[Federal Register Volume 70, Number 37 (Friday, February 25, 2005)]
[Notices]
[Pages 9395-9398]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E5-778]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-51227; File No. SR-Amex-2005-010]


Self-Regulatory Organizations; American Stock Exchange LLC; 
Notice of Filing and Order Granting Accelerated Approval of a Proposed 
Rule Change Relating to the Listing and Trading of Notes Linked to the 
Performance of the Nikkei 225 Index

February 18, 2005.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 
1934, as amended (``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is 
hereby given that on January 14, 2005, 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 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 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 list and trade notes linked to the 
performance of Nikkei 225 Index (``Nikkei 225'' or ``Index'').
    The text of the proposed rule change is available on the Amex's Web 
site http://www.amex.com, at the Amex's Office of the Secretary, and at 
the Commission's Public Reference Room.

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 Amex Company Guide (``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 notes 
linked to the performance of the Nikkei 225 (the ``Nikkei Notes'' or 
``Notes'').\4\ Morgan Stanley will issue the Notes under the name 
``PLUSSM.'' The Nikkei 225 is determined, calculated and 
maintained solely by NKS.\5\ The Notes will provide for a multiplier of 
any positive performance of the Nikkei 225 during their term subject to 
a maximum payment amount or ceiling to be determined at the time of 
issuance (``Capped Value'').
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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\ Morgan Stanley & Co. Incorporated (``Morgan Stanley'') and 
Nihon Keizai Shimbun, Inc. (``NKS'') have entered into a non-
exclusive license agreement providing for the use of the Nikkei 225 
by Morgan Stanley and certain affiliates and subsidiaries in 
connection with certain securities including the Notes. NKS is not 
responsible and will not participate in the issuance and creation of 
the Notes.
    \5\ The Nikkei 225 is calculated, published and disseminated by 
NKS. The Notes are not sponsored, endorsed, sold or promoted by NKS. 
NKS is a recognized service with business information in Japan and 
publishes a large business daily, The Nihon Keizai Shimbon, and four 
other financial newspapers. NKS is not affiliated with a securities 
broker or dealer. The Index measures the composite price performance 
of selected Japanese stocks. The Index is currently based on 225 
underlying stocks trading on the Tokyo Stock Exchange (``TSE'') and 
represents a broad cross-section of Japanese industry. All 225 of 
the stocks underlying the Index (``Underlying Stocks'') are stocks 
listed in the First Section of the TSE. Stocks listed in the First 
Section are among the most actively traded stocks on the TSE. The 
Index is a modified, price-weighted index. Each component stock's 
weight in the Index is based on its price per share rather than the 
total market capitalization of the issuers. NKS calculates the Index 
by multiplying the per share price of a component stock by the 
corresponding weighting factor for the stock (``Weight Factor''), 
calculating the sum of all these products and dividing that sum by a 
divisor. The divisor, initially set on May 16, 1949, at 225, was 
23.947 as of January 14, 2005, and is subject to periodic 
adjustments. Each Weight Fact or is computed by dividing [yen]50 by 
the par value of the relevant component stock, so that the share 
price of each component stock when multiplied by its Weight Factor 
corresponds to a share price based on a uniform par value of 
[yen]50. Each Weight Factor represents the number of shares of the 
related component stock, which are included in one trading unit of 
the Index. The stock prices used in the calculation of the Index are 
those reported by a primary market for the component stocks, which 
is currently the TSE.
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    The Nikkei 225 Notes will conform to the initial listing guidelines 
under Section 107A\6\ and continued listing guidelines under Sections 
1001-1003 \7\ of the Company Guide. The Notes are senior non-
convertible debt securities of Morgan Stanley. The Notes will have a 
term of no more than ten (10) years. Morgan Stanley will issue the 
Notes in denominations of whole units (``Unit''),

[[Page 9396]]

with each Unit representing a single Note. The original public offering 
price will be $10 per Unit. The Notes will entitle the owner at 
maturity to receive an amount based upon the percentage change of the 
Nikkei 225. The Notes will not have a minimum principal amount that 
will be repaid, and accordingly, payment on the Notes prior to or at 
maturity may be less than the original issue price of the Notes.\8\ The 
Notes are also not callable by the issuer, Morgan Stanley, or 
redeemable by the holder.
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    \6\ The initial listing standards for the Notes 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. In addition, the listing guidelines 
provide that the issuer has assets in excess of $100 million, 
stockholders' 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 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.
    \7\ The Exchange's continued listing guidelines are set forth in 
Sections 1001 through 1003 of Part 10 of 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 as to 
make further dealings on the Exchange inadvisable. With respect to 
continued listing guidelines for distribution of the Notes, the 
Exchange will rely, in part, 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.
    \8\ A negative return of the Nikkei 225 will reduce the 
redemption amount at maturity with the potential that the holder of 
the Note could lose his entire investment amount.
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    The payment that a holder or investor of a Note will be entitled to 
receive (``Redemption Amount'') will depend on the relation of the 
level of the Nikkei 225 at the close of the market on the second 
trading day \9\ prior to maturity of the Notes (``Final Level'') and 
the closing value of the Index on the trading day immediately following 
the day the Notes are priced for initial sale to the public (``Initial 
Level''). If there is a ``market disruption event'' \10\ when 
determining the Final Level of the Index, the Final Level will be 
determined on the next available trading day during which no ``market 
disruption event'' occurs.
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    \9\ A ``trading day'' is generally a day on which trading is 
conducted on the TSE and on any exchange on which futures or options 
related to the Index are traded, other than a day on which trading 
on any such exchange is scheduled to close prior to its regular 
final weekday closing time.
    \10\ A ``market disruption event'' is defined as (i) the 
occurrence of a suspension, absence, or material limitation of 
trading of 20% or more of the component stocks of the Index on the 
primary market for more than two hours of trading or during the one-
half hour period preceding the close of the principal trading 
session on such primary market; (ii) a breakdown or failure in the 
price and trade reporting systems of any primary market as a result 
of which the reported trading prices for 20% or more of the 
component stocks of the Index during the last one-half hour 
preceding the close of the principal trading session on such primary 
market are materially inaccurate; or (iii) the suspension, material 
limitation or absence of trading on any major securities market for 
trading in futures or options contracts or exchange traded funds 
related to the Index for more than two hours of trading or during 
the one-half hour period preceding the close of the principal 
trading session on such market, and a determination by Morgan 
Stanley that any event described in clauses (i)-(iii) above 
materially interfered with the ability of Morgan Stanley or any of 
its affiliates to unwind or adjust all or a material portion of the 
hedge position with respect to the Notes.
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    If the percentage change of the Index is positive (i.e. Final Level 
is greater than the Initial Level), the Redemption Amount per Unit will 
equal:
[GRAPHIC] [TIFF OMITTED] TN25FE05.005

the Capped Value, which, as set forth in the prospectus, is expected to 
be $11.35 to $11.575, or 113.5% to 115.75% of the issue price.\11\
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    \11\ Telephone conversation between Jeffrey Burns, Associate 
General Counsel, Amex, and Natasha Cowen, Attorney, Division, 
Commission, on February 15, 2005.
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    The Upside Leverage Factor, determined at the time of issuance, is 
expected to be 300%.
    If the percentage change of the Index is zero or negative (i.e., 
the Final Level is less than or equal to the Initial Level), the 
Redemption Amount per Unit will equal:
[GRAPHIC] [TIFF OMITTED] TN25FE05.006

    The Notes are cash-settled in U.S. dollars and do not give the 
holder any right to receive a portfolio security, dividend payments, or 
any other ownership right or interest in the portfolio or index of 
securities comprising the Nikkei 225. The Notes are designed for 
investors who want to participate in and gain enhanced upside exposure 
to a broad representation of the Japanese stock market and who are 
willing to forego principal protection and market interest payments on 
the Notes during their term. The issuer, Morgan Stanley, has disclosed 
in the prospectus that the original issue price of the Notes includes 
the agent's commissions and the cost of hedging Morgan Stanley's 
obligations under the Notes. According to Morgan Stanley, this fact is 
expected to adversely affect the secondary market prices of the 
Notes.\12\ The Commission has previously approved the listing of 
securities linked in whole, or in part, to the performance of the 
Nikkei 225 on the Exchange.\13\
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    \12\ Telephone conversation between Jeffrey Burns, Associate 
General Counsel, Amex, and Natasha Cowen, Attorney, Division, 
Commission, on February 9, 2005.
    \13\ See Securities Exchange Act Release Nos. 50016 (July 14, 
2004), 69 FR 43639 (July 21, 2004) (approving the listing and 
trading of Morgan Stanley PLUS Notes linked to the Nikkei 225); 
38940 (August 15, 1997), 62 FR 44735 (August 22, 1997) (approving 
the listing and trading of notes based on the Major 11 International 
Index that includes the Nikkei 225); 34821 (October 11, 1994), 59 FR 
52568 (October 18, 1994) (approving the listing and trading of 
warrants on the Nikkei 300); and 27565 (December 22, 1989), 55 FR 
376 (January 4, 1990) (approving the listing and trading of warrants 
based on the Nikkei 225). See also Securities Exchange Act Release 
No. 49670 (May 7, 2004), 69 FR 27959 (May 17, 2004) (approving the 
listing and trading of Accelerated Return Notes linked to the Nikkei 
225).
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    As of January 13, 2005, the market capitalization of the securities 
included in the Nikkei 225 ranged from a high of approximately 14.8 
trillion yen ($144.3 billion) to a low of approximately 29.7 billion 
yen ($289.6 million). The average daily trading volume for these same 
securities for the last six months ranged from a high of approximately 
56.7 million shares to a low of approximately 2,878 shares ($12.8 
million). The Index is composed of 225 securities and is broad-based. 
The highest weighted stock has a weight of 3.177% while the top five 
(5) stocks in the Index account for 13.515%. The level or value of the 
Index is calculated once per minute during TSE trading hours \14\ and 
is readily accessible to U.S. investors at http://www.nni.nikkei.co.jp 
and http://www.bloomberg.com. NKS is under no obligation to continue 
the calculation and dissemination of the Index. In the event that NKS 
ever ceases to maintain the Index, the Exchange will contact the 
Commission staff to consider prohibiting the continued trading of the 
Notes.\15\
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    \14\ TSE trading hours are currently 9:00 a.m. to 11:00 a. m. 
and from 12:30 p.m. to 3:00 p.m. Tokyo time, Monday through Friday. 
Due to time zone differences, on any normal trading day the TSE will 
close prior to the opening of business in New York City on the same 
calendar day. Therefore, the closing level of the Index on a trading 
day will generally be available in the U.S. by the opening of 
business on the same calendar day.
    \15\ Telephone conversation between Jeffrey Burns, Associate 
General Counsel, Amex, and Ira Brandriss, Assistant Director, and 
Natasha Cowen, Attorney, Division of Market Regulation 
(``Division''), Commission, on January 27, 2005.
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    In order to maintain continuity in the level of the Index in the 
event of certain changes due to non-market factors affecting the 
Underlying Stocks, such as the addition or deletion of stocks, 
substitution of stocks, stock dividends, stock splits or distributions 
of assets to stockholders, the divisor used in calculating the Index is 
adjusted in a manner designed to prevent any instantaneous change or 
discontinuity in the level of the Index. The divisor remains at the new 
value until a further adjustment is necessary as the result of

[[Page 9397]]

another change. As a result of each change affecting any Underlying 
Stock, the divisor is adjusted in such a way that the sum of all share 
prices immediately after the change multiplied by the applicable Weight 
Factor and divided by the new divisor, i.e., the level of the Index 
immediately after the change, will equal the level of the Index 
immediately prior to the change.\16\
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    \16\ Telephone conversation between Jeffrey Burns, Associate 
General Counsel, Amex, and Ira Brandriss, Assistant Director, and 
Natasha Cowen, Attorney, Division, Commission, on January 27, 2005. 
Underlying Stocks may be deleted or added by NKS. However, to 
maintain continuity in the Index, the policy of NKS is generally not 
to alter the composition of the Underlying Stocks except when an 
Underlying Stock is deleted in accordance with the following 
criteria. Any stock becoming ineligible for listing in the First 
Section of the TSE due to any of the following reasons will be 
deleted from the Underlying Stocks: bankruptcy of the issuer; merger 
of the issuer into, or acquisition of the issuer by, another 
company; delisting of the stock or transfer of the stock to the 
``Seiri-Post'' because of excess debt of the issuer or because of 
any other reason; or transfer of the stock to the Second Section of 
the TSE. Upon deletion of a stock from the Index, NKS will select, 
in accordance with certain criteria established by it, a replacement 
for the deleted Underlying Stock. In an exceptional case, a newly 
listed stock in the First Section of the TSE that is recognized by 
NKS to be representative of a market may be added to the Underlying 
Stocks. As a result, an existing Underlying Stock with low trading 
volume and not representative of the market will be deleted.
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    Because the Notes are issued in $10 denominations, the Amex's 
existing equity floor trading rules will apply to the trading of the 
Notes. 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 
Notes.\17\ Second, the Notes will be subject to the equity margin rules 
of the Exchange.\18\ Third, the Exchange will, prior to trading the 
Notes, distribute a circular to the membership providing guidance with 
regard to member firm compliance responsibilities (including 
suitability recommendations) when handling transactions in the Notes 
and highlighting the special risks and characteristics of the Notes. 
With respect to suitability recommendations and risks, the Exchange 
will require members, member organizations and employees thereof 
recommending a transaction in the Notes: (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. In addition, Morgan Stanley will deliver a prospectus in 
connection with initial sales of the Notes.
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    \17\ 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.
    \18\ See Amex Rule 462 and Section 107B of the Company Guide.
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    The Exchange represents that its surveillance procedures are 
adequate to properly monitor the trading of the Notes. Specifically, 
the Amex will rely on its existing surveillance procedures governing 
equities, which include additional monitoring on key pricing dates,\19\ 
and which have been deemed adequate under the Act. In addition, the 
Exchange has an effective surveillance sharing agreement with the TSE 
that may be used as a basis for listing and trading securities linked 
to the Nikkei 225.\20\ The Exchange also notes that the TSE is a member 
of the Intermarket Surveillance Group (``ISG'').\21\ As a result, the 
Exchange asserts that market surveillance information is available from 
the TSE, if necessary, due to regulatory concerns that may arise in 
connection with the component stocks. In the event that it becomes 
necessary, the Exchange will seek the Commission's assistance pursuant 
to memoranda of understanding or similar inter-governmental agreements 
or arrangements that may exist between the Commission and the Japanese 
securities regulators.\22\ The Exchange also has a general policy which 
prohibits the distribution of material, non-public information by its 
employees.
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    \19\ Telephone conversation between Jeffrey Burns, Associate 
General Counsel, Amex, and Ira Brandriss, Assistant Director, and 
Natasha Cowen, Attorney, Division, Commission, on January 27, 2005.
    \20\ See Information Sharing Agreement between the Amex and the 
TSE dated September 25, 1990.
    \21\ ISG membership obligates an exchange to compile and 
transmit market surveillance information and resolve in good faith 
any disagreements regarding requests for information or responses 
thereto. Telephone conversation between Jeffrey Burns, Associate 
General Counsel, Amex, and Ira Brandriss, Assistant Director, and 
Natasha Cowen, Attorney, Division, Commission, on January 27, 2005.
    \22\ Telephone conversation between Jeffrey Burns, Associate 
General Counsel, Amex, and Ira Brandriss, Assistant Director, and 
Natasha Cowen, Attorney, Division, Commission, on January 27, 2005.
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2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6 of the Act \23\ in general and furthers the objectives 
of Section 6(b)(5) \24\ 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 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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    \23\ 15 U.S.C. 78f(b).
    \24\ 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-Amex-2005-010 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-Amex-2005-010. 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. Copies of 
such filing also will

[[Page 9398]]

be available for inspection and copying at the principal offices of 
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-
Amex-2005-010 and should be submitted on or before March 18, 2005.

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.\25\ The Commission notes that it has previously approved 
the listing of securities the performance of which have been linked to, 
or based on, the Index.\26\ Accordingly, the Commission finds that the 
listing and trading of the Notes based on the Index 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.\27\
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    \25\ See id.
    \26\ See Securities Exchange Act Release Nos. 50016 (July 14, 
2004), 69 FR 43639 (July 21, 2004) (approving the listing and 
trading of Morgan Stanley PLUS Notes linked to the performance of 
the Nikkei 225); 49999 (July 9, 2004), 69 FR 43023 (July 19, 2004) 
(approving the listing and trading of Contingent Principal 
Protection Notes linked to the performance of the Nikkei 225); 49670 
(May 7, 2004), 69 FR 27959 (May 17, 2004) (approving the listing and 
trading of Accelerated Return Notes linked to the Nikkei 225 for 
Nasdaq); and 38940 (August 15, 1997), 62 FR 44735 (August 22, 1997) 
(approving the listing and trading of Market Index Target-Term 
Securities the return on which is based on changes in the value of a 
portfolio of 11 foreign indexes, including the Nikkei 225).
    \27\ 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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    The requirements of Section 107A of the Company Guide were designed 
to address the concerns attendant to the trading of hybrid securities, 
like the Notes. The Commission notes that the Amex will distribute a 
circular to its membership calling attention to the specific risks 
associated with the Notes, and impose other requirements of its rules 
as described in the proposal above. The Commission notes, in addition, 
that Morgan Stanley will deliver a prospectus in connection with the 
initial sales of the Notes. By imposing the hybrid listing standards, 
suitability, disclosure, and compliance requirements noted above, the 
Commission believes the Amex has addressed adequately the potential 
problems that could arise from the hybrid nature of the Notes.
    In approving the product, the Commission recognizes that the Index 
is a modified capitalization-weighted index \28\ based on 225 common 
stocks traded on the TSE, which represent a broad cross-section of 
Japanese industry. The Underlying Stocks are listed in the First 
Section of the TSE and are, therefore, among the most actively traded 
stocks on the TSE. Given the composition of the Index, the Commission 
believes that the listing and trading of the Notes that are linked to 
the Index should not unduly impact the market for the underlying 
securities comprising the Index or raise manipulative concerns.\29\
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    \28\ See supra note 5.
    \29\ The issuer Morgan Stanley disclosed in the prospectus that 
the original issue price of the Notes includes the agent's 
commissions and the cost of hedging Morgan Stanley's obligations 
under the Notes. According to Morgan Stanley, this fact is expected 
to adversely affect the secondary market prices of the Notes. Such 
hedging activity must, of course, be conducted in accordance with 
applicable regulatory requirements.
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    The Commission also believes that any concerns that a broker-
dealer, such as Morgan Stanley, or a subsidiary providing a hedge for 
the issuer, will incur undue position exposure are minimized by the 
size of the Notes issuance in relation to the net worth of Morgan 
Stanley.\30\
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    \30\ See Securities Exchange Act Release Nos. 44913 (October 9, 
2001), 66 FR 52469 (October 15, 2001) (order approving the listing 
and trading of notes whose return is based on the performance of the 
Nasdaq-100 Index) (File No. SR-NASD-2001-73); 44483 (June 27, 2001), 
66 FR 35677 (July 6, 2001) (order approving the listing and trading 
of notes whose return is based on a portfolio of 20 securities 
selected from the Amex Institutional Index) (File No. SR-Amex-2001-
40); and 37744 (September 27, 1996), 61 FR 52480 (October 7, 1996) 
(order approving the listing and trading of notes whose return is 
based on a weighted portfolio of healthcare/biotechnology industry 
securities) (File No. SR-Amex-96-27).
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    Finally, the Commission notes that the value of the Index will be 
calculated once per minute throughout the TSE trading day and will be 
readily accessible to U.S. investors. The Exchange represents that the 
Index will be calculated, published, and disseminated solely by NKS. 
NKS will also make the changes in the composition of the Index. 
Although NKS is under no obligation to continue the calculation and 
dissemination of the Index, in the event the calculation and 
dissemination every minute of the Index is discontinued, Amex 
represents that it will contact Commission staff and consider 
prohibiting the continued listing of the Notes.
    The Commission finds good cause for approving the proposed rule 
change prior to the 30th day after the date of publication of the 
notice of filing thereof in the Federal Register. The Exchange has 
requested accelerated approval because this product is similar to 
several other instruments currently listed and traded on the Amex.\31\ 
The Commission believes that the Notes will provide investors with an 
additional investment choice and that accelerated approval of the 
proposal will allow investors to begin trading the Notes promptly. 
Additionally, the Notes will be listed pursuant to Amex's existing 
hybrid security listing standards as described above. Therefore, the 
Commission finds good cause, consistent with Section 19(b)(2) of the 
Act,\32\ to approve the proposal on an accelerated basis.
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    \31\ See supra note 25.
    \32\ 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,\33\ that the proposed rule change (SR-Amex-2005-010) is hereby 
approved on an accelerated basis.
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    \33\ 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.\34\
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    \34\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
 [FR Doc. E5-778 Filed 2-24-05; 8:45 am]
BILLING CODE 8010-01-P