[Federal Register Volume 66, Number 121 (Friday, June 22, 2001)]
[Notices]
[Pages 33585-33588]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-15725]



[[Page 33585]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-44437; File No. SR-Amex-2001-39]


Self Regulatory Organizations; Notice of Filing and Order 
Granting Accelerated Approval of a Proposed Rule Change by the American 
Stock Exchange LLC Relating to the Listing and Trading of Industrial 15 
Notices

June 18, 2001.
    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 June 8, 2001, 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 and II below, which Items have been prepared by the Exchange. 
The Commission is publishing this notice to solicit comments on the 
proposed rule change from interested persons and is approving the 
proposal on an accelerated basis.
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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 list and trade notes, the return on which is 
based upon an equal-dollar weighted portfolio of securities 
representing the fifteen highest dividend yielding stocks from a group 
of certain stocks in the Standard & Poor's (``S&P'') Industrial Index 
\3\ from year to year that meet the additional criteria set forth below 
(the ``Industrial 15 Index'' or ``Index'').\4\
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    \3\ The S&P Industrial Index is a subset of the S&P 500 Index 
consisting of the largest 400 industrial stocks of the S&P 500. The 
S&P Industrial Index is calculated by starting with the S&P 500 
Index and then excluding financial, utility and transportation 
stocks.
    \4\ As of May 31, 2001, the portfolio of securities comprising 
the Industrial 15 Index are: Albertson's Inc.; ALLTEL Corporation; 
Avery Dennison Corporation; Bristol-Myers Squibb Company; The Clorox 
Company; ConAgra, Inc.; Emerson Electric Co.; Hershey Food 
Corporation; The Gillette Company; Johnson Controls, Inc.; The Mays 
Department Stores Company; Newell Rubbermaid Inc.; Pitney Bowes 
Inc.; Rohm and Haas Company; and Textron Inc. Telephone conversation 
between Jeffrey P. Burns, Senior Counsel, Amex, and Sapna C. Patel, 
Attorney, Division of Market Regulation, Commission, on June 15, 
2001.
    The portfolio of securities will include the fifteen highest 
dividend yielding stocks from a group of certain stocks in the S&P 
Industrial Index for that year and the Amex will not have any 
discretion in the selection process.
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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 III below. The Exchange 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
    Under section 107A of the Amex Company Guide (``Company Guide''), 
the Exchange may approve for listing and trading securities which 
cannot be readily categorized under the listing criteria for common and 
preferred stocks, bonds, debentures, or warrants.\5\ The Amex proposes 
to list for trading under section 107A of the Company Guide notes based 
on the Industrial 15 Index (the ``Industrial 15 Notes'' or ``Notes''). 
The Industrial 15 Index will be determined, calculated, and maintained 
solely by the Amex.\6\
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    \5\ See Securities Exchange Act Release No. 27753 (March 1, 
1990), 55 FR 8626 (March 8, 1990) (order approving File No. SR-Amex-
89-29).
    \6\ Subject to the criteria in the prospectus regarding the 
construction of the Index, the Exchange has sole discretion 
regarding changes to the Index due to annual reconstitutions and 
adjustments to the Index and the multipliers of the individual 
components.
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    The Industrial 15 Notes will conform to the initial listing 
guidelines under Section 107 \7\ and continued listing guidelines under 
sections 1001-1003 \8\ of the Company Guide. Industrial 15 Notes are 
senior non-convertible debt securities of Merrill Lynch & Co., Inc. 
(``Merrill Lynch''). The Industrial 15 Notes will have a term of not 
less than one nor more than ten years. Industrial 15 Notices will 
entitle the owner at maturity to receive an amount based upon the 
percentage change between the ``Starting Index Value'' and ``Ending 
Index Value'' (the ``Redemption Amount''). The ``Starting Index Value'' 
is the value of the Industrial 15 Index on the date on which the issuer 
prices the Industrial 15 Notes issue for the initial offering to the 
public. The ``Ending Index Value'' is the value of the Industrial 15 
Index over a period shortly prior to the expiration of the Industrial 
15 Notes. The Ending Index Value will be used in calculating the amount 
owners will receive upon maturity. The Industrial 15 Notes will not 
have a minimum principal amount that will be repaid and, accordingly, 
payments on the Notes prior to or at maturity may be less than the 
original issue price of the Industrial 15 Notes. During the designated 
month each year, the investors may have the right to require the issuer 
to repurchase the Industrial 15 Notes at a redemption amount based on 
the value of the Industrial 15 Index at such repurchase date. 
Industrial 15 Notes are not callable by the issuer.
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    \7\ The initial listing standards for Industrial 15 Notes 
require: (1) A minimum public distribution of one million units; (2) 
a minimum of 400 shareholders; (3) a market value of at least $4 
million; and (4) a term of at least one year. In addition, the 
listing guidelines provide that the issuer have assets in excess of 
$100 million, stockholder's equity of at least $10 million, and pre-
tax income of at least $750,000 in the last fiscal year or in two of 
the three prior fiscal years. In the case of an issuer which is 
unable to satisfy the earning criteria stated in Section 101 of the 
Company Guide, the Exchange will require the issuer to have the 
following: (1) Assets in excess of $200 million and stockholders' 
equity of at least $10 million; or (2) assets in excess of $100 
million and stockholders' equity of at least $20 million.
    \8\ The Exchange's continued listing guidelines are set forth in 
Sections 1001 through 1003 of Part 10 to the Exchange's Company 
Guide. Section 1002(b) of the Company Guide states that the Exchange 
will consider removing from listing any security where, in the 
opinion of the Exchange, it appears that the extent of public 
distribution or aggregate market value has become so reduced to make 
further dealings on the Exchange inadvisable. With respect to 
continued listing guidelines for distribution of the Industrial 15 
Notes, the Exchange will rely, in part, on the guidelines for bonds 
in Section 1003(b)(iv). Section 1003(b)(iv)(A) provides that the 
Exchange will normally consider suspending dealings in, or removing 
from the list, a security if the aggregate market value or the 
principal amount of bonds publicly held is less than $400,000.
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    Industrial 15 Notes are cash-settled in U.S. dollars and do not 
give the holder any right to receive a portfolio security or any other 
ownership right or interest in the portfolio securities, although the 
return on the investment is based on the aggregate portfolio value of 
the securities comprising the Industrial 15 Index.
    The Industrial 15 Index will consist of a portfolio of the fifteen 
qualifying stocks (the ``Qualifying Stocks'') with the highest dividend 
yields at the time of initial composition or any reconstitution of the 
Industrial 15 Index. ``Qualifying Stocks'' are those stocks from the 
S&P Industrial Index that are (1) in the top 75% of the Index, as 
measured by market capitalization after elimination of stocks included 
in the Dow Jones Industrial Average (``DJIA''), and (2) have an S&P 
Common Stock Ranking of A or A+.
    Components of the Industrial 15 Index approved pursuant to this 
filing

[[Page 33586]]

will meet the following criteria: (1) A minimum market value of at 
least $75 million, except that up to 10% of the component securities in 
the Industrial 15 Index may have a minimum market value of $50 million; 
(2) average monthly trading volume in the last six months of not less 
than 1,000,000 shares, except that up to 10% of the component 
securities in the Industrial 15 Index may have an average monthly 
trading volume of 500,000 shares or more in the last six months; (3) 
90% of the Industrial 15 Index's numerical value and at least 80% of 
the total number of component securities will meet the then current 
criteria for standardized option trading set forth in Exchange Rule 
915; and (4) all components stocks will either be listed on the Amex, 
the New York Stock Exchange, Inc. (``NYSE''), or traded through the 
facilities of the National Association of Securities Dealers Automated 
Quotation System (``NASDAQ'') and reported National Market System 
securities.
    As of May 31, 2001, the market capitalization of the securities 
that would represent the Industrial 15 Index would range from a high of 
$105.4 billion to a low to $6.1 billion. The average monthly trading 
volume of those same securities for the last six months, as of the same 
date, ranged from a high of 107.8 million shares to a low of 8.9 
million shares. Moreover, as of May 31, 2001, all of the securities 
that would comprise the Industrial 15 Index were eligible for 
standardized options trading pursuant to Amex Rule 915.
    At the outset, each of the securities in the Industrial 15 Index 
will represent approximately an equal percentage of the Starting Index 
Value. Specifically, each security included in the portfolio will be 
assigned a multiplier on the date of issuance so that the security 
represents approximately an equal percentage of the value of the entire 
portfolio underlying the Industrial 15 Index on the date that the 
Industrial 15 Notes are priced for initial sale to the public. The 
multiplier indicates the number of shares (or fraction of one share) of 
a security, given its market price on an exchange or through NASDAQ, to 
be included in the calculation of the portfolio. Accordingly, initially 
each of the fifteen companies included in the Industrial 15 Index will 
represent approximately 6.67% of the total portfolio at the time of 
issuance. The Industrial 15 Index will initially be set to provide a 
benchmark value of 100.00 at the close of trading on the day the Notes 
are priced for initial sale to the public.
    The value of the Industrial 15 Index at any time will equal: (1) 
The sum of the products of the current market price for each stock 
underlying the Industrial 15 Index and the applicable share multiplier, 
plus (2) an amount reflecting current calendar quarter dividends, and 
less (3) a pro rata portion of the annual index adjustment factor.\9\ 
Current quarter dividends for any day will be determined by the Amex 
and will equal the sum of each dividend paid by the issuer on one share 
of stock underlying the Industrial 15 Index during the current calendar 
quarter multiplied by the share multiplier applicable to such stock on 
the ex-dividend date.
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    \9\ At the end of each day, the Industrial 15 Index will be 
reduced by a pro rata portion of the annual index adjustment factor, 
expected to be 1.5% (i.e., 1.5%/365 days=0.0041% daily). This 
reduction to the value of the Index will reduce the total return to 
investors upon the exchange or at maturity. The Amex represents that 
an explanation of this deduction will be included in any marketing 
materials, fact sheets, or any other materials circulated to 
investors regarding the trading of this product.
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    As of the first day of the start of each calendar quarter, the Amex 
will allocate the current quarter dividends as of the end of the 
immediately preceding calendar quarter to each then outstanding 
components of the Industrial 15 Index. The amount of the current 
quarter dividends allocated to each stock will equal the percentage of 
the value of such stock contained in the portfolio of securities 
comprising the Industrial 15 Index relative to the value of the entire 
portfolio based on the closing market price of such stock on the last 
day in the immediately preceding calendar quarter. The share multiplier 
of each stock will be increased to reflect the number of shares, or 
portion of a share, that the amount of the current quarter dividend 
allocated to each stock can purchase of each stock based on the closing 
market price on the last day in the immediate preceding calendar 
quarter.
    As of the close of business on each anniversary date (anniversary 
of the date of the initial issuance of Industrial 15 Notes) through the 
applicable anniversary date in the year preceding the maturity of the 
Notes, the portfolio of securities comprising the Industrial 15 Index 
will be reconstituted by the Amex so as to include the fifteen 
Qualifying Stocks in the S&P Industrial Index having the highest 
dividend yield on the second scheduled index business day prior to such 
anniversary date. The Exchange will announce such changes to investors 
at least one day prior to the anniversary date.\10\
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    \10\ The Exchange will publish a notice to advise investors of 
changes to the securities underlying the Index if any such changes 
are made following an annual reconstitution.
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    The portfolio will be reconstituted and rebalanced on the 
anniversary date so that each stock in the Industrial 15 Index will 
represent 6.67% of the value of the Industrial 15 Index. To effectuate 
this, the share multiplier for each new stock will be determined by the 
Amex and will indicate the number of shares or fractional portion 
thereof of each new stock, given the closing market price of such new 
stock on the anniversary date, so that each new stock represents an 
equal percentage of the Industrial 15 Index value at the close of 
business on such anniversary date. For example, if the Industrial 15 
Index value at the close of business on an anniversary date was 150, 
then each of the fifteen new stocks comprising the Industrial 15 Index 
would be allocated a portion of the value of the Index equal to 10, and 
if the closing market price of one such new stock on the anniversary 
date was 20, the applicable share multiplier would be 0.5. Conversely, 
if the Industrial 15 Index value was 60, then each of the fifteen new 
stocks comprising the Industrial 15 Index would be allocated a portion 
of the value of the Industrial 15 Index equal to 4, and if the closing 
market price of one such new stock on the anniversary was 20, the 
applicable share multiplier would be 0.2. The last anniversary date on 
which such reconstitution will occur will be the anniversary date in 
the year preceding the maturity of the Notes. As noted above, investors 
will receive information on the new portfolio of securities comprising 
the Industrial 15 Index at least one day prior to each anniversary 
date.
    The multiplier of leach component stock in the Industrial 15 Index 
will remain fixed unless adjusted for quarterly dividend adjustments, 
annual reconstitutions or certain corporate events, such as payment of 
a dividend other than an ordinary cash dividend, a distribution of 
stock of another issuer to its shareholders,\11\ stock split, reverse 
stock split, and reorganization.
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    \11\ If the issuer of a component security in the Industrial 15 
Index issues to all of its shareholders publicly traded stock of 
another issuer, such new securities will be added to the portfolio 
comprising the Industrial 15 Index until the subsequent anniversary 
date. The multiplier for the new component will equal the product of 
the original issuer's multiplier and the number of shares of the new 
component issued with respect to one share of the original issuer.
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    The multiplier of each component stock may be adjusted, if 
necessary, in the event of a merger, consolidation, dissolution or 
liquidation of an issuer or in certain other events such as the 
distribution of property by an issuer to

[[Page 33587]]

shareholders. If the issuer of a stock included in the Industrial 15 
Index were to no longer exist, whether by reason of a merger, 
acquisition or similar type of corporate transaction, a value equal to 
the stock's final value will be assigned to the stock for the purpose 
of calculating the Industrial 15 Index value prior to the subsequent 
anniversary date. For example, if a company included in the Industrial 
15 Index were acquired by another company, a value will be assigned to 
the company's stock equal to the value per share at the time the 
acquisition occurred. If the issuer of stock included in the Industrial 
15 Index is in the process of liquidation or subject to a bankruptcy 
proceeding, insolvency, or other similar adjudication, such security 
will continue to be included in the Industrial 15 Index so long as a 
market price for such security is available or until the subsequent 
anniversary date. If a market price is no longer available for an 
Industrial 15 Index stock due to circumstances including but not 
limited to, liquidation, bankruptcy, insolvency, or any other similar 
proceeding, then the security will be assigned a value of zero when 
calculating the Industrial 15 Index for so long as no market price 
exists for that security or until the subsequent anniversary date. If 
the stock remains in the Industrial 15 Index, the multiplier of that 
security in the Industrial 15 Index may be adjusted to maintain the 
component's relative weight in the Industrial 15 Index at the level 
immediately prior to the corporate action. In all cases, the multiplier 
will be adjusted, if necessary, to ensure Industrial 15 Index 
continuity.
    The Exchange will calculate the Industrial 15 Index and, similar to 
other stock index values published by the Exchange, the value of the 
Index will be calculated continuously and disseminated every fifteen 
seconds over the Consolidated Tape Association's Network B. The Index 
value will equal the sum of the products of the most recently available 
market prices and the applicable multipliers for the component 
securities.
    Because Industrial 15 Notes are linked to a portfolio of equity 
securities, the Amex's existing equity floor trading rules will apply 
to the trading of Industrial 15 Notes. First, pursuant to Amex Rule 
411, the Exchange will impose a duty of due diligence on its members 
and member firms to learn the essential facts relating to every 
customer prior to trading Industrial 15 Notes.\12\ Second, Industrial 
15 Notes will be subject to the equity margin rules of the 
Exchange.\13\ Third, the Exchange will, prior to trading Industrial 15 
Notes, distribute a circular to the membership providing guidance with 
regard to member firm compliance responsibilities (including 
suitability recommendations) when handling transactions in Industrial 
15 Notes and highlighting the special risks and characteristics of the 
Industrial 15 Notes.
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    \12\ Amex Rule 411 requires that every member, member firm or 
member corporation use due diligence to learn the essential facts 
relative to every customer and to every order or account accepted.
    \13\ See Amex Rule 462 and Section 107B of the Company Guide.
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2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6 of the Act \14\ in general and furthers the objectives 
of Section 6(b)(5) \15\ 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 and a national market system.
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    \14\ 15 U.S.C. 78f(b).
    \15\ 15 U.S.C. 78f(b)(5).
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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 
impose any burden on competition.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    The exchange did not receive any written comments on the proposed 
rule change.

III. 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 at the 
Commission's Public Reference Room. Copies of such filing will also be 
available for inspection and copying at the principal office of the 
Exchange. All submissions should refer to File No. SR-Amex-2001-39 and 
should be submitted by July 13, 2001.

IV. Commission's Findings and Order Granting Accelerated Approval 
of Proposed Rule Change

    After careful consideration, the Commission finds that the proposed 
rule change is consistent with the requirements of the Act and the 
rules and regulations thereunder applicable to a national securities 
exchange, and, in particular, with the requirements of section 6(b)(5) 
of the Act.\16\ The Commission finds that this proposal is similar to 
several approved instruments currently listed and traded on the Amex 
and the NYSE.\17\ Accordingly, the Commission finds that the listing 
and trading of Industrial 15 Notes is consistent with the Act and will 
promote just and equitable principles of trade, foster cooperation and 
coordination with persons engaged in regulating, clearing, settling, 
processing information with respect to, and facilitating transactions 
in securities, and, in general, protect investors and

[[Page 33588]]

the public interest consistent with section 6(b)(5) of the Act.\18\
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    \16\ Id.
    \17\ See Securities Exchange Act Release Nos. 44342 (May 23, 
2001), 66 FR 29613 (May 31, 2001) (accelerated approval order for 
the listing and trading of Select Ten Notes); 42582 (March 27, 
2000), 65 FR 17685 (April 4, 2000) (accelerated approval order for 
the listing and trading of notes linked to a basket of no more than 
twenty equity securities) (File No. SR-Amex-99-42); 41546 (June 22, 
1999), 64 FR 35222 (June 30, 1999) (accelerated approval order for 
the listing and trading of notes linked to a narrow based index with 
a non-principal protected put option) (File No. SR-Amex-99-15); 
39402 (December 4, 1997), 62 FR 65459 (December 12, 1997) (notice of 
immediate effectiveness for the listing and trading non-principal 
protected commodity preferred securities linked to certain 
commodities indices) (File No. SR-Amex-97-47); 37533 (August 7, 
1996), 61 FR 42075 (August 13, 1996) (accelerated approval order for 
the listing and trading of the Top Ten Yield Market Index Target 
Term Securities (``MITTS'')) (File No. SR-Amex-96-28); 33495 
(January 19, 1994), 59 FR 3883 (January 27, 1994) (accelerated 
approval order for the listing and trading of Stock Upside Note 
Securities) (File No. SR-Amex-93-40); 32840 (September 2, 1993), 58 
FR 47485 (September 9, 1993) (accelerated approval order for the 
listing and trading of MITTS on the NYSE) (File No. SR-NYSE-93-31); 
and 32343 (May 20, 1993), 58 FR 30833 (May 27, 1993) (accelerated 
approval order for the listing and trading of non-principal 
protected notes linked to a single equity security) (File No. SR-
Amex-92-42).
    \18\ 15 U.S.C. 78f(b)(5). In approving this rule, the Commission 
notes that it has considered the proposed rule's impact on 
efficiency, competition, and capital formation. 15 U.S.C. 78c(f).
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    Industrial 15 Notes are not leveraged instruments; however, their 
price will still be derived and based upon the underlying linked 
security. Accordingly, the level of risk involved in the purchase or 
sale of Industrial 15 Notes is similar to the risk involved in the 
purchase or sale of traditional common stock. Nonetheless, because the 
final rate of return of Industrial 15 Notes is derivatively priced, 
based on the performance of a portfolio of securities, and the 
components of the Industrial 15 Index are more likely to change each 
year, over the terms of the Industrial 15 Notes, than products 
previously issued, there are several issues regarding the trading of 
this type of product.
    The Commission notes that the Exchange's rules and procedures that 
address the special concerns attendant to the trading of hybrid 
securities will be applicable to Industrial 15 Notes. In particular, by 
imposing the hybrid listing standards, suitability, disclosure, and 
compliance requirements noted above, the Commission believes the 
Exchange has addressed adequately the potential problems that could 
arise from the hybrid nature of Industrial 15 Notes. Moreover,the 
Exchange will distribute a circular to its membership calling attention 
to the specific risks associated with Industrial 15 Notes.
    In approving the product, the Commission recognizes that the 
components are likely to change each year over the life of the product. 
Nevertheless, the Commission believes that this is acceptable because 
the Amex has clearly stated its guidelines and formula for replacing 
components from a specific group of well-known and highly capitalized 
securities. Each year, as noted above, the portfolio of securities 
comprising the Industrial 15 Index will represent the fifteen highest 
dividend yielding Qualifying Stocks in the S&P Industrial Index. Amex 
will do the calculation for replacements based on a set formula to 
determine which of the S&P Industrial Index securities will be in the 
Index for the following year. The Commission believes that within these 
confines the potential frequent changes in the components of the 
Industrial 15 Index are reasonable and will meet the expectation of 
investors.
    In addition, the Commission notes that the Industrial 15 Notes. are 
non-principal protected. The Notes may not have a minimum principal 
amount that will be repaid and that payments on the Notes prior to or 
at maturity may be less than the original issue price of the Industrial 
15 Notes. The Commission also recognizes that during the designated 
month Industrial 15 Notes at a redemption amount based on the value of 
the Industrial 15 Index at such repurchase date.
    The Commission notes that Industrial 15 Notes are dependent upon 
the individual credit of the issuer, Merrill Lynch. To some extent this 
credit risk is minimized by the Exchange's listing standards in section 
107A of the Company Guide which provide the only issuers satisfying 
substantial asset and equity requirements may issue securities such as 
Industrial 15 Notes. In addition, the Exchange's hybrid listing 
standards further require that Industrial 15 Notes have at least $4 
million in market value.\19\ In any event, financial information 
regarding Merrill Lynch, in addition to the information on the issuers 
of the underlying securities comprising the Industrial 15 Index, will 
be publicly available.\20\
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    \19\ See Company Guide Section 107A.
    \20\ The companies that comprise the Industrial 15 Index are 
reporting companies under the Act.
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    The Commission also has a systemic concern, however, that a broker-
dealer, such as Merrill Lynch, or a subsidiary providing a hedge for 
the issuer will incur position exposure. As discussed in the prior 
approval orders for similar instruments (e.g.,the Select Ten Notes), 
the Commission believes this concern is minimal given the size of 
Industrial 15 Notes issuance in relation to the net worth of Merrill 
Lynch.
    The Commission also believes that the listing and trading of 
Industrial 15 Notes should not unduly impact the market for the 
underlying securities comprising the Industrial 15 Index. First, the 
underlying securities comprising the S&P Industrial Index, from which 
the Industrial 15 Index components are selected, are well-capitalized, 
highly liquid stocks. Second, because all of the components of the 
Industrial 15 Index will be equally weighted, initially and immediately 
following each annual reconstitution of the Industrial 15 Index, no 
single stock or group of stocks will likely dominate the Industrial 15 
Index. Finally, the issuers of the underlying securities comprising the 
Industrial 15 Index, are subject to reporting requirements under the 
Act, and all of the portfolio securities are either listed or traded 
on, or traded through the facilities of, U.S. securities markets. 
Additionally, the Amex's surveillance procedures will serve to deter as 
well as detect any potential manipulation.
    Finally, the Commission notes that the value of the Industrial 15 
Index will be disseminated at least once every fifteen seconds 
throughout the trading day. The Commission believes that providing 
access to the value of the Industrial 15 Index at least once every 
fifteen seconds throughout the trading day is extremely important and 
will provide benefits to investors in the product.
    The Commission finds good cause for approving the proposed rule 
change prior to the thirtieth day after the date of publication of 
notice thereof in the Federal Register. The Amex has requested 
accelerated approval because this product is similar to several other 
instruments currently listed and traded on the Amex and the NYSE.\21\ 
In determining to grant the accelerated approval for good cause, the 
Commission notes that the Industrial 15 Index is a portfolio of highly 
capitalized and actively traded securities similar to hybrid securities 
products that have been approved by the Commission for U.S. exchange 
trading. Additionally, Industrial 15 Notes will be listed pursuant to 
existing hybrid security listing standards as described above. 
Moreover, the Index's applicable equal-dollar weighting methodology is 
a commonly applied index calculation method. Based on the above, the 
Commission finds, consistent with Section 6(b) of the Act,\22\ that 
there is good cause for accelerated approval of the product.
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    \21\ See supra note 17.
    \22\ 15 U.S.C. 78f(b).
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V. Conclusion

    It is therefore ordered, pursuant to section 19(b)(2) of the 
Act,\23\ that the proposed rule change (SR-Amex-2001-39), is hereby 
approved on an accelerated basis.
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    \23\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\24\
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    \24\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 01-15725 Filed 6-21-01; 8:45 am]
BILLING CODE 8010-01-M