[Federal Register Volume 67, Number 89 (Wednesday, May 8, 2002)]
[Notices]
[Pages 30984-30985]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-11338]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-45858; File No. SR-Amex-2002-02]


Self-Regulatory Organizations; Notice of Filing of Proposed Rule 
Change and Amendment Nos. 1 and 2 Thereto by the American Stock 
Exchange LLC Amending Exchange Equities and Options Rules to Provide 
for Decimal Pricing

May 1, 2002.
    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 January 14, 2002, 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 Amex. On March 18, 
2002, the Amex amended the proposed rule change.\3\ The Amex again 
amended the proposal on April 18, 2002.\4\ The Commission is publishing 
this notice to solicit comments on the proposed rule change, as 
amended, 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 Geraldine Brindisi, Vice President and 
Corporate Secretary, Amex, to Alton S. Harvey, Assistant Director, 
Division of Market Regulation (``Division''), Commission, dated 
March 14, 2002 (``Amendment No. 1''). In Amendment No. 1, the Amex 
made technical corrections to the proposed rule text.
    \4\ See letter from Claire P. McGrath, Senior Vice President and 
Deputy General Counsel, Amex, to Alton S. Harvey, Assistant 
Director, Division, Commission, dated April 17, 2002 (``Amendment 
No. 2''). In Amendment No. 2, the Amex: (1) deleted the term 
``Trading Increment'' from Amex Rule 1000, Commentary .03(e) and 
Amex Rule 1000A, Commentary, .02(e); and (2) amended Amex Rule 
952(a) to replace the term ``trading increments'' with ``quoting 
increments.''
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I. Self-Regulatory Organization's Statement of the Terms of 
Substance of the Proposed Rule Change

    The Amex proposes to amend its equities and options rules to 
provide for decimal pricing. The text of the proposed rule change, as 
amended, is available at the 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 Exchange 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 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
    The Exchange proposes to amend its equities and options rules to 
provide for decimal pricing, in accordance with the Commission's order 
requiring self-regulatory organizations to submit rule filings 
regarding decimal pricing pursuant to Section 19(b)(2) of the Act by 
January 14, 2002,\5\ and with the Commission's June 8, 2000 order 
establishing the framework for decimal pricing.\6\ On August 7, 2000, 
the Amex filed with the Commission amendments to its rules to 
accommodate quoting in decimals in equities and options \7\ in 
accordance with the Decimals Implementation Plan for the Equities and 
Options Markets submitted to the Commission on July 26, 2000 (the 
``Plan'').\8\ The Exchange began phasing in decimal quoting in equities 
and options on August 28, 2000, and began quoting all equities and 
options overlying exchange-listed stocks in decimals on January 29, 
2001. Options overlying Nasdaq stocks began a phased-in conversion to 
decimal quoting on March 12, 2001, with full conversion to decimal 
quoting in options overlying Nasdaq stocks on April 9, 2001.
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    \5\ See Securities Exchange Act Release No. 44846 (September 25, 
2001), 66 FR 49983 (October 1, 2001).
    \6\ See Securities Exchange Act Release No. 42914 (June 8, 
2000), 65 FR 38010 (June 19, 2000).
    \7\ See Securities Exchange Act Release No. 43231 (August 30, 
2000), 65 FR 54574 (September 8, 2000) (SR-Amex-2000-41).
    \8\ See letter from Dennis L. Covelli, Vice President, New York 
Stock Exchange, Inc. to Annette Nazareth, Director, Division, 
Commission, dated July 25, 2000.
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    The Exchange proposes to continue the current minimum price 
variation (``MPV'') for equities and options included in SR-Amex-2000-
41 \9\ of: $.01 MPV for equities, exchange traded funds and trust 
issued receipts; $.05 MPV for option issues quoted under $3 a contract; 
and $.10 MPV for option issues quoted at $3 a contract or greater. The 
proposed changes, therefore, primarily delete references to quoting in 
fractions that were retained in SR-Amex-2000-41 \10\ to accommodate 
securities that continued quoting in fractions during the phase-in of 
full decimalization.
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    \9\ See supra note 7.
    \10\ Id.
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    The Amex proposes to amend the following rules:
    Amex Rule 25. Cabinet Trading of Equity and Derivative Securities. 
Commentary .01 is proposed to be amended to replace \1/256\ of $1.00 
with $.01 as the minimum price which can be defined in a computer-
readable format by the Exchange's market data system to the facilities 
of the Consolidated Tape and Consolidated Quotations Systems.
    Amex Rule 103. General Floor Prohibitions. The Commentary .03 
example is proposed to be amended to delete the reference to 25\1/8\ 
and to Amex Rule 127. A number of the Exchange's previous rule changes, 
included in SR-Amex-2000-41,\11\ referred to Amex Rule 127 in so far as 
Amex Rule 127 provided that securities not subject to decimal pricing 
under the phase-in would continue to be subject to the specified 
minimum fraction. Because previous rule changes maintained references 
to both fractions and decimals to accommodate quoting in both under the 
pilot, a number of the following rule changes delete references to Amex 
Rule 127.
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    \11\ Id.
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    Amex Rule 109. ``Stopping'' Stock. This rule is proposed to be 
amended to delete reference to Amex Rule 127.
    Amex Rule 127. MPVs. This rule is proposed to be amended to provide 
that the MPV for dealings in equity securities shall be one cent 
($.01). Rule language stating that different minimum fractional changes 
that may be fixed by the Exchange is proposed to be deleted. 
Commentary.01, which refers to the phase-in of decimal pricing under 
the Plan as well as continued quoting in fractions of equities not 
subject to decimal pricing, is proposed to be deleted. The proposed 
rule change would also delete Commentary .02 referring to quoting in 
\1/32\ or \1/64\ of specified Index Fund Shares and Portfolio 
Depositary Receipts; and Commentary .03 referring to quoting in \1/16\ 
or \1/64\ of specified Index Fund Shares. Commentary .04 relating to 
trading on the Floor in \1/32\ or \1/64\ to

[[Page 30985]]

match bids and offers displayed by other markets to prevent trade-
throughs would also be deleted.
    Amex Rule 132. Price Adjustment of Open Orders on ``Ex-Date.'' This 
rule is proposed to be amended to substitute ``one cent increment'' for 
``MPV'' and would delete reference to Amex Rule 127.
    Amex Rule 134. Cash, Next Day and Seller's Option Transactions. 
This rule is proposed to be amended to delete reference to \1/8\ point 
and to Amex Rule 127.
    Amex Rule 154. Orders Left with Specialist. This rule is proposed 
to be amended to delete reference to \1/8\ point or higher for 
securities quoting in fractions and reference to Amex Rule 127.
    Amex Rule 1000. Portfolio Depositary Receipts. Commentary .03 to 
this rule is proposed to be amended to delete reference to minimum 
trading increment of \1/64\, replacing it with an MPV of one cent 
($.01).
    Amex Rule 1000A. Index Fund Shares. Commentary .02 to this rule is 
proposed to be amended to delete reference to \1/16\, \1/32\, and \1/
64\ minimum trading increments, and replace them with an MPV of one 
cent ($.01).
    Amex Rule 918. Trading Rotations, Halts and Suspensions; Amex Rule 
952. MPVs;
    Amex Rule 958. Options Transactions of Registered Traders; and Amex 
Rule 951C. Premium Bids and Offers. These rules are proposed to be 
amended to delete references to options series quoting in fractions and 
to the phase-in of decimals quoting under the Plan.
    Amex Rule 903G. Terms of FLEX Options. This rule is proposed to be 
amended to clarify that exercise prices and premiums for FLEX options 
are to be rounded to the nearest MPV as set forth in Amex Rule 952.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\12\ in general, and furthers the 
objectives of Section 6(b)(5) of the Act,\13\ 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, to remove impediments to and perfect the 
mechanism of a free and open market and a national market system, and 
to protect investors and the public interest.
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    \12\ 15 U.S.C. 78f(b).
    \13\ 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

    Within 35 days of the date of publication of this notice in the 
Federal Register or within such longer period (i) as the Commission may 
designate up to 90 days of such date if it finds such longer period to 
be appropriate and publishes its reasons for so finding, or (ii) as to 
which the Exchange consents, the Commission will:
    (A) by order approve such proposed rule change; or
    (B) institute proceedings to determine whether the proposed rule 
change should be disapproved.

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 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 the filing will also be 
available for inspection and copying at the principal offices of the 
Exchange. All submissions should refer to File No. SR-Amex-2002-02 and 
should be submitted by May 29, 2002.
    For the Commission, by the Division of Market Regulation, pursuant 
to delegated authority.\14\
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    \14\ 17 CFR 200.30-3(a)(12).

J. Lynn Taylor,
Assistant Secretary.
[FR Doc. 02-11338 Filed 5-7-02; 8:45 am]
BILLING CODE 8010-01-P