[Federal Register Volume 68, Number 167 (Thursday, August 28, 2003)]
[Notices]
[Pages 51818-51820]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-22032]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-48382; File No. SR-Amex-2003-71]


Self-Regulatory Organizations; Notice of Filing of Proposed Rule 
Change by the American Stock Exchange LLC Relating to the Elimination 
of the Minor Floor Violation Disciplinary Committee

August 20, 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 July 25, 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. 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 Amex proposes to amend Amex Rule 590 to eliminate its Minor 
Floor Violation Disciplinary Committee (``MFVDC'' or ``Committee'') and 
to transfer the MFVDC's responsibilities to the Exchange's Enforcement 
Department. The text of the proposed rule change is available at the 
Office of the Secretary, 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 has had a Minor Rule Violation Fine Plan since 1976 
that provides a simplified procedure for the resolution of specified 
rule violations. Codified in Amex Rule 590, the Minor Rule Violation 
Fine Plan has three distinct sections: Part 1 (``General Rule 
Violations''), which covers more substantive matters; Part 2 (``Floor 
Decorum''), which covers Floor Decorum and operational matters; and 
Part 3 (``Reporting Violations''), which covers the late submission of 
routine reports.
    The Exchange's Enforcement Department and MFVDC \3\ currently 
divide responsibility for administering Part 1 of Amex Rule 590. The 
Enforcement Department enforces those rules enumerated in paragraph (g) 
of Part 1 of Amex Rule 590, and the MFVDC enforces the rules enumerated 
in paragraph (h) of Part 1 of Amex Rule 590. The rules that currently 
may be enforced by the MFVDC follow:
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    \3\ The Exchange established the MFVDC in 1993. See Securities 
Exchange Act Release No. 32989 (September 29, 1993), 58 FR 52122 
(October 6, 1993) (SR-Amex-92-11). The structure of the Committee 
recently changed to include two floor members, two members of the 
Amex staff and one representative of an upstairs member firm.

Failure to comply with the Exchange's Auto-Ex Policy relating to 
signing on and off the Auto-Ex system
Failure to comply with the Exchange's rules regarding openings. (Amex 
Rules 108(a) and (b) and 950(b))

[[Page 51819]]

Failure to comply with the Exchange's delayed opening policy. (Amex 
Floor Transaction Handbook, Part IV, B.3.(g))
Failure to comply with the Exchange's procedures for stopping orders. 
(Amex Rule 109 and 950(o))
Failure to properly mark or identify and represent Floor orders as 
required under Exchange rules:
    1. Amex Rule 111, Commentary .04; Amex Rule 114, Commentary .09; 
and Amex Rule 153(g) (which are made applicable to options by Amex Rule 
950(a)).
    2. Amex Rule 950(c) & (d); 957(d); Amex Rule 958, Commentary .09; 
and Amex Rule 958A(b)).
Failure to comply with requirements relating to block sized cross 
transactions. (Amex Rule 126(g), Commentaries .01 and .02)
Failure to comply with the Exchange's procedures for executing 
``cross'' transactions. (Amex Rule 151 which is made applicable to 
options by Amex Rule 950(a))
Failure to comply with Exchange procedures regarding stop orders. (Amex 
Rules 154, Commentary .04 and 950(f))
Violation of the Exchange's rules regarding orders left with 
specialists. (Amex Rules 154 and 950(f))
Failure to comply with the ``2, 1, 1/2 Point Rule''. (Amex Rules 154, 
Commentary .08 and 950(f), Commentary .04)
Failure to comply with the Exchange's rules regarding the execution of 
orders. (Amex Rules 156 and 950(g))
Failure by specialists to obtain Floor Official approval when 
establishing, increasing or liquidating a position. (Amex Rule 170, 
Commentaries .01 and .02)
Failure to obtain Exchange approval, or failure to comply with the 
terms of approval, for member or member firm proprietary electronic 
devices or systems used on the Exchange Floor. (Amex Rule 220)
Violation of Intermarket Trading System (ITS) rules relating to Pre-
Opening Applications (Amex Rule 232) and Trade Throughs, Locked 
Markets, and the Block Trade Policy (Amex Rule 236).
Failure to comply with the Exchange's ``facilitation'' policy. (Amex 
Rule 950(d), Commentary .02)
Failure to comply with the Exchange's ``solicitation'' policy. (Amex 
Rule 950(d), Commentary .03)
Failure to quote options markets within the maximum quote spread 
differentials. (Amex Rules 950(n), Commentary .10; 958(c)(i); and 
958(c)(ii))
Failure to comply with the Exchange's rules regarding the announcement 
of trader orders. (Amex Rule 958, Commentary .09)
Failure to comply with the Exchange's modified firm quote rule. (Amex 
Rule 958A)
    Part 1 of Amex Rule 590 allows the Enforcement Department and the 
Committee to issue abbreviated ``written statements'' to persons who 
may have violated the specified rules identifying the rules violated, 
the act or omission constituting the violation, and the amount of the 
fine. The issuance of a ``written statement'' by the Enforcement 
Department or MFVDC does not constitute a finding of guilt. Persons 
receiving a written statement may plead ``no contest'' and return the 
statement to the Exchange with the specified fine. In the alternative, 
persons who are charged under the Plan may contest the fine and receive 
a hearing before an Exchange Disciplinary Panel. The Exchange is not 
required to use Amex Rule 590 to impose a fine for a violation of the 
rules enumerated in the rule and is free to pursue disciplinary action 
under Article V of the Amex Constitution or Amex Rule 345.
    In this filing, the Exchange is proposing to eliminate the MFVDC 
and to transfer its responsibilities to the Exchange's Enforcement 
Department so that responsibility for initiating disciplinary action 
under Part 1 of the Minor Rule Violation Fine Plan will rest 
exclusively with the Amex enforcement staff. The Exchange currently has 
one rule filing pending with the Commission that would add a violation 
to paragraph (h) of Part 1 of Amex Rule 590.\4\ This filing is being 
amended to transfer this violation to the list of rules that may be the 
subject of Enforcement Department action under paragraph (g) of Part 1 
of Amex Rule 590. In connection with the elimination of the MFVDC, the 
Amex also is proposing to eliminate reference to the Committee wherever 
it appears in the Exchange's rules.\5\
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    \4\ SR-Amex-2002-09 would add to the list of violations that may 
be sanctioned by the MFVDC, ``Failure to use best efforts to attempt 
to ensure that the next Auto-Ex execution is appropriately allocated 
to the price improving registered options trader. (Amex Rule 933, 
Commentary .04(d).'' See Amendment No. 9 to Amex-2002-09. Amex 
proposes to transfer this rule to the list of rules enforced by the 
Enforcement Department under paragraph (g) of Part 1 of Amex Rule 
590.
    \5\ The MFVDC is mentioned in Commentaries .04 and .06 to Amex 
Rule 26. These Commentaries concern the calculation of performance 
ratings for option and ETF specialists.
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2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act \6\ in general and furthers the objectives 
of Section 6(b)(1),\7\ 6(b)(6),\8\ and 6(b)(7) \9\ in particular in 
that it will enhance the ability of the Exchange to enforce compliance 
by its members and persons associated with its members with the 
provisions of the Act, the rules and regulations thereunder, and the 
rules of the Exchange; it will help ensure that members and persons 
associated with members are appropriately disciplined for violations of 
the Act, the rules and regulations thereunder, and the rules of the 
Exchange; and it will provide a fair procedure for the disciplining of 
members and persons associated with members.
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    \6\ 15 U.S.C. 78f(b).
    \7\ 15 U.S.C. 78f(b)(1).
    \8\ 15 U.S.C. 78f(b)(6).
    \9\ 15 U.S.C. 78f(b)(7).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    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 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.

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

[[Page 51820]]

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-2003-71 and should be 
submitted by September 18, 2003.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\10\
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    \10\ 17 CFR 200.30-3(a)(12).
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J. Lynn Taylor,
Assistant Secretary.
[FR Doc. 03-22032 Filed 8-27-03; 8:45 am]
BILLING CODE 8010-01-P