[Federal Register Volume 65, Number 175 (Friday, September 8, 2000)]
[Notices]
[Page 54574]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-23031]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-43233; File No. SR-Amex-00-03]


Self-Regulatory Organizations; American Stock Exchange LLC.; 
Order Approving Proposed Rule Change Relating to the Reporting of 
Options Transactions

August 30, 2000.

I. Introduction

    On February 22, 2000, the American Stock Exchange LLC (``Amex'' or 
the ``Exchange'') filed with 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 relating to the reporting of 
options transactions. The Amex filed Amendment No. 1 to this proposal 
on June 12, 2000.\3\ The proposed rule change, as amended, was 
published for comment in the Federal Register on June 27, 2000.\4\ The 
Commission received no comments on the proposal. This order approves 
the proposal, as amended.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See letter from Claire P. McGrath, Vice President and 
Special Counsel, Derivative Securities, Amex to Nancy Sanow, 
Assistant Director, Division of Market Regulation (``Division''), 
Commission, dated June 9, 2000 (``Amendment No. 1''). In Amendment 
No. 1, the Exchange clarified the proposed rule text and confirmed 
that a member's failure to report an options transaction within 90 
seconds would be considered a violation of proposed Amex Rule 992.
    \4\ Securities Exchange Act Release No. 42966 (June 20, 2000), 
65 FR 39638 (June 27, 2000).
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II. Description of the Proposal

    The Amex proposes to adopt a new rule, Amex Rule 992, to require 
the reporting of options transactions within 90 seconds of the 
execution. In Amendment No. 1, the Exchange confirmed that any 
transaction not reported within 90 seconds after execution would be 
designated as ``late'' and would be a violation of proposed Amex Rule 
992. In addition, pursuant to the proposed rule, a pattern or practice 
of late reporting without exceptional circumstances may be considered 
conduct inconsistent with just and equitable principles of trade.
    Currently, the Amex Options Display Book (``AODB'') handles the 
reporting of options transactions.\5\ The AODB processes orders routed 
to it both electronically and manually. Orders routed electronically 
are either executed automatically by the Exchange's Auto-Ex system or 
executed by the specialist through the AODB.\6\ These options 
transactions are immediately reported to the Amex Option Market Data 
System, which processes all Amex trades, and the Options Price 
Reporting Authority, which disseminates trade information to the Amex's 
members and the investing public through vendors. Orders manually 
routed to the Exchange through a floor broker and executed in the 
trading crowd are reported to the specialist or his clerk for entry 
into the AODB and processed in the same manner as electronically routed 
and executed trades.\7\
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    \5\ According to the Exchange, the AODB is an electronic order 
book and execution-processing system that was adopted to replace and 
improve upon what was once a paper-based specialist's book.
    \6\ The Exchange estimates that 60-70% of options transactions 
are electronically routed and executed orders that are immediately 
reported and printed on the tape.
    \7\ An example of such a trade is one that does not include 
either the specialist or a customer limit order as a party to the 
trade.
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III. Discussion

    The Commission finds that the proposal is consistent with the 
requirements of the Act.\8\ In particular, the Commission finds that 
the proposed rule change furthers the objectives of section 6(b)(5),\9\ 
in that it is designed to prevent fraudulent 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.
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    \8\ In approving this rule, the Commission has considered the 
proposed rule's impact on efficiency, competition, and capital 
formation. 15 U.S.C. 78c(f).
    \9\ 15 U.S.C. 78f(b)(5).
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    The Commission believes that the proposal, which requires the 
reporting of all options transactions within 90 seconds of execution, 
should help to prevent fraudulent and manipulative acts and practices, 
as well as to promote just and equitable principles of trade. The 
Commission believes that the proposed rule change, as amended, should 
enable the Exchange to provide accurate trade information to investors 
more efficiently. The enhanced transparency associated with timely 
trade reporting should facilitate price discovery for investors and 
assist the Amex's surveillance of its members' trading in listed 
options.

IV. Conclusion

    It Is Therefore Ordered, pursuant to section 19(b)(2) of the 
Act,\10\ that the proposed rule change (SR-Amex-00-03) is approved, as 
amended.
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    \10\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\11\
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    \11\ 17 CFR 200.30-3(a)(12)
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 00-23031 Filed 9-07-00; 8:45 am]
BILLING CODE 8010-01-M