[Federal Register Volume 65, Number 120 (Wednesday, June 21, 2000)]
[Notices]
[Pages 38614-38615]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-15613]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-42925; File No. SR-Amex-00-11]


Self-Regulatory Organizations; Order Approving a Proposed Rule 
Change by the American Stock Exchange LLC Relating to Floor Official 
Rulings

June 13, 2000.

I. Introduction

    On February 22, 2000, the American Stock Exchange LLC (``Amex'' or 
``Exchange'') submitted to the Securities and Exchange Commission 
(``SEC'' or ``Commission''), pursuant to section 19(b)(1) of the 
Securities Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 
thereunder, \2\ a proposed rule change to require a written record of 
all floor official rulings. The proposed rule change was published in 
the Federal Register on April 25, 2000. \3\ The Commission did not 
receive any comments on the proposed rule change. This order approves 
the proposed rule change.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ Securities Exchange Act Release No. 42697 (April 18, 2000), 
65 FR 24234.
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II. Description of the Proposed Rule Change

    The Amex proposes to revise its Rule 22 to require a written record 
of all floor official rulings, including rulings involving complaints 
of harassment, intimidation or other activities in violation of 
Exchange rules by either specialists or traders. Currently, floor 
officials are not required to make a written record of their rulings 
unless specifically requested by a member to do so.
    The Exchange proposes to develop a form to be used by floor 
officials on which they will be able to record their rulings. Floor 
officials will be required to prepare the completed rulings form as 
soon as practicable after the decision is made and to submit their 
rulings on the Exchange form at the end of each trading day. Floor 
officials who fail to complete the written rulings form may be removed 
from their position or may become ineligible for reappointment.

III. Discussion

    The Commission finds that the proposed rule change is consistent 
with the requirements of the Act and the rules and regulations 
thereunder applicable to a national securities exchange. \4\ In 
particular, the Commission finds that the proposed rule change is 
consistent with Section 6(b)(5) of the Act \5\ because 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. Further, the 
Commission finds that the proposal is consistent with the requirements 
of section 6(b)(7) of the Act \6\ because it provides a fair procedure 
for disciplining members of the Exchange.
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    \4\ In approving this proposal, the Commission has considered 
its impact on efficiency, competition, and capital formation. 15 
U.S.C. 78c(f).
    \5\ 15 U.S.C. 78f(b)(5).
    \6\ 15 U.S.C. 78f(b)(7).
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    The Amex has proposed to modify its procedures for rulings made by 
floor officials. Rather than relying solely on verbal rulings made on 
the floor, Amex proposes to require floor officials to reduce their 
rulings to writing and to require floor officials to submit such 
written rulings to the Exchange. The Commission believes that requiring 
written rulings will assist in fostering a fair disciplinary procedure 
on the floor of the Exchange. A written ruling provides an official 
record of member conduct and the events that led to the floor 
official's decision. Members will be able to review the rulings and 
therefore, should be better able to conform their conduct to the 
requirements of the Exchange's rules. Further, members will have the 
floor official's written findings regarding the member's conduct and 
the basis upon which the floor official relied to make his or her 
decision. Members will continue to be able to appeal floor official 
decisions as is currently provided in Amex Rule 22. The Commission 
believes that a written record of the decision will enhance the 
fairness and efficiency of the appeals process.
    Further, the Exchange will have a written record of the alleged 
conduct, upon which it may base investigations or other inquiries. The 
proposal requires floor officials to make their written rulings as soon 
as practicable after the decision is made. This should lead to a more 
complete and full description of the conduct and the floor official's 
basis for his or her ruling because floor officials should complete 
their written rulings while the details are fresh in their memories. A 
written record should provide the Exchange with an enhanced mechanism 
by which to prevent violations of its rules as well as the violations 
of the Act. The Exchange will review all floor official rulings and 
determine if further investigation or inquiry is warranted. This should 
enable the Exchange to enforce its rules in a more fair and efficient 
manner, and provide the Exchange with a means to prevent fraudulent and 
manipulative acts on its floor.
    Finally, the proposal provides that if a floor official fails to 
submit his or her written findings to the Exchange at the end of each 
trading day, the floor official may be subject to removal or become 
ineligible for reappointment as a floor official. The Commission 
believes that this provision is appropriate because it seeks to enforce 
floor official compliance with the proposed rule change.

IV. Conclusion

    It is Therefore Ordered, pursuant to Section 19(b)(2) of the 
Act.\7\ that the proposed rule change (SR-Amex-00-11) is approved.
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    \7\ 15 U.S.C. 78s(b)(2).


[[Page 38615]]


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    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\8\
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    \8\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 00-15613 Filed 6-20-00; 8:45 am]
BILLING CODE 8010-01-M