[Federal Register Volume 65, Number 138 (Tuesday, July 18, 2000)]
[Notices]
[Pages 44552-44553]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-18071]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-43016; File No. SR-Amex-00-19]


Self-Regulatory Organizations; Order Approving Proposed Rule 
Change by the American Stock Exchange LLC To Establish an Interim Seat 
Allocation Program

July 7, 2000.

I. Introduction

    On April 14, 2000, the American Stock Exchange LLC (``Amex'' or 
``Exchange'') submitted to the Securities and Exchange Commission 
(``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 establish an Interim Seat Allocation Program. 
The proposed rule change was published for comment in the Federal 
Register on June 7, 2000.\3\ The Commission received no comments on the 
proposal. This order approves the Amex's proposal.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ Securities Exchange Act Release No. 42853 (May 30, 2000), 65 
FR 36182.
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II. Description of the Proposal

    Active seats on the Exchange are assigned to a person, not a firm. 
Consequently, when a person to whom a seat is assigned is absent from 
the trading floor, the seat cannot be used to participate in trading 
activities.
    The Exchange has proposed an Interim Seat Allocation Program, which 
will allow an active member (i.e., the person to whom the seat has been 
assigned and who actively participates in securities transactions on 
the Exchange floor) temporarily to allocate the membership to an 
interim member when the active member is absent from the trading floor. 
An interim member must be approved for membership in accordance with 
the Amex's Constitution and Rules. The Exchange also will require prior 
approval of the interim member by the lessor of the seat. An active 
member must pay an interim member status annual fee of $1,500 for the 
right make any allocations and a flat fee of $250 for each allocation. 
After an interim member has been approved for membership and the active 
member has paid the necessary fees and submitted the appropriate form 
to the Exchange's Membership Services Department, the active member may 
allocate its seat to the interim member. A temporary allocation may be 
for a minimum of one day to a maximum of one year.
    Contracts made on the trading floor by an interim member will be 
considered contracts made by the active member, and the active member 
will be responsible for all obligations to the Exchange and all 
obligations to other members resulting from Exchange transactions, or 
transactions in other securities, conducted by the interim member. The 
owner of the membership, rather than the interim member, will be deemed 
to be the member of the Amex for purposes of participating in any 
distribution of the assets and funds of the Exchange in the event of 
any voluntary or involuntary final liquidation, dissolution, or winding 
up of the Exchange's affairs. The owner of the membership or active 
member (as the case may be), rather than the interim member, would be 
the Participant in the Exchange's Gratuity Fund and entitled to the 
benefits described in Article IX of the Exchange Constitution. In 
addition, and interim member may not vote the active member's seat or 
serve on an Exchange committee in the place of the active member.
    If an interim member is not allocated the membership held by the 
active member within one year of approval by

[[Page 44553]]

the Exchange's Membership Services Department, the individual's 
eligibility for interim membership would be terminated. To become 
eligible again for interim member status, the individual would have to 
requalify for membership in accordance with the Constitution and Rules 
of the Exchange.

III. Discussion

    After careful review, the Commission finds that the proposed rule 
change is consistent with the requirements of the Act.\4\ In 
particular, the Commission finds the proposal is consistent with 
Sections 6(b)(4) and 6(b)(5) of the Act.\5\
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    \4\ In approving this proposal, the Commission has considered 
its impact on efficiency, competition, and capital formation. See 15 
U.S.C. 78c(f).
    \5\ 15 U.S.C. 78f(b)(4) and (b)(5).
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    Section 6(b)(5) of the Act \6\ requires, among other things, that 
the rules of an exchange be designed to promote just and equitable 
principles of trade and to protect investors and the public interest. 
The Commission believes that the proposed Interim Seat Allocation 
program will promote just and equitable principles of trade and will 
protect the public interest by maximizing Amex members' use of personal 
and capital resources. Currently, seats on the Exchange may not be 
available for use during absences by active members due, for example, 
to vacation or illness. Allowing interim members to fill these seats, 
and to use then to continue trading, will provide greater liquidity on 
the Exchange than may exist otherwise. Furthermore, the proposed rule 
change is designed to protect investors because interim members must be 
approved for membership in accordance with the Exchange's rules in the 
same manner as active members. The public interest and investor 
protection will also be served by the requirement that the active 
member bear responsibility for all obligations to the Exchange and to 
other members resulting from Exchange transactions conducted by an 
interim member.
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    \6\ 15 U.S.C. 78f(b)(5).
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    Section 6(b)(4) of the Act \7\ requires that the rules of the 
exchange provide for the equitable allocation of reasonable dues, fees, 
and other charges among its members. All of the Exchange's members that 
wish to avail themselves of the Interim Seat Allocation Program will be 
subject to the same fees, and these fees do not appear to be 
unreasonable. Therefore, the Commission believes that the Exchange's 
proposal meets the requirements of Section 6(b)(4) of the Act.

IV. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\8\ that the proposed rule change (SR-Amex-00-19) is approved.
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    \7\ 15 U.S.C. 78f(b)4.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\9\
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    \9\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary
[FR Doc. 00-18071 Filed 7-17-00; 8:45 am]
BILLING CODE 8010-01-M