[Federal Register Volume 69, Number 8 (Tuesday, January 13, 2004)]
[Notices]
[Pages 2025-2026]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-619]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-49024; File No. SR-AMEX-2003-78]


Self-Regulatory Organizations; American Stock Exchange LLC; 
Notice of Filing of a Proposed Rule Change by American Stock Exchange 
Relating to Resolving Uncompared Options Transactions

January 6, 2004.
    Pursuant to section 19(b)(1) of the Securities Exchange Act of 
1934,\1\ notice is hereby given that on August 27, 2003, the American 
Stock Exchange LLC (``Amex'') 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 primarily 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).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    Amex proposes to amend Amex Rule 970 (Comparison of Option 
Transactions Excluded From Clearance) to make the processes for 
resolving uncompared transactions in its intra-day options and equities 
comparison systems more consistent.

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 IV below. The Amex has prepared summaries, set forth in sections 
A, B, and C below, of the most significant aspects of such 
statements.\2\
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    \2\ The Commission has modified the text of the summaries 
prepared by Amex.
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A. Self-Regulatory Organization's Statement of the Purpose of, and the 
Statutory Basis for, the Proposed Rule Change

    Amex Rule 970 sets forth the process by which Amex members 
reconcile uncompared option transactions on the business day following 
the trade date, or T+1.\3\ Specifically, Rule 970 requires that, at a 
time designated by Amex on T+1, each member or member organization must 
review their contract sheets listing all uncompared option trades and 
option advisory trades. For each uncompared option trade, members must 
deliver to the contra-party a Rejected Option Transaction Notice 
(``ROTN''), which details the terms of the uncompared trade. The 
contra-party or an authorized representative must then accept (``OK'') 
or reject (``DK'') and sign the ROTN no later than one-half hour 
(fifteen minutes if the transaction was executed by a specialist or 
floor broker) prior to the opening of trading on T+1.
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    \3\ An uncompared transaction is one in which trade data is 
received from one member but no corresponding data is received from 
a contra-member.
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    In July 1992, Amex introduced the Intra-day Comparison System for 
Options (the ``IDCO'') to facilitate the intra-day comparison of option 
trades and the reconciliation of uncompared option trades. The IDCO 
provides an electronic input and correction facility for option 
transactions executed on Amex. Specifically, the system displays 
uncompared options trades and option advisory trades and delivers an 
electronic ROTN to the appropriate contra-party. In addition, the 
system allows members or member organizations to accept or reject a 
ROTN, to correct or delete uncompared trades, and to add new trades for 
comparison where necessary.
    Amex proposes to amend Rule 970 by adopting a format consistent 
with that of Amex Rule 731, which sets forth a similar process for 
resolving uncompared equity transactions and the use of the Intra-Day 
Comparison System for Equities (``IDCE''). With login and password 
safeguards to protect members against unauthorized rejections and 
acceptances of electronic ROTNs, Amex believes that the use of the IDCO 
renders unnecessary the requirement that members manually sign paper 
ROTNs for each uncompared option transaction. With the exception of 
eliminating the manual signature requirement for paper ROTNs, Amex does 
not propose any other change to the comparison process for option 
transactions. For clarity and consistency, Amex proposes to supplement 
and preserve the current language of Rule 970 in new Commentary.
    Amex believes that the proposed rule change is consistent with 
section 6(b) of the Act \4\ in general and furthers the objectives of 
section 6(b)(5) of the Act \5\ in particular because it is designed to 
foster cooperation and coordination with persons engaged in regulating, 
clearing, settling, processing information with respect to, and 
facilitating transactions in securities, and to remove impediments to 
and perfect the mechanism of a free and open market and a national 
market system.
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    \4\ 15 U.S.C. 78f(b).
    \5\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    Amex 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 thirty-five days of the date of publication of this notice 
in the Federal Register or such longer period (i) as the Commission may 
delegate up to ninety days of such date if it finds such longer period 
to be appropriate and published 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 proposed rule 
change is consistent with the Act.

[[Page 2026]]

Persons making written submissions should file six copies thereof with 
the Secretary, Securities and Exchange Commission, 450 5th Street NW., 
Washington, DC 20549-0069. Comments may also be submitted 
electronically at the following e-mail address: [email protected]. 
All comment letters should refer to File No. SR-AMEX-2003-78. This file 
number should be included on the subject line if e-mail is used. To 
help the Commission process and review your comments more efficiently, 
comments should be sent in hardcopy or by e-mail but not by both 
methods. Copies of the submission, all subsequent amendments, all 
written statements with respect to the rule filing that are filed with 
the Commission, and all written communications relating to the rule 
filing between the Commission and any person, other than those that may 
be withheld from the public in accordance with provisions of 5 U.S.C. 
552, will be available for inspection and copying in the Commission's 
Public Reference Room in Washington, DC. Copies of such filing will 
also be available for inspection and copying at Amex's principal 
office. All submissions should refer to File No. SR-AMEX-2003-78 and 
should be submitted within by February 3, 2004.

    For the Commission by the Division of Market Regulation, 
pursuant to delegated authority.\6\
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    \6\ 17 CFR 200.30-3(a)(12).
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Jill M. Peterson,
Assistant Secretary.
[FR Doc. 04-619 Filed 1-12-04; 8:45 am]
BILLING CODE 8010-01-P