[Federal Register Volume 66, Number 184 (Friday, September 21, 2001)]
[Notices]
[Pages 48727-48729]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-23619]


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SECURITIES AND EXCHANGE COMMISSION

[(Release No. 34-44807; File No. SR-Amex-2001-67)]


Self-Regulatory Organizations; Notice of Filing of Proposed Rule 
Change by the American Stock Exchange LLC to Codify Current Audit Trail 
and Trade Comparison Requirements and to Make Other Technical 
Amendments to the Exchange's Audit Trail Rules

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 August 28, 2001, the American Stock exchange LLC (``Amex'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission'') the proposed rule change as described in Items I, II, 
and III 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.
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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 Exchange proposes to amend Amex Rule 719: (1) To codify current 
audit trail and trade comparison requirements, (2) to clarify that Amex 
Rule 719 applies to all Amex securities, and (3) to delete rule 
language to the implementation of T+1 comparison.
    The text of the proposed rule change appears below. New text is in 
italics; deletions are in brackets.

[[Page 48728]]

[Next Day] Comparison of Exchange Transactions
Rule 719
    (a) Notwithstanding any other rule to the contrary, [on and after 
February 26, 1990,] each transaction effected on the Exchange shall be 
compared or otherwise closed out by the close of business on the 
Exchange on the business day following the day of the contract.
    (b) The provisions of paragraph (a) above shall apply regardless of 
whether the transaction has been submitted to a registered clearing 
agency for comparison or settlement, but such provisions shall apply 
only to contracts for ``regular way'', ``next day'' and ``seller's 
option'', settlement on alternative delivery periods, and settlement in 
Options Clearing Corporation issued securities, stocks, rights, 
warrants, ``when issued'' and ``when distributed'' securities, bonds, 
and other securities admitted to dealings. [The provisions of paragraph 
(a) shall apply to contracts in listed bonds on and after October 21, 
1994.]
    (c) To facilitate [next day] comparison of transactions effected on 
the Exchange as provided for in paragraph (a) above, by such time 
following any such transaction as the Exchange may prescribe (but in no 
event more than two hours after execution), each member or member 
organization which is a party to the contract shall submit, or cause to 
be submitted, such trade data as may be required by the Exchange or the 
registered clearing agency it selects in such form as the Exchange or 
the registered clearing agency shall prescribe, to:
    (i) The registered clearing agency it selects; or
    (ii) Such facility as the Exchange may develop and implement to 
facilitate comparison of transactions effected on the Exchange; and,
    (iii) In the case where the registered clearing agency will not be 
used to compare or settle the transactions, to the party or parties on 
the other side of the trade.
    (d) No change
* * * Commentary
    .01  For purposes of paragraph (b) of this Rule 719, the term 
``registered clearing agency'' shall have the same meaning as set forth 
in Rule 700, provided further that a clearing agency shall be deemed a 
``registered clearing agency`` only if it has established rules and 
procedures to facilitate [next day] comparison of transactions as 
provided for in paragraph (a) of this Rule 719.
    .02  Regardless of whether or not a registered clearing agency is 
being used for comparison and/or settlement, each clearing member 
organization shall submit the following trade data and audit trail 
information with respect to contracts for securities entered into on 
the Exchange to a registered clearing agency in such form and within 
such time periods as may be described by the registered clearing agency 
or the Exchange:
    (1) Name or identifying symbol of the security,
    (2) The clearing firm's number of alpha symbol as may be used from 
time to time, in regard to its side of the contract,
    (3) The executing broker's badge number or alpha symbol as may be 
used from time to time, in regard to its side of the contract,
    (4) Trade date,
    (5) The time the trade was executed,
    (6) Number of shares or quantity of security,
    (7) Transaction price,
    (8) The clearing firm's number or alpha symbol as may be used from 
time to time, in regard to the contra side of the contract,
    (9) The executing broker badge number or alpha symbol as may be 
used from time to time, in regard to the contra side of the contract,
    (10) The terms of settlement,
    (11) Specialist, registered trader, and market maker acronyms in 
regards to options transactions,
    (12) Account type code--equities only. The current account type 
codes for equity transactions are as follows. Members should use the 
most restrictive account type code available. Thus, for example, 
members only should use the ``A'' account type code for an agency 
transaction when no other account type code accurately describes the 
trade. These codes may be changed from time to time as the Exchange may 
determine:

S--Specialist principal transaction in a specialty security (regardless 
of the account or clearing member)
G--Registered Trader market maker transaction regardless of the 
clearing member
V--Amex Option Specialist or Market Maker transaction in an Amex 
``paired security'' (regardless of the clearing member)
O--Proprietary transactions cleared for a competing market maker that 
is affiliated with the clearing member
T--Transactions cleared for the account of an unaffiliated member's 
competing market maker
R--Transactions cleared for the account of a non-member competing 
market maker
I--Transactions cleared for the account of an individual investor
    E--Short exempt transactions cleared for the proprietary account of 
a clearing member organization or affiliated member/member organization
    F--Short exempt transactions cleared for the proprietary account of 
an unaffiliated member/member organization
    H--Short exempt transactions cleared for an individual customer 
account
    B--Short exempt transactions cleared for all agency customer 
accounts
    L--Short exempt transaction cleared for a competing market maker 
that is affiliated with the clearing member
    X--Short exempt transaction cleared for the account of an 
unaffiliated member competing market maker
    Z--Short exempt transaction cleared for the account of a non-member 
competing market maker
    W--Proprietary transactions not specified above and cleared for the 
account of an unaffiliated member/member organization
    A--Transactions cleared for all agency customer accounts
    P--Transactions not specified above and cleared for the proprietary 
account of a clearing member organization or affiliated member/member 
organization New York Stock Exchange program trade audit trail account 
type codes as used from time to time also are acceptable.
    (13) Account type code--options only. The current account type 
codes for option transactions are as follows. Members should use the 
most restrictive account type code available. These codes may be 
changed from time to time as the Exchange may determine:
    S--Specialist principal transaction in a specialty security 
(regardless of the account or clearing member)
    C--Transactions cleared for the account of an individual investor
    F--Transactions cleared for the account of a broker-dealer that is 
not a registered market maker in the security
    P--Registered trader market maker transaction regardless of the 
clearing member
    N--Transactions cleared for the account of a non-member market 
maker
    (14) Such other information as the Exchange may from time to time 
require. Clearing members may not ``summarize'' multiple trades in the 
same security, executed at the same price with the same contra clearing 
firm as this results in degradation of the audit trail.

[[Page 48729]]

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, 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 IV below. Amex 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
    Amex's requirements regarding the timely and accurate reporting of 
clearance and audit trail information into the comparison system 
currently are embodied in Information Circulars and are not codified in 
the Exchange's rules. The Exchange, accordingly, is proposing to amend 
Amex Rule 719 to codify both the time frame in which information must 
be submitted to comparison (within two hours of execution) and the 
specifics of the trade data and audit trail information to be 
submitted.
    Amex believes that the prompt submission of trades to comparison 
reduces the financial risk to investors and broker-dealers of 
uncompared transactions. Amex further believes that the provision of 
detailed audit trail information by the parties to Amex transactions 
allows the Exchange to better perform its market oversight functions.
    The Exchange also is proposing to amend Amex Rule 719 to clarify 
that it applies to all Amex securities admitted to dealings. This will 
ensure that the rule applies to the new securities that the Exchange 
lists. The Exchange also is proposing to delete obsolete language in 
Amex Rule 719 related to the implementation of T+1 comparison in the 
early 1990s.
    Amex has represented that the proposed rule change would not alter 
the Exchange's substantive requirements and would make these 
requirements more readily accessible to members.
2. Statutory Basis
    Amex believes that the proposed rule change is consistent with 
Section 6(b) of the Act \3\ in general and furthers the objectives of 
Section 6(b)(5) \4\ in particular in that it is designed to prevent 
fraudulent and manipulative acts and practices, to promote just and 
equitable principles of trade, 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; and is not 
designed to permit unfair discrimination between customers, issuers, 
brokers and dealers.
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    \3\ 15 U.S.C. 78f(b).
    \4\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    Amex believes that the proposed rule change would impose no burden 
on competition.

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

    No written comments were solicited or received with respect to the 
proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing 
for Commission Action

    Within 35 days of the date of publication of this notice in the 
Federal Register or within such longer period (i) as the Commission may 
designate up to 90 days of such date if it finds such longer period to 
be appropriate and publishes its reasons for so finding, or (ii) as to 
which the Exchange consents, the Commission will:
    (A) by order approve such proposed rule change; or
    (B) institute proceedings to determine whether the proposed rule 
change should be disapproved.

IV. 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, 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 in the 
Commission's Public Reference Room. Copies of such filings will also be 
available for inspection and copying at the principal office of the 
Exchange. All submissions should refer to File No. SR-Amex-2001-67 and 
should be submitted by October 12, 2001.
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    \5\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\5\
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 01-23619 Filed 9-20-01; 8:45 am]
BILLING CODE 8010-01-M