[Federal Register Volume 65, Number 120 (Wednesday, June 21, 2000)]
[Notices]
[Pages 38615-38616]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-15617]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-42931; File No. SR-AMEX-99-45]


Self-Regulatory Organizations; Notice of Filing of Proposed Rule 
Change by the American Stock Exchange LLC To Increase the Maximum Order 
Size Eligible for Automatic Execution

June 13, 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 25, 1999, the American Stock Exchange LLC (``Amex'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``SEC'' or ``Commission'') the proposed rule change as described in 
Items I, II, and III below, which Items have been prepared by the Amex. 
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 increase to seventy-five, the maximum 
permissible number of equity and index option contracts in an order 
executable through the AUTO-EX system. The text of the proposed rule 
change is available at the Office of the Secretary, Amex and at the 
Commission.

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 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    In 1985, the Exchange implemented the AUTO-EX system, which 
automatically executes public customer market and marketable limit 
orders in options at the best bid or offer displayed at the time the 
order is entered into the Amex Order File (``AOF''). There are, 
however, limitations on the number of option contracts that can be 
entered into or executed by these systems. AOF, which handles limit 
orders routed to the specialist's book as well as orders routed to 
AUTO-EX, was recently increased to allow for the entry of orders up to 
250 option contracts.\3\ Generally, however, AUTO-EX is only permitted 
to execute equity option orders and index option orders of up to fifty 
contracts.\4\ Thus, market and marketable limit orders of more than 
fifty contracts are generally routed by AOF to the specialist's book.
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    \3\ See Securities Exchange Act Release No. 42128 (November 10, 
1999), 64 FR 63836 (November 22, 1999).
    \4\ See Securities Exchange Act Release No. 42094 (November 3, 
1999), 64 FR 61675 (November 12, 1999). While the maximum 
permissible number of contracts in an option order executable 
through AUTO-EX is generally fifty contracts, there are three 
exceptions: the Institutional, Japan and S&P MidCap 400 Indexes 
allow ninety-nine contract orders.
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    The Exchange now proposes to increase to seventy-five, the maximum 
permissible number of equity and index option contracts in an order 
that can be executed through the AUTO-EX system.\5\ It is proposed that 
this increase in permissible order size be implemented on a case-be-
case basis for an individual option class or for all option classes 
when two floor governors or senior floor officials deem such an 
increase appropriate. The Exchange represents that it has sufficient 
systems capacity necessary to accommodate implementation of the 
proposed increase.
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    \5\ Order size maximum levels for Institutional, Japan, and S&P 
MidCap 400 Indexes (Id.) would remain at ninety-nine contracts under 
this proposal.
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    The Exchange represents that AUTO-EX has been extremely successful 
in enhancing execution and operational efficiencies during emergency 
situations and during other, non-emergency situations for certain 
option classes. The Exchange believes that automatic executions of 
orders for up to seventy-five contracts will allow for the quick, 
efficient execution of public customer orders.
2. Statutory Basis
    The proposed rule change is consistent with Section 6(b)\6\ of the 
Act in general and furthers the objectives of Section 6(b)(5)\7\ 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.
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    \6\ 15 U.S.C. 78f(b).
    \7\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    Amex 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

    No written comments were solicited or received with respect to 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 self-regulatory organization 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. Solicitations of Comments

    The Commission invites interested persons to submit written data, 
views, and arguments concerning the foregoing, including whether the 
proposed rule change is consistent with the Act. In addition, the 
Commission seeks comment concerning whether the proposed rule change 
fosters quote competition among options market professionals and 
enhances investors' interests in obtaining the best available price.
    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

[[Page 38616]]

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-99-45 and should be 
submitted by July 12, 2000.

    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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Jonathan G. Katz,
Deputy Secretary.
[FR Doc. 00-15617 Filed 6-20-00; 8:45 am]
BILLING CODE 8010-01-M