[Federal Register Volume 70, Number 77 (Friday, April 22, 2005)]
[Notices]
[Pages 20939-20946]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E5-1914]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-51567; File No. SR-AMEX-2003-66]


Self-Regulatory Organizations; Notice of Filing of Proposed Rule 
Change and Amendment Nos. 1, 2, 3, 4, 5, 6 and 7 Thereto by the 
American Stock Exchange LLC Relating to the Listing and Trading of 
Trust Issued Receipts Based on a Single Issuer

April 18, 2005.
    Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 
(``Exchange Act'' or ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice 
is hereby given that on June 26, 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 January 30, 2004, the Commission received Amendment No. 1 
to the proposed rule change.\3\ On May 10, 2004, the Exchange submitted 
Amendment No. 2 to the proposed rule change.\4\ On August 16, 2004, the 
Exchange submitted Amendment No. 3 to the proposed rule change.\5\ On 
November 8,

[[Page 20940]]

2004, the Exchange submitted Amendment No. 4 to the proposed rule 
change.\6\ On January 14, 2005, the Exchange submitted Amendment No. 5 
to the proposed rule change.\7\ On April 4, 2005, the Exchange 
submitted Amendment No. 6 to the proposed rule change.\8\ On April 15, 
2005, the Exchange submitted Amendment No. 7 to the proposed rule 
change.\9\ 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 Jeffrey P. Burns, Associate General Counsel, 
Amex, to Florence Harmon, Senior Special Counsel, Division of Market 
Regulation (``Division''), Commission, dated January 28, 2004 
(``Amendment No. 1''). Amendment No. 1 revised the original proposal 
to require the underlying securities in Single TIRs (as defined 
herein) to meet the market capitalization requirements for equity 
linked term notes in Rule 107B(d) of the Amex Company Guide 
(``Company Guide''), modified maintenance listing standards for 
Single TIRS to increase the minimum amount of receipts required to 
be outstanding, revised the proposed rule text to allow odd lot 
trading in Single TIRs, provided a more detailed explanation of how 
Single TIRs would function, clarified that either Susquehanna 
Investment Group or an affiliate would be the initial depositor for 
the Single TIR, and rescinded its earlier request for relief from 
Commission Rule 10a-1.
    \4\ See letter from Jeffrey P. Burns, Associate General Counsel, 
Amex, to Nancy J. Sanow, Assistant Director, Division, Commission, 
dated May 7, 2004 (``Amendment No. 2''). In Amendment No. 2, Amex 
revised the proposed rule text to require Single TIRs to comply with 
requirements imposed on equity linked term notes in Rule 107B(e) and 
(f) of the Company Guide, added rule text requiring a firewall 
around affected personnel in the event that a broker-dealer selects 
the underlying security of a Single TIR, added rule text requiring 
the Exchange to consider distributing guidance to member firms 
regarding compliance responsibilities for a Single TIR before its 
issue, and added a representation in the discussion that Single TIRs 
are exempt from Commission Rule 10A-3.
    \5\ See letter from Jeffrey P. Burns, Associate General Counsel, 
Amex, to Nancy J. Sanow, Assistant Director, Division, Commission, 
dated August 13, 2004 (``Amendment No. 3''). In Amendment No. 3, 
Amex extended the application of Rule 107B(e) and (f) of the Company 
Guide to Single TIR underlying securities issued by U.S. issuers as 
well as foreign issuers, added a requirement that a minimum of 
150,000 receipts be outstanding when trading in a Single TIR 
commences, and eliminated a provision of the proposed rule text 
deemed to be redundant. Amendment No. 3 also provided guidance on 
the applicability of Commentary .05 of Amex Rule 190 to Single TIRs.
    \6\ See letter from Jeffrey P. Burns, Associate General Counsel, 
Amex, to Nancy J. Sanow, Assistant Director, Division, Commission, 
dated November 8, 2004 (``Amendment No. 4''). In Amendment No. 4, 
Amex added Commentary .13 to Amex Rule 170 to provide a limited 
exception for specialists in Single TIRs to buy on plus ticks and/or 
sell on minus ticks to bring a Single TIR into parity with the 
underlying security.
    \7\ In Amendment No. 5, Amex provided: (1) A clarification of 
the fee structure in connection with Single TIRs; (2) a revision to 
the continued listing standards stating that an underlying security 
must be registered pursuant to Section 12 of the Exchange Act; (3) a 
revision to the eligibility requirements for a component security of 
a Single TIR; (4) the addition of Commentary .05 to Amex Rule 1202 
proposing that side-by-side trading and integrated market making is 
not permitted in connection with Single TIRs; (5) a description of 
the trading halt provisions applicable to Single TIRs; and (6) a 
description of the prospectus delivery requirements.
    \8\ In Amendment No. 6, Amex made the following revisions: (1) A 
clarification in the continuing listing standard for TIRs in Amex 
Rule 1202 that each component security must be listed on a national 
securities exchange or traded through the facilities of Nasdaq and 
reported national market system security; (2) an amendment to 
proposed Commentary .03(a)(iii) providing that each component 
security must be a security of a U.S. or foreign issuer that meets 
the requirements of Section 107B(f) of the Company Guide (and not 
(d) and (e)); (3) the addition of paragraph (f) in proposed 
Commentary .03 providing that for the continued trading of a Single 
TIR, the underlying security must be eligible for standardized 
equity options trading pursuant to Amex Rule 916; (4) the addition 
of proposed Commentary .06 regarding trading halts and (5) the 
addition of proposed Commentary .07 regarding the allowable 
percentages set forth in Section 107B(f) of the Company Guide.
    \9\ In Amendment No. 7, Amex revised rule text in proposed 
subsection (f) of Commentary .03 of Amex Rule 1202 to clarify that 
the equity component of a Single TIR must be eligible for 
standardized equity options trading.
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I. Self-Regulatory Organization's Statement of the Terms of the 
Substance of the Proposed Rule Change

    The Exchange proposes to add new Commentaries .03, .05, .06, and 
.07 to Amex Rule 1202 to accommodate the listing and trading of trust 
issued receipts based on the common stock of single U.S. corporate 
issuers or qualified foreign issuers (the ``Underlying Company''). The 
Exchange also proposes to add new Commentary .13 to Amex Rule 170 to 
allow a limited exception for specialists in Single TIRs to buy on plus 
ticks and/or sell on minus ticks to bring the Single TIR into parity 
with the underlying securities. The text of the proposed rule change is 
attached hereto as Exhibit A and is also available on the Amex Web site 
http://www.amex.com, at the principal office of Amex, 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, Amex included statements 
concerning the purpose of, and basis for, the proposed rule change, as 
amended, and discussed any comments it received on the proposal. The 
text of these statements may be examined at the places specified in 
Item IV below. 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 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    Under Amex Rule 1201, the Exchange may approve for listing and 
trading trust issued receipts (``TIRs'') \10\ based on one or more 
securities.\11\ The Amex in this proposal seeks to list for trading 
under Amex Rule 1202, TIRs representing ownership interests in a trust, 
the assets of which will consist of either the common stock of a 
single, U.S. corporate issuer or the stock of non-U.S. companies traded 
in the U.S. market as sponsored American Depositary Receipts, ordinary 
shares or otherwise (collectively, ``foreign securities'') that is 
listed and traded on a national securities exchange or quoted through 
The Nasdaq Stock Market, Inc. (``Single TIRs''). The Exchange proposes 
that the minimum number of receipts or Single TIRs required to be 
outstanding when trading commences be 150,000. The Exchange expects 
Susquehanna Investment Group (``SIG'') to offer Single TIRs under the 
trade name of ``BIGS.'' \12\
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    \10\ A TIR is defined in Amex Rule 1200(b) as a security (a) 
that is issued by a trust which holds specified securities deposited 
with the trust; (b) that, when aggregated in some specified minimum 
number, may be surrendered to the trust by the beneficial owner to 
receive the securities; and (c) that pays beneficial owners 
dividends and other distributions on the deposited securities, if 
any are declared and paid to the trustee by an issuer of the 
deposited securities.
    \11\ The Exchange defines a ``security'' or ``securities'' to 
include stocks, bonds, options, and other interests or instruments 
commonly known as securities. See Amex Constitution, Article I, 
Section 3(j). Pursuant to Commentary .01 to Amex Rule 1202, 
initially, no component security of a TIR may represent more than 
20% of the overall value of the receipt. If the portfolio of 
securities underlying the TIR drops to fewer than nine, the SRO will 
consult with the Commission staff to confirm the appropriateness of 
continued listing of such TIR. See Securities Exchange Act Release 
No. 41892 (September 21, 1999), 64 FR 52559 (September 29, 1999) 
(``TIR Approval Order'').
    \12\ SIG, or an affiliate of SIG, intends to form one or more 
single purpose grantor trusts that will issue BIGS. Bank of New York 
(``BNY''), a state-chartered bank that is a member of the Federal 
Reserve System and meeting the standards specified in Section 
26(a)(1) of the Investment Company Act of 1940 (the ``1940 Act''), 
will act as trustee. The BIGS trust will not be a registered 
investment company under the 1940 Act. Each trust will be formed 
under a depositary trust agreement among SIG or its affiliate, as 
the initial depositor, the trustee and the registered owners and 
beneficial owners of BIGS issued by that trust. SIG or an affiliate, 
as the initial depositor, will capitalize each trust through 
purchases of the Underlying Company or other transactions by 
depositing the common stock of the Underlying Company into the 
trust. The sole asset of each trust will be the common stock of the 
Underlying Company.
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Introduction
    In September 1999, the Exchange adopted rules for the listing and 
trading of TIRs.\13\ TIRs are negotiable receipts issued by trusts that 
represent investors' discrete identifiable and undivided beneficial 
ownership interest in the securities deposited into the trust. Since 
that time, the Exchange has listed 17 TIRs under the trade name of 
HOLDRS,\14\ representing a wide variety of industry sectors and the 
market as a whole. The original HOLDR was the Internet HOLDR.
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    \13\ See TIR Approval Order.
    \14\ See HOLDRS No-Action Letter infra note 17 and Registration 
No. 333-78575 filed with the Commission on September 23, 1999 
pursuant to Rule 424 (b)(4) CIK No. 00007286(2).
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    To accommodate the listing of additional TIRs, the Exchange in 
September 2000 revised the existing listing criteria and trading rules 
to permit the listing and trading, including pursuant to unlisted 
trading privileges, of TIRs pursuant to Rule 19b-4(e) under the Act 
(the ``Generic Listing Standards'').\15\ In order to efficiently list

[[Page 20941]]

TIRs without submitting a separate rule filing with the Commission for 
each TIR, the Exchange, consistent with Rule 19b-4(e) under the Act, 
requires, among other things, evidence of sufficient size, liquidity 
and non-concentration of the underlying component securities of the 
TIR.\16\ Because of the structure of Single TIRs, the Exchange believes 
that the current Generic Listing Standards require revision to include 
the listing and trading of TIRs on the common stock of a single U.S. 
corporate issuer or qualified foreign securities. As a result, the 
Exchange submits this proposed rule change for the purpose of adding 
Commentaries .03, .05, .06, and .07 to Amex Rule 1202 to permit the 
listing and trading of Single TIRs, including pursuant to Rule 19b-
4(e), under the Exchange Act and also submits related proposed 
Commentary .13 to Amex Rule 170.
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    \15\ Commission Rule 19b-4(e), adopted on December 8, 1998, 
permits the Exchange to list and trade new derivative securities 
products without submitting a proposed rule change, provided the 
Exchange has in place trading rules, procedures, a surveillance 
program and listing standards that pertain to the class of 
securities covering the new product. See Securities Exchange Act 
Release No. 40761 (December 8, 1998), 63 FR 70952 (December 22, 
1998).
    \16\ Commentary .01 of Amex Rule 1202 currently provides the 
eligibility criteria for component securities represented by a 
series of a TIR as follows: (1) Each component security must be 
registered under Section 12 of the Exchange Act; (2) each component 
security must have a minimum public float of at least $150 million; 
(3) each component security must be listed on a U.S. national 
securities exchange or traded through the facilities of The Nasdaq 
Stock Market, Inc. (``Nasdaq'') and a reported national market 
system security; (4) each component security must have an average 
daily trading volume of at least 100,000 shares during the preceding 
sixty-day trading period; (5) each component security must have an 
average daily dollar value of shares traded during the preceding 
sixty-day trading period of at least $1 million; and (6) the most 
heavily weighted component security may not initially represent more 
than 20% of the overall value of the TIR.
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Listing Criteria
    Under Amex Rule 1201, the Exchange may list and trade TIRs based on 
one or more securities. The securities that are included in a series of 
a TIR are required to be selected by the Exchange or its agent, a 
wholly-owned subsidiary of the Exchange, or by such other person as 
shall have a proprietary interest in such TIRs.\17\ Pursuant to Amex 
Rule 1201, the Exchange submits that it may designate Single TIRs for 
trading.
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    \17\ SIG Indices, LLLP, an affiliate of SIG, will determine the 
particular Underlying Company stock to be included in each BIGS 
trust.
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    Under proposed Commentary .03 to Amex Rule 1202, Single TIRs would 
have eligibility criteria that would conform substantially to the 
initial and continued listing standards for all TIRs under Amex Rule 
1202(a) and (b).\18\ The proposed rule text would also modify the 
continued listing criteria in Amex Rule 1202(b) to provide that each 
component security of any TIR must be registered under Section 12 of 
the Exchange Act and listed on a national securities exchange or traded 
through Nasdaq and reported as a national market system security; and 
the proposed rule for Single TIRs also includes these requirements. The 
Single TIRs trust will be formed under a depositary trust agreement, 
among the trustee, an initial depositor, and other depositors, if any, 
and the holders of Single TIRs (the ``Single TIR Trust'' or 
``Trust'').\19\
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    \18\ The initial listing standards set forth in Amex Rule 
1202(a) provide that the Exchange must establish a minimum number of 
Single TIRs required to be outstanding at the time of the 
commencement of trading on the Exchange. The proposed Commentary 
.03(c) to Amex Rule 1202 would establish that minimum number at 
150,000 receipts for all Single TIRs. The continued listing 
guidelines for all TIRs are set forth in Rule 1202(b) and currently 
state that the Exchange will consider the suspension of trading in 
or removal from listing of a trust upon which a series of TIRs is 
based under any of the following circumstances: (1) If the trust has 
more than 60 days remaining until termination and there are fewer 
than 50 record and/or beneficial holders of Trust Issued Receipts 
for 30 or more consecutive trading days; (2) if the trust has fewer 
than 50,000 receipts issued and outstanding; (3) if the market value 
of all receipts issued and outstanding is less than $1,000,000; or 
(4) if such other event shall occur or condition exists which in the 
opinion of the Exchange makes further dealings on the Exchange 
inadvisable. In addition, for Single TIRs, the component equity 
security must continue to be eligible for standardized equity 
options trading. Upon termination of a trust, the Exchange requires 
that any TIRs issued in connection with such trust be removed from 
Exchange listing. In addition, a trust may terminate in accordance 
with the provisions of the trust prospectus, which may provide for 
termination if the value of securities in the trust falls below a 
specified amount.
    \19\ The trust is not a registered investment company under the 
1940 Act. See SEC No-Action Letter dated September 3, 1999 to 
Merrill Lynch, Pierce, Fenner & Smith Incorporated, providing relief 
from registration as a management investment company under the 1940 
Act for HOLDRS (the ``HOLDRS No-Action Letter'').
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The Underlying Company Securities
    The common stock of the Underlying Company or the stock of a 
foreign issuer (hereinafter the term ``common stock'' will refer to 
both the common stock of the Underlying Company and the stock of a 
foreign issuer) for each Single TIR will meet the requirements set 
forth in proposed Commentary .03 to Amex Rule 1202. These requirements 
are substantially similar to the existing criteria for TIRs found in 
Commentary .01 to Amex Rule 1202. The primary differences in new 
Commentary .03 relate to the omission of the concentration prohibition 
in paragraph (vi) of Commentary .01 and the addition of the equity 
linked term note requirements for underlying linked stock as set forth 
in Section 107B(f) of the Amex Company Guide. In particular, the 
Exchange believes that each Underlying Company in connection with 
Single TIRs should either be a U.S. company or a non-U.S. company that 
meets the requirements of Section 107B(f) of the Company Guide.\20\ In 
the case of a Single TIR, the concentration prohibition is not relevant 
because the structure by definition is ``concentrated'' in one 
Underlying Company. The Exchange believes that the proposed criteria 
for Single TIRs with the addition of the equity linked noted standards 
for an Underlying Company will help to ensure that a minimum level of 
liquidity will exist to allow for the maintenance of fair and orderly 
markets and will serve to ensure that Single TIRs are based on well-
capitalized and actively-traded companies.\21\ The Exchange submits 
that the proposed selection criteria will help to ensure that an 
Underlying Company's common stock is not readily susceptible to 
manipulation.\22\ Furthermore, in the event that the underlying 
security of a Single TIR is selected by a broker-dealer, or an 
affiliate of a broker-dealer such as SIG Indices LLLP, the proposed 
rule change would require that such broker-dealer (or affiliate) erect 
a firewall around personnel with access to information regarding that 
selection prior to listing to separate them from the broker-dealer 
personnel trading the Single TIR or any of the component securities.
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    \20\ Section 107B(f) of the Company Guide provides requirements 
to meet in connection with the listing and trading of equity linked 
notes based on foreign and U.S. underlying securities. In general, 
this provision limits the amount of outstanding common shares of an 
entity that may be linked to a derivative instrument. The Exchange 
has also set forth, in proposed Commentary .07, that if an issuer 
proposes to list a Single TIR that relates to more than the 
allowable percentages set forth in Section 107B(f) of the Company 
Guide, the Exchange will submit a proposed rule change with the 
Commission pursuant to Section 19(b)(2) and cannot list and trade 
such Single TIR until the Commission issues an approval order.
    \21\ An example of such Underlying Companies may include: Lucent 
Technologies, Inc; Sun Microsystems, Inc.; EMC Corporation; 
Motorola, Inc.; and Siebel Systems, Inc.
    \22\ The Exchange notes that it currently lists and trades 
equity linked notes (``ELNs'') on various well-capitalized and 
actively-traded common stocks pursuant to Section 107B of the 
Company Guide. See Securities Exchange Act Release Nos. 32343 (May 
20, 1993), 58 FR 30833 (May 27, 1993); 42582 (March 27, 2000), 65 FR 
17685 (April 4, 2000); and 47055 (December 19, 2002), 67 FR 79669 
(December 30, 2002) (Amex 2002-110). The requirements noted above in 
proposed Commentary .03 to Amex Rule 1202 are more stringent than 
the ELN standards of Section 107B of the Company Guide.
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    The Single TIRs will be comprised solely of shares of the common 
stock of

[[Page 20942]]

an Underlying Company. An investment in a Single TIR will accordingly 
involve risks similar to investing directly in the Underlying Company's 
common stock. Therefore, the value of the Single TIR will largely 
depend on the financial performance of the Underlying Company and will 
be exposed to all the risks associated with an investment in equity 
securities in general, and, in the common stock of the Underlying 
Company, in particular.
Product Description
    The Exchange states that Single TIRs are designed to provide 
investors greater access to lower-priced, highly-capitalized companies 
while reducing transaction costs by aggregating multiple shares of the 
Underlying Company's common stock into a single trading instrument. 
Single TIRs represent an undivided beneficial interest in the 
underlying securities held by the Single TIR Trust. A holder of a 
Single TIR may exchange the Single TIR to receive the underlying 
securities. The Exchange states that the expenses associated with 
trading Single TIRs are expected to be less than the expenses 
associated with separately buying and selling the Underlying Company 
security in a traditional brokerage account.
    Single TIRs are separate and distinct from the Underlying Company's 
common stock comprising the portfolio of the Single TIR Trust. In 
contrast to the prior TIR Approval Order,\23\ a Single TIR Trust may 
issue and retire Single TIRs in both odd-lots and round-lots.\24\ 
Holders of Single TIRs accordingly may obtain, hold, trade or exchange 
Single TIRs in odd and round lots or multiples thereof.
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    \23\ See TIR Approval Order.
    \24\ Single TIRs will be evidenced by one or more global 
certificates that the trustee will deposit with DTC and register in 
the name of Cede & Co., as nominee for DTC. Single TIRs will be 
available only in book-entry form. Owners of Single TIRs may hold 
their Single TIRs through DTC, if they are participants in DTC, or 
indirectly through entities that are participants in DTC.
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    The number of outstanding Single TIRs will increase and decrease as 
a result of in-kind deposits and withdrawals of the Underlying 
Company's common stock. The Single TIRs Trust will stand ready to issue 
additional Single TIRs on a continuous basis when an investor deposits 
the required securities with the trustee.
    The initial price for Single TIRs issued to the initial depositor 
will equal the sum of the closing market price of the Underlying 
Company's common stock on its primary market on the date of the 
transaction, multiplied by the ``share per receipt ratio amount'' \25\ 
to be determined on the date of issuance, plus an issuance fee.\26\ The 
Trust is expected to issue additional Single TIRs on a continuous 
basis. Investors may acquire Single TIRs in two ways: (1) through a 
purchase on the Exchange, or (2) through an in-kind deposit of the 
requisite number of the Underlying Company's common stock with the 
trustee during normal business hours evidencing a trust issued receipt. 
Investors that create Single TIRs by delivery to the Trust of the 
requisite Underlying Company common stock will be required to pay an 
issuance fee. In addition, investors will also be responsible for 
paying any sales commissions that are charged by a broker in connection 
with any purchase of the Underlying Company's common stock. In 
selecting the underlying securities, no investigation or review of the 
Underlying Company, including the public filings, will be performed by 
the issuer SIG Indices LLLP or the Exchange, other than to the extent 
required to determine whether the Underlying Company's common stock 
satisfies the selection criteria for a Single TIR.
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    \25\ The ``share per receipt ratio amount'' is the number of 
shares of the Underlying Company's common stock (or multiplier) for 
each one (1) Single TIR. Initially, SIG expects this ratio to be ten 
(10) shares for each Single TIR.
    \26\ SIG expects the issuance fee to be $5.00 or less for each 
100 receipts or portion thereof.
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    After the date of issuance, the ``share per receipt ratio amount'' 
for an Underlying Company will not change, except for changes due to 
corporate events, such as stock splits or reverse stock splits. Under 
no circumstances will the common stock of a different publicly-traded 
company be substituted for the Underlying Company's common stock 
established for the Single TIR. The actual number of shares will be 
determined on the date of the initial capitalization of the Trust by 
the initial depositor and will appear in the final prospectus delivered 
in connection with sales of Single TIRs.\27\ As stated above, Single 
TIRs are designed to provide investors with greater access to lower-
priced highly-capitalized companies while reducing transactions cost by 
aggregating multiple shares of the Underlying Company's common stock 
into a single trading instrument.
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    \27\ As a result of the share per receipt ratio amount or 
multiplier, the initial issue price will be a multiple of the 
current price of the common stock of the Underlying Company. For 
example, the initial issue price of the Single TIR will be $16.60 
provided a multiple of ten (10) and a current price of $1.66 per 
share for a given stock that qualifies as a Single TIR candidate. In 
addition, if a Single TIR is surrendered to the trustee, the 
investor will receive 10 shares of the Underlying Company's common 
stock for each one (1) Single TIR. In the event that a Single TIR 
represents fractional shares due to certain corporate events such as 
stock splits or reverse stock splits or other corporate 
distributions, the trustee will deliver cash in lieu of such 
fractional share.
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    Investors may withdraw the Underlying Company's common stock of a 
Single TIR upon request by delivering an odd or round lot Single TIR to 
the trustee during normal business hours. The trustee will charge a 
cancellation fee for retiring Single TIRs and delivering the deposited 
securities.\28\ To the extent that any exchange of Single TIRs requires 
the delivery of a fractional share, the trustee will sell such share in 
the market and deliver cash in lieu of such share. Beneficial owners of 
Single TIRs will have the same rights and privileges as they would have 
if they beneficially owned the underlying securities outside of the 
trust.\29\ These include the right of investors to instruct the trustee 
to vote the securities, the right to receive dividends and other 
distributions on the underlying securities, if any, and the right to 
exchange Single TIRs to receive the underlying securities. However, 
except with respect to the right to vote for dissolution of the Trust, 
holders of Single TIRs will not have voting rights with respect to the 
Single TIR Trust.\30\ The Trust will not be managed and will remain 
static over the term of the Trust.
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    \28\ SIG expects the cancellation fee to be $5.00 or less for 
each 100 receipts or portion thereof.
    \29\ The trustee will deliver proxy soliciting materials 
provided to it by the Underlying Company for the benefit of holders 
of Single TIRs to give the trustee instructions as to how to vote on 
matters to be considered at any annual or special meeting of 
shareholders held by Underlying Company.
    \30\ Beneficial owners of Single TIRs will have the right to 
vote to dissolve and liquidate the Trust.
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    The Trust will not publish or otherwise calculate the aggregate 
value of the underlying security represented by a Single TIR.\31\ Bid 
and asked prices

[[Page 20943]]

will be quoted on a per receipt basis and will be disseminated by the 
Amex every 15 seconds over the Consolidated Tape Association's Network 
B. Single TIRs may trade in the secondary market at prices that are 
lower than the aggregate value of the corresponding underlying 
security. If, in such case, a holder of a Single TIR wishes to realize 
the net asset value of the underlying security, that owner will have to 
exchange the Single TIR.
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    \31\ In contrast, the Exchange disseminates at least every 15 
seconds over the Consolidated Tape Association's Network B a ``per 
receipt value'' or ``per share value'' for TIRs listed pursuant to 
Amex Rules 1200, 1201, and 1202 and Commentary .01 of Amex Rule 1202 
(which does not reflect the product's fees), due to the fact that 
the TIR holds multiple securities. The reason that the ``per receipt 
value'' currently disseminated for TIRs, such as HOLDRs, does not 
reflect fees is because the only fees charged are for issuance and 
cancellation and a trustee custodial fee that is paid out of 
dividends, if any are declared. See Securities Exchange Act Release 
No. 41593 (July 1, 1999), 64 FR 37178 (July 9, 1999), note 3. 
Because Single TIR, such as BIGS, hold only one equity component, 
for which real-time last sale reporting (and bid and offer 
quotations) are available, the Exchange does not plan to disseminate 
the intraday valuation of the product based on the fact that 
sufficient information exists for intraday valuation of the Single 
TIR shares. The Exchange states that fee structure for Single TIRs 
is similar to that of existing products and should not affect the 
intraday trading valuation of the Single TIR shares. Telephone 
conversation between Jeffrey Burns, Associate General Counsel, Amex, 
and Florence Harmon, Senior Special Counsel, Commission, on April 
14, 2005.
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    The Exchange believes that Single TIRs will not trade at a material 
discount or premium to the underlying securities held by the Trust 
based on potential arbitrage opportunities. The arbitrage process, 
which provides the opportunity to profit from differences in prices of 
the same or similar securities, increases the efficiency of the markets 
and serves to prevent potentially manipulative efforts. If the price of 
the Single TIR deviates enough from the price of the Underlying 
Company's common stock to create a material discount or premium, an 
arbitrage opportunity is created allowing the arbitrageur to either buy 
the Single TIR at a discount, immediately cancel them in exchange for 
the Underlying Company's common stock and sell the securities in the 
cash market at a profit, or sell the Single TIR short at a premium and 
buy the Underlying Company's common stock represented by the Single TIR 
to deposit in exchange for the Single TIR to deliver against the short 
position. In both instances the arbitrageur locks in a profit and the 
markets move back into line.
Prospectus Delivery
    In connection with the listing and trading of Single TIRs, all 
investors in Single TIRs who purchase in the initial offering will 
receive a prospectus. In addition, purchasers of a Single TIR directly 
from the Trust (by delivering the underlying security to the Trust) 
will also receive a prospectus. Finally, Amex members purchasing Single 
TIRs from the Trust for resale to customers will deliver a prospectus 
to such customers.
Fee Structure
    As set forth in the Registration Statement in connection with the 
BIGS Trust I, the fee structure involves issuance and cancellation 
fees, commissions and custody fees. The Bank of New York (``BNY''), as 
trustee, will charge an issuance fee of $5.00 in connection with the 
creation of each 100 BIGS or portion thereof. In addition, BNY will 
charge a cancellation fee of $5.00 for each 100 BIGS or portion thereof 
surrendered for delivery of the underlying security or proceeds of such 
security.
    Brokerage commissions may be charged by a securities broker in 
connection with the purchase of the underlying security in connection 
with the creation of the BIGS. In addition, purchases of BIGS on the 
Exchange may also be subject to brokerage commissions.
    BNY as trustee also will charge an annual custody fee of $0.02 for 
each BIGS, deducted from any cash dividend or other cash distributions, 
if any. For any calendar year, BNY will waive any portion of the 
custody fee which exceeds the total cash dividends and other cash 
distributions paid in that year.
Termination Events
    The Single TIR Trust will be terminated if any of the following 
circumstances occur: (1) Underlying Company no longer has a class of 
common stock registered under Section 12 of the Act and the trustee has 
actual knowledge of such event; (2) the Commission finds that 
Underlying Company or the Trust should be registered as an investment 
company under the 1940 Act, and the trustee has actual knowledge of the 
Commission finding; (3) the securities of the Underlying Company are 
converted or exchanged into, or into a right to receive, securities 
that are (i) issued by a company or other entity other than the 
Underlying Company (with certain exceptions for a recapitalization, 
reorganization or reincorporation), (ii) not registered under Section 
12 of the Act or (iii) not listed on a U.S. national securities 
exchange or included in Nasdaq; (4) the Underlying Company's common 
stock is not listed for trading on a U.S. national securities exchange 
or traded through the facilities of Nasdaq National Market System for 
five (5) consecutive business days and the trustee has actual knowledge 
of such event; (5) the Single TIRs are delisted from the Amex and are 
not listed for trading on another U.S. national securities exchange or 
authorized for quotation on the Nasdaq National Market System within 
five (5) business days from the date the Single TIRs are delisted; (6) 
the trustee resigns and no successor trustee is appointed within 60 
days from the date the trustee provides notice to the initial depositor 
of its intent to resign; (7) 75% of beneficial owners of outstanding 
Single TIRs vote to dissolve and liquidate the trust; and/or (8) the 
withdrawal of such number of Underlying Company common stock from the 
Trust so that the aggregate value of the Trust's assets fall below a 
pre-determined amount.
    Upon termination of the Trust, the beneficial owners will surrender 
the Single TIRs and the trustee will distribute the underlying 
securities to the Single TIRs holders.
Information Circular
    The proposed rule change would require the Exchange to evaluate the 
nature and complexity of each Single TIR, prior to the commencement of 
its trading, and, if appropriate, distribute and circulate to the 
membership guidance regarding member firm compliance responsibilities 
when handling transactions in such securities. In addition, prior to 
the commencement of trading in Single TIRs, the Exchange will issue a 
circular to members informing them of, among other things, Exchange 
policies regarding trading halts in such securities. First, the 
circular will advise that trading will be halted in the event the 
market volatility trading halt parameters set forth in Amex Rule 117 
have been reached. Second, the circular will advise that, in addition 
to other factors that may be relevant, the Exchange may consider 
factors such as the extent to which trading is not occurring in a 
deposited share(s) and whether other unusual conditions or 
circumstances detrimental to the maintenance of a fair and orderly 
market are present; however, in any event, trading in the Single TIRs 
will be halted if trading in the underlying equity security is halted 
because of a regulatory trading halt as defined in Rule 6h-1 under the 
Exchange Act.
    In addition, the circular will also discuss the special 
characteristics and risks of trading Single TIRs. Specially, the 
circular, among other things, will discuss how the Single TIRs are 
issued and redeemed from the trust, member prospectus delivery 
requirements, and applicable Exchange rules, such as the limited 
exception to Amex Rule 170. The circular will also explain the various 
fees as described in the Registration Statement. The circular will also 
advise members of their suitability obligations with respect to a 
recommended transaction in the Single TIR shares.\32\
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    \32\ See Amex Rule 411.
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Trading Rules
    Proposed Commentary .13 of Amex Rule 170 would grant a specialist 
in a Single TIR a limited exception from Commentaries .01, .02, and .07 
of Amex

[[Page 20944]]

Rule 170. Such exception would allow a specialist in a Single TIR to 
buy on plus ticks and/or sell on minus ticks for the purpose of 
bringing the Single TIR into parity with its underlying security. 
Generally, Single TIRs are equity securities subject to Amex Rules 
governing the trading of equity securities, including, among others, 
rules governing priority, parity and precedence of orders, specialist 
responsibilities, account opening and customer suitability (Amex Rule 
411), with the prior approval of a floor official, of a stop or limit 
order by a quotation (Amex Rule 154, Commentary .04(c)). Initial equity 
margin requirements of 50% and the regular equity trading hours of 9:30 
a.m. to 4 p.m. will apply to transactions in Single TIRs. Unlike 
HOLDRS, the trading rules pertaining to odd-lot trading in Amex 
equities (Amex Rule 205) will apply to the trading of Single TIRs, 
since Single TIRs can be traded in odd-lots. Single TIRs will be deemed 
``Eligible Securities,'' as defined in Amex Rule 230, for purposes of 
the Intermarket Trading System Plan and therefore will be subject to 
the trade through provisions of Amex Rule 236 that require that Amex 
members avoid initiating trade-throughs for ITS securities.
    Specialist transactions of Single TIRs made in connection with the 
creation and redemption of Single TIRs will not be subject to the 
prohibitions of Amex Rule 190.\33\ Single TIRs will trade in minimum 
fractional increments pursuant to Amex Rule 127, resulting in a minimum 
fractional change of $0.01. Single TIRs will be subject to the short 
sale rule, Rule 10a-1 under the Act and Regulation SHO under the 
Act.\34\ The Exchange represents that its surveillance procedures 
applicable to the Single TIRs are adequate to deter manipulation,\35\ 
and will be similar to those used for other TIRs and exchange-traded 
funds and will incorporate and rely upon existing Amex surveillance 
procedures governing options and equities.
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    \33\ See Commentary .05 to Amex Rule 190.
    \34\ 17 CFR 240.10a-1; 17 CFR 242.200(g).
    \35\ Telephone conversation between Jeffrey Burns, Associate 
General Counsel, Amex, and Florence Harmon, Senior Special Counsel, 
Commission, on April 14, 2005.
---------------------------------------------------------------------------

    Proposed Commentary .05 to Amex Rule 1202 also makes clear that 
Single TIRs may not be traded side-by-side and on an integrated market 
making basis. Furthermore, the Exchange proposes, in proposed 
Commentary .06, to halt trading on the Exchange in Single TIRs whenever 
the Exchange deems such action appropriate in the interests of a fair 
and orderly market and to protect investors. Among the factors that may 
be considered are that: (1) Trading in the underlying security has been 
halted or suspended in the primary market; (2) the opening of such 
underlying security in the primary market has been delayed because of 
unusual circumstances; (3) the Exchange has been advised that the 
issuer of the underlying security is about to make an important 
announcement affecting such issuer; (4) other unusual conditions or 
circumstances are present. To the extent that a security underlying a 
Single TIR is subject to a regulatory halt as defined in Rule 6h-1 
under the Exchange Act, the Exchange will halt or suspend trading in 
such Single TIR.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6 of the Act,\36\ in general, and furthers the objectives 
of Section 6(b)(5),\37\ 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.
---------------------------------------------------------------------------

    \36\ 15 U.S.C. 78f(b).
    \37\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

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. 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 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, as amended, 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-2003-66 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-2003-66. 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. Copies of such filing also will be 
available for inspection and copying at the principal office of the 
Exchange. 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-2003-66 and should be submitted on or before May 13, 2005.


[[Page 20945]]


    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\38\
---------------------------------------------------------------------------

    \38\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Margaret H. McFarland,
Deputy Secretary.

Exhibit A--American Stock Exchange, Inc.

Proposed Rule Change

    It is proposed that the following provisions of the American Stock 
Exchange Rules be amended as set forth below. [Bracketing] indicates 
text to be deleted and italics indicates text to be added.

Rule 170. Registration and Functions of Specialists

    (a)-(e) No Change.

Commentary

    .01 through .12 No Change.
    .13 In connection with Trust Issued Receipts listed pursuant to 
Commentary .03 to Rule 1202 (``Single TIRs''), Commentaries .01, .02 
and .07 of this Rule shall not apply to the trading of receipts for the 
purpose of bringing the price of the receipt into parity with the value 
of the securities on which the receipt is based, with the net asset 
value of the securities comprising the receipt or with a futures 
contract on the value of the securities on which the receipt is based. 
Such transactions must be effected in a manner that is consistent with 
the maintenance of a fair and orderly market and with the other 
requirements of this rule and the supplementary material herein.

Rule 1202. Initial and Continued Listing

    Trust Issued Receipts will be listed and traded on the Exchange 
subject to application of the following criteria:
    (a) No Change.
    (b) Continued Listing--Following the initial twelve month period 
following formation of a Trust and commencement of trading on the 
Exchange, the Exchange will consider the suspension of trading in or 
removal from listing of a Trust upon which a series of Trust Issued 
Receipts is based under any of the following circumstances:
    (i) If the Trust has more than 60 days remaining until termination 
and there are fewer than 50 record and/or beneficial holders of Trust 
Issued Receipts for 30 or more consecutive trading days;
    (ii) If the Trust has fewer than 50,000 receipts issued and 
outstanding;
    (iii) If the market value of all receipts issued and outstanding is 
less than $1,000,000;[or]
    (iv) Each component security must be a section 12 security under 
the Securities Exchange Act of 1934 and listed on a national securities 
exchange or traded through the facilities of Nasdaq and reported 
national market system security; or
    (v)[(iv)] If such other event shall occur or condition exists which 
in the opinion of the Exchange makes further dealings on the Exchange 
inadvisable.
    Upon termination of a Trust, the Exchange requires that Trust 
Issued Receipts issued in connection with such Trust be removed from 
Exchange listing. A Trust may terminate in accordance with the 
provisions of the Trust prospectus, which may provide for termination 
if the value of securities in the Trust falls below a specified amount.
    (c)-(e) No Change.

Commentary

    .01 The Exchange may approve a series of Trust Issued Receipts for 
listing and trading on the Exchange pursuant to Rule 19b-4(e) under the 
Securities Exchange Act of 1934 (``Act''), provided each of the 
component securities satisfies the following criteria:
    Eligibility Criteria for Component Securities Represented by a 
series of Trust Issued Receipts:
    (i) Each component security must be registered under Section 12 of 
the Exchange Act;
    (ii) Each component security must have a minimum public float of at 
least $150 million;
    (iii) Each component security must be listed on a national 
securities exchange or traded through the facilities of Nasdaq and 
reported national market system security;
    (iv) Each component security must have an average daily trading 
volume of at least 100,000 shares during the preceding sixty-day 
trading period;
    (v) Each component security must have an average daily dollar value 
of shares traded during the preceding sixty-day trading period of at 
least $1 million; and
    (vi) The most heavily weighted component security may not initially 
represent more than 20% of the overall value of the Trust Issued 
Receipt.
    .02 The eligibility requirements for Component Securities that are 
represented by a series of Trust Issued Receipts and that became part 
of the Trust Issued Receipt when the security was either: (a) 
Distributed by a company already included as a Component Security in 
the series of Trust Issued Receipts; or (b) received in exchange for 
the securities of a company previously included as a Component Security 
that is no longer outstanding due to a merger, consolidation, corporate 
combination or other event, shall be as follows:
    (i) The Component Security must be listed on a national securities 
exchange or traded through the facilities of Nasdaq and a reported 
national market system security;
    (ii) The Component Security must be registered under Section 12 of 
the Exchange Act; and
    (iii) The Component Security must have a Standard & Poor's Sector 
Classification that is the same as the Standard & Poor's Sector 
Classification represented by the Component Securities included in the 
Trust Issued Receipt at the time of the distribution or exchange.
    .03(a) The Exchange may approve a series of Trust Issued Receipts 
based on a single component security for listing and trading on the 
Exchange pursuant to Rule 19b-4(e) under the Securities Exchange Act of 
1934 (``Act''), provided, the component security satisfies the 
following criteria:
    Eligibility Criteria for a Single Component Security Represented by 
a series of Trust Issued Receipts:
    (i) The component security must be registered under Section 12 of 
the Exchange Act;
    (ii) The component security must be listed on a national securities 
exchange or traded through the facilities of Nasdaq and reported 
national market system security;
    (iii) The component security may be a security of a U.S. or foreign 
issuer that meets the requirements of Section 107B(f) of the Amex 
Company Guide;
    (iv) The component security must have a minimum public float of at 
least $150 million;
    (v) The component security must have an average daily trading 
volume of at least 100,000 shares during the preceding sixty-day 
trading period;
    (vi) The component security must have an average daily dollar value 
of shares traded during the preceding sixty-day trading period of at 
least $1 million.
    (b) A series of Trust Issued Receipts based on a single component 
equity security may be issued, exchange or traded in round lots and/or 
odd lots.
    (c) A minimum of 150,000 receipts are required to be outstanding 
when trading commences.
    (d) Prior to commencement of trading of securities admitted to 
listing under this section, the Exchange will evaluate the nature and 
complexity of the issue

[[Page 20946]]

and, if appropriate, distribute and circulate to the membership 
providing guidance regarding member firm compliance responsibilities 
when handling transactions in such securities.
    (e) If the component security is to be selected by a broker-dealer, 
the broker-dealer should erect a ``firewall'' around the personnel who 
have access to information regarding such selection prior to listing.
    (f) For continued eligibility for trading Single TIRs, the 
underlying equity security of such Single TIR must be eligible for 
standardized equity options trading pursuant to Rule 916.
    .04 {Reserved{time} 
    .05 Trust Issued Receipts listed pursuant to Commentary .03 to Rule 
1202 (``Single TIRs'') do not qualify for side-by-side trading and 
integrated market making as set forth in Rule 175(c)(2) and 958(e).
    .06 Single TIR Trading Halts--Trading on the Exchange in Single 
TIRs shall be halted or suspended whenever the Exchange deems such 
action appropriate in the interests of a fair and orderly market and to 
protect investors. Among the factors that may be considered are that: 
(1) Trading in the underlying security has been halted or suspended in 
the primary market; (2) the opening of such underlying security in the 
primary market has been delayed because of unusual circumstances; (3) 
the Exchange has been advised that the issuer of the underlying 
security is about to make an important announcement affecting such 
issuer; (4) other unusual conditions or circumstances are present. To 
the extent that a security underlying a Single TIR is subject to a 
regulatory halt as defined in Rule 6h-1 under the Securities Exchange 
Act of 1934, the Exchange will halt or suspend trading in such Single 
TIR.
    .07 If an issuer proposes to list a Single TIR that relates to more 
than the allowable percentages set forth in Section 107B(f) of the 
Company Guide, the Exchange will submit a proposed rule change with the 
Commission pursuant to Section 19(b)(2) and cannot list and trade such 
Single TIR until the Commission issues an approval order.

[FR Doc. E5-1914 Filed 4-21-05; 8:45 am]
BILLING CODE 8010-01-P