[Federal Register Volume 66, Number 203 (Friday, October 19, 2001)]
[Notices]
[Pages 53274-53276]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-26400]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-44929; File No. SR-Amex-2001-86]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by the American Stock Exchange 
LLC Relating to the Temporary Use of Personal Cellular Telephones

October 12, 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 11, 2001, the American Stock Exchange LLC (``Exchange'' 
or ``Amex'') filed with the Securities and Exchange Commission (``SEC'' 
or ``Commission'') the proposed rule change as described in Items I, 
II, and III below, which Items have been prepared by the Amex. The Amex 
asserts that the proposed rule change meets the criteria set forth in 
Rule 19b-4(f)(6) \3\ under the Act, which renders the proposal 
effective upon receipt of the filing by the Commission.\4\ 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.
    \3\ 17 CFR 240.19b-4(f)(6).
    \4\ The Amex has requested that the Commission waive the five-
business day pre-filing notice requirement and the 30-day operative 
delay. See Rule 19b-4(f)(6)(iii).
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I. Self-Regulatory Organization's Statement of the Terms of 
Substance of the Proposed Rule Change

    A proposed rule change adopting temporary Amex Rule 220T, which 
allowed Amex members to use personal cellular telephones on a temporary 
10-business day basis, became effective on filing on October 1, 
2001.\5\ The Amex adopted temporary Amex Rule 220T as a result of 
damage to Amex-provided telephones sustained during the September 11, 
2001, attacks on the World Trade Center. The Amex proposes to extend 
the effectiveness of temporary Amex Rule 220T through and including 
November 9, 2001, to permit members continue to use personal cellular 
telephones as long as their service on Amex-provided telephones 
continues to be limited as a result of damage sustained in the attacks 
on the World Trade Center. In addition, the Amex proposes to include in 
the text of temporary Amex Rule 220T procedures applicable to a floor 
broker who receives an incoming call on a cellular telephone or 
initiates an outgoing call on a cellular telephone.\6\
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    \5\ See Securities Exchange Act Release No. 44890 (October 1, 
2001), 66 FR 51482 (October 9, 2001) (notice of filing and immediate 
effectiveness of File No. SR-Amex-2001-82 (``October 1 Release'').
    \6\ These procedures were included in Amendment No. 2 to the 
proposal adopting temporary Amex Rule 220T on a temporary ten-
business day basis and were discussed in the October 1 Release. See 
note 5, supra. The current proposal codifies the procedures 
applicable to floor brokers in the text of temporary Amex Rule 220T.
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    The text of the proposed rule change is available at the Office of 
the Secretary, Amex, and at the Commission.

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 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. The 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
    Telecommunications facilities in the western half of downtown New 
York sustained serious damage as the result of the attacks on the World 
Trade Center on September 11, 2001. In light of the damage sustained 
during the September 11, 2001, attacks, the Amex filed a proposal with 
the Commission to adopt temporary Amex Rule 220T. The proposal to adopt 
temporary Amex Rule 220T became effective on filing on October 1, 
2001.\7\ Temporary Amex Rule 220T allowed Amex members to use personal 
cellular telephones on a temporary ten-business day basis, subject to 
the conditions in temporary Amex Rule 220T.
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    \7\ See October 1 Release, supra note 5.
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    The Amex notes that its staff has worked diligently with the Amex's 
primary telecommunications service providers and member firms to 
restore the damaged telecommunications facilities to full operational 
status. The repairs, however, have not been completed. Accordingly, the 
Amex seeks to extend the effectiveness of temporary Amex Rule 220T 
through and including November 9, 2001, to permit Amex members (i.e., 
specialists, registered traders, and floor brokers) to

[[Page 53275]]

use personal cellular telephones in the event that their service on the 
Amex's telephone system continues to be limited. In addition, the Amex 
proposes to amend temporary Amex rule 220T to include in the text of 
temporary Amex Rule 220T procedures applicable to a floor broker who 
receives an incoming call on a cellular telephone or initiates an 
outgoing call on a cellular telephone.
    Under temporary Amex Rule 220T, the use by members of personal 
cellular telephones is subject to the following conditions:
     A member must have (1) tested his or her Exchange-provided 
telephones and found significant limitations on service, and (2) 
furnished a written statement to the Exchange to that effect. Members 
that previously applied to use a personal cellular telephone will be 
required to reapply for the extension of the effectiveness of temporary 
Amex Rule 220T;
     A member may not use a personal cellular telephone once 
full service is restored to the member's or member organization's 
Exchange telephone systems;
     A member must maintain his or her cellular telephone 
records, including logs of calls placed, for a period of not less than 
one year. The Exchange reserves the right to inspect and/or examine 
such telephone records;
     If a floor broker receives an incoming call on a cellular 
telephone and the caller wishes to give the floor broker an order for a 
security traded at the post where the broker is standing, the broker 
must step out of the crowd prior to accepting the order. In contrast, 
if a broker receives an incoming call on a cellular telephone and the 
caller wishes to give the broker an order for a security traded at some 
other location on the floor, the broker does not have to leave the 
crowd where he or she is standing in order to receive the order. A 
floor broker also may initiate an outgoing call on a cellular telephone 
and (1) accept an order for a security traded at the post where the 
broker is standing without leaving the trading crowd, or (2) accept an 
order for a security traded at some other location on the floor; and
     Except as provided in temporary Amex Rule 220T, all other 
requirements applicable to the use of Exchange-provided telephones by 
members shall apply to the use by members of personal cellular 
telephones.\8\
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    \8\ The rules of the Exchange continue to prohibit individuals 
who are not properly qualified to take public orders for securities 
(i.e., non-Series 7 member or member firm employees) from 
interacting with the public. Surveillance of such telephone usage 
will be accomplished through the record-maintenance requirements of 
temporary Amex Rule 220T, which requires members to maintain OSC 
cellular telephone records for at least one year and to give the 
Exchange the authority to inspect such records.
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2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\9\ in general, and furthers the 
objectives of Section 6(b)(5),\10\ 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. The Exchange also believes that the proposed rule change is 
not designed to permit unfair discrimination between customers, 
issuers, brokers, and dealers.
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    \9\ 15 U.S.C. 78f(b).
    \10\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Amex believes that the proposed rule change will 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

    The Amex has filed the proposed rule change as a ``non-
controversial'' rule change pursuant to Section 19(b)(3)(A) of the Act 
\11\ and subparagraph (f)(6) of Rule 19b-4 thereunder.\12\ Because the 
foregoing proposed rule change: (1) Does not significantly affect the 
protection of investors or the public interest; (2) does not impose any 
significant burden on competition; and (3) does not become operative 
for 30 days after the date of the filing, or such shorter time as the 
Commission may designate, it has become effective pursuant to Section 
19(b)(3) of the Act and Rule 19b-4(f)(6) thereunder. At any time within 
60 days of the filing of the 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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    \11\ 15 U.S.C. 78s(b)(3)(A).
    \12\ 17 CFR 240.19b-4(f)(6).
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    A proposed rule change filed under Rule 19b-4(f)(6) normally does 
not become operative prior to 30 days after the date of filing. 
However, Rule 19b-4(f)(6)(iii) permits the Commission to designate a 
shorter time if such action is consistent with the protection of 
investors and the public interest. The Amex has asked the Commission to 
designate such shorter time period so that the proposed rule change may 
become operative immediately. In this regard, the Amex believes that it 
would be prudent to permit members to use personal cellular telephones 
as a temporary back up in the event that regular phone service is not 
fully restored. In addition, the Amex notes that the Commission 
previously has permitted floor brokers, lead market makers, 
specialists, and registered traders on the Pacific Exchange and the 
Philadelphia Stock Exchange to use personal cellular telephone to 
conduct business.\13\ Moreover, the Amex notes that its proposal 
contemplates the use of personal cellular telephones on a temporary 
basis until the current telecommunications difficulties resulting from 
the September 11, 2001, attacks on the World Trade Center are resolved.
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    \13\ See Securities Exchange Act Release Nos. 43972 (February 
15, 2001), 66 FR 12579 (February 27, 2001) (order approving File No. 
SR-PHLX-00-48); and 43836 (January 11, 2001), 66 FR 6727 (January 
22, 2001) (order approving File No. SR-PCX-00-33).
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    The Commission, consistent with the protection of investors and the 
public interest, has determined to make the proposed rule change 
operative immediately to allow Amex members to continue to use personal 
cellular telephones through and including November 9, 2001, subject to 
the requirements of temporary Amex Rule 220T.\14\ The Commission finds 
that permitting the proposal to become operative immediately is 
consistent with the protection of investors and the public interest 
because it will help the Amex to continue to operate effectively while 
the Exchange and its telecommunications service providers work to 
repair the damage to the Amex's telecommunications facilities resulting 
from the September 11, 2001, attacks on the World Trade Center.
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    \14\ For purposes only of accelerating the operative date of the 
proposal, the Commission has considered the proposed rule's impact 
on efficiency, competition, and capital formation. 15 U.S.C. 78c(f).
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    The Commission notes that temporary Amex Rule 220T is effective 
only on a temporary basis through and including November 9, 2001. In 
addition, the

[[Page 53276]]

Commission notes that the relief provided under temporary Amex Rule 
220T applies in limited circumstances. Specifically, the Commission 
notes that under temporary Amex Rule 220T a member may use a personal 
cellular telephone only if the member has provided the Amex with a 
written statement indicating that service on the member's Exchange-
provided telephone is limited significantly. In addition, a member may 
not continue to use a personal cellular telephone after full service is 
restored to the member's Amex telephone systems. The Commission also 
notes that temporary Amex Rule 220T provides safeguards in connection 
with the use of personal cellular telephones. In this regard, temporary 
Amex Rule 220T requires a member to maintain records of his or her 
cellular telephone calls, including logs of calls placed, for a period 
of not less than one year. In addition, as described more fully above, 
temporary Amex Rule 220T specifies procedures applicable to a floor 
broker who receives an incoming call on a cellular telephone or 
initiates an outgoing call on a cellular telephone.
    A proposed rule change filed under Rule 19b-4(f)(6) normally 
requires that the self-regulatory organization give the Commission 
written notice of its intent to file the proposed rule change, along 
with a brief description and text of the proposed rule change, at least 
five business days prior to the date of filing of the proposed rule 
change. However, Rule 196-4(f)(6)(iii) permits the Commission to waive 
the five-business day pre-filing notice requirement. The Amex has asked 
the Commission waive the pre-filing notice requirement. The Commission 
finds good cause to waive the five-business day pre-filing requirement 
because the Exchange's staff discussed with the Commission staff the 
need for an extension of temporary Amex Rule 220T prior to filing the 
proposed rule change. In addition, the Commission notes that the Amex 
submitted a draft of its proposal for review prior to filing the 
proposal.

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, as amended, 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 
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-2001-86 and should be submitted by November 9, 2001.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\15\
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    \15\ 17 CFR 200.30-3(a)(12).

Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 01-26400 Filed 10-8-01; 8:45 am]
BILLING CODE 8010-01-M