[Federal Register Volume 65, Number 49 (Monday, March 13, 2000)]
[Notices]
[Pages 13350-13351]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-6008]


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SECURITIES AND EXCHANGE COMMISSION

  

[Release No. 34-42498; File No. SR-Amex-99-21]


Self-Regulatory Organizations; Order Approving a Proposed Rule 
Change by the American Stock Exchange LLC Amending Section 106 of the 
Amex Company Guide

March 6, 2000.

I. Introduction

    On June 10, 1999, the American Stock Exchange LLC (``Exchange'' or 
``Amex''), submitted to the Securities Exchange Act of 1934 (``Act'') 
\1\ and Rule 19b-4 thereunder,\2\ a proposed rule change amending 
Section 106 of the Amex Company Guide. The Exchange filed Amendments 
No. 1 \3\ and No. 2 \4\ to the proposed rule change on June 14, 1999 
and December 1, 1999, respectively. The proposed rule change, as 
amended, was published for comment in the Federal Register on January 
24, 2000.\5\ The Commission received no comments on the proposal. This 
order approves the proposal, as amended.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ Letter from Scott Van Hatten, Amex, to Richard Strasser, 
Assistant Director, Division of Market Regulation (``Division''), 
Commission, dated June 11, 1999 (``Amendment No. 1''). The Exchange 
originally filed the proposed rule change under Section 19(b)(3)((A) 
of the Act. Pursuant to Commission staff's request, the Exchange 
refiled the proposed rule change under Section 199b)(2) of the Act.
    \4\ Letter from Scott Van Hatten, Amex, to Nancy Sanow, 
Assistant Director, Division, Commission, dated December 1, 1999 
(``Amendment No. 2''). Amendment No. 2 states that the Exchange will 
issue a circular prior to trading any new index warrant pursuant to 
Rule 19b-4(e) to (i) highlight specific risks associated with 
warrants on new indexes and remind members that index warrants are 
direct obligations of the issuer, which are not subject to a 
clearing house guarantee, (ii) clarify that index warrants may only 
be sold to accounts approved for standardized options trading, and 
(iii) clarify that the Exchange's options suitability standards 
apply to index warrants. Amendment No. 2 also states that Amex Rules 
1100 through 1110, which govern issuer eligibility, margin 
requirements, discretionary accounts, supervision of accounts, 
position and exercise limits, reportable positions, and trading 
halts and suspensions, will apply to index warrants. Finally, 
Amendment No. 2 states that the Exchange's enhanced surveillance 
procedures will continue to apply to surveillance of index warrants 
traded pursuant to rule 19b-4(e).
    \5\ Securities Exchange Act Release No. 42342 (Jan. 14, 2000), 
65 FR 3750.
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II. Description of the Proposal

    The Exchange proposes to amend Section 106 of the Amex Company 
guide to provide for the trading of stock index industry group warrants 
\6\ pursuant to new Rule 19b-4(e) \7\ under the Act. Section 106 of the 
Amex Company Guide currently authorizes the Exchange to trade warrants 
on a stock index industry group pursuant to Section 19(b)(3)(A) of the 
Act provided that the index meets the generic criteria set forth in 
Commentary .02 to Amex Rule 901C.\8\ As discussed in the New Products 
Release, however, the Exchange would no longer be required to submit, 
pursuant to new Rule 19b-4(e) under the Act, a proposed rule change to 
trade warrants on a new stock index industry group provided the index 
meets the generic criteria set forth in Commentary .02 to Amex Rule 
901C.
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    \6\ Amex Rule 900C defines ``Stock Index Industry Group'' as a 
stock index group relating to a stock index which reflects 
representative stock market values or prices of a particular 
industry or related industries (also referred to as a ``narrow based 
index'').
    \7\ See Securities Exchange Act Release No. 40761 (Dec. 8, 
1998), 63 FR 70952 (Dec. 22, 1998) (``New Products Release``).
    \8\ The Commission granted approval to list and trade narrow-
based index warrants pursuant to Section 19(b)(3)(A) in Securities 
Exchange Act Release No. 37007 (March 21, 1996), 61 FR 14165 (March 
29, 1996).
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    In the New Products Release, the Commission noted that in order to 
rely on the amendment and not submit filings pursuant to Section 
19(b)(3)(A) for warrants that satisfy the criteria of rule 901C, a 
self-regulatory organization would be required to submit a proposed 
rule change for Commission approval to eliminate the Section 
19(b)(3)(A) rule filing requirement from its existing rules. \9\ 
Accordingly, to enable the Exchange to use new Rule 19b-4(e), the 
Exchange proposes to eliminate the Section 19(b)(3)(A) rule filing 
requirement from Section 106 of the Amex Company Guide.\10\ Amex Rule 
901c will remain unchanged. The Exchange represents that the use of new 
Rule 19b-4(e) will be in accordance with the terms and conditions set 
forth in the New Products Release.
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    \9\ See supra n. 7, at n. 89.
    \10\ The Commission approved a similar change to Amex Rule 901C 
to permit the trading of narrow-based index options pursuant to new 
Rule 19b-4(e). See Securities Exchange Act Release No. 41091 (Feb. 
23, 1999), 64 FR 10515 (March 4, 1999).
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III. Discussion

    The Commission finds that the proposed rule change is consistent 
with the requirements of Section 6(b)(5) of

[[Page 13351]]

the Act \11\ and the rules and regulations thereunder applicable to a 
national securities exchange, in that it is designed to facilitate 
securities transactions and to remove impediments to and perfect the 
mechanism of a free and open market.\12\ The Commission believes that 
proposed rule change will significantly reduce the Exchange's 
regulatory burden and allow it to compete more effectively in today's 
marketplace by facilitating the listing and trading of stock index 
industry group warrants that meet the generic criteria of Commentary 
.02 to Exchange Rule 901c. The commission also believes that the 
proposed rule change will benefit investors by enabling the Exchange to 
more quickly provide them with tailored products that directly meet 
their evolving investment needs. The Commission notes that the New 
Products Release authorizes the Exchange to list and trade certain 
derivative securities without first riling with the Commission a 
proposed rule change pursuant to Section 19(b)(3)(A) of the Act, but 
requires the Exchange to eliminate references to these filing 
requirements before it can rely on Rule 19b-4(e). The Commission also 
notes that the Exchange's existing trading rules, procedures, 
surveillance programs, and listing standards will apply to generic 
stock index industry group warrants listed and traded on the Exchange 
and that the Exchange has represented that it will comply with the 
terms and conditions of the New Product Release.
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    \11\ 15 U.S.C. 78f(b)(5).
    \12\ In approving this rule change, the Commission has 
considered the proposal's impact on efficiency, competition, and 
capital formation, consistent with Section 3 of the Act. 15 U.S.C. 
78c(f).
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IV. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the Act, 
\13\ that the proposed rule change (SR-Amex-99-21), as amended, is 
approved.
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    \13\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority. \14\
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    \14\ 17 CFR 200.30-3(a)(12).
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Jonathan G. Katz,
Secretary.
[FR Doc. 00-6008 Filed 3-10-00; 8:45 am]
BILLING CODE 8010-01-M