[Federal Register Volume 64, Number 111 (Thursday, June 10, 1999)]
[Notices]
[Pages 31331-31332]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-14682]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-41472; File No. SR-Amex-99-14]


Self-Regulatory Organizations; Notice of Filing of a Proposed 
Rule Change by the American Stock Exchange LLC Relating to a Reduction 
in the Morgan Stanley High Technology Index Value

June 2, 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 April 13, 1999, the American Stock Exchange LLC (``Amex'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission'') the proposed rule changes 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 Amex proposes to split the Morgan Stanley High Technology Index 
(``Index'') to one-third its current value.

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 Amex 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 Amex 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
    The Exchange proposes to split the Morgan Stanley High Tech Index 
to one-third its current value and temporarily increase its position 
and exercise limits to three times their current levels as discussed 
more fully below. Position and exercise limits will revert to their 
applicable limits at the expiration of the furthest LEAP expiration 
month as established on the date of the split.
    Morgan Stanley High Tech Index: On September 26, 1995, the 
Commission approved the Exchange's request to permit options trading on 
the Index.\3\ Initially, the aggregate value of the stocks contained in 
the Index was reduced by a divisor to establish an index benchmark 
value of 200. The Index's current value, as of the close on April 7, 
1999, taken from Bloomberg Financial Markets Commodities News

[[Page 31332]]

and rounded to the nearest whole number, was approximately 1075.
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    \3\ Securities Exchange Act Release No. 36283 (Sept. 26, 1995), 
60 FR 51825 (Oct. 3, 1995).
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    As a consequence of the rising of the Index's value, premium levels 
for options on the Index have also risen. These higher premium levels 
have discouraged retail investors and some market professionals from 
trading options on the Index. The Exchange believes that decreasing the 
value of the Index may make the Index options more attractive to retail 
investors and other market professionals and therefore more competitive 
with other products in the marketplace. As a result, the Exchange is 
proposing to decrease the Index to one-third its present value.
    To decrease the Index's value, the Exchange will triple the divisor 
used in calculating the Index. No other changes are proposed as to the 
components of the Index, its method of calculation (other than the 
change in the divisor), expiration style of the option, or any other 
Index specification.
    The lower valued Index will result in substantial lowering of the 
dollar values of option premiums for Morgan Stanley High Technology 
contracts. The Exchange plans to adjust outstanding series similar to 
the manner in which equity options are adjusted for a 3-for-1 stock 
split. On the effective date of the split ``ex-date,'' the number of 
outstanding Morgan Stanley option contracts will be tripled and strike 
prices reduced by a factor of three.
    Position and Exercise Limits: Currently, the Index's position and 
exercise limits are equal to 15,000 contracts on the same side of the 
market. The Exchange proposes to triple the Index's position and 
exercise limits to 45,000 contracts on the same side of the market. 
This change will be made in conjunction with the simultaneous reduction 
of the Index's value and the tripling of the number of contracts.
    Because the new limits will be equivalent to the Index's present 
limits, there is no additional potential for manipulation of the Index 
or the underlying securities. Further, an investor who is currently at 
the 15,000 contract limit will, as a result of the index value 
reduction, automatically hold 45,000 contracts to correspond with the 
lowered Index value. The position and exercise limits will revert to 
their then applicable limits at the expiration of the furthest non-LEAP 
(Long Term Equity Anticipation Security) expiration month as 
established on the date of the split.
2. Basis
    The proposed rule change is consistent with Section 6(b) of the Act 
\4\ in general, and furthers the objectives of Section 6(b)(5) \5\ 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 facilitating transactions in securities, and to 
remove impediments to and perfect the mechanism of a free and open 
market and a national market system.
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    \4\ 15 U.S.C. 78f(b).
    \5\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    The Exchange did not solicit or receive written comments on 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, NW., Washington, DC 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, 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-99-14 and should 
be submitted by July 1, 1999.

    For the Commission by the Division of Market Regulation, 
pursuant to delegated authority.\6\
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    \6\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 99-14682 Filed 6-9-99; 8:45 am]
BILLING CODE 8010-01-M