[Federal Register Volume 66, Number 233 (Tuesday, December 4, 2001)]
[Notices]
[Pages 63081-63083]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-29988]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-45106; File No. SR-Amex-2001-97]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by the American Stock Exchange 
LLC, To Allow for $0.50 Strike Price Intervals for Options Based on the 
iShares 100 Index Fund

November 27, 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 November 8, 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. On 
November 9, 2001, the Exchange filed Amendment No. 1 to the proposed 
rule change.\3\ The Commission is

[[Page 63082]]

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\ See Letter from Jeffrey Burns, Assistant General Counsel, 
Legal & Regulatory Department, Amex, to Nancy Sanow, Assistant 
Director, Division of Market Regulation (``Division''), Commission, 
dated November 9, 2001 (``Amendment No. 1''). Amendment No. 1 
clarified that the proposed rule change applies only to the strike 
prices of the iShares S&P 100 Index Fund and that the Exchange would 
be able to support a change in strike prices even though such a 
change would result in a slight increase in message traffic.
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I. Self-Regulatory Organization's Statement of the Terms of 
Substance of the Proposed Rule Change

    The Amex proposes to allow for one-half point ($0.50) strike price 
intervals for options based on the iShares 100 Index Fund (``OEF'').
    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
    The Exchange is proposing to establish one-half point ($0.50) 
strike price intervals for options on OEF,\4\ an exchange-traded fund 
(``ETF'') that represents ownership in an open-end management company 
established to hold a portfolio of stocks replicating the S&P 100 Index 
(``Index''). OEF holds substantially all of the securities of the Index 
in approximately the same proportions as reflected in the Index. 
Currently, OEF options and OEF are listed and traded on the Chicago 
Board Options Exchange, Inc. (``CBOE''); however, the Amex expects in 
the near future to also list and trade these products.
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    \4\ Telephone conversation between Jeffrey Burns, Assistant 
Counsel, Amex, and Steven Johnston, Special Counsel, Division, 
Commission, on November 26, 2001 (clarifying that Amex will file a 
separate proposed rule change and obtain approval before either: (1) 
Establishing any new strike price interval on an exchange-traded 
fund and other than OEF; or (2) establishing any new strike price 
interval on the OEF other than the $0.50 interval that is the 
subject of SR-Amex-2001-97) (``Telephone Conversation'').
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    The Exchange will list options on OEF pursuant to the criteria set 
forth in Interpretation .06 to Amex Rule 915.\5\ However, the Amex 
believes that it is appropriate to amend its existing strike price 
intervals for ETFs \6\ to permit the strike price interval for options 
on OEF to be set at $0.50.\7\ Currently, options on ETFs at the Amex 
have strike price intervals of one point ($1.00). The CBOE, however, 
recently received approval from the Commission to introduce $0.50 
strike price intervals on OEF, and accordingly, introduced the $0.50 
strike price interval on or about January 31, 2001.\8\
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    \5\ Amex Rule 915 describes the criteria for underlying 
securities. Specifically, Commentary .04 under Amex Rule 915 
indicates which securities are deemed appropriate for options 
trading.
    \6\ The Exchange received approval to trade options on ETFs on 
July 1, 1998. See Securities Exchange Act Release No. 40157 (July 1, 
1998) 63 FR 37426 (July 10, 1998) (Order Approving File No. SR-Amex-
96-44). As noted in the Exchange's filing and the Commission's 
approval order, strike price intervals for both 100- and 1000-share 
contracts are set to bracket the ETF share at one-point intervals up 
to a share price of $200.
    \7\ Telephone Conversation.
    \8\ See Securities Exchange Act Release No. 43969 (February 15, 
2001) 66 FR 11311 (February 23, 2001) (Notice of Filing and 
Immediate Effectiveness of File No. SR-CBOE-01-02).
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    The Amex believes that trading options contracts on OEF with one-
half point fixed strike prices will benefit investors by providing 
greater strike price choices and fostering competition between the 
options exchanges.\9\ The Exchange further asserts that it is 
appropriate to list options on the OEF with half-point strike prices to 
ensure that products traded on the Amex remain competitive.\10\
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    \9\ Telephone Conversation.
    \10\ Id.
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    Although the Exchange recognizes that adding additional strike 
prices on OEF options for trading under the proposed rule change may 
result in a slight increase in message traffic, the Exchange represents 
that it has the necessary systems capacity to support any additional 
strike prices on OEF options that may be added under the proposed rule.
2. Statutory Basis
    The Exchange represents that the proposed rule change is consistent 
with section 6(b) of the Act \11\ in general, and furthers the 
objectives of section 6(b)(5) of the Act \12\ in particular, in that it 
will permit trading in options based on OEF pursuant to strike 
intervals designed to promote just and equitable principles of trade, 
and thereby will provide investors with the ability to invest in 
options based on an additional Amex product.
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    \11\ 15 U.S.C. 78f(b).
    \12\ 15 U.S.C. 78f(b)(5).
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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 not necessary or appropriate in 
furtherance of the purposes of the Act.

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

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

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

    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 from the date of filing, 
or such shorter time as the Commission may designate if consistent with 
the protection of investors and the public interest, the proposed rule 
change has become effective pursuant to section 19(b)(3)(A) \13\ of the 
Act and Rule 19b-4(f)(6) \14\ thereunder.\15\
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    \13\ 15 U.S.C. 78s(b)(3)(A).
    \14\ 17 CFR 40.19b-4(f)(6).
    \15\ Under Rule 19b-4(f)(6)(iii), the Exchange must give 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 the rule change, or 
such shorter time as designated by the Commission. As required, the 
Exchange has provided the Commission with written notice of its 
intent to file the proposed rule change.
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    A proposed rule change filed under Rule 19b-4(f)(6) may 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 Exchange seeks to have the proposed rule change become 
operative immediately as of November 7, 2001 so that the proposed $0.50 
strike price intervals may be implemented immediately.
    The Commission believes that it is consistent with the protection 
of investors and the public interest that the proposed rule change, as 
amended, become operative immediately as of November 7, 2001.\16\ At 
any time within

[[Page 63083]]

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.\17\
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    \16\ For purposes only of accelerating the operative date of 
this proposal, the Commission has considered the proposed rule's 
impact on efficiency, competition, and capital formation. 15 U.S.C. 
78c(f).
    \17\ For purposes of calculating the 60-day abrogation date, the 
Commission considers the 60-day period to have commenced on November 
9, 2001, the date the Amex filed Amendment No. 1.
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IV. Solicitation of Comments

    Interested persons are invited to submit written data, views and 
arguments concerning the foregoing, including whether the proposed rule 
change, as amended, 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 
filing will also be available for inspection and copying at the 
principal office of the CBOE. All submissions should refer to File No. 
SR-Amex-2001-97 and should be submitted by December 26, 2001.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\18\
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    \18\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 01-29988 Filed 12-3-01; 8:45 am]
BILLING CODE 8010-01-M