[Federal Register Volume 66, Number 194 (Friday, October 5, 2001)]
[Notices]
[Pages 51078-51080]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-24995]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-44889; File No. SR-Amex-2001-83]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by the American Stock Exchange 
LLC Amending Exchange Rule 220 Relating to Floor Broker Acceptance of 
Orders at the Specialist's Post

October 1, 2001.
    Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ and Rule 19b-4 \2\ thereunder, notice is hereby given 
that on October 1, 2001, the Amercian Stock Exchange LLC (``Amex'' or 
``Exchange'') filed with the Securities and Exchange Commission (the 
``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 Exchange Rule 220 to allow floor 
brokers to accept orders over telephones at or near the specialist's 
post.\3\
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    \3\ The Exchange previously filed notice of these amendments on 
September 6, 2001. However, that notice did not become immediately 
operative. See SR-Amex-2001-73, Release No. 34-44810 (September 18, 
2001), 66 FR 49053 (September 25, 2001). In this Notice (SR-Amex-
2001-83), the Exchange makes identical amendments and requests that 
they be immediately operative on October 1, 2001. Telephone 
conversation with Claire McGrath, Vice-President and Deputy General 
Counsel, Amex, and Florence Harmon, Senior Special Counsel, Division 
of Market Regulation, SEC (October 1, 2001).
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    The text of the proposed rule change appears below. New text is in 
italics; deletions are in brackets.

Section 6. Floor Wires

Rule 220  Communications to and on the Floor

    No member shall establish or maintain any telephonic or electronic 
communication between the Floor and any other location, or between 
locations on the Floor, without the prior written approval of the 
Exchange.
    Commentary
    .01  With the approval of the Exchange, a member or member 
organization may establish and maintain a telephone line which permits 
a non-

[[Page 51079]]

member located off the Floor to communicate with such member or member 
organization on the Floor. Except as provided in Commentary .03 below, 
[T]the Exchange will not approve the use of a portable telephone or 
other portable communication device on the Floor which would permit 
direct voice communication between members and non-members.
    .02  No change.
    .03  With the approval of the Exchange, floor brokers may use 
wireless telephone devices to receive off-floor orders from any source 
(i.e., members, broker-dealers, non-broker-dealers, or public 
customers) at the specialist's post where the security is traded. The 
following requirements and conditions shall apply to the floor broker's 
use of telephone services at the specialist's post:
    (1) Only those quotations that have been publicly disseminated 
pursuant to SEC Rule 11Ac1-1 may be provided over telephones at or near 
the specialist's post.
    (2) Floor Brokers may only receive orders over the telephone lines 
at the specialist post or the wireless telephone device during outgoing 
telephone calls initiated by the floor brokers.
    (3) Only those floor brokers properly qualified in accordance with 
applicable rules and regulations may accept orders from public 
customers pursuant to this Commentary.
    .04 [.03]  No change.
    .05 [.04]  No change.

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 Exchange included statements 
concerning the purpose of and basis for the proposed rule change and 
discussed and comments it received on the proposed rule change. The 
text of these statements may be examined at the places specified in 
Item IV 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
    Exchange rules and policies currently prohibit floor brokers from 
taking orders from off-floor at the specialist's post and require off-
floor orders to be received at the floor broker's booth. The Exchange 
believes that this prohibition, at times, impacts the fast and 
efficient routing and execution of orders at the Exchange. Therefore, 
the Exchange is now proposing to amend Exchange Rule 220 regarding 
communications to and on the floor to allow floor brokers to use 
telephones at or near the specialist's post or Exchange-provided 
wireless telephone devices to receive off-floor orders from any source 
(i.e., members, broker-dealers, non-broker-dealers or public 
customers). However, such orders would only be permitted to be received 
during outgoing conversations initiated by the floor broker. The 
Exchange notes that the wireless telephone devices currently in use by 
the Exchange would need to be reconfigured to allow outgoing phone 
calls to be made. Members and their employees would continue to be 
prohibited from using personal wireless voice communication devices on 
the trading floor.
    In addition, the following requirements and conditions would apply 
to the floor brokers' use of telephone services at or near the 
specialist's post: (i) Only those quotations that have been publicly 
disseminated pursuant to SEC Rule 11Ac1-1 may be provided over 
telephones at or near the specialist's post; (ii) floor brokers may 
only receive orders over the telephones during outgoing telephone calls 
that they have initiated; and (iii) only those floor brokers properly 
qualified in accordance with applicable rules and regulations may 
accept orders from public customers.\4\ The Exchange's policy regarding 
the use of time clocks at the specialist post would also be amended to 
allow floor brokers receiving orders over the telephone at or near a 
specialist post to use the time clock to stamp such order.
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    \4\ For example, floor brokers accepting orders from public 
customers are required to be qualified pursuant to Exchange Rule 
341. Any floor broker accepting an order from a public customer is 
required to be Series 7 qualified and registered with the Exchange 
by a member organization approved to conduct non-member customer 
business.
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    The Exchange intends to police compliance with the conditions 
applicable to use of telephones by floor brokers for the receipt of 
orders at the specialist's post through oversight and review of 
complaints from members at the trading posts as well as observations of 
floor officials and Exchange personnel.
    The Exchange believes that the use of the telephones by floor 
brokers to receive off-floor orders would provide more efficient order 
routing and execution, increase the speed of execution, and satisfy 
member and non-member customers in an increasingly competitive 
environment.
(2) Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act \5\ in general and furthers the objectives 
of section 6(b)(5) \6\ 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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    \5\ 15 U.S.C. 78f(b).
    \6\ 15 U.S.C. 78f(b)(5).
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    The Exchange also believes that the proposed rule change is 
consistent with section 6(c)(3)(B) of the Act.\7\ Under this section, 
it is the Exchange's responsibility to prescribe standards for 
training, experience and competence for persons associated with 
Exchange members and member organizations. The Exchange believes that 
this proposed rule change will establish an additional mechanism for 
the administration of the education program, which will enable 
registered persons to satisfy their continuing education obligations.
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    \7\ 15 U.S.C. 78f(c)(3)(B).
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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

    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

    The foregoing rule change has become effective pursuant to section 
19(b)(3)(A) of the Act \8\ and subparagraph (f)(6) of Rule 19b-4 \9\ 
thereunder because it does not: (i) Significantly affect the protection 
of investors or the public interest; (ii) impose any significant burden 
on competition; (iii) become operative for 30 days from the date on 
which it was filed, or such shorter time as the Commission may 
designate; and the Exchange has given the Commission

[[Page 51080]]

written notice of its intention to file the proposed rule change at 
least five business days prior to filing. At any time within 60 days of 
the filing of such proposed rule change, the Commission may summarily 
abrogate such rule change if it appears to the Commission that such 
action is necessary or appropriate in the public interest, for the 
protection of investors, or otherwise in furtherance of the purposes of 
the Act.
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    \8\ 15 U.S.C. 78s(b)(3)(A).
    \9\ 17 CFR 240.19b-4(f)(6).
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    The Commission notes that under rule 19b-4(f)(6)(iii), the proposal 
does not become operative for 30 days after the date of its filing, or 
such shorter time as the Commission may designate if consistent with 
the protection of investors and the public interest. The Exchange has 
requested that the Commission waive the five-day pre-filing requirement 
and designate that the proposed rule become operative on October 1, 
2001 due to the emergency situation caused by the attack on and 
destruction of the World Trade Center on September 11, 2001 and the 
resulting limitations on the Exchange's trading floor systems including 
its wired telephone lines.
    The Commission believes that it is consistent with the protection 
of investors and the public interest to waive the five-day pre-filing 
requirement and designate the proposal immediately operative on October 
1, 2001. Accelerating the operative date and waiving the pre-filing 
requirement will aid the Exchange in overcoming the damage caused to 
its telephone lines by the destruction of the World Trade Center on 
September 11, 2001. For this reason, the Commission finds good cause to 
designate that the proposal become operative on October 1, 2001.

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 that 
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 Section. Copies of such 
filing will also be available for inspection and copying at the 
principal office of the Amex. All submissions should refer to File No. 
SR-Amex-2001-83 and should be submitted by October 26, 2001.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\10\
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    \10\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 01-24995 Filed 10-4-01; 8:45 am]
BILLING CODE 8010-01-M