[Federal Register Volume 65, Number 33 (Thursday, February 17, 2000)]
[Notices]
[Pages 8217-8220]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-3813]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-42409; File No. SR-Amex-00-01]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by the American Stock Exchange 
LLC Revising Its Floor Decorum Policy and Amending Its Minor Rule 
Violation Fine System (Rule 590)

February 10, 2000.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 
1934,\1\ notice is hereby given that on January 14, 2000, the American 
Stock Exchange LLC (``Amex'' or ``Exchange'') filed with the Securities 
and Exchange Commission (``Commission'') the proposed rule change as 
described in Items I, II, and III below, which Items have been prepared 
by the Amex. The Amex filed the proposal pursuant to Section 
19(b)(3)(A) of the Act,\2\ and Rule 19b-4(f)(6) thereunder,\3\ which 
renders the proposal effective upon filing with the Commission. 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\ 15 U.S.C. 78s(b)(3)(A).
    \3\ 17 CFR 240.19b-4(f)(6).
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I. Self-Regulatory Organization's Statement of the Terms of 
Substance of the Proposed Rule Change

    The Amex proposes to revise its Floor Decorum Policy and to amend 
its Minor Rule Violation Fine System (Rule 590) to establish a two-tier 
fine system imposing stiffer penalties for more serious violations. The 
text of the proposed rule change is as follows (words and characters in 
brackets are to be deleted; words and characters in italics are to be 
inserted):
* * * * *

D. Office Rules Minor Rule Violation Fine Systems Rule 590. Minor 
Violation Fine System

Part 2, Floor Decorum Violations
    (a) [Notwithstanding Article V, Section 1(b) of the Constitution, 
the Exchange may, subject to the requirements set forth herein, impose 
a fine on any member or member organization for any violation of the 
Exchange's floor decorum policy in the amount of $100 for a first 
offense, $300 for a second offense, and $500 for any subsequent 
offenses within a rolling 12-month period.] The Exchange's [f]Floor 
[d]Decorum [p]Policy, [which is published periodically] set forth at 
the end of this Part 2, [sets forth] delineates specific guidelines 
concerning the personal appearance and conduct of persons on the 
Trading Floor and generally prohibits any other act or omission which 
disrupts the orderly conduct of business on the Floor or which causes 
serious interference with the personal comfort or safety of other 
persons on the Floor.
    (b) Notwithstanding Article V, Section 1(b) of the Constitution, 
the Exchange may, subject to the requirements set forth herein, impose 
the following fines on any member or member firm for those violations 
of the Exchange's Floor Decorum Policy by a member or trading floor 
employee of a member firm listed below:

Violations

    1. Fighting involving any form of physical altercation (Paragraph 1 
of the Floor Decorum Policy, Respectful Conduct).
    2. Vandalism of property (Paragraph 9 of the Floor Decorum Policy, 
Vandalism of Property).

------------------------------------------------------------------------
                           Offense                                Fine
------------------------------------------------------------------------
1st Offense..................................................     $1,000
2nd Offense*.................................................      1,500
Subsequent Offenses*.........................................     2,000
------------------------------------------------------------------------
* Within a ``rolling'' 12-month period.

    (c) Notwithstanding Article V, Section 1(b) of the Constitution, 
the Exchange may, subject to the requirements set forth herein, impose 
the following fines on any member or member firm for any violation of 
the Exchange's Floor Decorum Policy by a member or trading floor 
employee of a member firm other than a violation set forth in Paragraph 
(b) above:

 
------------------------------------------------------------------------
                           Offense                                Fine
------------------------------------------------------------------------
1st Offense..................................................       $100
2nd Offense*.................................................        300
Subsequent Offenses*.........................................       500
------------------------------------------------------------------------
*Within a ``rolling'' 12-month period.

    [(b)](d) In addition to [floor decorum] violations of the 
Exchange's Floor Decorum Policy, the fines set forth in paragraph [(a)] 
(c) above may be imposed by the Exchange with respect to the following 
on-floor and off-floor operational violations:
    1. Failure of a specialist to be properly represented at the 
trading post at scheduled times to answer inquiries regarding the 
status of orders and to resolve equity DK notices.
    2. Failure of a specialist to respond to inquiries regarding 
unreported PER/

[[Page 8218]]

AMOS automated order routing market orders.
    3. Failure to submit option trade comparison data to the Exchange 
by specified deadlines.
    4. Failure to be represented in the Exchange's options 
reconciliation room at scheduled times to resolve rejected option 
trades.
    [(c)](e) In any action taken by the Exchange pursuant to Part 2 of 
this Rule, any person against whom a fine is imposed shall be served 
with a written statement, signed by a Floor Governor, [or] Exchange 
Official, or Floor Official, setting forth (i) the act or omission 
constituting the violation, (ii) the fine imposed for such violation, 
and (iii) the date by which such determination becomes final and such 
fine becomes due and payable to the Exchange, or such determination 
must be contested as provided below, such date to be not less than 20 
days after the date of service of the written statement.
    [(d)](f) If the person against whom a fine is imposed pays the 
fine, such payment will be deemed to be a waiver of such person's right 
to a hearing before an Exchange Disciplinary Panel and to an appeal to 
the Amex Adjudicatory Council.
    [(e)](g) Any person against whom a fine is imposed pursuant to Part 
2 of this Rule may contest the Exchange's determination by notifying 
the Secretary of the Exchange not later than the date by which such 
determination must be contested, at which point the matter shall become 
subject to the provisions of Article V, Section 1(b) of the 
Constitution. In any such formal disciplinary proceeding, if the 
Disciplinary Panel determines that the person charged is guilty of the 
floor decorum violation, the Panel shall be free to impose any one or 
more of the disciplinary sanctions authorized by the Exchange's 
Constitution and rules.
    (h) The $2,000 maximum fine for any violation set forth in 
Paragraph (b) above subsequent to a second offense may be imposed for a 
first or second offense if warranted under the circumstances in the 
view of the Floor Governor, Exchange Official, or Floor Official. The 
Floor Governor, Exchange Official, or Floor Official may also impose a 
lesser fine of $500 for a first offense, again, if circumstances 
warrant.
    [(f)](i) The $500 maximum fine for any violation set forth in 
Paragraph (c) above subsequent to a second offense may be imposed for a 
first or second offense if warranted under the circumstances in the 
view of the Floor Governor, [or] Exchange Official, or Floor Official. 
The Floor Governor, [or[ Exchange Official, or Floor Official may also 
impose a lesser fine of $50 for a first offense, again if circumstances 
warrant.
    (j) In addition to any fine imposed for vandalism of property under 
Paragraph (b) above, the Exchange may recover from a member or member 
firm any cost incurred by the Exchange as a result of such vandalism.
    [(g)] The Exchange shall issue an information circular to the 
membership from time to time setting forth the Exchange's floor decorum 
policy as to which it may impose fines as provided in Part 2 of this 
Rule. Such policy statement shall indicate the specific dollar amount 
that may be imposed as a fine hereunder with respect to any floor 
decorum violation.]

Amex Floor Decorum Policy

    All persons on the Trading Floor are required to comply with the 
following specific guidelines concerning personal appearance and 
conduct. Any other act or omission which disrupts the orderly conduct 
of business on the Floor or which causes serious interference with the 
personal comfort or safety of others is also prohibited.
    Violations of the Exchange's Floor Decorum Policy by members or 
member firm trading floor personnel may result in a member or member 
firm being charged before an Exchange disciplinary panel or fined under 
the Exchange's Floor Decorum Violation Fine System (Rule 590, Part 2).
    Exchange trading floor personnel who fail to comply with this 
policy may be subject to disciplinary action by the Exchange, including 
termination of employment.

1. Respectful Conduct

    All persons on the Trading Floor should conduct themselves in a 
manner suitable to a proper business environment.
    Fighting involving any form of physical or verbal altercation, 
including the use of unwarranted profanity, is strictly prohibited.

2. Standard Business Dress Code

     Shirts and Blouses: Shirts and blouses and other tops must 
be of an appropriate business style. Blouses (when appropriate) and 
shirts must be tucked in. Tee shirts, tennis shirts, golf shirts, polo 
shirts, tank tops, halter tops, strapless tops, cropped tops, and other 
informal wear are not permitted.
     Ties: While on the Trading Floor between the hours of 9:00 
a.m. and 4:45 p.m., men are required to wear ties which are knotted at 
the appropriate place and in an appropriate style. Clip-on ties must be 
connected to both sides of the collar.
     Pants and Slacks: Pants and slacks must be of appropriate 
business length and style. Casual pants or slacks, including shorts, 
cargo pants, and jeans of any type or color are not permitted.
     Skirts and Dresses: Skirts and dresses must be of 
appropriate business length and style. Casual skirts and dresses are 
not permitted.
     Jackets: Suit jackets, tailored jackets, sports jackets, 
or trading smocks provided or approved by the Exchange must be worn 
while on the Trading Floor. Those persons working in booths or inside 
posts may remove their jackets, but must wear their jackets while in 
transit on Trading Floor.
     Footwear: Footwear must be appropriate for business. 
Rubber-soled dress shoes are recommended. No extreme styles will be 
allowed on the Trading Floor.
     Grooming: Grooming must be neatly maintained.
     General: All clothing must present a neat appearance and 
be appropriately cleaned and pressed. No faded or torn clothing or 
informal wear of any kind is permitted. Any clothing that draws 
excessive attention or detracts from a business atmosphere is not 
acceptable attire on the Trading Floor and is prohibited.

3. Business Casual Days

    The Exchange may designate certain days as ``business casual'' 
days. On business casual days, all standard business dress guidelines 
are in force, with the following exceptions:
     Shirts and Blouses: Collared sport shirts, including 
collard tennis, polo, or golf shirts are permitted.
     Ties: Ties are not required.
     Pants and Slacks: Casual pants and slacks, including 
``chino'' type slacks are permitted if they are of appropriate business 
length, clean and neatly pressed. Shorts, cargo pants, and jeans of any 
type or color are not permitted.

4. Smoking

    Smoking is not permitted on the Trading Floor or any other area of 
the Exchange Building at any time, except for the following designated 
smoking areas:
     The Members' lounge located on the ground floor next to 
the Members' entrance;
     The lounge located between the main Trading Floor and the 
Red Room; and Private offices.

5. Exchange Identification

    Members and member firm and Exchange trading floor personnel will

[[Page 8219]]

not be allowed on the Trading Floor without proper Exchange 
identification. All persons on the Trading Floor must display their 
identification at all times while on the Trading Floor in a prominent 
and visible manner.
    Exchange identification shall not be altered or defaced in any way.
    Visitors and service people must have their floor admission pass on 
display at all times.

6. Food and Drink

    Food and drink, while allowed on the Trading Floor, should be kept 
and consumed in a way that does not interfere with others. Nuts and 
seeds which must be shelled prior to consumption are prohibited. All 
drinks should be in cans or covered containers. Food and drink may not 
be consumed while in transit on the Floor.
    Consumption of alcoholic beverages on the Trading Floor is 
prohibited.

7. Trash and Litter

    All debris resulting from the consumption of food and drink, and 
other non-business trash, must be properly disposed of. Throwing or 
dropping objects on the Floor, including food and drink, is strictly 
prohibited.
    While paper of a business nature may be affixed to appropriate wall 
fixtures on the Floor, tape and other adhesive material may not be used 
to do so.

8. Running on the Floor

    In order to prevent injury to persons on the Trading Floor, running 
will not be allowed at any time.

9. Vandalism of Property

    The abuse, destruction, or theft (``Vandalism``) of any property on 
the Exchange's premises, whether or not owned by the Exchange, is a 
serious offense and will be dealt with appropriately, including prompt 
disciplinary action and possible criminal prosecution.

10. Members' Facilities

    Members' facilities, including the members' area of the cafeteria, 
the members' entrance and lounge, and members' restroom and telephones, 
are for the use of members only.

11. Clerks on the Trading Floor

    All clerks are prohibited from entering onto or crossing the 
Trading Floor from 5 minutes prior to the opening until 30 minutes 
after the opening and from 30 minutes before the closing until 5 
minutes after the closing.
    Firms will be issued a limited number of clip-on Clerk Floor Access 
badges which will be required for a clerk to gain access to the Floor. 
The badge shall identify the member firm rather than the clerk. This 
will allow the Exchange to control the number of clerks on the Floor at 
any one time.
    Clerks may not directly deliver orders to brokers in trading crowds 
or to specialists at trading posts.

12. Visitors

    Visitors are permitted on the Trading Floor between 10:00 a.m. and 
3:30 p.m., unless special prior arrangement are made through a Floor 
Governor. Signed approval from an Exchange Official or Floor Governor 
is required for the admission of visitors. These requirements do not 
apply to visitors from listed companies and other guests of the 
Exchange.
    All visitors must remain with their host at all times and, with the 
exception of ties, all visitors must comply with the dress requirements 
outlined above.
    All visitors mut be at least twelve years of age. Children admitted 
as visitors will be permitted on the Floor only for a limited period of 
time (not all day).

13. Tube Carriers

    All large carriers must be properly maintained by the members firms 
using them. Carriers are not to be discarded or removed from the 
Trading Floor.

14. General

    Under emergency or unusual circumstances, a Floor Governor or 
Senior Floor Official in his discretion may waive certain of the above 
requirements.
    Floor Officials, Exchange Officials, Floor Governors, and Exchange 
Supervisory Personnel are all expected to strictly enforce the 
Exchange's Floor Decorum Policy.
* * * Commentary
    .01-.04 (No change).
* * * * *

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 place 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 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    Amex Rule 590, Part 2, currently sets forth a system of fines for 
the disposition of violations of the Exchange's Floor Decorum Policy, 
which, until now, has been published periodically by the Exchange. 
Under the current system, Floor Governors and Exchange Officials are 
authorized to charge members and member firms with floor decorum 
violations and to assess fines of $100 for a first offense, $300 for a 
second offense, or $500 for any subsequent offense within a rolling 12-
month period. The maximum fine of $500 for a third and subsequent 
offenses may be imposed for a first or second offense if warranted by 
circumstances. A lesser fine of $50 may also be imposed for a first 
offense, if circumstances warrant the reduction. The member or member 
firm may plead guilty and pay the fine or contest the charge and 
request a formal hearing before an Exchange Disciplinary Panel.
    The Exchange has recently initiated plans to improve the general 
appearance and conduct of people on the Amex Trading Floor. As a 
result, certain revisions to the Exchange's Floor Decorum Policy are 
now being proposed.\4\ Under the proposal, the standard business dress 
code set forth in the Policy would clarify what business attire is 
deemed acceptable on the Floor. The dress code for ``business casual 
days'' would also be incorporated into the Floor Decorum Policy. To 
incorporate other minor changes as well, the proposed rule change would 
add the entire text of the Floor Decorum Policy to the Amex Rulebook at 
the end of Rule 590, Part 2, to make it more visible to members and 
member firms, ending the current practice of periodically sending 
updates to members and member firms in the form of Information 
Circulars.
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    \4\ In Paragraph 11 of the proposed Floor Decorum Policy, the 
Amex has stated that ``[c]lerks may not directly deliver orders to 
brokers in trading crowds or to specialists at trading posts.'' In 
an attempt to reduce congestion on the trading floor, the Amex has 
made it the policy that the delivery of orders to specialists shall 
be the responsibility of broker/dealers, although clerks may have 
access to the trading floor in order to resolve discrepancies, or 
``don't-know'' problems, arising from the booking of orders. 
Telephone conversation between Bruce Ferguson, Associate General 
Counsel, Amex, and Matthew Boesch, Paralegal, Office of Market 
Supervision, Division of Market Regulation, Commission, on February 
9, 2000.
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    In addition to the above revisions to the Floor Decorum Policy, 
Part 2 of Rule 590 is being amended to impose a new

[[Page 8220]]

two-tier fine system for violations of the Floor Decorum Policy. The 
Exchange believes that certain floor decorum violations should be 
treated as more serious than others, with stiffer fines imposed for 
those violations. The Amex proposes that the following violations be 
subject to a fine of $1,000 for a first offense, $1,500 for a second 
offense, and $2,000 for any subsequent offense within a rolling 12-
month period:
     Fighting involving any form of physical altercation 
(Paragraph 1 of the Floor Decorum Policy, Respectful Conduct); and
     Vandalism of property (Paragraph 9 of the Floor Decorum 
Policy, Vandalism of Property).

The maximum fine of $2,000 for a third or subsequent offense may be 
imposed for a first or second offense if warranted by circumstances. A 
lesser fine of $500 may also be imposed for a first offense, if 
circumstances warrant. Moreover, in addition to any fine imposed for 
vandalism of property, the Exchange may recover from a member or member 
firm any cost incurred by the Exchange as a result of such 
vandalism.\5\
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    \5\ The fines imposed for all other violations of the Exchange's 
Floor Decorum Policy, other than those more serious violations 
described above, will remain unchanged by the proposed rule change, 
ranging from $100 for a first offense to $500 for a third or 
subsequent offense within a rolling 12-month period.
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    Finally, it is proposed that, in addition to Floor Governors and 
Exchange Officials, Floor Officials will be allowed to levy fines for 
violation of the Floor Decorum Policy. This proposed change would 
appreciably expand the number of persons on the Floor available to 
enforce the Policy.
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)(6) \6\ in 
particular in that it is intended to assure that the rules of the 
Exchange provide that its members and persons associated with its 
members shall be appropriately disciplined for violation of the 
provisions of the Act, the rules or regulations thereunder, or the 
rules of the Exchange.
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    \6\ 15 U.S.C. 78f(b)(6).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Amex believes that the proposed rule change will not impose any 
burden on competition.

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

    Written comments were neither solicited nor received with respect 
to the proposed rule change.

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

    Because the foregoing proposed rule change does not:
    (i) Significantly affect the protection of investors or the public 
interest;
    (ii) Impose any significant burden on competition; and
    (iii) Become operative for 30 days from the date on which it was 
filed, or such shorter time as the Commission may designate, and since 
the Amex has given the Commission written notice of its intent to file 
the proposed rule change, along with a brief description and text of 
the proposed rule change, at least five business days prior to the date 
of filing of the proposed rule change, it has become effective pursuant 
to Section 19(b)(3)(A) of the Act \7\ and Rule 19b-4(f)(6) thereunder. 
\8\ 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. \9\
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    \7\ 15 U.S.C. 78s(b)(3)(A).
    \8\ 17 CFR 240.19b-4(f)(6).
    \9\ In reviewing this proposal, the Commission has considered 
the proposal's impact on efficiency, competition, and capital 
formation. 15 U.S.C. 78c(f).
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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, 450 Fifth Street, N.W., Washington, 
D.C. Copies of such filing will also be available for inspection and 
copying at the principal office of the Amex. All submissions should 
refer to the file number in the caption above and should be submitted 
by March 9, 2000.

    For the Commission by the Division of Market Regulation, 
pursuant to delegated authority. \10\
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    \10\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 00-3813 Filed 2-16-00; 8:45 am]
BILLING CODE 8010-01-M