[Federal Register Volume 67, Number 11 (Wednesday, January 16, 2002)]
[Notices]
[Pages 2255-2256]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-1099]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-45260; File No. SR-Amex-2001-19]


Self-Regulatory Organizations; Order Approving a Proposed Rule 
Change and Amendment Nos. 1, 2, 3 and 4 Thereto by the American Stock 
Exchange LLC Relating to Its Performance Evaluation and Allocations 
Procedures

January 9, 2002.
    On March 19, 2001, the American Stock Exchange LLC (``Amex'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``SEC'' or ``Commission''), pursuant to section 19(b)(1) of the 
Securities Exchange Act of 1934 (``Act'')\1\ and Rule 19b-4 
thereunder,\2\ a proposed rule change to codify the Exchange's 
performance evaluation and allocations procedures. On May 31, 2001, the 
Exchange submitted Amendment No. 1 to the proposed rule change.\3\ On 
August 13, 2001, the Exchange submitted Amendment No. 2 to the proposed 
rule change.\4\ On August 27, 2001, the Exchange submitted Amendment 
No. 3 to the proposed rule change.\5\ The proposed rule change, as 
amended, was published in the Federal Register on October 31, 2001.\6\ 
On December 18, 2001, the Exchange submitted Amendment No. 4 to the 
proposed rule change.\7\ The Commission received no comments on the 
proposed rule change. This order approves the proposed rule change, as 
amended, and approves Amendment No. 4 on an accelerated basis.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Letter from Bill Floyd-Jones, Jr., Assistant General 
Counsel, Legal and Regulatory, Amex, to Katherine A. England, 
Assistant Director, Division of Market Regulation (``Division''), 
Commission (May 31, 2001). Amendment No. 1 adds discussion to the 
purpose section of the proposal regarding the ability of the 
Performance Committee to take appropriate action should a member or 
member organization fail without a reasonable excuse to meet with 
the committee after receiving notice. In addition, Amendment No. 1 
corrects structural and typographical errors that appeared in the 
proposed rule language.
    \4\ See Letter from Bill Floyd-Jones, Jr., Assistant General 
Counsel, Legal and Regulatory, Amex, to Katherine A. England, 
Assistant Director, Division, Commission (August 10, 2001). 
Amendment No. 2 adds a reference to the Special Allocations 
Committee in the proposal and proposed rule text; adds allocations 
procedures for structured products and Exchange Traded Funds; and 
makes technical changes to the proposed rule test.
    \5\ See Letter from Bill Floyd-Jones, Jr., Assistant General 
Counsel, Legal and Regulatory, Amex, to Katherine A. England, 
Assistant Director, Division, Commission (August 24, 2001). 
Amendment No. 3 clarifies the Performance and Allocations Committee 
review procedures.
    \6\ See Securities Exchange Act Release No. 44972, (October 23, 
2001), 66 FR 55031 (SR-Amex-2001-19).
    \7\ See Letter from Geraldine Brindisi, Vice President and 
Corporate Secretary, Amex, to Katherine A. England, Assistant 
Director, Division of Market Regulation (``Division''), Commission 
(December 14, 2001). Amendment No. 4 (1) clarifies that the 
Adjudicatory Council shall review the written statements and 
supporting documents submitted by the appellant and Committee in 
connection with the appeal; (2) specifies in the proposed rule text 
that the specialist will receive written notice or notice will be 
posted on one of the Exchange's websites of allocation decisions by 
the Allocations Committee; (3) decreases the number of days an 
appellant would have to submit a timely application for review; and 
(4) makes technical changes to the proposed rule text.
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I. Description of the Proposed Rule Change

    The Exchange proposes to adopt Amex Rules 26 and 27 to codify the

[[Page 2256]]

Exchange's performance evaluation and allocations procedures in order 
to make them readily available in one accessible location. Performance 
evaluation is the process by which the Exchange reviews Floor member 
conduct and takes remedial action where necessary to improve 
performance. The registration of specialists (``allocations'') is the 
process by which the Exchange matches appropriate specialists to 
particular securities.
    Proposed Rule 26 describes the composition of the Performance 
Committee, and allows the Performance Committee to delegate some or all 
its responsibilities to one or more subcommittees consisting of six 
persons. Proposed Rule 26 also describes the responsibilities of the 
Performance Committee with respect to specialists, registered traders, 
and brokers, including remedial actions available to the Performance 
Committee with respect to each group of Floor members.
    Proposed Rule 27 describes the composition and responsibilities of 
the Options and Equities Allocations Committees. In addition, the 
Exchange represents that the Special Allocations Committee allocates 
securities that are not allocated by the Options or Equities 
Allocations Committees and securities with special characteristics as 
may be determined by the Chief Executive Officer of the Exchange or his 
or her designee.

II. Discussion

    The Commission finds that the proposed rule change, as amended, is 
consistent with the requirements of the Act and the rules and 
regulations thereunder applicable to a national securities exchange.\8\ 
In particular, the Commission finds that the proposal, as amended, is 
consistent with section 6(b)(5) of the Act,\9\ which requires, among 
other things, that the Exchange's procedures are designed to prevent 
fraudulent and manipulative acts and practices, to promote just and 
equitable principles of trade, and, in general, to protect investors 
and the public interest.
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    \8\ In approving this proposed rule change, the Commission has 
considered its impact on efficiency, competition, and capital 
formation. 15 U.S.C. 78c(f).
    \9\ 15 U.S.C. 78f(b)(5).
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    The Commission believes that codifying the Exchange's performance 
evaluation and allocations procedures should help the Exchange to 
ensure quality markets by monitoring and encouraging the performance 
and competition among specialists and other Floor members, thereby 
protecting investors and the public interest.

III. Amendment No. 4

    The Commission finds good cause for approving Amendment No. 4 prior 
to the thirtieth day after notice of publication in the Federal 
Register. In addition to making minor technical changes to the proposed 
rule language, Amendment No. 4 (1) clarifies that the Adjudicatory 
Council shall review the written statements and supporting documents 
submitted by the appellant and Committee in connection with the appeal; 
(2) specifies in the proposed rule text that the specialist will 
receive written notice or notice will be posted on one of the 
Exchange's Web sites of allocation decisions by the Allocations 
Committee; and (3) decreases the number of days an appellant would have 
to submit a timely application for review.\10\ The Commission finds 
that Amendment No. 4 to the proposed rule enhances the fairness of Amex 
procedures for the evaluation of specialists' performance and 
allocation measures. The Commission believes that it is not necessary 
to separately solicit comment on Amendment No. 4 before approving this 
proposal because it received no comments in response to the initial 
publication of the proposed rule change and Amendment No. 4 makes 
changes that improve the rule. The Commission therefore finds that the 
approval of Amendment No. 4 on an accelerated basis is appropriate.
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    \10\ The Amex, however, determined that it would not further 
amend the proposed rule to require that the Performance Committee 
maintain a verbatim record of its meetings, although the rule as 
proposed requires that a verbatim record of Adjudicatory Council 
proceedings be kept.
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IV. Solicitation of Comments

    Interested persons are invited to submit written data, views and 
arguments concerning Amendment No. 4, including whether the amendment 
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 Amex. All 
submissions should refer to File No. SR-Amex-2001-19 and should be 
submitted by February 6, 2002.

V. Conclusion

    It Is Therefore Ordered, pursuant to section 19(b)(2) of the 
ACt,\11\ that the proposed rule change (SR-AMEX-2001-19), as amended, 
is approved.
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    \11\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Market Regulation, 
pursuant to the delegated authority.\12\
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    \12\ 17 CFR 200.30-2(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 02-1099 Filed 1-15-02; 8:45 am]
BILLING CODE 8010-01-M