[Federal Register Volume 66, Number 66 (Thursday, April 5, 2001)]
[Notices]
[Pages 18124-18125]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-8348]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-44123; File No. SR-Amex-01-02)]


Self-Regulatory Organizations; the American Stock Exchange LLC; 
Order Granting Approval to Proposed Rule Change To Amend Commentary .02 
to Amex Rule 126(g) ``Precedence of Bids and Offers''

March 28, 2001.

I. Introduction and Background

    On February 5, 2001, the American Stock Exchange LLC (``Amex'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission'') a proposed rule change pursuant to Section 19(b)(1) of 
the Securities Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 
therunder.\2\ The proposed rule change would amend Commentary .02 to 
Amex Rule 126(g) ``Precedence of Bids and Offers'' to reduce the number 
of shares that may be crossed on an agency basis from 25,000 shares to 
5,000 shares. Notice of the proposed rule change was published in the 
Federal Register on February 21,

[[Page 18125]]

2001.\3\ The Commission received no comments on the proposal. 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. 43950 (February 12, 
2001), 66 FR 11074.
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II. Description of the Proposal

    The Exchange proposes to amend Commentary .02 to Amex Rule 126(g) 
``Precedence of Bids and Offers'' to reduce the number of shares that 
may be crossed on an agency basis from 25,000 shares to 5,000 shares. 
Amex Rule 126 delineates priority and precedence of bids and offers on 
the Exchange floor, and generally provides that bids and offers are 
entitled to precedence based on time, with members bidding at the 
highest price (offering at the lowest price) entitled to be on parity 
and divide executions at their price after a previous sale removes all 
bids and offers from the floor. Commentary .02 to Amex Rule 126(g) 
applies only to agency crosses (``clean crosses'') to buy and sell 
orders of 25,000 shares or more (that is, both orders of accounts of 
non-members). This commentary provides that a member may cross those 
orders at a price at or within the prevailing quotation, with such 
orders entitled to priority at the cross price over previously entered 
bids and offers. When crossing these orders, the member must follow the 
crossing procedures of Amex Rule 151 ``On Order' Transactions'' and 
another member may trade with either the bid or offer side of the cross 
to provide price improvement to all or part of the bid or offer. In 
addition, the member must trade with all other market interest having 
time priority at that price before trading with any part of the cross 
transaction.

III. Discussion

    The Commission has reviewed carefully the proposed rule change and 
finds that it is consistent with the Act and the rules and regulations 
promulgated thereunder applicable to a national securities exchange. 
The Commission finds that the proposal is consistent with the 
requirements of Section 6(b) of the Act \4\ in general, and 
particularly furthers the objectives of Section 6(b)(5) of the Act,\5\ 
in that it is designed to promote just and equitable principles of 
trade and further the protection of investors and the public interest. 
The Commission believes that reducing the number of shares that may be 
crossed on an agency basis from 25,000 shares to 5,000 shares is 
reasonable, and that such a reduction may help to facilitate the 
transition from pricing equities in fractions to pricing in decimals. 
Additionally, the Commission believes such a reduction may enhance 
competition among markets in the execution of agency crosses, resulting 
in better efficiency and prices for investors.
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    \4\ 15 U.S.C. 78f(b).
    \5\ 15 U.S.C. 78f(b)(5).
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IV. Conclusion

    For the above reasons, the Commission find that the proposed rule 
change is consistent with the provisions of the Act, in general, and 
with Section 6(b)(5) \6\ in particular.
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    \6\ 15 U.S.C. 78f(b)(5).
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    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\7\ that the proposed rule change SR-Amex-01-02) be, and hereby is, 
approved.\8\

    \7\ 15 U.S.C. 78s(b)(2)
    \8\ In approving the proposal, the Commission has considered the 
rule's impact on efficiency, competition, and capital formation. 15 
U.S.C. 78c(f).

    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. 01-8348 Filed 4-4-01; 8:45 am]
BILLING CODE 8010-01-M