[Federal Register Volume 67, Number 7 (Thursday, January 10, 2002)]
[Notices]
[Pages 1377-1378]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-633]



[[Page 1377]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-45234; File No. SR-AMEX-2001-109]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by the American Stock Exchange 
LLC Relating to the Pilot Program Eliminating Position and Exercise 
Limits for Certain Broad Based Index Options

January 3, 2002.
    Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 
(the ``Act),'' \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given 
that on December 26, 2001, the American Stock Exchange LLC (``Amex'' or 
the ``Exchange'') filed with the Securities and Exchange Commission 
(``SEC'' or ``Commission'') the proposed rule change as described in 
Items I and II below, which Items have been prepared by the Exchange. 
The Exchange has designated the proposed rule change as constituting a 
``non-controversial'' rule change under paragraph (f)(6) of Rule 19b-4 
under the Act \3\ which renders the proposal effective upon receipt of 
this filing by the Commission.\4\ The Commission is publishing this 
notice to solicit comments on the proposed rule change from interested 
persons and to grant accelerated approval to the proposed rule change.
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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 Exchange has represented that the proposed rule change: 
(i) Will not significantly affect the protection of investors or the 
public interest, (ii) will not impose any significant burden on 
competition; and (iii) will not become operative for 30 days after 
the date of this filing, unless otherwise accelerated by the 
Commission. The Exchange also has provided at least five business 
days notice to the Commission of its intent to file this proposed 
rule change, as required by Rule 19b-4 under the Act. id.
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I. Self-Regulatory Organization's Statement of the Terms of 
Substance of the Proposed Rule Change

    The Exchange seeks a six-month extension of the pilot program that 
provides for the elimination of position and exercise limits for the 
Major Market (``XMI'') and Institutional (``XII'') broad-based index 
options, as well as FLEX Options.

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
    On February 1, 1999, The Commission approved the elimination of 
position and exercise limits for the XMI and XII index options, as well 
as FLEX options on these indexes on a two-year basis (the ``Pilot 
Program'').\5\ The Pilot Program originally ended on February 1, 2001 
with an extension for six months approved on July 3, 2001.\6\ The 
purpose of this proposed rule change is to request a six-month 
extension of the Pilot Program.\7\
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    \5\ See Securities Exchange Act Release No. 41011, 64 FR 6405 
(February 9, 1999) (``Original Approval Order'').
    \6\ See Securities Exchange Act Release No. 44507, 66 FR 36348 
(July 11, 2001).
    \7\ By separate filing, the Exchange intends to seek permanent 
approval by the Commission of the Pilot Program.
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    The Original Approval Order required the Exchange to submit a 
report to the Commission regarding the status of the Pilot Program so 
that the Commission could use this information to evaluate any effects 
of the program.\8\ The Exchange submitted the required report to the 
Commission on May 22, 2001 in connection with the first six-month 
extension of the Pilot Program. The report indicated that from February 
1, 1999 through March 30, 2001, no customer and/or firm accounts 
reached a level of 100,000 or more options contracts in XMI or XII 
options. The Amex during the review period and the extended pilot 
program did not discover any instances where an account maintained an 
unusually large unhedged position. Accordingly, because the Exchange 
has not experienced any aberrations due to the large unhedged positions 
during the operation of the Pilot Program, it requests that the 
effectiveness of the Pilot Program be extended for an additional six 
months until July 3, 2002.
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    \8\ The Commission requests that the Amex update the Commission 
on any problems that have developed with the pilot since the last 
extension, including any compliance issues, and whether there have 
been any large unhedged positions that have raised concerns for the 
Amex. In addition, the Commission expects that the Amex will take 
prompt action, including timely communication with the Commission 
and other marketplace self-regulatory organizations responsible for 
oversight of trading in component stocks, should any unanticipated 
adverse market effects develop. See also Original Approval Order.
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2. Basis
    The proposed rule change is consistent with section 6(b) of the Act 
\9\ in general and furthers the objects 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 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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    \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 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 immediately effective pursuant 
to section 19(b)(3)(A) of the Act \11\ and Rule 19b-4(f)(6) thereunder 
\12\ because it: (i) Does not significantly affect the protection of 
investors or the public interest; (ii) does not impose any significant 
burden on competition; and (iii) does not, by its terms, become 
operative for 30 days after the date of the filing, or such shorter 
time as the Commission may designate if consistent with the protection 
of investors and the public interest; and the Exchange has given the 
Commission written notice of its intent to file the proposed rule 
change at least five business days prior to the filing date of the 
proposed rule change.
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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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    The Exchange has requested that the Commission accelerate the 
operative date of the proposal. In addition, the Exchange provided the 
Commission with notice of its intent to file the proposed rule change, 
along with a brief description and text of the proposed

[[Page 1378]]

rule change, more than five business days prior to the date of the 
filing of the proposed rule change.
    The Commission finds that it is appropriate to accelerate the 
operative date of the proposal and designate the proposal to become 
operative on January 4, 2002.\13\ Acceleration of the operative date 
will allow the Exchange to continue its Pilot Program without 
interruption. Further the Commission has approved a similar pilot 
program proposed by another options exchange.\14\
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    \13\ 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).
    \14\ See Securities Exchanges Act Release No. 44335 (May 22, 
2001), 66 FR 29369 (May 30, 2001) (SR-CBOE-2001-26).
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    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 Act.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views and 
arguments concerning the foregoing, including whether it 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 provision 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-2001-109 and should be 
submitted by January 31, 2002.

    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).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 02-633 Filed 1-9-02; 8:45 am]
BILLING CODE 8010-01-M