[Federal Register Volume 66, Number 184 (Friday, September 21, 2001)]
[Notices]
[Pages 48723-48727]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-23524]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-44802, File Nos. SR-Amex 2001-80; SR-Phlx-2001-86]


Self-Regulatory Organizations; Notice of Filing and Order 
Granting Accelerated Approval to Proposed Rule Changes Filed by the 
American Stock Exchange LLC (``Amex'') and the Philadelphia Stock 
Exchange, Inc. (``Phlx'') Relating to Temporary Trading of Amex Options 
on the Phlx To Respond to Market Developments

September 17, 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 September 16, 2001, the American Stock Exchange LLC (``Amex'') 
and the Philadelphia Stock Exchange Inc. (``Phlx'') (collectively 
referred to as ``Exchanges'') submitted to the Securities and Exchange 
Commission (``SEC'' or ``Commission'') proposed rule

[[Page 48724]]

changes. The Amex and Phlx descriptions of their respective proposed 
rule changes are set forth in Items I and II below. The Commission is 
publishing this notice to solicit comments on the proposed rule changes 
form interested persons and to grant accelerated approval to the 
proposed rule changes.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statements of the Terms of 
Substance of the Proposed Rule Changes

    As a result of the attacks on the World Trade Center in New York 
City on September 11, 2001, the building housing the trading facilities 
of the Amex suffered physical damage. In addition, the area surrounding 
the Amex has remained largely inaccessible to all but the most 
essential emergency and rescue personnel and many basic services, such 
as electricity, water and communication lines, have not been re-
established as a result of the collapse of several buildings and 
ensuring fires. The Exchanges, therefore, propose to permit Amex 
members to trade Amex options on the floor of the Phlx on a temporary 
basis until the Amex facility is operational. The proposals are 
intended to enable Amex option products to resume trading when the U.S. 
markets open, as well as to accommodate Amex members.

Amex

    The Amex, pursuant to Rule 19b-4 of the Act, as amended, requests 
emergency authorization to allow certain options traded at the Amex to 
be traded on the Phlx, and for Amex specialists, registered options 
traders (``ROTs'') and floor brokers to trade on the floor of the Phlx.

Phlx

    The Phlx, pursuant to Rule 19b-4 of the Act, proposes to 
temporarily permit qualified Amex members who are registered at the 
Amex as floor brokers, registered option traders (``ROTs'') or 
specialists (``Amex Temporary Access Persons'' or ``TAPs'') to access 
the Phlx options trading floor on a temporary basis to trade the 
following options on the terms specified below: (i) Phase 1--non-Phlx 
Amex options, which include, as of the close of trading on September 
10, 2001, (a) equity options traded only on the Amex; (b) equity 
options traded on the Amex and another options exchange, but not the 
Phlx; and (c) index options traded only on the Amex; and (ii) Phase 2--
equity options that are traded on both the Phlx and Amex (``Phlx/Amex 
options'') as of the close of trading on September 10, 2001.
    The proposal includes two categories of Amex members trading as 
Phlx ROTs or specialists: Amex ROTs and Amex specialists. The proposal 
may also include enabling Amex floor brokers to act as Phlx floor in 
Phlx/Amex options and non-Phlx Amex options (but not Phlx options not 
traded on Amex). The Phlx anticipates Phase 1 to begin on Monday, 
September 17, 2001, and Phase 2 thereafter, possibly on the same 
day.\3\
---------------------------------------------------------------------------

    \3\ The Phlx intends to trade all non-Phlx Amex and Phlx/Amex 
options, but may not, taking into account space, safety, licensing, 
operational and technological considerations.
---------------------------------------------------------------------------

    In addition, only Amex TAPs will be permitted to trade non-Phlx 
Amex options that trade on the Phlx under this proposal, unless deemed 
necessary by the Phlx for Phlx members to act as ROTs or floor brokers, 
in the interest of fair and orderly markets. However, Phlx specialist 
units may be allocated non-Phlx Amex options if the current Amex 
specialist is not affiliated with a Phlx specialist unit, as described 
further below.
    At this time, the Phlx is proposing that Amex TAPs be permitted to 
act as Phlx members for purposes of temporary access on the options 
trading floors. As such, Amex TAPs will be subject to the Phlx trading 
rules that would apply today to a Phlx member in the course of trading 
Phlx options.\4\ Further, like members, with respect to the liability 
provisions of Phlx By-Law Article XII, Section 12-11, Use of Facilities 
of Exchange (Phlx), the Phlx's liability to Amex TAPs would be 
limited.\5\
---------------------------------------------------------------------------

    \4\ These include, but are not limited to, Phlx Rule 104, 1000, 
et seq.
    \5\ Specifically, that provision states that the Phlx shall not 
be liable for any damages sustained by a member or a member 
organization arising out of the use or enjoyment by such member or 
member organization of the facilities afforded by Phlx to members 
for the conduct of their business.
---------------------------------------------------------------------------

    However, Amex TAPs will not be eligible to vote, serve on 
committees or otherwise participate in Phlx governance, apply for 
specialist privileges,\6\ nor act as floor officials.\7\
---------------------------------------------------------------------------

    \6\ The extent to which Amex specialists currently acting as 
specialists in non-Phlx Amex options that are traded on the Phlx 
under Phase 1 will continue to act as specialists is discussed 
below.
    \7\ Amex TAPs would, however, be subject to the rulings of Phlx 
floor officials pursuant to Phlx rules, including Phlx Rule 124 and 
appeals therefrom.
---------------------------------------------------------------------------

    For purposes of Phlx Rule 104, which provides, in pertinent part, 
that no member shall, while on the floor, make a transaction with any 
non-member, Amex TAPs shall not be considered ``non-members.'' Amex 
TAPs will not have access to, or the ability to act as, members 
respecting Phlx options that are not Phlx/Amex options. Lastly, Amex 
TAPs' physical access to the Phlx facilities will be limited to the 
Phlx options trading floor crowds where they have been granted access 
to trade by this proposal and any other areas designated by the Phlx.
    With respect to qualification of and jurisdiction over Amex TAPs, 
the Phlx intends to require submission of a form containing an 
acknowledgement to abide by Phlx rules and submit to Phlx jurisdiction, 
as well as other provisions relating to Phlx floor activity and 
responsibility. The Acknowledgement may also include the Phlx's ability 
to terminate Amex TAPs access and status, or to impose conditions on 
such access or status.
    Further, this form will contain a certification by both the Amex 
TAP and the Amex as to the qualification of that Amex member to trade 
on the Amex. Thus, qualified Amex TAPs, with approval from an 
appropriate Amex official, will be deemed to have satisfied, and the 
Phlx will waive specific compliance with, rules governing or applying 
to the maintenance of a person's or a firm's status as a Phlx member, 
including the 600 series of Phlx rules. In that regard, Amex procedures 
respecting the admission and qualification of members to trade on the 
Amex, for example, will be deemed to satisfy Phlx Rules 901 and 1014(b) 
regarding registration of ROTs.\8\ Notwithstanding the above, the Phlx 
may determine to impose or waive certain training requirements, 
including the use of Phlx technology or equipment and Phlx rules, such 
as those contained in the Phlx Rule 620. The Phlx also proposes that 
Amex TAPs who sigh the form thereby bind their member organization to 
Phlx requirements and jurisdiction as well, consistent with fundamental 
principles of agency law. Amex TAPs must also de-register when 
discontinuing their Amex TAP status using the appropriate form.\9\ 
Lastly, on this form, Amex TAPs shall designate an OCC-member clearing 
firm. The Phlx is also proposing that clearing firms that are not Phlx 
members will be deemed to have satisfied, and the Phlx will waive 
specific compliance with, in respect of accounts of Amex TAPs trading 
on the Phlx, rules governing or applying to clearing firms.\10\
---------------------------------------------------------------------------

    \8\ The Phlx believes that this is consistent with prior 
Commission-approved practices respecting members on one exchange 
trading on the facilities of another exchange. See Securities 
Exchange Act Release No. 40088 (June 12, 1998), 63 FR 33426 (June 
18, 1998) (SR-Phlx-98-25).
    \9\ The Phlx has determined that de-registration may be by any 
written submission to the Phlx's Membership Services Department.
    \10\ See, e.g., Phlx Rule 1000(A)(3). The Phlx is also seeking 
agreements from non-Phlx member clearing firms whereby the clearing 
firm agrees and undertakes to comply with all applicable Phlx rules 
in respect of Phlx/Amex options and/or non-Phlx Amex options for the 
account of Amex TAPs as if the clearing firm were a member of the 
Phlx.

---------------------------------------------------------------------------

[[Page 48725]]

    Because Amex TAPs would be trading on the Phlx options floor using 
Phlx technology in the regular Phlx trading crowd pursuant to Phlx 
rules, the rules (including by-laws, Certificate of Incorporation, 
floor procedure advices, policies and practices, all as supplemented 
and modified by this proposed rule change) of the Phlx would govern 
such activity.\11\ For instance, the trading rules applicable to Phlx 
ROTs would apply to Amex TAPs acting as ROTs on the Phlx, including the 
two-sided market making obligations of Phlx Rule 1014. The Phlx intends 
to surveil the Phlx trading activity of Amex TAPs trading on the Phlx 
under this proposal, as it surveils other Phlx options trading. To the 
extent that Amex TAPs request the installation of equipment or 
communication lines, for purposes of Phlx Rule 606, the Phlx staff (in 
lieu of The Options Committee) must approve such.
---------------------------------------------------------------------------

    \11\ The Phlx notes that Amex TAP trades shall be deemed Phlx 
trades, including for purposes of trade reporting, clearing and the 
Plan for Reporting of Consolidated Options Last Sale Reports and 
Quotation Information (``OPRA Plan'').
---------------------------------------------------------------------------

    Non-Phlx Amex options would be deemed eligible for listing on the 
Phlx, subject to the written representation by a designated, authorized 
Amex official that each non-Phlx Amex option proposed to be listed and 
traded on the Phlx meets Amex listing and maintenance standards. The 
Phlx hereby requests approval, as of September 14, 2001, for a 
temporary listing standard whereby options listed on Amex (and not the 
Phlx) as of September 10, 2001 shall be eligible for listing on the 
Phlx. Non-Phlx Amex options will be deemed to have satisfied, and the 
Phlx will waive specific compliance with, any other applicable Phlx 
rules governing options listing and maintenance.\12\ Non-Phlx Amex 
options subject to delisting (and thus, ineligible for the addition of 
new strike prices and new expirations) at the time they are listed on 
the Phlx, would be deemed eligible for listing, subject to closing 
transactions only in those series with open interest.
---------------------------------------------------------------------------

    \12\ Amex will enter into an agreement with Phlx concerning the 
Exchanges' respective obligations under the proposal; Amex will, 
inter alia, agree to be responsible for maintenance studies and 
maintaining listing standards on all Non-Phlx Amex options.
---------------------------------------------------------------------------

    Phlx/Amex options will be traded by the Phlx specialist unit 
assigned to that option. With respect to how specialists will be 
assigned to trade non-Phlx Amex options, the following agreements have 
been reached between the Phlx and the Amex and are proposed herein: (i) 
Non-Phlx Amex options normally traded by Amex specialist units whose 
firms or affiliates have a Phlx specialist unit will be traded by the 
same firm's Phlx specialist unit; (ii) non-Phlx Amex options normally 
traded by Amex specialist units whose firms or affiliates have no Phlx 
specialist unit will be traded by the Phlx specialist unit designated 
by that Amex specialist; and (iii) non-Phlx Amex options normally 
traded by Amex specialist units whose firms or affiliates have no Phlx 
specialist units, and are not designated by that Amex specialist, will 
be allocated, as of September 14, 2001, to Phlx specialist units in 
accordance with Phlx Rules 500-526. Further, non-Phlx Amex options will 
be deemed to have been duly allocated to qualified specialists, subject 
to the written representation by a designated, authorized Amex official 
that each non-Phlx Amex option has been allocated on the Amex in 
compliance with Amex rules governing qualifications of specialists and 
allocation of options to Amex specialist units. Accordingly, Amex 
specialists will be deemed to have satisfied, and the Phlx will waive 
specific compliance with, Phlx rules governing qualification of 
specialists.
    With respect to fees, the Phlx intends to impose its options 
transaction charges, both equity option and index option, where 
applicable, on trades by Amex TAPs. For instance, Amex TAPs trading as 
ROTs would be subject to the option transaction/comparison charges 
applicable to Phlx ROTs under this proposal.\13\ Amex TAPs acting as 
floor brokers will be charged with Phlx fees applicable to floor 
brokers (floor brokerage assessment) respecting all trades. Phlx 
members and member organizations may not apply fees paid by Amex TAPs 
who are associated with Phlx member organizations to their $1,000 
monthly credit.\14\ The Phlx has determined not to impose its dues, 
technology fee and facilities related fees (e.g., post/booth space) due 
to the emergency and temporary nature of the situation.
---------------------------------------------------------------------------

    \13\ The Phlx intends to bill Amex TAPs through their clearing 
firms.
    \14\ See Securities Exchange Act Release No. 44292 (May 11, 
2001), 66 FR 27715 (May 18, 2001) (SR-Phlx-2001-49).
---------------------------------------------------------------------------

II. Self-Regulatory Organizations' Statements of the Purpose of, 
and Statutory Basis for, the Proposed Rule Changes

    In its filing with the Commission, the Exchange included statements 
concerning the purpose of and the basis for the proposed rule changes 
and discussed any comments they received on the proposed rule changes. 
The text of these statements may be examined at the places specified in 
Item III below. The Exchanges have prepared summaries set forth in 
Sections A, B, and C below, of the most significant parts of such 
statements.

A. Self-Regulatory Organizations' Statements of the Purpose of, and 
Statutory Basis for the Proposed Rule Changes

1. Amex
    The purpose of the Amex's proposed rule change is to permit Amex 
members, on a temporary basis, to trade Amex options at the Phlx. As 
proposed, Amex members who are duly qualified as specialists, ROTs and 
floor brokers will be temporary members of the Phlx known as 
``Temporary Access Persons'' or ``TAPs.'' The arrangement for trading 
Amex options by Amex TAPs at the Phlx would be limited to those options 
traded on the Amex as of the close of business on September 10, 2001, 
which are the following: (1) Multiply-traded options that are traded on 
both the Amex and Phlx; (2) multiply-traded options traded on the Amex 
but not currently traded on the Phlx; (3) equity options solely traded 
on the Amex; and (4) index options only traded on the Amex.
    With respect to all of the options indicated above, Amex 
specialists and ROTs that expect to trade on the Phlx will serve as 
Phlx ROTs in the trading crowd on the floor of the Phlx. Amex 
specialists that are dual members of both the Amex and Phlx will 
continue to trade as specialists in their assigned options through 
their affiliated specialist unit at the Phlx. Moreover, it is expected 
that Amex floor brokers will be permitted to act as floor brokers on 
the Phlx for those options traded on the Amex as of the close of 
business on September 10, 2001 and that will now trade on the Phlx. The 
Phlx will provide trade reporting, quote reporting and surveillance in 
connection with the trading of options by Amex TAPs on the Phlx as 
would otherwise be the case for options trading of Phlx options.
    The Phlx proposes to impose transaction-based fee charges on all 
options transactions of Amex TAPs. Amex floor brokers trading on the 
Phlx as TAPs will be charged the fees by the Phlx applicable to current 
Phlx floor brokers.
    For purposes of this temporary access to the Phlx options trading 
floor, Amex members will be Phlx members identified as TAPs, and, 
therefore,

[[Page 48726]]

subject to Phlx rules and regulations, including all options trading 
rules. However, Amex TAPs will not be permitted to participate in the 
corporate governance of the Phlx, including, but not limited to, the 
right to vote or serve as floor officials.
    As detailed in the Phlx proposed rule change, Amex TAPs who execute 
the acknowledgement form and conduct business at the Phlx will be 
subject to the jurisdiction of the Phlx as well as the Amex. Therefore, 
Amex members will be qualified members of both the Amex and the Phlx, 
although, primary jurisdiction for trading on the options floor of the 
Phlx will reside with the Phlx. However, the Amex has not completely 
relinquished jurisdiction over its own members. For example, the Phlx 
may prefer that the Amex investigate and bring an enforcement action 
against an Amex member for violations of Phlx rules in connection with 
options trading at the Phlx.
    For these reasons, the Amex believes that its proposed rule change 
is consistent with Section 6 of the Act,\15\ in general, and with 
Section 6(b)(5) of the Act,\16\ specifically, in that it is designed to 
perfect the mechanisms of a free and open market and the national 
market system, protect investors and the pubic interest and promote 
just and equitable principles of trade by members.
---------------------------------------------------------------------------

    \15\ 15 U.S.C. 78f.
    \16\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

2. Phlx
    The purpose of the Phlx proposed rule change is to accommodate Amex 
TAPs and to accommodate trading in non-Phlx Amex options, particularly 
those options traded only on the Amex that would otherwise temporarily 
have no trading facility, on a temporary basis, during a crisis in the 
nation's financial markets. The proposal is intended to provide access 
to certain options products previously traded by these Amex members on 
the Amex, pending restoration of the Amex's facility.
    The Phlx's proposal is tailored to permit access to Amex TAPs 
seeking to continue their livelihood and make markets, as well as 
provide a marketplace for options that trade only on the Amex. It is 
with respect to these options, in particular, that this proposal is 
intended to perfect the mechanism of a free and open market and a 
national market system. Because the Phlx trading facility is being 
utilized, the Phlx technology and trading rules would apply to both 
Phlx/Amex options and non-Phlx Amex options, including minimum trading 
increments, strike price, position and exercise limits, and firm quote 
and Auto-X guarantees. The method of submission of orders to the Phlx 
trading floor continues to be the use of the AUTOM System (through a 
Phlx member) or a floor broker, although the floor broker could be an 
Amex floor broker/TAP.\17\ The Phlx also anticipates that Amex TAPs may 
require support staff, such as trading floor clerks, who would be 
permitted under specified terms. Clerks would be required to register 
(and de-register) \18\ on a similar form, identifying the responsible 
Amex market makers and Amex member organization.\19\
---------------------------------------------------------------------------

    \17\ If the Phlx permits an Amex TAP to act as a floor broker on 
the Phlx, the Phlx is not obligated to provide trading floor or 
other physical space, or technology, including floor broker order 
entry terminals, to such floor brokers.
    \18\ The Phlx has determined the de-registration may be by any 
written submission to the Phlx's Membership Services Department.
    \19\ The Phlx, in its sole discretion, may limit the number of 
clerks and Amex TAPs granted access to the Phlx options floor due to 
space and safety concerns.
---------------------------------------------------------------------------

    Operationally, the Phlx intends to handle Amex market maker quotes 
and trades like other Phlx quotes and trades, including quote and trade 
reporting and dissemination via OPRA. The Phlx intends to establish 
appropriate account number processing for Amex TAP trades. The Phlx 
will provide general notice as well as an educational session for Amex 
TAPs. Respecting Phlx/Amex options, Amex TAPs will trade with Phlx ROTs 
and other Phlx members in the respective Phlx options trading crowds.
    With respect to other regulatory aspects of the proposals, in 
addition to surveillance, the Phlx intends to exercise enforcement 
jurisdiction over Amex TAPs trading options on the Phlx. However, the 
Phlx and the Amex have agreed that the Phlx may request the Amex to 
assume enforcement jurisdiction upon request by Phlx, as well as 
incremental costs associated with surveillance, investigations and 
enforcement, under this proposal. The Amex has also agreed to cooperate 
with the Phlx by providing information to the Phlx respecting Amex 
TAPs. Because Amex TAPs will continue to be Amex members and subject to 
Amex rules respecting such membership, Amex financial responsibility 
rules, including margin provisions, will continue to apply.\20\ 
Accordingly, the Amex has agreed to retain examination jurisdiction 
over Amex TAPs, including the daily net capital review. With respect to 
arbitration jurisdiction, Phlx arbitration rules will apply.
---------------------------------------------------------------------------

    \20\ As stated above and in the certification form, Amex 
membership-related rules would apply, because Phlx is waiving its 
rules governing status as a Phlx member. Admissions procedures is 
another example of such a rule.
---------------------------------------------------------------------------

    The Phlx is requesting immediate accelerated approval of the 
proposal in order to promptly enable Amex TAPs to begin trading on the 
Phlx, which is anticipated to be a 9:30 A.M. on Monday, September 17, 
2001. In addition to the immediacy of the situation, the Phlx believes 
that Amex TAP access would only remain in effect until the Amex 
facility is restored and resumes such options trading, which is 
anticipated to be several days, although it is difficult to predict the 
timing of the resolution of the situation in New York described above.
    For these reasons, the Phlx believes that the proposed rule change 
is consistent with Section 6 of the Act,\21\ in general, and in 
particular, with section 6(b)(5) of the Act,\22\ because it would 
promote just and equitable principles of trade, remove impediments to 
and perfect the mechanism of a free and open market and a national 
market system, and foster cooperation and coordination with persons 
engaged in regulating, clearing, settling, processing information with 
respect to, and facilitating transactions in securities, by providing 
an options facility for Amex members.
---------------------------------------------------------------------------

    \21\ 15 U.S.C. 78f.
    \22\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

B. Self-Regulatory Organizations' Statements on Burden on Competition

    The Exchanges do not believe that the proposed rule changes will 
impose any inappropriate burden on competition.

C. Self-Regulatory Organizations' Statements on Comments on the 
Proposed Rule Changes Received From Members, Participants, or Others

    No comments were either solicited or received by Amex or Phlx.

III. Solicitation of Comments

    Interested persons are invited to submit written data, views and 
arguments concerning the foregoing, including whether the proposed rule 
changes are consistent with the Act. Persons making written submissions 
should file fix copies thereof with the Secretary, Securities and 
Exchange Commission, 450 Fifth Street, NW., Washington, DC 20549-0609. 
Copies of the submissions, all subsequent amendments, all written 
statements with respect to the proposed rule changes that are filed 
with the Commission, and all written communications relating to the 
proposed rule changes between the Commission and any person, other than

[[Page 48727]]

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 in the Commission's Public Reference Room. Copies of the 
filings will also be available for inspection and copying at the 
principal offices of Amex and Phlx, respectively. All submissions 
should refer to File Nos. SR-Amex-2001-80 and SR-Phlx-2001-86 and 
should be October 12, 2001.

IV. Commission Findings and Order Granting Accelerated Approval of 
the Proposed Rule Changes

    The Commission notes that the proposed rule changes were submitted 
in response to the emergency situation that resulted from the September 
11, 2001 attacks on the World Trade Center in New York City. On 
September 11, 2001, the U.S. equities and options markets determined 
not to open in light of the attacks that morning. The U.S. equities and 
options markets remained closed throughout the remainder of that week. 
As a result of the attacks, the Amex facilities were damaged and, at 
this time, cannot be reopened. The Amex and Phlx have worked to 
accommodate the opening of trading of Amex options and to accommodate 
trading by Amex members.\23\
---------------------------------------------------------------------------

    \23\ The Commission notes that the Phlx and the Amex have, of 
necessity, had discussions, understandings and agreements concerning 
the listing of non-Phlx Amex options on the Phlx in order to 
facilitate the establishment of the arrangements described in this 
Order outside the framework permitted by the Plan for the Purpose of 
Developing and Implementing Procedures Designed to Facilitate the 
Listing and Trading of Standardized Options Submitted Pursuant to 
Section 11A(a)(3)(B) of the Securities Exchange Act of 1934. This 
Order approves such discussions, understandings, and agreements.
---------------------------------------------------------------------------

    The Commission notes that Amex TAPS that are granted temporary 
access to the Phlx will only be permitted to trade on the Phlx those 
securities that the TAP traded on the Amex, and to act in those 
capacities that are authorized by Phlx and that are comparable to 
capacities that the TAP has been authorized to act on the Amex.
    The Commission finds that the proposed rule changes are consistent 
with the requirements of the Act and the rules and regulations 
thereunder applicable to a national securities exchange.\24\ 
Specifically, the Commission finds that the proposed rule changes are 
consistent with section 6(b)(5) of the Act,\25\ which requires, among 
other things, that the rules of an exchange be designed to foster 
cooperation and coordination with persons engaged in regulating, 
clearing, settling, processing information with respect to, and 
facilitating transactions in securities, to remove impediments to and 
perfect the mechanism of a free and open market and a national market 
system, and, in general, to protect investors and the public interest.
---------------------------------------------------------------------------

    \24\ In approving these proposals, the Commission has considered 
their impact on efficiency, competition, and capital formation. 15 
U.S.C. 78c(f).
    \25\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    The Commission believes that the arrangements between the Amex and 
Phlx to permit the trading of Amex products on the Phlx by Amex members 
will ensure that all Amex options products will be available for 
trading by market participants when trading resumes in the U.S. 
markets. The Commission also believes that the arrangements allowing 
Amex specialists and Amex ROTs to make markets on the Phlx in the 
options for which they made markets on Amex should ensure that Amex 
options have a similar level of liquidity as was the case on September 
10, 2001. Further, the Commission believes that permitting Amex floor 
brokers to act as floor brokers in the options for which they acted as 
floor brokers on Amex should ensure that the orders directed to Phlx 
for Amex options are handled efficiently. The Commission considers to 
be appropriate the arrangement whereby the Phlx will be responsible for 
ensuring compliance of Amex members trading on the Phlx floor with Phlx 
trading rules, while Amex will be responsible for ensuring that its 
members comply with member qualification and financial responsibility 
rules. In this regard, the Commission notes that it is important that 
the Amex and the Phlx continue to closely coordinate and cooperate to 
ensure that Amex members temporarily trading on the Phlx are adequately 
surveilled and that their financial condition is monitored.
    The Commission is satisfied that the arrangements worked out 
between Amex and Phlx will enable continuous, liquid markets to be 
maintained for :Amex options in an exchange environment while 
maintaining the usual investor protection safeguards. This is 
especially important in light of the upcoming options expiration on 
September 21, 2001.
    The Commission finds good cause for approving the proposed rule 
changes prior to the thirtieth day after the date of publication of the 
notice of filing in the Federal Register. The Commission believes that 
it is necessary to approve the proposed rule changes on an accelerated 
basis to provide a trading venue for Amex options, which market 
participants would otherwise not be able to trade until Amex's New York 
facilities are reopened, and to provide a higher level of liquidity in 
those products than would be available without permitting Amex members 
temporary access to the Phlx.
    It Is Therefore Ordered, pursuant to section 19(b)(2) of the 
Act,\26\ that the proposed rule changes (SR-Amex-2001-80 and SR-Phlx-
2001-86) are hereby approved on an accelerated basis.
---------------------------------------------------------------------------

    \26\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\27\
---------------------------------------------------------------------------

    \27\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 01-23524 Filed 9-20-01; 8:45 am]
BILLING CODE 8010-01-M