[Federal Register Volume 68, Number 91 (Monday, May 12, 2003)]
[Notices]
[Pages 25400-25402]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-11728]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-47796; File No. SR-Amex-2003-34]


Self-Regulatory Organizations; Notice of Filing of Proposed Rule 
Change by the American Stock Exchange LLC, Relating to Indications, 
Openings and Re-Openings

May 5, 2003.
    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 April 23, 2003, 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, II and III below, which items have been prepared by Amex. The 
Commission is 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.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to adopt rule 119 to codify and revise the 
Exchange's policies regarding tape indications and re-openings in 
stocks that are subject to a trading halt (other than ``circuit 
breaker'' or ``equipment changeover'' halts). Below is the text of the 
proposed rule change. Although this text is not currently in the Amex 
rulebook, it was approved by the Commission as Amex policy in 1997.\3\ 
Text that Amex is now proposing to add to the previously approved 
policy is italicized.
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    \3\ See Release No. 34-38549 (April 28, 1997), 62 FR 24519 
(1997).
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* * * * *

INDICATIONS, OPENINGS AND REOPENINGS

Rule 119. Except as provided elsewhere in the Constitution and rules of 
the Exchange, this rule shall govern indications, openings and 
(re)openings of securities traded on the Exchange.

(1) Mandatory Indications: When Commencements Is Permitted
    A specialist is required to disseminate indications of interest 
prior to (re)opening trading in a previously halted stock or in the 
event of a delayed opening as follows:
    (a) Regulatory Halts--A specialist may commence disseminating 
indications of interest in a stock subject to a Regulatory Halt when 
the Exchange determines that an adequate publication or disclosure of 
information has occurred so as to permit the termination of the halt 
and a Floor Official approves the dissemination of indications of 
interest for the stock. In the case of an inter-day Regulatory Halt 
(i.e., a halt which remains in effect from the preceding trading day) 
such approval may include disseminations of interest before the 
Exchange opens for business.
    (b) Non-Regulatory Halts--A specialist may commence disseminating 
indications of interest in a stock subject to a Non-Regulatory Halt 
when an Exchange Official or Floor Governor approves such 
dissemination, in consultation with a Floor Official when appropriate. 
In the case of an inter-day Non-Regulatory Halt, such approval may 
include disseminations of interest before the Exchange opens for 
business.
    (c) Delayed Openings--A specialist may commence disseminating 
indications of interest in a stock subject to delayed opening other 
than by reason of an inter-day Regulatory Halt, when an Exchange 
Official or Floor Governor approves.
    (d) ``Regulatory Halt'' Defined--For the purposes of this policy, 
``Regulatory Halt'' has the meaning that the CTA Plan assigns to it.
    (e) ``Circuit Breaker'' Halts--Dissemination of an indication shall 
be mandatory prior to the reopening of trading following a ``circuit 
breaker'' halt under rule 117 if such reopening will result in a price 
change constituting the lesser of 10% or three points from the last 
sale reported on the AMEX, or five points if the previous reported last 
sale is $100 or higher. No indications would be required if the price 
change is less than one point. If, on any day that rule 117 halt is in 
effect, trading in a security has not reopened by one-half hour after 
resumption of trading on the Exchange, the matter should be treated as 
a delayed opening, and would require an indication as well as a Floor 
Official's supervision.
(2) Optional Indications
    (a) Spin-Offs, IPOs, Etc.--Prior to the commencement of trading in 
a stock for which there has been no prior public market, the specialist 
in the stock may disseminate indications of interest for the stock if 
an Exchange Official or Floor Governor approves. In the case of a spin-
off, any Floor Official may approve such dissemination which may 
include dissemination before the Exchange opens for business.
    (b) Other Opening Situations--In any opening situation not 
specified above, the specialist in the affected stock may disseminate 
indications of interest for the stock before the Exchange opens for 
business if an Exchange Official or Floor Governor approves, and 
thereafter if any Floor Official approves.
(3) Waiting Periods Before (Re)Opening
    (a) Periods Specified--The specialist may not (re)open a stock that 
has been the subject of an indication pursuant to paragraphs (1) and 
(2) above until:
    (i) Ten minutes after an indication is displayed, except that the 
minimum halt period shall be five minutes after an indication is 
displayed in the case of an equipment change over halt condition, in 
each case, unless clause ii applies;
    (ii) Five minutes after an indication is displayed if one or more 
indications preceded it. However, regardless of the number of 
indications disseminated, the minimum waiting period is ten minutes. 
For example, if only 3 minutes elapsed from the time of the first 
indication to the second indication, the minimum waiting period after 
the second indication would be 7 minutes.
    (iii) With respect to a post-opening trading halt, a minimum of 
five minutes must elapse between the first indication and a stock's 
reopening. However, where more than one indication is disseminated, a 
stock may re-open three minutes after the last indication, provided 
that at least five minutes must have elapsed from the dissemination of 
the first indication.
    In the case of inter-day Non-Regulatory Halts, the Exchange 
Official or Floor Governor involved may dispense with the waiting 
period if no unusual situation exists prior to the opening of the 
affected stock. In the case of indications made pursuant to paragraph 
2(b), the Exchange Official or Floor Governor involved may alter the 
applicable waiting periods to take into account the circumstances of 
the particular opening situation.

[[Page 25401]]

    If during an equipment changeover trading halt in a stock, a 
significant order imbalance develops or a regulatory condition occurs 
(i.e., news pending or news dissemination) then the nature of the halt 
condition shall be changed accordingly, and notice of such change shall 
be disseminated. The minimum halt period prior to the resumption of 
trading in this case shall be ten minutes following the first 
indication after the new halt condition is disseminated.
    ``Significant Order Imbalance'' Defined--For purposes of this 
subparagraph, a ``significant order imbalance'' is one which would 
result in a reopening at a price change constituting two points or more 
away from the last previous sale in a stock selling at $20 or more, one 
point or more away from the last previous sale in a stock selling at 
$10 or more (but less than $20), and one/half point or more away from 
the last previous sale in a stock selling at less than $10.
* * * * *

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, 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. 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
    In 1997, the Commission approved the Exchange's policies regarding 
indications, openings and re-openings.\4\ The Exchange is now proposing 
to codify these policies as new rule 119 to make them more accessible 
to members and member organizations. The Exchange also is proposing to 
update the Exchange's rules on re-openings to conform them to those in 
effect at the New York Stock Exchange (``NYSE'').
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    \4\ See n. 3, supra.
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    The Exchange's current policy on reopening trading in a stock that 
has opened and then is halted during a trading day (i.e., a stock that 
is subject to a ``post-opening'' trading halt) requires a minimum of 10 
minutes to elapse between the first price indication and the reopening 
of the stock, and a minimum of five minutes to elapse after the last 
indication, provided in all cases that the minimum 10 minutes has 
elapsed since the first indication. The Exchange is proposing to 
compress these minimum time periods before reopening a stock that is 
subject to a post-opening trading halt to five minutes after the first 
indication, and three minutes after the last indication, provided that 
a minimum of five minutes has elapsed since the first price indication.
    In developing procedures for openings and re-openings over the 
years, the Exchange has focused on providing a balance between 
timeliness and achieving a price that reflects market conditions. As 
the speed of communications has increased, the Exchange believes that 
it is important to provide the ability to react more quickly if 
circumstances permit a reopening of trading in a shorter period of 
time. Management believes that the newly approved NYSE procedures for 
reopening after a post-opening trading halt strike the appropriate 
balance between preserving the price discovery process and providing 
timely opportunities for investors to participate in the market.\5\ 
Thus, at the end of the five-minute period, if equilibrium has been 
established, there would be no purpose to extending the halt for a 
longer period. If, however, at the end of the five minute period, more 
time is needed to bring supply and demand into balance, then the 
resumption of trading could be further delayed. Trading halts will 
continue to be overseen by Floor Officials who will use their judgment 
to see that the stock reopens at an appropriate time.
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    \5\ See Release No. 34-47104 (December 30, 2002), 68 FR 597 
(January 6, 2003).
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2. Statutory Basis
    The proposed rule change is consistent with section 6(b) of the Act 
\6\ in general and furthers the objectives of section 6(b)(5)\7\ 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 mechanism 
of a free and open market and a national market system, and, in 
general, to protect investors and the public interest; and is not 
designed to permit unfair discrimination between customers, issuers, 
brokers and dealers.
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    \6\ 15 U.S.C. 78f(b).
    \7\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange believes that the proposed rule change will impose no 
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 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 self-regulatory organization 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 proposal 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 Amex. All submissions 
should refer to File No. SR-Amex-2003-34 and should be submitted by 
June 2, 2003.


[[Page 25402]]


    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\8\
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    \8\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 03-11728 Filed 5-9-03; 8:45 am]
BILLING CODE 8010-01-P