[Federal Register Volume 66, Number 128 (Tuesday, July 3, 2001)]
[Notices]
[Pages 35291-35292]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-16676]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-44477; File No. SR-AMEX-2001-14]


Self-Regulatory Organizations; Order Approving Proposed Rule 
Change and Amendment No. 1 Thereto and Notice of Filing and Order 
Granting Accelerated Approval of Amendment No. 2 Thereto by the 
American Stock Exchange LLC Relating to Members' Written Proposals To 
List Equity Option Classes

June 27, 2001.

I. Introduction

    On March 8, 2001, the American Stock Exchange LLC (``Amex'' or 
``Exchange'') filed with 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 adopting formal procedures for members to submit 
proposals to list option classes on the Exchange. The Exchange 
submitted an amendment to the proposed rule change on April 17, 
2001.\3\ the Federal Register published the proposed rule change for 
comment on April 30, 2001.\4\ The Commission receive no comments on the 
proposal. The Exchange filed Amendment No. 2 to the proposed rule 
change on June 22, 2001.\5\ This order approves the proposed rule 
change and grants accelerated approval to Amendment No. 2. The 
Commission also is soliciting comment on Amendment No. 2 to the 
proposed rule change.
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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 Elizabeth King, 
Associate Director, Division of Market Regulation (``Division''), 
Commission, dated April 16, 2001 (``Amendment No. 1''). Amendment 
No. 1 revises proposed Commentary .08 to Amex Rule 915 to require 
the Amex to maintain a record of any bona fide business 
considerations it relies upon in denying or placing limitations or 
conditions upon a proposal listing.
    \4\ Securities Exchange Act Release No. 44211 (April 23, 2001), 
66 FR 21421.
    \5\ See letter from Claire P. McGrath, Vice President and 
Special Counsel, Derivative Securities, Amex, to Nancy Sanow, 
Assistant Director, Division, Commission, dated June 21, 2001 
(``Amendment No. 2''). Amendment No. 2 revised Commentary .08 to 
Amex Rule 915 to clarify that when the Exchange relies upon other 
bona fide business considerations in denying or placing conditions 
or limitations upon a member listing proposal, the Exchange must 
provide the member with a written response specifying that the 
Exchange has relied upon other bona fide business considerations, in 
addition to maintaining a record of the bona fide business 
considerations supporting its decision.
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II. Description of the Proposal

    The proposed rule change would adopt formal procedures for members 
to submit proposals to list option classes on the Exchange, and would 
codify the factors considered by the Exchange in listing option 
classes.\6\ The Exchange would be required to review and make a 
determination regarding a member's listing proposal within 25 days of 
receipt of the proposal. If the Exchange decides not to list the 
proposed option class or to limit or condition the listing of the 
option in any way, the Exchange would be required, in writing and 
within the 25-day period, to inform the member of the basis for denial 
of the proposal or the basis for any limitation or condition put on its 
acceptance.
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    \6\ As part of a settlement of an enforcement action by the 
Commission, four of the five options exchanges, including the Amex, 
are required to adopt rules to codify listing procedures to be 
carried out when a member or member organization requests the 
exchange to list options not currently trading on the exchange. See 
Order Instituting Public Administrative Proceedings Pursuant to 
Section 19(h)(1) of the Securities Exchange Act of 1934, Making 
Findings and Imposing Remedial Sanctions, Securities Exchange Act 
Release No. 43268 (September 11, 200).
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III. Discussion

    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.\7\ 
Specifically, the Commission believes that the proposed rule change is 
consistent with the section 6(b)(5) \8\ requirements that the rules of 
an exchange be designed to promote just and equitable principles of 
trade, to remove impediments to and perfect the mechanisms of a free 
and open market and a national market system, and, in general, to 
protect investors and the public interest.
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    \7\ In approving the proposal, the Commission has considered its 
impact on efficiency, competition, and capital formation. 15 U.S.C. 
78c(f).
    \8\ 15 U.S.C. 78f(b)(5).
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    The Commission believes that the proposed rule change will remove 
impediments to and perfect the mechanisms of a free and open market by 
providing formal procedures for members to request the listing of 
options on the Exchange. The proposal would required the Exchange to 
respond in writing within 25 days to requests by members to list 
options. The Commission believes that the proposed procedures and time 
frames set forth in the proposed rule change are reasonable and 
adequately balance the Exchange's need to thoroughly examine proposed 
listings before making its determination with its members' need for a 
prompt and specific response to its listing recommendation.
    In addition, the proposed rule change codifies the factors to be 
considered by the Exchange in determining whether to list a recommended 
option. The Commission believes that the proposed factors represent 
legitimate issues that the Exchange may consider when making a listing 
decision. The Commission notes that if the Exchange denies or places 
conditions or limitations upon a proposed listing, it must include its 
reasons in the letter notifying the member of its decision. The 
Commission believes that this requirement should help to ensure that 
the Exchange relies on upon the factors codified in its rules when 
making a listing decision.
    The Commission finds good cause for accelerating approval of 
Amendment No. 2 to the proposed rule change prior to the thirtieth day 
after publication in the Federal Register. The Commission notes that 
Amendment No. 2 provides useful clarification to the proposed

[[Page 35292]]

rules. Accordingly, the Commission finds that good cause exists, 
consistent with sections 6(b)(5) \9\ and 19(b) of the Act,\10\ to 
accelerate approval of Amendment No. 2 to the proposed rule change.
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    \9\ 15 U.S.C. 78f(b)(5).
    \10\ 15 U.S.C. 78s(b).
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IV. Solicitation of Comments

    Interested persons are invited to submit written data, views and 
arguments concerning Amendment No. 2, including whether the amendment 
is consistent with the Act. Persons making written submissions should 
file six copies thereof with the Secretary, Securities and Exchange 
Commission, 450 Fifth Street, NW., Washington, DC 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 Amex. All 
submissions should refer to the File No. SR-AMEX-2001-14 and should be 
submitted by July 24, 2001.

V. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\11\ that the proposed rule change (SR-AMEX-2001-14), as amended, 
is approved.
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    \11\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\12\
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    \12\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 01-16676 Filed 7-2-01; 8:45 am]
BILLING CODE 8010-01-M