[Federal Register Volume 66, Number 183 (Thursday, September 20, 2001)]
[Notices]
[Pages 48493-48494]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-23462]


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SECURITIES AND EXCHANGE COMMISSION

[Securities Exchange Act of 1934 Rel. No. 44797]


Emergency Order Pursuant to Section 12(k)(2) of the Securities 
Exchange Act of 1934 Taking Temporary Action To Respond To Market 
Developments Concerning the American Stock Exchange LLC

September 16, 2001.
    The United States securities markets are the world's strongest and 
most vibrant. The Commission has full confidence that the attacks of 
September 11, 2001, will have little lasting impact. To that end, the 
Commission seeks to serve investors and the markets through all 
available means to facilitate the reopening of fair and orderly 
markets.
    Some of the nation's securities exchanges may have incurred 
physical damage or disruption that require relocation of trading 
facilities and personnel to anther suitable physical location. The 
American Stock Exchange LLC (``Amex''), in particular, has reported 
that it is not yet able to occupy its trading floor. Amex anticipates 
that its electronic order routing systems will function as they did 
before September 11, 2001. However, due to the severe damage to the 
infrastructure surrounding its building, Amex will relocate part of its 
operations to the floor of the New York Stock Exchange (``NYSE''). 
Because there is limited space available at the NYSE, Amex will operate 
with limited staffing. As a result, specialists will have to serve as 
floor brokers while performing their usual functions.
    Section 12(k)(2) of the Securities Exchange Act of 1934 (``Exchange 
Act'') grants the Commission the authority, in the event of certain 
major market disturbances, to issue summarily an order to alter, 
supplement, suspend, or impose requirements or restrictions with 
respect to matters or actions subject to regulation by the Commission. 
Section 11(a) of the Exchange Act prohibits a member of a national 
securities exchange from effecting transactions for its own account, 
the account of an associated person, or an account with respect to 
which it or an associated person has investment discretion unless an 
exemption applies. Section 11(b) of the Exchange Act requires a 
national securities exchange to adopt rules to permit a member to 
register as a specialist. Section 11(b) of the Exchange Act also 
prohibits a specialist permitted to act as a broker and dealer to 
effect on the exchange as a broker any transaction except upon a market 
or limited price order. Because Amex specialists do not generally act 
as floor brokers, the Amex rules that govern specialists contain 
certain restrictions that, unless modified, would impair the ability of 
Amex specialists to act as floor brokers.
    Based on all available information, the Commission has determined 
that:
    (1) Amex's inability to trade on its own floor due to the physical 
damage to the infrastructure surrounding its premises constitutes a 
major market disturbance characterized by a substantial threat of 
sudden and excessive fluctuations of securities prices that threaten 
the nation's fair and orderly markets.\1\
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    \1\ This finding of an ``emergency'' is solely for purposes of 
Section 12(k)(2) of the Exchange Act and is not intended to have any 
other effect or meaning or to confer any right or impose any 
obligation.
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    (2) Ensuring that all national securities exchanges are able to 
operate provides an important source of liquidity during times of 
market volatility. Facilitation of the resumption of trading at all of 
the nation's exchanges is necessary in the public interest and for the 
protection of investors.
    (3) Because space limitations will require Amex personnel to act 
both as specialists and floor brokers, including

[[Page 48494]]

handling certain large orders over which they have investment 
discretion, the specialists may not be able to comply with Amex rules 
for specialists adopted in conformance with Section 11(b). They also 
may not be able to comply with the restrictions of Sections 11(a) or 
11(b) with respect to these discretionary orders.\2\ Accommodating this 
trading, as a temporary measure, is in the public interest and for the 
protection of investors in order to maintain or restore fair and 
orderly securities markets.
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    \2\ While our authority to supplement Exchange Act Sections 
11(a) and 11(b) in this context is derived from the Exchange Act, we 
acknowledge that our action will affect the application of other 
provisions of the securities laws that require compliance with 
Sections 11(a) and 11(b). Terms used in this Order have the same 
meanings as those terms used in Sections 11(a) and 11(b).
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    Therefore, It Is Ordered, pursuant to Section 12(k)(2) of the 
Exchange Act, that:
    Amex specialists shall be temporarily exempt from Section 11(a) 
solely for effecting transactions when acting as floor brokers for Amex 
orders on the floor of the NYSE for accounts in which they have 
investment discretion provided that,
    1. the specialist's discretion, when acting as a floor broker, is 
limited to time and price discretion of the type exercised by floor 
brokers on the Amex floor prior to September 11, 2001 pursuant to Amex 
rules;
    2. such discretionary orders to be executed by the Amex specialist 
acting as a floor broker exceed 50,000 shares; and
    3., Amex floor officials take reasonable steps to ensure that the 
specialist meets its agency obligations and does not disadvantage the 
customers for which it acts as a floor broker;
    It Is Further Ordered, That,
    Amex specialists shall be temporarily exempt from Section 11(b) 
solely for effecting transactions as described above;
    It Is Further Ordered, That,
    The Amex shall be temporarily exempt from Section 11(b) to permit 
its specialists to effect transactions as described above.
    This order shall be effective with respect to the five business 
days beginning on the date of the first reopening of trading on the 
U.S. equities and options markets after September 11, 2001.\3\
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    \3\ The Commission has authority under Section 36 of the 
Exchange Act to exempt, by order, persons form the requirements of 
Sections 11(a) and 11(b) of the Exchange Act. Due to exigent 
circumstances, the procedures for such exemptions established by the 
Commission under Section 36(b) of the Exchange Act have not yet been 
followed. The Commission expects that, if necessary, within the 
period of this order, it could issue a Section 36 order, with 
appropriate findings and conditions, to provide similar exemptions 
from Sections 11(a) and 11(b) until the Amex obtains its own space.

    By the Commission.
Jonathan G. Katz,
Secretary.
[FR Doc. 01-23462 Filed 9-19-01; 8:45 am]
BILLING CODE 8010-01-M