Exchange provided a description of
the methodology used to calculate the MSCI Indices, discussed the
requirements of Amex Rule 411 and the disclosure of the procedure
for making purchases and redemption of WEBS, revised its tracking
error discussion, and lowered the minimum number of shares needed
for Creation Unit. See Letter from Michael Cavalier, Associate
General Counsel, Legal & Regulatory Policy, Amex, to Katherine
England, Assistant Director, Division of Market Regulation
(``Division''), Commission, dated April 8, 1999 (``Amendment No.
2'').
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I. Self-Regulatory Organization's Statement of the Terms of
Substance of the Proposed Rule Change
The Exchange proposes to list and trade under Amex Rules 1000A et
seq. Index Fund Shares based on the following MSCI Indices: Brazil,
Greece, Indonesia (Free), South Korea, Portugal, South Africa, Taiwan,
Thailand (Free), Turkey, United States and EMU. The MSCI EMU Index is
comprised of companies from countries participating in the EMU.\5\
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\5\ See Amendment No. 1, supra note 3.
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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 Exchange 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 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 the
Statutory Basis for, the Proposed Rule Change
1. Purpose
In Securities Exchange Act Release No. 36947,\6\ the Commission
approved Amex's listing and trading of Index Fund Shares under Amex
Rules 1000A et seq. Index Fund Shares 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.
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\6\ Securities Exchange Act Release No. 36947 (March 8, 1996),
61 FR 10606 (March 14, 1996).
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The first Index Fund Shares listed on the Exchange were seventeen
series of World Equity Benchmark SharesTM
(``WEBSTM'') issued by Foreign Fund, Inc. (now WEBS Index
Fund, Inc.) (``Fund''), based on the following Morgan Stanley Capital
International (``MSCI'') indices: Australia, Austria, Belgium, Canada,
France, Germany, Hong Kong, Italy, Japan, Malaysia, Mexico (Free),
Netherlands, Singapore (Free), Spain, Sweden, Switzerland and the
United Kingdom.\7\ These WEBS Index Series, which the Commission
specifically approved for Amex listing and trading in Securities
Exchange Act Release No. 36947,\8\ have been trading on the Amex since
March 18, 1996.
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\7\ ``World Equity Benchmark Shares'' and ``WEBS'' are service
marks of Morgan Stanley Group, Inc. ``MSCI'' and ``MSCI Indices''
are service marks of Morgan Stanley & Co. Incorporated.
\8\ See Securities Exchange Act Release No. 36947, supra note 6.
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The Exchange proposes to list additional WEBS Index Series based on
the following MSCI indices: MSCI Brazil Index, MSCI Greece Index, MSCI
Indonesia (Free) Index, MSCI South Korea Index, MSCI Portugal Index,
MSCI South Africa Index, MSCI Taiwan Index, MSCI Thailand (Free) Index,
MSCI Turkey Index, MSCI United States Index and MSCI EMU Index.\9\
Descriptions of the eleven specific indices referenced above have been
prepared by the Fund and are available in the public file.
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\9\ The Fund has filed with the Commission an Application for
Orders under Sections 6(c) and 17(b) of the Investment Company Act
of 1940 (``1940 Act'') as amended, for the purpose of exempting the
eleven additional WEBS Index Series referenced herein from various
provisions of the 1940 Act and rules thereunder (File No. 812-
10756).
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The MSCI EMU Index is comprised of stocks of companies from
countries participating in the EMU. Currently, eleven countries are
participating in the EMU: Austria, Belgium, Finland, France, Germany,
Ireland, Italy, Luxembourg, the Netherlands, Portugal and Spain. The
MSCI EMU is currently comprised of stocks of companies from ten of
these EMU countries (e.g., all of the EMU countries except Luxembourg).
MSCI has advised that it may, in accordance with its methodology,
change the composition of MSCI EMU in the future, such changes could
include adding stock(s) of companies from Luxembourg or from any other
[[Page 23139]]
country that becomes a participant in EMU.\10\
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\10\ See Amendment No. 1, supra note 3.
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Issuances of WEBS by the Fund are made only in Creation Unit size
aggregations or multiples thereof. The size of the applicable Creation
Unit size aggregation will be set forth in the Fund's prospectus and
varies from one WEBS Index Series to another, but is generally
substantial (e.g., value in excess of $450,000 per Creation Unit). The
Fund issues and sells WEBS through Funds Distributor, Inc.
(``Distributor''), the distributor and principal underwriter, on a
continuous basis at the net asset value per share next determined after
an order to purchase WEBS in Creation Unit size aggregations is
received in proper form. Following issuance, WEBS are traded on the
Exchange like other equity securities by professionals, as well as
retail and institutional investors.
Creation Unit size aggregations of WEBS are generally issued in
exchange for the ``in kind'' deposit of a specified portfolio of
securities, together with a cash payment representing, in part, the
amount of dividends accrued up to the time of issuance. Such deposits
are made primarily by institutional investors, arbitrageurs and the
Exchange specialist. Redemption of WEBS is generally made on an in-kind
basis, with a portfolio of securities and cash exchanged for WEBS that
have been tendered for redemption. Issuances or redemptions could also
occur for cash under specified circumstances (e.g., if it is not
possible to effect delivery of securities underlying the specific
series in a particular foreign country) and at other times in the
discretion of the Fund.
The Fund makes available on a daily basis a list of the names and
the required number of shares of each of the securities to be deposited
in connection with the issuance of a particular WEBS Index Series in
Creation Unit size aggregations, as well as information relating to the
required cash payment representing, in part, the amount of accrued
dividends.
A WEBS Index Series may make periodic distributions of dividends
from net investment income, including net foreign currency gains, if
any, in an amount approximately equal to accumulated dividends on
securities held by the WEBS Index Series during the applicable period,
net of expenses and liabilities for such period.
The net asset value for each WEBS Index Series is calculated by the
Fund's administrator, PFPC Inc. (``Administrator''). After calculation,
such net asset values are available to the public from the Fund's
Distributor via a toll free telephone number, and are also available to
National Securities Clearing Corporation (``NSCC'') participants
through data made available from NSCC.
WEBS are registered in book entry form through The Depository Trust
Company. Trading in WEBS on the Exchange is effected until 4:00 p.m.
(ET) each business day. The minimum trading increment for WEBS is \1/
16\ of $1.00, pursuant to Amex Rule 127, Commentary .02.\11\
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\11\ Id.
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a. MSCI Indices. A description of the methodology used to calculate
the MSCI Indices was prepared by MSCI. The methodology is substantially
similar to the procedures previously submitted to the Commission in
connection with the Exchange's initial proposal to list WEBS. The
current description varies from the original description submitted in
connection with the Exchange's initial WEBS proposal. As to the
changes, the current description expands upon the reasons MSCI believes
full market capitalization weighting is preferable to other weighting
schemes; expands upon the description of calculating the foreign MSCI
``Free'' Indices (indices that exclude companies and share classes not
purchasable by foreigners based on certain countries' restrictions on
foreign ownership); provides specific reasons for excluding large new
issues from an Index; and provides factors to be considered in
determining which companies should be deleted from an Index.\12\ MSCI
generally seeks to have 60% of the capitalization of a country's stock
market reflected in the MSCI Index for such country, although in some
cases, other considerations may result in an MSCI Index reflecting less
or more than this percentage.\13\
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\12\ See Amendment No. 2, supra note 4.
\13\ Telephone conversation between Michael Cavalier, Associate
General Counsel, Legal & Regulatory Policy, Amex, and Marc McKayle,
Attorney, Division, Commission, on April 14, 1999.
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b. Shares Per Creation Unit. It is anticipated that the number of
WEBS shares constituting a Creation Unit for each WEBS Index Series
will range from 50,000 to 500,000 \14\ and that the value of a Creation
Unit at start of trading for these series will be in excess of
$500,000. The fund will establish a minimum number of WEBS shares per
Creation Unit for each Index Series prior to commencement of trading,
which minimum will be disclosed in the Fund's prospectus. It is further
anticipated that the net asset value \15\ of an individual share will
initially range from $7 to $25.
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\14\ Id.
\15\ The Exchange expanded the term ``NVA.'' Telephone
conversation between Michael Cavalier, Associate General Counsel,
Legal & Regulatory Policy, Amex, and Terri Evans, Attorney,
Division, Commission, on March 10, 1999.
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Each MSCI Index on which a WEBS Index Series is based is calculated
by MSCI for each trading day in the applicable foreign exchange markets
based on official closing prices of the applicable foreign exchange
markets. For each trading day, MSCI publicly disseminates each index
value for the previous day's close. MSCI Indices are reported
periodically in major financial publications worldwide, and are also
available through vendors of financial information.
There are two broad categories of changes to the MSCI Indices. The
first consists of market-driven changes, including mergers,
acquisitions and bankruptcies. These are announced and implemented as
they occur. The second category consists of structural changes to
reflect the evolution of a market that may occur due to changes in
industry composition or regulations, among other reasons. Structural
changes to MSCI Indices may occur only on four dates throughout the
year: the first business day of March, June, September and December.
The changes are announced at least two weeks in advance.
As noted in the WEBS prospectus for the initial seventeen WEBS
Index Series (Registration No. 33-97598), the investment objective of
each WEBS Index Series is to seek to provide investment results that
correspond generally to the price and yield performance of public
securities traded in the aggregate in particular markets, as
represented by specific MSCI benchmark indices. Each WEBS Index Series
utilizes a ``passive'' or indexing investment approach which attempts
to approximate the investment performance of its benchmark index
through quantitative analytical procedures. Each Index Series has the
policy to remain as fully invested as practicable in a pool of
securities the performance of which will approximate the performance of
the benchmark MSCI Index taken in its entirety.
A WEBS Index Series will normally invest at least 95% of its total
assets in stocks that are represented in the relevant MSCI Index and
will at all times invest at least 90% of its total assets in such
stocks, subject to certain limited exceptions.\16\ A WEBS Index
[[Page 23140]]
Series does not hold all of the issues that comprise the subject MSCI
Index, but attempts to hold a representative sample of the securities
in the Index utilizing a technique known as ``portfolio sampling.'' As
noted in the WEBS prospectus, it is expected that, over time, the
``expected tracking error'' of a WEBS Index Series relative to the
performance of the relevant MSCI Index will be less that 5%.\17\ An
expected tracking error of 5% means that there is a 68% probability
that the net return on the asset values for the Index Series (including
dividends and without reflecting expenses) will be between 95% and 105%
of the return of the subject MSCI Index after one year without
rebalancing the portfolio composition.\18\ While no particular level of
tracking error is assured, the Fund's advisor, Barclays Global Fund
Advisors (``Advisor''), monitors the tracking error of each Index
Series on an ongoing basis and seeks to minimize tracking error to the
maximum extent possible. Semi-annual and annual reports of the Fund
disclose tracking error over the previous six month periods, and in the
event that tracking error exceeds 5%, the Fund Board of Directors will
consider what action might be appropriate.
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\16\ The WEBS prospectus states that, in order to permit the
Advisor additional flexibility to comply with the requirements of
the Internal Revenue Code of 1986, as amended, and other regulatory
requirements and to manage future corporate actions and index
changes in the smaller markets, each of the Australia, Austria,
Belgium, Hong Kong, Italy, Mexico (Free), Netherlands, Singapore
(Free), Spain, Sweden and Switzerland WEBS Index Series will at all
times invest at least 80% of its total assets in such stocks and at
least half of the remaining 20% of its total assets in such stocks
or in stocks included in the relevant market, but not in the
relevant MSCI Index. See Amendment No. 1, supra note 3.
\17\ This expected tracking error applies to all WEBS Index
Series, including the proposed eleven WEBS Index Series and existing
WEBS Index Series. See Amendment No. 2, supra note 4.
\18\ This applies to all WEBS Index Series. See Amendment No. 2,
supra note 4. The Exchange clarified that there is only a 68%, not
69% as described in Amendment No. 2, probability that the net return
on the asset value of the Index Series will be between 95% and 105%.
Telephone conversation between Michael Cavalier, Associate General
Counsel, Legal & Regulatory Policy, Amex, and Terri Evans, Attorney,
Division, Commission, on April 13, 1999.
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c. Criteria for Initial and Continued Listing. WEBS are subject to
the criteria for initial and continued listing of Index Fund Shares in
Amex Rule 1002A. For each of the eleven WEBS Index Series,\19\ it is
anticipated that a minimum of two Creation Units will be required to be
outstanding at the start of trading, with the exception of the United
States WEBS Index Series, for which one Creation Unit will be required
to be outstanding at commencement of trading (in light of the large
size of a Creation Unit of the United States WEBS Index Series in
comparison with the others). It is anticipated that a Creation Unit
will consist of 50,000 WEBS except for the United States WEBS Index
Series and EMU WEBS Index Series, for which the anticipated minimums
are 500,000 and 200,000 WEBS, respectively. The value of a Creation
Unit at the start of trading would in all cases be in excess of
$500,000. The proposed minimum number of Creation Units is identical to
the minimum applied in connection with the listing of the initial
seventeen WEBS Index Series in 1996, except for the Japan WEBS Index
Series, for which one Creation Unit was required to be outstanding.\20\
For the initial WEBS Index Series, the number of shares per Creation
Unit ranged from 40,000 (for the Belgium Index Series) to 600,000 (for
the Japan Index Series).\21\ The Exchange believes that the proposed
minimum number of WEBS outstanding at the start of trading of each WEBS
Index Series is sufficient to provide market liquidity and to further
the Fund's objective to seek to provide investment results that
correspond generally to the price and yield performance of a specified
MSCI Index.\22\
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\19\ See Amendment No. 1, surpa note 3.
\20\ See Securities Exchange Act Release No. 36947, supra note
6.
\21\ See Amendment No. 2, supra note 4. The Commission notes
that number of shares per Creation Unit for the original WEBS were
as follows: Australia--200,000, Austria--100,000, Belgium--40,000,
Canada--100,000, France--200,000, Germany--300,000, Hong Kong--
75,000, Italy--150,000, Japan--600,000, Malaysia--75,000, Mexico--
100,000, Netherlands--50,000, Singapore (Free)--100,000, Spain--
75,000, Sweden--75,000, Switzerland--125,000 and United Kingdom--
200,000. See Securities Exchange Act Release No. 36947, supra note
6.
\22\ See Amendment No. 2, supra note 4.
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d. Dissemination of Indicative Optimized Portfolio Value. As noted
above, MSCI disseminates values for each MSCI Index once each trading
day, based on closing prices in the relevant exchange market. In
addition, the Fund makes available on a daily basis the names and
required number of shares of each of the securities to be deposited in
connection with the issuance of WEBS in Creation Unit size aggregations
for each WEBS Index Series, as well as information relating to the
required cash payment representing, in part, the amount of accurued
dividends appliable to such WEBS Index Series. This information is made
available by the Fund's Advisor to any NSCC participant requesting such
information. In addition, other investors can request such information
directly from the Fund's Distributor. The net asset value for each WEBS
Index Series is calculated daily by the Fund's Administrator.
In order to provide updated informaiton relating to each WEBS Index
Series for use by investors, professionals and persons wishing to
create or redeem WEBS,\23\ the Exchange disseminates through the
facilities of the Consolidated Tape Association (``CTA'') an updated
``indicative optimized portfolio value'' (``Value'') for each of the
seventeen WEBS Index Series cureently traded as calculated by
Bloomberg, L.P. The Exchange will also disseminate a Value for the
proposed eleven new WEBS Index Series\24\ over CTA facilities (Network
B) as calculated by a securities information provider (``Value
calaclator''). It is anticipated that the methodology utilized in
connenction with the seventeen WEBS Index Series currently traded will
also be utilitzed for the proposed eleven new series. The Value is
disseminated on a per WEBS basis every 15 seconds during regular Amex
trading hours of 9:30 a.m. to 4:00 p.m. (ET). The equity securities
values included in the Value are the values of the designated portfolio
of equity securities (``Deposit Securities'') constituting an optimized
representation of the benchmark MSCI foreign index for each WEBS Index
Series, which is the same as the portfolio that is to be utilized
generally in connection with creations and redemptios of WEBS in
Creation Unit size aggregations on that day. The equity securities
included in the Value reflect the same market capitalization weighting
as the Deposit Securities in the optimized portfolio for the particular
WEBS Index Series. In addition to the value of the Deposit Securities
of each WEBS Index Series, the Value includes a cash component
consisting of estimated accured dividend and other income, less
expenses. The Value also reflects changes in currency exchange rates
between the U.S. dollar and the applicable home country currency.
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\23\ WEBS cannot be redeemed individually but must be redeemed
in Creation Unit size aggregations applicable to the specific WEBS
Index Series.
\24\ Telephone conversation between Michael Cavalier, Assistant
General Counsel, Legal & Regulatory Policy, Amex, and Terri Evans,
Attorney, Division, Commission, on March 10, 1999.
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The Value does not reflect the value of all securities included in
the applicable benchmark MSCI index. In addition, the Value does not
necessarily reflect the precise composition of the current portfolio of
securities held by the Fund for each WEBS Index Series at
[[Page 23141]]
a particular point in time. Therefore, the Value on a per WEBS basis
disseminated during Amex trading hours should not be viewed as a real
time update of the net asset value of the Fund, which is calculated
only once a day. While the Value disseminated by the Amex at 9:30 a.m.
is generally very close to the most recently calculated Fund net asset
value on a per WEBS basis,\25\ it is possible that the value of the
portfolio of securities held by the Fund for a particular WEBS Index
Series may diverge from the Deposit Securities Values during any
trading day. In such case, the Value will not precisely reflect the
value of the Fund portfolio. Following calculation of net asset value
by the Fund's Administrator as of 4:00 p.m. (ET), the Value on a per
WEBS basis can be expected to be the same as the net asset value of the
Fund on a per WEBS basis.
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\25\ A slight difference between the Value disseminated at 9:30
a.m. and the most recently calculated Fund net asset value can be
expected because the Value will include an estimated cash amount
consisting principally of any dividend accruals for the Deposit
Securities going ``ex-dividend'' on that day.
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However, during the trading day, the Value can be expected to
closely approximate the value per WEBS share of the portfolio of
securities for each WEBS Index Series except under unusual
circumstances (e.g., in the case of extensive rebalancing of multiple
securities in a WEBS Index Series at the same time by the Fund
Advisor). The circumstances that might cause the Value to be based on
calculations different from the valuation per WEBS share of the actual
portfolio of an Index Series would not be different than circumstances
causing any index fund or trust to diverge from an underlying benchmark
index.
The Exchange believes that dissemination of the Value based on the
Deposit Securities providing additional information regarding each WEBS
Index Series that is not otherwise available to the public and is
useful to professionals and investors in connection with WEBS trading
on the Exchange or the creation or redemption of WEBS.
Greece, Indonesia (Free), South Korea, Taiwan, Thailand
(Free)
For Greece, Indonesia (Free), South Korea, Taiwan, Thailand (Free),
there is no overlap in trading hours between the foreign markets and
the Amex. Therefore, for each Index Series, the Value calculator will
utilize closing prices (in applicable foreign currency prices) in the
principal foreign market for securities in the WEBS portfolio, and
convert the price to U.S. dollars. This Value will be updated every 15
seconds during Amex trading hours to reflect changes in currency
exchange rates between the U.S. dollar and the applicable foreign
currency. The Value will also include the applicable estimated cash
component for each WEBS Index Series.
Brazil, Portugal, South Africa, Turkey, EMU
For Brazil, Portugal, South Africa, Turkey, and countries included
in the WEBS EMU Index,\26\ which have trading hours overlapping regular
Amex trading hours, the Value calculator will update the applicable
Value every 15 seconds to reflect price changes in the applicable
foreign market or markets,\27\ and convert such prices into U.S.
dollars based on the current currency exchange rate. When the foreign
market or markets \28\ are closed but the Amex is open, the Value will
be updated every 15 seconds to reflect changes in currency exchange
rates after the foreign markets close. \29\ The Value will also include
the applicable estimated cash component for each Index Series.
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\26\ See Amendment No. 1, supra note 3.
\27\ Id.
\28\ Id.
\29\ Id.
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United States
For United States WEBS Index Series, the Value calculator will
update the Value at least every 15 seconds, and such Value will include
the applicable estimated cash component.
e. Original and Annual Listing Fees. The Amex original listing fee
applicable to the listing of WEBS Index Series is $5,000 per WEBS Index
Series (i.e., $55,000 for the eleven WEBS Index Series listed above).
\30\ In addition, the annual listing fee applicable to WEBS Index
Series under Section 141 of the Amex Company Guide will be based upon
the year-end aggregate number of outstanding WEBS in all series,
including the seventeen existing series and the additional series
proposed herein.
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\30\ Id.
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f. Stop and Stop Limit Orders. Amex Rule 154, Commentary .04(c)
provides that stop and stop limit orders to buy or sell a security
(other than an option, which is covered by Amex Rule 950(f) and
Commentary thereto) the price of which is derivatively priced based
upon another security or index of securities, may with the prior
approval of a Floor Official, be elected by a quotation, as set forth
in Commentary .04(c)(i-v). The Exchange has designated Index Fund
Shares, including WEBS, as eligible for this treatment.\31\
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\31\ See Securities Exchange Act Release No. 29063 note 9 (April
10, 1991) 56 FR 15652 (April 17, 1991) (regarding Exchange
designation of equity derivative securities as eligible for such
treatment under Rule 154, Commentary .04(c)).
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g. Amex Rule 190. Amex Rule 190, Commentary .04, applies to Index
Fund Shares listed on the Exchange, including WEBS. Commentary. 04
states that nothing in Amex Rule 190(a) should be construed to restrict
a specialist registered in a security issued by an investment company
from purchasing and redeeming the listed security, or securities that
can be subdivided or converted into the listed security, from the
issuer as appropriate to facilitate the maintenance of a fair and
orderly market.\32\
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\32\ See Amendment No. 1, supra note 3.
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h. Prospectus Delivery. The Exchange, in an Information Circular to
Exchange members and member organizations, will inform members and
member organizations, prior to commencement of trading, that investors
purchasing WEBS are required to receive a Fund prospectus prior to or
concurrently with the confirmation of a transaction therein.\33\
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\33\ Id.
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i. Purchases and Redemption in Creation Unit Size. In the
Information Circular, members and member organization will be informed
that procedures for purchases and redemptions of WEBS in Creation Unit
Size are described in the Fund prospectus and Statement of Additional
Information, and that WEBS are not individually redeemable but are
redeemable only in Creation Unit Size aggregations or multiples
thereof.\34\
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\34\ See Amendment No. 2, supra note 4.
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j. Suitability. Prior to commencement of trading, the Exchange will
issue an Information Circular informing members and member
organizations of the characteristics of the specific series and of
applicable Exchange rules, as well as of the requirements of Amex Rule
411 (Duty to Know and Approve Customers).\35\
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\35\ Id.
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k. Trading Halts. In addition to other factors that may be
relevant, the Exchange may consider factors such as those set forth in
Amex Rule 918C(b) in exercising its discretion to halt or suspend
trading in Index Fund Shares, including WEBS. These factors would
include, but are not limited to: (1) the extent to which trading is not
occurring in stocks underlying the index; or (2) whether other unusual
conditions or circumstances determental to the maintenance of a fair
and orderly market are present.\36\ In addition, trading in WEBS will
be halted if the
[[Page 23142]]
circuit breaker parameters under Amex Rule 117 have been reached.
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\36\ See Amex Rule 918C.
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2. Statutory Basis
The proposed rule change is consistent with Section 6(b) of the Act
\37\ in general and furthers the objectives of Section 6(b)(5) \38\ in
particular in that it is designed to prevent fraudulent and
manipulative acts and practices, to promote just and equitable
principles of trade, to foster cooperation and coordination with
persons engaged in regulating, clearing, settling, processing
information with respect to, and facilitating transaction in
securities, and, in general to protect investors and the public
interest.
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\37\ 15 U.S.C. 78f.
\38\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange believes the proposed rule change will impose no
burden on competition.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received from Members, Participants or Others
The Exchange neither solicited nor received written comments 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 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, D.C. 20549-
0609. 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 in Washington, D.C. 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-98-49 and should be submitted by May 20, 1999.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\39\
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\29\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 99-10760 Filed 4-28-99; 8:45 am]
BILLING CODE 8010-01-M