[Federal Register Volume 67, Number 233 (Wednesday, December 4, 2002)]
[Notices]
[Pages 72247-72251]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-30681]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-46923; File No. SR-Amex-2002-92]


Self-Regulatory Organizations; Notice of Filing and Order 
Granting Accelerated Approval of a Proposed Rule Change by the American 
Stock Exchange LLC Relating to the Listing and Trading of Corporate 
Bond TRACERS Units Representing Ownership Interests in a Trust Linked 
to a Basket of Investment Grade Fixed Income Securities

November 27, 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 November 5, 2002, the American Stock Exchange LLC (``Amex'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission'' or ``SEC'') the proposed rule change as described in 
items I, and II below, which items have been prepared by the Exchange. 
The Commission is publishing this notice to solicit comments on the 
proposed rule change from interested persons and is approving the 
proposal on an accelerated basis.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to approve for listing and trading under 
section 107A of the Amex Company Guide (``Company Guide''), trust 
certificates linked to a basket of investment-grade fixed-income 
corporate debt instruments.

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 III 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 the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    Under section 107A of the Company Guide, the Exchange may approve 
for listing and trading securities which cannot be readily categorized 
under the listing criteria for common and preferred stocks, bonds, 
debentures, or warrants.\3\ The Amex proposes to list for trading under 
section 107A of the Company Guide, Corporate Bond TRACERS Units (the 
``Units'') representing ownership interests in the Structured Asset 
Trust Repackaging Series 2002------- (the ``Trust''),\4\ a special 
purpose entity to be formed by Morgan Stanley Dean Witter (``MSDW'') 
Structured Asset Corporation (``SAC''),\5\

[[Page 72248]]

the depositor, and the trustee of the Trust pursuant to a trust 
agreement, which will be entered into on the date that the Units are 
issued. The assets of the Trust will consist of a basket or portfolio 
of not less than 15 investment-grade fixed-income securities (the 
``Underlying Corporate Bonds'').
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    \3\ See Securities Exchange Act Release No. 27753 (March 1, 
1990), 55 FR 8626 (March 8, 1990) (order approving File No. SR-Amex-
89-29).
    \4\ A series number will be assigned when the Trust is 
established. Pursuant to a telephone conversation between Jeffrey P. 
Burns, Assistant General Counsel, Amex, and Hong-Anh Tran, Special 
Counsel, Division of Market Regulation (``Division''), Commission, 
dated November 14, 2002.
    \5\ SAC is a wholly-owned special purpose entity of Morgan 
Stanley and the registrant under form S-3 Registration Statement 
(No. 333-64879) under which the securities will be issued.
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    The issuance of the Units will be a repackaging of the Underlying 
Corporate Bonds with the obligation of the Trust to make distributions 
to holders of the Units depending on the amount of distributions 
received by the Trust on the Underlying Corporate Bonds. Due to the 
pass-through and passive nature of the Units, the Exchange intends to 
rely on the asset and stockholder equity of the corporate issuer, 
parent or guarantor of such issuer of the Underlying Corporate Bonds 
rather than the Trust to meet the requirement in section 107A of the 
Company Guide. The distribution and principal amount/aggregate market 
value requirements found in sections 107A(b) and (c), respectively, 
will otherwise be met by the Trust as issuer of the Units.\6\ The 
corporate issuer, parent or guarantor of such issuer of each of the 
Underlying Corporate Bonds will meet or exceed the requirements of 
section 107A of the Company Guide.\7\ Further, the Units will initially 
conform to the listing guidelines under section 107A,\8\ and the 
continued listing guidelines under sections 1001-1003 \9\ of the 
Company Guide. At the time of issuance, the Units will receive an 
investment grade rating from a nationally recognized securities rating 
organization (an ``NRSRO'').
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    \6\ Telephone conversation between Jeff P. Burns, Assistant 
General Counsel, Amex, and Florence Harmon, Senior Special Counsel, 
Division, Commission, on November 26, 2002.
    \7\ See section 104 of the Company Guide permitting the Exchange 
to list corporate debt securities where the issuer of equity 
securities listed on the Amex, New York Stock Exchange (``NYSE'') or 
Nasdaq National Market (``Nasdaq''), directly or indirectly owns a 
majority interest in, or is under common control with, the issuer of 
the debt security or has guaranteed the debt security.
    \8\ The initial listing standards for the Units require: (1) A 
minimum public distribution of one million units; (2) a minimum of 
400 shareholders; (3) a market value of at least $4 million; and (4) 
a term of at least one year. However, if traded in thousand dollar 
denominations, then there is no minimum public distribution and 
holder requirement. In addition, the listing guidelines provide that 
the issuer have assets in excess of $100 million, stockholder's 
equity of at least $10 million, and pre-tax income of at least 
$750,000 in the last fiscal year or in two of the three prior fiscal 
years. In the case of an issuer which is unable to satisfy the 
earning criteria stated in section 101 of the Company Guide, the 
Exchange will require the issuer to have the following: (1) Assets 
in excess of $200 million and stockholders' equity of at least $10 
million; or (2) assets in excess of $100 million and stockholders' 
equity of at least $20 million.
    \9\ The Exchange's continued listing guidelines are set forth in 
sections 1001 through 1003 of part 10 to the Exchange's Company 
Guide. Section 1002(b) of the Company Guide states that the Exchange 
will consider removing from listing any security where, in the 
opinion of the Exchange, it appears that the extent of public 
distribution or aggregate market value has become so reduced to make 
further dealings on the Exchange inadvisable. With respect to 
continued listing guidelines for distribution of the Units, the 
Exchange will rely, in part, on the guidelines for bonds in section 
1003(b)(iv). Section 1003(b)(iv)(A) provides that the Exchange will 
normally consider suspending dealings in, or removing from the list, 
a security if the aggregate market value or the principal amount of 
bonds publicly held is less than $400,000.
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    The Exchange states that the basket of Underlying Corporate Bonds 
will not be managed and will generally remain static over the term of 
the Units. The Units provide for periodic distributions of interest 
dependent on the interest paid by the Underlying Corporate Bonds. To 
insure periodic interest distributions, the Underlying Corporate Bonds 
held by the Trust will have stepped or staggered interest payment 
dates. Principal distributions on the Units are expected to be made on 
or about the dates that correspond to the maturity dates of the 
Underlying Corporate Bonds. However, some of the Underlying Corporate 
Bonds may have redemption provisions, and in the event of an early 
redemption or other liquidation (e.g., upon an event of default) of the 
Underlying Corporate Bonds, the proceeds from such redemption 
(including any amortization payments) or liquidation will be 
distributed pro rata to the holders of the Units.\10\ Each Underlying 
Corporate Bond will be issued by a corporate issuer and purchased in 
the secondary market.
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    \10\ The Trust will pay to holders of the Units interest and 
principal distributions pursuant to the schedule set forth in the 
prospectus. Among other things, the schedule discloses to holders of 
the Units, the maturity dates of the Underlying Corporate Bonds. 
Upon such distributions, holders of the Units will receive a report 
or notification regarding interest and principal payments showing 
the remaining Underlying Corporate Bonds.
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    Holders of the Units will receive interest on the face value of the 
Underlying Corporate Bonds in an amount to be determined at the time of 
issuance of the Units and disclosed to investors. The rate of interest 
payments will be based upon prevailing interest rates at the time of 
issuance and made to the extent that coupon payments are received from 
the Underlying Corporate Bonds. Distributions of interest will be made 
periodically. Investors will also be entitled to be repaid the 
principal of their Units from the proceeds of the principal payments on 
the Underlying Corporate Bonds. The payout or return to investors on 
the Units will not be leveraged.
    The Units will mature on the latest maturity date of the Underlying 
Corporate Bonds. Holders of the Units will have no direct ability to 
exercise any of the rights of a holder of the Underlying Corporate 
Bonds. However, holders of the Units as a group will have the right to 
direct the Trust in its exercise of its rights as a holder of the 
Underlying Corporate Bonds.
    The Exchange states that the proposed Units are similar to equity 
linked notes (``ELNs''), previously approved by the Commission, except 
that the cash flow from the proposed Units will come from a basket of 
investment-grade corporate bonds as compared to a single equity, basket 
of equity securities or equity index in the case of an ELN.\11\ In 
addition, ELNs may or may not pay interest while the Units will pay 
interest periodically based on the pass-through nature of the 
structure. Also, publicly issued asset backed securities that repackage 
a single underlying corporate debt obligation are currently listed and 
traded on the NYSE.\12\ The proposed Units are similar to those 
repackaging transactions, except that the Trust will own more than one 
corporate debt obligation. In addition, the Exchange recently filed a 
similar proposal to list and trade asset-backed securities representing 
ownership interest in a trust consisting of a basket of investment-
grade fixed-income

[[Page 72249]]

securities.\13\ Accordingly, the Exchange proposes to provide for the 
listing and trading of the Units where the Underlying Corporate Bonds 
meet the Exchange's Bond and Debenture Listing Standards set forth in 
section 104 of the Company Guide. The Exchange represents that all of 
the Underlying Corporate Bonds in the proposed basket will meet or 
exceed these listing standards.
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    \11\ See e.g., Securities Exchange Act Release Nos. 44483 (June 
27, 2001), 66 FR 35677 (July 6, 2001) (approving the listing and 
trading of non-principal protected exchangeable notes linked to the 
Institutional Holdings Index); 44437 (June 18, 2001), 66 FR 33585 
(June 22, 2001) (approving the listing and trading of non-principal 
protected exchangeable notes linked to the Industrial 15 Index); 
44342 (May 23, 2001), 66 FR 29613 (May 31, 2001) (approving the 
listing and trading of non-principal protected exchangeable notes 
linked to the Select Ten Index); 42582 (March 27, 2000), 65 FR 17685 
(April 4, 2000) (approving the listing and trading of notes linked 
to a basket of no more than 20 equity securities); 40956 (January 
20, 1999), 64 FR 4480 (January 28, 1999) (approving the listing and 
trading of notes linked to Select Sector SPDRs); 37533 (August 7, 
1996), 61 FR 42075 (August 13, 1996) (approving the listing and 
trading of the Top Ten Yield MITTS); and 32343 (May 20, 1993), 58 FR 
30833 (May 27, 1993) (listing and trading of equity linked 
securities). See also Securities Exchange Act Release No. 41334 
(April 27, 1999), 64 FR 23883 (May 4, 1999) (Bond Index Term Notes).
    \12\ See e.g. Structured Asset Trust Unit Repackagings 
(SATURNS), CSFB USA Debenture Backed Series 2002-10, 1,330,000 of 
7.00% Class A Callable Units, dated August 15, 2002 and trading 
under the symbol ``MKK''; 1,380,000 PreferredPlus 8.375% Trust 
Certificates underlying 7.05% Debentures of Citizens Communications 
Company, dated August 24, 2001 and trading under the symbol ``PIY''; 
and 1,980,000 Corporate Backed Trust Certificates, Royal & Sun 
Alliance Bond Backed Series 2002-2, underlying securities 8.95% 
subordinated guaranteed bonds issued by Royal & Sun Alliance 
Insurance Group plc, dated February 11, 2002 and trading under the 
symbol ``CCS.''
    \13\ See Securities Exchange Act Release No. 46835 (November 14, 
2002), 67 FR 70271 (November 21, 2002).
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    The Exchange's Bond and Debenture Listing Standards in section 104 
of the Company Guide provide for the listing of individual bond or 
debenture issuances provided the issue has an aggregate market value or 
principal amount of at least $5 million and any of: (1) The issuer of 
the debt security has equity securities listed on the Exchange (or on 
the NYSE or on Nasdaq); (2) an issuer of equity securities listed on 
the Exchange (or on the NYSE or on Nasdaq) directly or indirectly owns 
a majority interest in, or is under common control with, the issuer of 
the debt security; (3) an issuer of equity securities listed on the 
Exchange (or on the NYSE or on Nasdaq) has guaranteed the debt 
security; (4) a NRSRO has assigned a current rating to the debt 
security that is no lower than a Standard & Poor's Corporation 
(``S&P'') ``B'' rating or equivalent rating by another NRSRO; or (5) or 
if no NRSRO has assigned a rating to the issue, an NRSRO has currently 
assigned (i) an investment grade rating to an immediately senior issue 
or (ii) a rating that is no lower than an S&P ``B'' rating or an 
equivalent rating by another NRSRO to a pari passu or junior issue.
    In addition to the Exchange's Bond and Debenture Listing Standards, 
an Underlying Corporate Bond must also be of investment grade quality 
as rated by a NRSRO and at least 75% of the underlying basket is 
required to contain Underlying Corporate Bonds from issuances of $100 
million or more. The payment of principal of the Units is expected to 
be made upon the maturity of each Underlying Corporate Bond unless it 
is paid upon an earlier redemption (including any amortization 
payments) or liquidation, as discussed above, with the maturity date of 
the Units being the latest maturity date of the Underlying Corporate 
Bonds. Amortization of the Units will be based on (1) the respective 
maturities of the Underlying Corporate Bonds; (2) principal payout 
amounts reflecting the pro-rata principal amount of maturing Underlying 
Corporate Bonds; and (3) any early redemption or liquidation of the 
Underlying Corporate Bonds.
    Investors will be able to obtain the prices for the Underlying 
Corporate Bonds through Bloomberg L.P. (``Bloomberg'') or other market 
vendors, including the broker-dealer through whom the investor 
purchased the Units. In addition, the Bond Market Association provides 
links to price and other bond information sources on its investor web 
site at http://www.investinginbonds.com. Transaction prices and volume 
data for the most actively traded bonds on the exchanges are also 
published daily in newspapers and on a variety of financial websites. 
The National Association of Securities Dealers, Inc. (``NASD'') Trade 
Reporting and Compliance Engine (TRACE) will also help investors obtain 
transaction information for most corporate debt securities, such as 
investment grade corporate bonds.\14\ For a fee, investors can have 
access to intra-day bellwether quotes.\15\ Price quotes are also 
available to institutional investors via proprietary systems such as 
Bloomberg, Reuters and Dow Jones Telerate. Valuation prices \16\ and 
analytical data may be obtained through vendors such as Bridge 
Information Systems, Muller Data, Capital Management Sciences, 
Interactive Data Corporation and Barra.
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    \14\ See Securities Exchange Act Release No. 43873 (January 23, 
2001), 66 FR 8131 (January 29, 2001). Investors are able to access 
TRACE information at http://www.nasdbondinfo.com/.
    \15\ Corporate prices are available at 20-minute intervals from 
Capital Management Services at http://www.bondvu.com/.
    \16\ ``Valuation Prices'' refer to an estimated price that has 
been determined based on an analytical evaluation of a bond in 
relation to similar bonds that have traded. Valuation prices are 
based on bond characteristics, market performance, changes in the 
level of interest rates, market expectations and other factors that 
influence a bond's value.
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    The prices of the Underlying Corporate Bonds generally will be 
determined by one or more market makers in accordance with applicable 
statutory rules, self-regulatory organization rules and generally 
accepted accounting principles regarding the valuation of securities.
    The Units will be listed in $1,000 denominations with the 
Exchange's existing debt floor trading rules applying to trading. 
First, pursuant to Amex rule 411, the Exchange will impose a duty of 
due diligence on its members and member firms to learn the essential 
facts relating to every customer prior to trading the Units.\17\ 
Second, the Units will be subject to the debt margin rules of the 
Exchange.\18\ Third, the Exchange will, prior to trading the Units, 
distribute a circular to the membership providing guidance with regard 
to member firm compliance responsibilities (including suitability 
recommendations) when handling transactions in the Units and 
highlighting the special risks and characteristics of the Units. With 
respect to suitability recommendations and risks, the Exchange will 
require members, member organizations and employees thereof 
recommending a transaction in the Units: (1) To determine that such 
transaction is suitable for the customer; and (2) to have a reasonable 
basis for believing that the customer can evaluate the special 
characteristics of, and is able to bear the financial risks of such 
transaction.
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    \17\ Amex rule 411 requires that every member, member firm or 
member corporation use due diligence to learn the essential facts, 
relative to every customer and to every order or account accepted.
    \18\ See Amex rule 462.
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    The Exchange represents that its surveillance procedures are 
adequate to properly monitor the trading of the Units. Specifically, 
the Amex will rely on its existing surveillance procedures governing 
debt, which have been deemed adequate under the Act. In addition, the 
Exchange also has a general policy, which prohibits the distribution of 
material, non-public information by its employees.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with section 6 of the Act,\19\ in general, and furthers the objectives 
of section 6(b)(5),\20\ 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 mechanisms of a free and open market and, in general, protect 
investors and the public interest.
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    \19\ 15 U.S.C. 78f(b).
    \20\ 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

    The Exchange did not receive any written on the proposed rule 
change.

III. Solicitation of Comments

    Interested persons are invited to submit written data, views and 
arguments concerning the foregoing,

[[Page 72250]]

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 such filing will also be available for 
inspection and copying at the principal office of the Exchange. All 
submissions should refer to File No. SR-Amex-2002-92 and should be 
submitted by December 26, 2002.

IV. Commission's Findings and Order Granting Accelerated Approval of 
Proposed Rule Change

    After careful consideration, the Commission finds that the proposed 
rule change is consistent with the requirements of the Act and the 
rules and regulations thereunder applicable to the national securities 
exchange, and, in particular, with the requirements of section 6(b)(5) 
of the Act.\21\ The Commission finds that this proposal is similar to 
several approved equity-linked instruments currently listed and traded 
on the Amex,\22\ as well as to asset-backed securities listed and 
traded on the NYSE.\23\ In addition, the Commission recently approved a 
similar proposal to list and trade asset-backed securities representing 
ownership interest in a trust consisting of a basket of investment-
grade fixed-income securities.\24\ Accordingly, the Commission finds 
that the listing and trading of the Units are consistent with the Act 
and will promote just and equitable principles of trade, foster 
cooperation and coordination with persons engaged in regulating, 
clearing, settling, processing information with respect to, and 
facilitating transactions in securities, and, in general, protect 
investors and the public interest consistent with Securities 6(b)(5) of 
the Act.\25\
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    \21\ Id.
    \22\ See Securities Exchange Act Release Nos. 45160 (December 
17, 2001), 66 FR 66485 (December 26, 2001) (approving the listing 
and trading of non-principal protected notes linked to the Balanced 
Strategy Index) (File No. SR-Amex-2001-91); 44483 (June 27, 2001), 
66 FR 35677 (July 6, 2001) (approving the listing and trading of 
non-principal protected notes linked to the Institutional Holdings 
Index) (File No. SR-Amex-2001-40); 44437 (June 18, 2001), 66 FR 
33585 (June 22, 2001) (approving the listing and trading of non-
principal protected notes linked to the Industrial 15 Index) (File 
No. SR-Amex-2001-39); 44342 (May 23, 2001), 66 FR 29613 (May 31, 
2001) (accelerated approval order for the listing and trading of 
Select Ten Notes) (File No. SR-Amex-2001-28); 42582 (March 27, 
2000), 65 FR 17685 (April 4, 2000) (accelerated approval order for 
the listing and trading of notes linked to a basket of no more than 
20 equity securities) (File No. SR-Amex-99-42); 41546 (June 22, 
1999), 64 FR 35222 (June 30, 1999) (accelerated approval order for 
the listing and trading of notes linked to a narrow-based index with 
a non-principal protected put option) (File No. SR-Amex-99-15); 
39402 (December 4, 1997), 62 FR 65459 (December 12, 1997) (notice of 
immediate effectiveness for the listing and trading non-principal 
protected commodity preferred securities linked to certain 
commodities indices) (File No. SR-Amex-97-47); 37533 (August 7, 
1996), 61 FR 42075 (August 13, 1996) (accelerated approval order for 
the listing and trading of the Top Ten Yield Market Index Target 
Term Securities (``MITTS'')) (File No. SR-Amex-96-28); 33495 
(January 19, 1994), 59 FR 3883 (January 27, 1994) (accelerated 
approval order for the listing and trading of Stock Upside Note 
Securities) (File No. SR-Amex-93-40); and 32343 (May 20, 1993), 58 
FR 30833 (May 27, 1993) (accelerated approval order for the listing 
and trading of non-principal protected notes linked to a single 
equity security) (File No. SR-Amex-92-42).
    \23\ See e.g., supra note 12.
    \24\ See supra note 13.
    \25\ 15 U.S.C. 78f(b)(5). In approving this rule, the Commission 
notes that it has considered the proposed rule's impact on 
efficiency, competition, and capital formation. 15 U.S.C. 78c(f).
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    As described more fully above, the Units are asset-backed 
securities and represent a repackaging of the Underlying Corporate 
Bonds, subject to certain distribution of interest obligations of the 
Trust. The Units are not leveraged instruments. The Units are debt 
instruments whose price will still be derived and based upon the value 
of the Underlying Corporate Bonds. The Exchange represents that the 
value of the Underlying Corporate Bonds will be determined by one or 
more market makers, in accordance with Exchange rules and generally 
accepted principles of accounting regarding the valuation of 
securities. Investors are guaranteed at least the principal amount that 
they paid for the Underlying Corporate Bonds. In addition, holders of 
the Units will receive interest on the face value of the Underlying 
Corporate Bonds in an amount to be determined at the time of issuance 
of the Units and disclosed to investors. The rate of interest payments 
will be based upon prevailing interest rates at the time of issuance 
and made to the extent that coupon payments are received from the 
Underlying Corporate Bonds. Distributions of interest will be made 
periodically. In addition, the Units will mature on the latest maturity 
date of the Underlying Corporate Bonds. However, due to the pass-
through nature of Units, the level of risk involved in the purchase or 
sale of the Unit is similar to the risk involved in the purchase or 
sale of traditional common stock. The Commission notes that asset-
backed securities that repackage a single underlying debt instrument 
are currently listed and traded on the NYSE. However, because the Units 
are asset-backed securities that repackage a basket of Underlying 
Corporate Bonds, instead of a single underlying corporate bond, there 
are several issues regarding the trading of this type of product that 
the Exchange must address.
    The Commission notes that the Exchange's rules and procedures that 
address the special concerns attendant to the trading of hybrid 
securities will be applicable to the Units. In particular, by imposing 
the hybrid listing standards, suitability, disclosure, and compliance 
requirements notes above, the Commission believes the Exchange has 
addressed adequately the potential problems that could arise from the 
hybrid nature of the Units. Moreover, the Commission notes that the 
Exchange will distribute a circular to its membership calling attention 
to the specific risks associated with the Units.
    The Commission notes that the Units are dependent upon the 
individual credit of the issuers of the Underlying Corporate Bonds. To 
some extent the credit risk is minimized by the Exchange's listing 
standards in section 107A of the Company Guide, which provide that only 
issuers satisfying asset and equity requirements may issue securities 
such as the Units. In addition, the Exchange's ``Other Securities'' 
listing standards further provide that there is no minimum holder 
requirement if the securities are traded in thousand dollar 
denominations.\26\ The Commission notes that the Exchange has 
represented that the Units will be listed in $1000 denominations with 
its existing debt floor trading rules applying to the trading. In any 
event, financial information regarding the issuers of the Underlying 
Corporate Bonds will be publicly available.\27\
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    \26\ See Company Guide section 107A.
    \27\ The Units will be registered under section 12 of the Act.
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    Due to the pass-through and passive nature of the Units, the 
Commission does not object to the Exchange's reliance on the assets and 
stockholder equity of the corporate issuer, parent or guarantor of such 
issuer of the Underlying Corporate Bonds rather than the Trust to meet 
the requirement in section 107A of the Company Guide. The Commission 
notes that the

[[Page 72251]]

distribution and principal amount/aggregate market value requirements 
found in sections 107A(b) and (c), respectively, will otherwise be met 
by the Trust as issuer of the Units. Thus, the Units will initially 
conform to the listing guidelines under section 107A and the continued 
listing guidelines under sections 1001-1003 of the Company Guide, 
except for the assets and stockholder equity characteristics of the 
Trust. At the time of issuance, the Commission also notes that the 
Unites will receive an investment grade rating from an NRSRO.
    The Commission also believes that the listing and trading of the 
Units should not unduly impact the market for the Underlying Corporate 
Bonds or raise manipulative concerns. As discussed more fully above, 
the Exchange represents that, in addition to requiring the issuers of 
the Underlying Corporate Bonds meet the Exchange's section 107A listing 
requirements, the Underlying Corporate Bonds will be required to meet 
or exceed the Exchange's Bond and Debenture Listing Standards pursuant 
to section 104 of the Company Guide, which among other things, requires 
that underlying debt instrument receive at least in investment grade 
rating of ``B'' or equivalent from an NRSRO. Furthermore, at least 75% 
of the underlying basket is required to contain Underlying Corporate 
Bonds from issuances of $100 million or more. The Amex has also 
represents that the basket of Underlying Corporate Bonds will not be 
managed and will remain static over the term of the Units. In addition, 
the Amex's surveillance procedures will serve to deter as well as 
detect any potential manipulation.
    The Commission notes that the investors may obtain price 
information on the Underlying Corporate Bonds through market venders 
such Bloomberg, or though websites such as www.investinbonds.com.
    The Commission finds good cause for approving the proposed rule 
change prior to the thirtieth day after the date of publication of the 
notice of filing thereof in the Federal Register. The Amex has 
requested accelerated approval because this product is similar to a 
recently approved proposal to list and trade asset-backed securities 
representing ownership interest in a trust consisting of a basket of 
investment-grade fixed-income securities,\28\ several other equity-
linked instruments currently listed and traded on the Amex,\29\ and 
other asset-backed securities currently listed and traded on the 
NYSE.\30\ The Commission believes that the Units will provide investors 
with an additional investment choice and that accelerated approval of 
the proposal will allow investors to begin trading the Units promptly. 
Additionally, the Units will be listed pursuant to Amex's existing 
hybrid security listing standards as described above. Based on the 
above, the Commission believes that there is good cause, consistent 
with sections 6(b)(5) and 19(b)(2) of the Act,\31\ to approve the 
proposal an accelerated basis.
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    \28\ See supra note 13.
    \29\ See supra note 22.
    \30\ See, e.g. supra note 12.
    \31\ 15 U.S.C. 78f(b)(5) and 78s(b)(2).
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V. Conclusion

    It is therefore ordered, pursuant to section 19(b)(2) of the 
Act,\32\ that the proposed rule change (SR-Amex-2002-92), is hereby 
approved on an accelerated basis.
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    \32\ 15 U.S.C. 78s(b)(2).

    For the Commission by the Division of Market Regulation, 
pursuant to delegated authority.\33\
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    \33\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 02-30681 Filed 12-3-02; 8:45 am]
BILLING CODE 8010-01-P