[Federal Register Volume 69, Number 94 (Friday, May 14, 2004)]
[Notices]
[Pages 26905-26909]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-10954]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-49668; File No. SR-Amex-2004-21]


Self-Regulatory Organizations; Notice of Filing and Order 
Granting Accelerated Approval of a Proposed Rule Change by American 
Stock Exchange LLC Relating to Trust Certificates Linked to a Basket of 
Investment Grade Fixed Income Securities

May 7, 2004.
    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 March 29, 2004, 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

[[Page 26906]]

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 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, the asset-backed securities (``ABS 
Securities'') representing ownership interests in the Select Notes 
Trust 2004-03 (``Trust''), a special purpose trust to be formed by 
Structured Obligations Corporation (``SOC''),\4\ and the trustee of the 
Trust pursuant to a trust agreement, which will be entered into on the 
date that the ABS Securities are issued. The assets of the Trust will 
consist primarily of a basket or portfolio of up to approximately 
twenty-five (25) investment-grade fixed-income securities (``Underlying 
Corporate Bonds'') and United States Department of Treasury STRIPS or 
securities issued by the United States Department of the Treasury 
(``Treasury Securities'') or government sponsored entity securities 
(``GSE Securities''). In the aggregate, the component securities of the 
basket or portfolio will be referred to as the ``Underlying 
Securities.''
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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\ SOC is a wholly-owned special purpose entity of J.P. Morgan 
Securities Holdings Inc. and the registrant under the Form S-3 
Registration Statement (No. 333-67188) under which the securities 
will be issued.
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    The ABS Securities will conform to the initial listing guidelines 
under Section 107A \5\ and continued listing guidelines under Sections 
1001-1003 \6\ of the Company Guide. At the time of issuance, the ABS 
Securities will receive an investment grade rating from a nationally 
recognized securities rating organization (``NRSRO''). The issuance of 
the ABS Securities will be a repackaging of the Underlying Corporate 
Bonds together with the addition of either Treasury Securities or GSE 
Securities,\7\ with the obligation of the Trust to make distributions 
to holders of the ABS Securities depending on the amount of 
distributions received by the Trust on the Underlying Securities.
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    \5\ The initial listing standards for the ABS Securities 
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 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 
pursuant to Section 107A of the Company Guide 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.
    \6\ 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 ABS Securities, 
the Exchange will rely 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.
    \7\ A GSE Security is a security that is issued by a government-
sponsored entity such as Federal National Mortgage Association 
(Fannie Mae), Federal Home Loan Mortgage Corporation (Freddie Mac), 
Student Loan Marketing Association (Sallie Mae), the Federal Home 
Loan Banks and the Federal Farm Credit Banks. All GSE debt is 
sponsored but not guaranteed by the federal government, whereas 
government agencies such as Government National Mortgage Association 
(Ginnie Mae) are divisions of the U.S. government whose securities 
are backed by the full faith and credit of the U.S.
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    However, due to the pass-through and passive nature of the ABS 
Securities, the Exchange intends to rely on the assets and stockholder 
equity of the issuers of the Underlying Corporate Bonds, as well as GSE 
Securities, rather than the Trust to meet the requirement in Section 
107A of the Company Guide. The corporate issuers of the Underlying 
Corporate Bonds and GSE Securities will meet or exceed the requirements 
of Section 107A of the Company Guide. The distribution and principal 
amount/aggregate market value requirements found in Section 107A(b) and 
(c), respectively, will otherwise be met by the Trust as issuer of the 
ABS Securities. In addition, the Exchange for purposes of including 
Treasury Securities will rely on the fact that the issuer is the United 
States Government rather than the asset and stockholder tests found in 
Section 107A.
    The basket of Underlying Securities will not be managed and will 
generally remain static over the term of the ABS Securities. Each of 
the Underlying Securities provides for the payment of interest on a 
semi-annual basis and the ABS Securities will provide for monthly or 
quarterly distributions of interest. Neither the Treasury Securities or 
GSE Securities will make periodic payments of interest.\8\ The Exchange 
represents that, to alleviate this cash flow timing issue, the Trust 
will enter into an interest distribution agreement (``Interest 
Distribution Agreement'') as described in the prospectus supplement 
related to the ABS Securities (``Prospectus Supplement'').\9\ Principal 
distributions on the ABS Securities are expected to be made on dates 
that correspond to the maturity dates of the Underlying Securities 
(i.e., the Underlying Corporate Bonds and Treasury Securities or GSE 
Securities). However, some of the Underlying Securities 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 
Securities, the proceeds from such redemption (including any make-whole 
premium associated with such redemption) or liquidation will be 
distributed pro rata to the holders of the ABS Securities. Each 
Underlying Corporate Bond will be issued by a

[[Page 26907]]

corporate issuer and purchased in the secondary market.
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    \8\ A stripped fixed income security, such as a Treasury 
Security or GSE Security, is a security that is separated into its 
periodic interest payments and principal repayment. The separate 
strips are then sold individually as zero coupon securities 
providing investors with a wide choice of alternative maturities.
    \9\ Pursuant to the Interest Distribution Agreement, shortfalls 
in the amounts available to pay monthly or quarterly interest to 
holders of the ABS Securities due to the Underlying Securities 
paying interest semi-annually will be made to the Trust by JP Morgan 
Chase Bank or one of its affiliates and will be repaid out of future 
cash flow received by the Trust from the Underlying Securities.
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    In the case of Treasury Securities, the Trust will either purchase 
the securities directly from primary dealers or in the secondary market 
that consists of primary dealers, non-primary dealers, customers, 
financial institutions, non-financial institutions and individuals. 
Similarly, in the case of GSE Securities, the Trust will either 
purchase the securities directly from the issuer or in the secondary 
market.
    Holders of the ABS Securities generally will receive interest on 
the face value in an amount to be determined at the time of issuance of 
the ABS Securities 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 Securities. Distributions of interest will be made 
monthly or quarterly. Investors will also be entitled to be repaid the 
principal of their ABS Securities from the proceeds of the principal 
payments on the Underlying Securities.\10\ The payout or return to 
investors on the ABS Securities will not be leveraged.
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    \10\ The Underlying Securities may drop out of the basket upon 
maturity or upon payment default or acceleration of the maturity 
date for any default other than payment default. See Prospectus for 
a schedule of the distribution of interest and of the principal upon 
maturity of each Underlying Security and for a description of 
payment default and acceleration of the maturity date.
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    The ABS Securities will mature on the latest maturity date of the 
Underlying Securities. Holders of the ABS Securities will have no 
direct ability to exercise any of the rights of a holder of an 
Underlying Corporate Bond; however, holders of the ABS Securities as a 
group will have the right to direct the Trust in its exercise of its 
rights as holder of the Underlying Securities.
    The proposed ABS Securities are virtually identical to a product 
currently listed and traded on the Exchange.\11\ The only difference 
being the actual Underlying Securities in the basket of investment 
grade fixed-income securities. Accordingly, the Exchange proposes to 
provide for the listing and trading of the ABS Securities where the 
Underlying Securities 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 Securities in the proposed basket 
will meet or exceed these listing standards.
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    \11\ See Securities Exchange Act Release Nos. 49315 (February 
24, 2004), 69 FR 9882 (March 2, 2004) (File No. SR-Amex-2004-08); 
49136 (January 28, 2004), 69 FR 6345 (File No. SR-Amex-2003-99); 
48791 (November 17, 2003), 68 FR 65750 (November 21, 2003) (File No. 
SR-Amex-2003-92); 48312 (August 8, 2003), 68 FR 48970 (August 15, 
2003) (File No. SR-Amex-2003-69); 47884 (May 16, 2003), 68 FR 28305 
(May 23, 2003) (File No. SR-Amex-2003-37); 47730 (April 24, 2003), 
68 FR 23340 (May 1, 2003) (File No. SR-Amex-2003-25); 46923 
(November 27, 2002), 67 FR 72247 (December 4, 2002) (File No. SR-
Amex-2002-92); and 46835 (November 14, 2002), 67 FR 70271 (November 
21, 2002) (File No. SR-Amex-2002-70).
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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 New York Stock Exchange, Inc. (``NYSE'') or on the Nasdaq National 
Market ``(Nasdaq'')); (2) an issuer of equity securities listed on the 
Exchange (or on the NYSE or on the 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 the Nasdaq) has guaranteed the debt 
security; (4) an NRSRO has assigned a current rating to the debt 
security that is no lower than an S&P 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 a 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 Security must also be of investment grade quality as 
rated by an NRSRO and at least 75% of the underlying basket is required 
to contain Underlying Securities from issuances of $100 million or 
more. The maturity of each Underlying Security is expected to match the 
payment of principal of the ABS Securities with the maturity date of 
the ABS Securities being the latest maturity date of the Underlying 
Securities. Amortization of the ABS Securities will be based on (1) The 
respective maturities of the Underlying Securities, including Treasury 
Securities or GSE Securities, (2) principal payout amounts reflecting 
the pro-rata principal amount of maturing Underlying Securities and (3) 
any early redemption or liquidation of the Underlying Securities, 
including Treasury Securities or GSE Securities.
    Investors will be able to obtain the prices for the Underlying 
Securities through Bloomberg L.P. or other market vendors, including 
the broker-dealer through whom the investor purchased the ABS 
Securities. In addition, The Bond Market Association (``TBMA'') 
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 the most active 
corporate debt securities, such as investment grade corporate 
bonds.\12\ For a fee, investors can have access to intra-day bellwether 
quotes.\13\
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    \12\ 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/.
    \13\ Corporate prices are available at 20-minute intervals from 
Capital Management Services at http://www.bondvu.com/.
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    Price and transaction information for Treasury Securities and GSE 
Securities may also be obtained at http://www.publicdebt.treas.gov and 
http://www.govpx.com, respectively. Price quotes are also available to 
investors via proprietary systems such as Bloomberg L.P., Reuters and 
Dow Jones Telerate. Valuation prices \14\ 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\ ``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 ABS Securities will be listed in $1,000 denominations with the 
Exchange's existing debt floor trading rules applying to trading.\15\ 
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 ABS 
Securities.\16\ Second, the ABS Securities will be subject to the debt 
margin rules of the Exchange.\17\ Third,

[[Page 26908]]

the Exchange will, prior to trading the ABS Securities, distribute a 
circular to the membership providing guidance with regard to member 
firm compliance responsibilities (including suitability 
recommendations) when handling transactions in the ABS Securities and 
highlighting the special risks and characteristics of the ABS 
Securities. With respect to suitability recommendations and risks, the 
Exchange will require members, member organizations and employees 
thereof recommending a transaction in the ABS Securities: (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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    \15\ The ABS Securities will trade on Amex's debt trading floor. 
Telephone conversation between Jeffrey P. Burns, Associate General 
Counsel, Amex, and Florence Harmon, Senior Special Counsel, Division 
of Market Regulation, Commission, on May 7, 2004.
    \16\ 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.
    \17\ See Amex Rule 462.
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    The Exchange represents that its surveillance procedures are 
adequate to properly monitor the trading of the ABS Securities. 
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 \18\ of the Act in general and furthers the objectives 
of section 6(b)(5) \19\ in particular in that it is designed to prevent 
fraudulent and manipulative acts and practices, promote just and 
equitable principles of trade, remove impediments to and perfect the 
mechanisms of a free and open market and a national market system, and, 
in general, protect investors and the public interest.
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    \18\ 15 U.S.C. 78f(b).
    \19\ 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 comments on the proposed 
rule change.

III. 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. Comments may be submitted by any of 
the following methods:
    Electronic comments:
     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an e-mail to [email protected]. Please include 
File Number SR-2004-AMEX-21 on the subject line.
    Paper comments:
     Send paper comments in triplicate to Jonathan G. Katz, 
Secretary, Securities and Exchange Commission, 450 Fifth Street, NW., 
Washington, DC 20549-0609.
    All submissions should refer to File Number SR-2004-AMEX-21. 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, please use only one method. The Commission will post all 
comments on the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). 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 Section, 450 Fifth 
Street, NW., Washington, DC 20549-0609. Copies of such filing also will 
be available for inspection and copying at the principal office of the 
Amex. All comments received will be posted without change; the 
Commission does not edit personal identifying information from 
submissions. You should submit only information that you wish to make 
available publicly. All submissions should refer to File Number SR-
2004-AMEX-21 and should be submitted on or before June 4, 2004.

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 a national securities 
exchange, and, in particular, with the requirements of section 6(b)(5) 
of the Act.\20\ The Commission finds that this proposal is similar to 
several approved equity-linked instruments currently listed and traded 
on the Amex.\21\ Accordingly, the Commission finds that the listing and 
trading of the ABS Securities is 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 section 6(b)(5) of the Act.\22\
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    \20\ Id.
    \21\ See supra note 11.
    \22\ 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 ABS Securities are asset-backed 
securities and represent a repackaging of the Underlying Corporate 
Bonds together with the addition of either Treasury Securities or GSE 
Securities, subject to certain distribution of interest obligations of 
the Trust. The ABS Securities are not leveraged instruments. The ABS 
Securities are debt instruments whose price will still be derived and 
based upon the value of the Underlying Securities. Investors are 
guaranteed at least the principal amount that they paid for the 
Underlying Securities. In addition, each of the Underlying Corporate 
Bonds will pay interest on a semi-annual basis while the ABS Securities 
themselves will pay interest on the monthly or quarterly basis, 
pursuant to the Interest Distribution Agreement. Neither the Treasury 
Securities or GSE Securities will make periodic payments of 
interest.\23\ In addition, the ABS Securities will mature on the latest 
maturity date of the Underlying Securities.\24\ However, due to the 
pass-through nature of the ABS Securities, the level of risk involved 
in the purchase or sale of the ABS Securities is similar to the risk 
involved in the purchase or sale of traditional common stock.
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    \23\ See supra note 8.
    \24\ The Commission notes, however, that the Exchange has 
represented that the Underlying Securities may drop out of the 
basket upon maturity or upon payment default or acceleration of the 
maturity date of any default other than payment default. See 
Prospectus for a schedule of the distribution of interest and of the 
principal upon maturity of each Underlying Security and for a 
description of payment default and acceleration of the maturity 
date.
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    The Commission notes that the Exchange's rules and procedures that 
address the special concerns attendant to the trading of hybrid 
securities will

[[Page 26909]]

be applicable to the ABS Securities. In particular, by imposing the 
hybrid listing standards, suitability disclosure, and compliance 
requirements noted above, the Commission believes the Exchange has 
addressed adequately the potential problems that could arise from the 
hybrid nature of the ABS Securities. Moreover, the Commission notes 
that the Exchange will distribute a circular to its membership calling 
attention to the specific risks associated with the ABS Securities.
    The Commission notes that the ABS Securities are dependent upon the 
individual credit of the issuers of the Underlying Securities. To some 
extent this credit risk is similar 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 ABS Securities. 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.\25\ The Commission notes that the Exchange has 
represented that the ABS Securities 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 Securities will be publicly available.\26\
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    \25\ See Company Guide Section 107A.
    \26\ The ABS Securities will be registered under section 12 of 
the Act.
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    Due to the pass-through and passive nature of the ABS Securities, 
the Commission does not object to the Exchange's reliance on the assets 
and stockholder equity of the Underlying Securities rather than the 
Trust to meet the requirement in Section 107A of the Company Guide. The 
Commission notes that 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 ABS 
Securities. Thus, the ABS Securities will conform to the initial 
listing guidelines under Section 107A and 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 ABS Securities will 
receive an investment grade rating from an NRSRO.
    The Commission also believes that the listing and trading of the 
ABS Securities should not unduly impact the market for the Underlying 
Securities or raise manipulative concerns. As discussed more fully 
above, the Exchange represents that, in addition to requiring the 
issuers of the Underlying Securities meet the Exchange's Section 107A 
listing requirements (in the case of Treasury Securities, the Exchange 
will rely on the fact that the issuer is the United States Government 
rather than the asset and stockholder tests found in Section 107A), the 
Underlying Securities will also be required to meet or exceed the 
Exchange's Bond and Debenture Listing Standards pursuant to Section 104 
of the Amex's Company Guide, which among other things, requires that 
underlying debt instrument receive at least an investment grade rating 
of ``B'' or equivalent from an NRSRO. Furthermore, at least 75% of the 
basket is required to contain Underlying Securities from issuances of 
$100 million or more. The Amex also represents that the basket of 
Underlying Securities will not be managed and will remain static over 
the term of the ABS Securities. 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 Securities through market venders such as 
Bloomberg L.P., or through websites such as http://www.investinginbonds.com (for Underlying Corporate Bonds) and http://www.publicdebt.treas.gov and http://www.govpx.com (for Treasury 
Securities and GSE Securities, respectively).
    The Commission finds good cause for approving the proposed rule 
change prior to the thirtieth day after the date of publication of 
notice thereof in the Federal Register. The Amex has requested 
accelerated approval because this product is similar to other asset-
backed instruments currently listed and traded on the Amex.\27\ The 
Commission believes that the ABS Securities will provide investors with 
an additional investment choice and that accelerated approval of the 
proposal will allow investors to begin trading the ABS Securities 
promptly. Additionally, the ABS Securities 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 \28\ to 
approve the proposal on an accelerated basis.
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    \27\ See supra note 11.
    \28\ 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,\29\ that the proposed rule change (SR-Amex-2004-21) is hereby 
approved on an accelerated basis.
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    \29\ 15 U.S.C. 78o-3(b)(6) and 78s(b)(2).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\30\
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    \30\ 17 CFR 200.30-3(a)(12).
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Jill M. Peterson,
Assistant Secretary.
[FR Doc. 04-10954 Filed 5-13-04; 8:45 am]
BILLING CODE 8010-01-P