[Federal Register Volume 68, Number 115 (Monday, June 16, 2003)]
[Notices]
[Pages 35741-35743]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-15111]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-48004; File No. SR-Amex-2003-28]


Self-Regulatory Organizations; Notice of Filing of Proposed Rule 
Change and Amendment Nos. 1 and 2 by the American Stock Exchange LLC 
Relating to the Elimination of the 10-Second Interval at Which Persons 
May Enter Auto-Ex Eligible Orders for Exchange-Traded Funds

June 9, 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 16,

[[Page 35742]]

2003, 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 Exchange. On May 7, 2003, Amex 
submitted Amendment No. 1 to the proposed rule change.\3\ On June 3, 
2003, Amex submitted Amendment No. 2 to the proposed rule change.\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 William Floyd-Jones, Associate General 
Counsel, Amex, to Nancy Sanow, Assistant Director, Division of 
Market Regulation (``Division''), Commission dated May 6, 2003 
(``Amendment No. 1'').
    \4\ See letter from William Floyd-Jones, Associate General 
Counsel, Amex, to Nancy Sanow, Assistant Director, Division, 
Commission dated June 2, 2003 (``Amendment No. 2'').
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    Amex seeks to eliminate the 10-second ``speed bump'' on the entry 
of Auto-Ex eligible orders for Exchange-Traded Funds (``ETFs'') and 
Trust-Issued Receipts (``TIRs''), while allowing it to be reinstated if 
conditions warrant its reintroduction. The text of the proposed rule 
change is available at the Office of the Secretary, 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, as 
amended, 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
    On June 19, 2001, the Commission approved the Exchange's proposal 
to permit the automatic execution of orders for Exchange Traded Funds 
(``ETFs'') on a six-month pilot program basis.\5\ The Exchange most 
recently extended the pilot for an additional six months on December 4, 
2002.\6\ As part of the most recent extension of the Auto-Ex for ETFs 
pilot, the Exchange reduced from 30 to 10 seconds, the interval at 
which member firms could enter orders on the same side of the market 
for any account in which the same person is directly or indirectly 
interested. The Exchange now proposes to eliminate the 10-second 
``speed bump'' for all ETFs. The Exchange also proposes to amend Amex 
Rule 128A to clarify that Auto-Ex for ETFs applies to both ETFs and 
TIRs.
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    \5\ See Securities Exchange Act Release No. 44449 (June 19, 
2001), 66 FR 33724 (June 25, 2001), (SR-Amex-2001-29).
    \6\ See Securities Exchange Act Release No. 47105 (December 30, 
2002), 68 FR 592 (January 6, 2003), (SR-Amex-2002-99).
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    The Exchange's rules currently provide that Auto-Ex eligible orders 
on the same side of the market in an ETF for any account in which the 
same person is directly or indirectly interested may only be entered at 
intervals of 10 seconds or more. According to the Exchange, order flow 
providers have objected to this interval since it requires them to 
block their customers from entering any Auto-Ex eligible orders on the 
same side of the market in the Exchange's order routing systems for the 
affected security within 10 seconds. The Exchange, accordingly, is 
proposing to eliminate the speed bump in ETFs and TIRs while allowing 
it to be reinstated on a temporary basis if conditions warrant its 
reintroduction.
    The Exchange states that the Auto-Ex Enhancements Committee 
(``Committee''), upon the request of a specialist, would review a 
request to reinstate the 10-second speed bump. The Committee consists 
of the Exchange's four Floor Governors and the Chairmen (or their 
designees) of the Specialists Association, Options Market Makers 
Association and the Floor Brokers Association. According to the 
Exchange, this Committee currently reviews requests to change various 
Auto-Ex parameters. (See Commentaries .02 and .04 to Amex Rule 128A.) 
The Exchange would give members and member organizations ten business 
days notice prior to reintroducing the 10-second speed bump to allow 
them to implement internal procedures to comply with this requirement. 
The Exchange would notify members and member organizations of the 
reintroduction of the 10-second speed bump through Amex Notices, which 
are distributed on the Exchange Floor and posted on the Exchange's 
``Amex Trader'' Web site.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act \7\ in general and furthers the objectives 
of Section 6(b)(5) \8\ 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 regulating, clearing, settling, processing 
information with respect to and facilitating transactions in 
securities, 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. The Exchange also believes that the proposed rule change will 
facilitate the use of Auto-Ex by order flow providers by eliminating a 
compliance burden on them. Finally, the Exchange asserts that the 
proposal also facilitates the comparison and settlement of trades since 
Auto-Ex transactions result in ``locked-in'' trades.
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    \7\ 15 U.S.C. 78f.
    \8\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    Amex believes that the proposed rule change will impose no burden 
on competition that is 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 Amex 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.

[[Page 35743]]

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 such filing will also be 
available for inspection and copying at the principal office of the 
Amex. All submissions should refer to file number SR-Amex-2003-28 and 
should be submitted by July 7, 2003.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\9\
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    \9\ 17 CFR 200.30-3(a)(12).
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Margaret McFarland,
Deputy Secretary.
[FR Doc. 03-15111 Filed 6-13-03; 8:45 am]
BILLING CODE 8010-01-P