[Federal Register Volume 65, Number 65 (Tuesday, April 4, 2000)]
[Notices]
[Pages 17685-17686]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-8194]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-42582; File No. SR-Amex 99-42]


Self-Regulatory Organizations; Notice of Filing and Order 
Granting Accelerated Approval of Proposed Rule Change by the American 
Stock Exchange LLC Revising Section 107B of the Amex Company Guide

March 27, 2000
    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 October 13, 1999, the American Stock Exchange LLC (``Amex'' or 
``Exchange'') filed with the Securities and Exchange Commission the 
proposed rule change as described in Items I, and II below, which Items 
have been prepared by the Amex. On December 1, 1999, the Amex submitted 
Amendment No. 1 to the proposed rule change.\3\ The Commission is 
publishing this notice and order to solicit comments on the proposed 
rule change, as amended, from interested persons and to grant 
accelerated approval on the proposed rule change, as amended.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Letter from Scott Van Hatten, Legal Counsel, Amex, to 
Nancy Sanow, Senior Special Counsel, Division of Market Regulation, 
Commission, dated December 1, 1999 (``Amendment No. 1''). Amendment 
No. 1 proposed to cap the maximum number of underlying equity 
securities that may be linked to an ELN at 20.
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I. Self-Regulatory Organization's Statement of the Terms of 
Substance of the Proposed Rule Change

    The Exchange seeks to revise Section 107B of the Amex Company Guide 
concerning the listing standards for the listing of equity linked notes 
(``ELNs''). The Exchange proposes to allow more than one equity 
security to be linked to an ELN, thereby creating a basket of equity 
securities to be linked to an ELN, provided that each of the underlying 
equity securities meets the listing standards for ELNs set forth in 
Section 107B. The Exchange proposes to cap the maximum number of 
underlying equity securities that may be linked to an ELN at 20.\4\
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    \4\ Id.
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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 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 III 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
    On May 20, 1993, the Exchange received Commission approval to adopt 
Section 107B of the Amex Company Guide to provide for the listing and

[[Page 17686]]

trading of ELNs, hybrid instruments whose values are linked to the 
performance of highly capitalized, actively traded equity 
securities.\5\ ELNs are non-convertible debt securities. Their value is 
derived from the value of another issuer's common stock or non-
convertible preferred stock.
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    \5\ Securities Exchange Act Release No. 32343 (May 20, 1993), 58 
FR 30833 (May 27, 1993).
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    Section 107B of the Amex Company Guide sets forth the Exchange's 
listing standards for ELNs. Specifically, Section 107B requires that 
the equity securities linked to ELNs each must have (i) a minimum 
market capitalization of $3 billion and during the 12 months preceding 
listing shown to have traded at least 2.5 million shares; (ii) a 
minimum market capitalization of $1.5 billion and during the 12 months 
preceding listing shown to have traded at least 10 million shares; or 
(iii) a minimum market capitalization of $500 million and during the 12 
months preceding listing shown to have traded at least 15 million 
shares.
    The Exchange occasionally receives proposals to list ELNs that are 
linked to more than one equity security. The Exchange believes that 
linking more than one equity security to an ELN is appropriate only if 
each of the underlying securities meets the listing standards for ELNs 
set forth in Section 107B. Furthermore, the Exchange proposes to cap 
the maximum number of underlying securities that may be linked to an 
ELN at 20.\6\ Accordingly, the Exchange proposes to amend the text of 
Section 107B to clarify that ELNs may be linked to more than one equity 
security only if all of the underlying equity securities individually 
satisfy the applicable listing standards set forth in Section 107B of 
the Amex Company Guide.
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    \6\ See supra, note 3.
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2. Statutory Basis
    The Exchange represents that the proposed rule change is consistent 
with Section 6(b) of the Act,\7\ in general, and furthers the 
objectives of Section 6(b)(5),\8\ in particular, in that it is designed 
to prevent fraudulent and manipulative acts and practices, promote just 
and equitable principles of trade, foster cooperation and coordination 
with persons engaged in facilitating transactions in securities, and 
remove impediments to and perfect the mechanism of a free and open 
market and a national market system.
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    \7\ 15 U.S.C. 78f(b).
    \8\ 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 the proposed rule change will not impose 
any burden on competition that is not necessary or appropriate in 
furtherance of the purposes of the Act.

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

    The Exchange has neither solicited nor received written comments on 
the proposed rule change.

III. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change, as amended, is consistent with the Act. Additionally, the 
Commission seeks comment on whether the rule should contain a maximum 
number of underlying securities linked on an ELN. If so, is 20 an 
appropriate maximum number of underlying equity securities? Persons 
making written submissions should file six copies thereof with the 
Secretary, Securities and Exchange Commission, 450 Fifth Street, N.W., 
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 Section, 450 Fifth Street, NW, 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 the File 
No. SR-Amex-99-42 and should be submitted by April 25, 2000.

IV. Commission's Findings and Order Granting Accelerated Approval 
of Proposed Rule Change

    After careful consideration, the Commission finds, for the reasons 
set forth below, that the Amex's proposal is consistent with the 
requirements of the Act and the rules and regulations thereunder. 
Specifically, the Commission finds that the proposal is consistent with 
Section 6(b)(5) of the Act.\9\ Section 6(b)(5) of the Act requires that 
the rules of a national securities exchange be designed to prevent 
fraudulent and manipulative acts and practices, promote just and 
equitable principles of trade, foster cooperation and coordination with 
persons engaged in facilitating transactions in securities, and remove 
impediments to and perfect the mechanism of a free and open market and 
a national market system. The proposal is consistent with Section 
6(b)(5) of the Act because by requiring each of the equity securities 
linked to ELNs to meet the listing standards set forth in Amex Company 
Guide Section 107B, the integrity of the security is strengthened and 
the likelihood and susceptibility of ELN baskets to manipulation is 
reduced.\10\
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    \9\ 15 U.S.C. 78f(b)(5).
    \10\ In approving this proposal, the Commission has considered 
its impact on efficiency, competition, and capital formation. 15 
U.S.C. 78c(f).
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    The Commission finds good cause for approving the proposed rule 
change prior to the 30th day after the date of publication of notice 
thereof in the Federal Register. The Commission finds that because each 
of the equity securities linked to ELNs must meet the Exchange's 
listing standards for ELNs, increased financial stability in the 
marketplace and enhanced market integrity are provided for. Moreover, 
the Commission finds that these listing standards are designed to 
reduce the likelihood and susceptibility of ELN baskets to 
manipulation. Therefore, the Commission finds good cause for approving 
the proposed rule change on an accelerated basis.
    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\11\ proposed rule change (SR-Amex-99-42), as amended, is hereby 
approved on an accelerated basis.
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    \11\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\12\
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    \12\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 00-8194 Filed 4-3-00; 8:45 am]
BILLING CODE 8010-01-M