[Federal Register Volume 65, Number 152 (Monday, August 7, 2000)]
[Notices]
[Pages 48262-48264]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-19910]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-43092; File No. SR-Amex-00-36]


Self-Regulatory Organizations; Notice of Filing of Proposed Rule 
Change by the American Stock Exchange LLC Creating an Options Principal 
Membership Seat Upgrade Program

July 31, 2000.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934

[[Page 48263]]

(``Act'') \1\ and Rule 196-4 thereunder,\2\ notice is hereby given that 
on June 30, 2000, the American Stock Exchange LLC (``Amex'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``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 Exchange is proposing (i) to create an options principal 
membership seat upgrade program and (ii) to amend Article IV, Sections 
1 (a)(1) and (b)(1) of the Exchange Constitution to increase the number 
of authorized regular memberships to accommodate the program. Below is 
the test of the proposed rule change. Proposed new language is in 
italics; proposed deletions are in brackets.
* * * * *

American Stock Exchange Constitution--Article IV

Admission to Membership

Number of Regular Memberships
    SEC. 1(a)(1) Regular membership--There shall be up to 864 [661] 
regular memberships in the Exchange[.], inclusive of any regular 
memberships created through the options principal membership upgrade 
program. The number of regular memberships shall be increased only if 
the Board of Governors requests The Amex Corporation to issue 
additional regular memberships. Any such issuance of additional regular 
memberships shall require the approval of a majority of the regular and 
options principal members voting together as a single class at a 
meeting called for the purpose of considering the request that new 
regular memberships be issued.
    (2)-(3) No change.
Number of Options Principal Memberships
    (b)(1) Options principal membership--There shall be 203 options 
principal memberships in the Exchange[.], but this number shall be 
reduced by the number of options principal memberships upgraded to 
regular memberships. The number of options principal memberships shall 
be increased only if the Board of Governors requests The Amex 
Corporation to issue additional options principal memberships. Any such 
issuance of additional options principal memberships shall require the 
approval of a majority of the regular and options principal members 
voting together as a single class at a meeting called for the purpose 
of considering the request that additional options principal 
memberships be issued.
    (2)-(5) No change.
* * * * *

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
    The recent increase in the number of securities listed on the 
Exchange, especially options and Exchange-traded funds, has led to a 
greater demand for specialists and brokers to handle the increased 
volume. Specialists and brokers are required to be regular members of 
the Exchange. Exchange members requested that the Exchange explore the 
feasibility of a voluntary Options Principal Membership (``OPM'') Seat 
Upgrade Program (``Program''), with the potential for upgrading 203 
options principal memberships into regular memberships. In response to 
that request, the Exchange proposed the Program as one approach to 
creating additional regular memberships. The effective date of the 
Program will be determined by the Exchange once it is approved by the 
Commission.
    The one-time fee to upgrade an OPM membership to a regular 
membership under the proposed Program will be $30,000 or $36,000, 
depending on whether the OPM owner elects to participate in the Program 
within 120 days of the effective date of the Program.
    OPM owners that elect to upgrade to a regular membership within 240 
days would be entitled to pay on a monthly basis for 12 months. After 
240 days from Program effectiveness, an OPM owner would be required to 
pay a lump sum payment of $36,000 at the time of election. New 
applications for the Program would not be accepted after 18 months from 
the Program's effective date. At the end of the 18 month period, the 
Program would terminate unless the Exchange elects to continue it.\3\ 
Fund proceeds, less administrative costs to the Exchange, would be 
distributed equally to regular seat owners of record at the time of 
distribution (excluding regular seat owners who upgraded their OPM 
seats).\4\ The final distribution would occur no later than the end of 
the 21st month from the Program's effective date, because fund proceeds 
could be payable through the 20th month from the effective date of the 
Program.\5\
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    \3\ At that time, the Exchange could consider changing the terms 
of the Program, including raising the cost of upgrading an OPM seat. 
The Commission notes and the Exchange acknowledges that it would be 
required to file a proposed rule change with the Commission pursuant 
to Section 19(b) of the Act if it decides to extend or make any 
changes to the Program. Telephone call between Ivonne Lugo, 
Assistant General Counsel, Amex, and Sonia Patton, Attorney, 
Division of Market Regulation (``Division''), Commission, on July 
13, 2000.
    \4\ Within 21 months of the Program's effective date, the 
Exchange would distribute the proceeds received from OPM owners that 
elected to upgrade to regular memberships within 18 months, 
regardless of whether it decides to continue the Program. Telephone 
call between Ivonne Lugo, Assistant General Counsel, Amex, and Sonia 
Patton, Attorney, Division, Commission, on July 13, 2000.
    \5\ For instance, an OPM owner that elects to participate in the 
Program on the 240th day would be entitled to make monthly payments 
for 12 months and would pay the last monthly installment the 20th 
month from the effective date of the Program.
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    All payments made to the Exchange by OPMs under the Program would 
be deposited into a fund created and managed by the Exchange for the 
purpose of collecting proceeds for subsequent distribution to regular 
members (excluding regular seat owners who updated their OPM seats) as 
described above. Interest on fund deposits would accrue to the regular 
members. Participants that elect to upgrade to a regular membership 
within 240 days would be billed by the Exchange on a monthly basis and 
would be subject to Exchange policy on billing matters. Program 
participants who are delinquent in their installment payments by more 
than sixty days would forfeit all payments made to date and their seats 
would revert to OPM status.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the provisions of paragraphs (b) and (c) Section 6 of the Act,\6\ 
in general, and furthers the objectives of Section

[[Page 48264]]

6(c)(4),\7\ in particular, in that it is designed to increase or to 
remove any limitation on the number of memberships in the Exchange or 
the number of members or designated representatives of members 
permitted to effect transactions on the floor of the Exchange.
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    \6\ 15 U.S.C. 78f(b) and (c).
    \7\ 15 U.S.C. 78f(c)(4).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
result in 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 did not solicit or receive written comments on 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 Exchange 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. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Persons making written submissions 
should file six copies thereof with the Secretary, Securities and 
Exchange Commission, 450 Fifth Street, N.W., Washington, D.C. 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 Room. Copies of the filing will also be 
available for inspection and copying in the Commission's Public 
Reference Room. Copies of the 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-00-36 and should be 
submitted by August 28, 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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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 00-19910 Filed 8-4-00; 8:45 am]
BILLING CODE 8010-01-M