[Federal Register Volume 62, Number 29 (Wednesday, February 12, 1997)]
[Notices]
[Pages 6590-6591]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-3428]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-38243; File No. SR-Amex-97-02]
Self-Regulatory Organizations; Notice of Filing of Proposed Rule
Change by American Stock Exchange, Inc., Relating to Amendments to
Rules 103 and 950 Regarding Intra-day Trading
February 5, 1997.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ notice is hereby given that on January 22, 1997, the
American Stock Exchange, Inc. (``Amex'' or ``Exchange'') filed with the
Securities and Exchange Commission (``SEC'') or ``Commission'') the
proposed rule change as described in Items I, II, and III below, which
Items have been prepared by the self-regulatory organization. The
Commission is publishing this notice to solicit comments on the
proposed rule change from interested persons.
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\1\ 15 U.S.C. Sec. 78s(b)(1).
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
Amex proposes to amend Exchange Rules 103 and 950 regarding new
intra-day trading provisions. The text of the proposed rule change is
available at the Office of the Secretary, the Amex and at the
Commission.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the self-regulatory organization
included statements concerning the purpose of and basis for the
proposed rule change and discussed any comments it received on the
proposed rule change. The text of these statements may be examined at
the places specified in Item IV below. The self-regulatory organization
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 Rule 103(c), an Amex Floor member, with certain exceptions,
may not exercise discretion with respect to the choice of security to
be bought or sold, the total amount of the security to be bought or
sold, or whether the transaction shall be a purchase or sale.
Currently, there are no provisions in Rule 103(c), or otherwise,
specifically governing the practice of intra-day trading. The term
``intra-day trading'' refers to the practice whereby a customer places
orders on both sides of the market and attempts to profit by buying at
the bid and selling at the offer.
The Exchange proposes to amend Rule 103 to add new intra-day
trading provisions. These provisions will apply only when a Floor
member simultaneously represents, for the same customer's account,\2\
market or limit orders on both sides of a minimum variation market.
Under the proposal, if a Floor member acquires a position on behalf of
an intra-day trader's account, Rule 103(c)(2) will place certain
restrictions on how the member can liquidate or cover that position
during the same trading session. Specifically, the member will be
required to obtain a new liquidating order (i.e., one entered
subsequent to the acquisition of the contra-side position) from his or
her customer. The new order must be time-recorded both upstairs and
upon receipt on the Trading Floor.
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\2\ For purposes of this Rule, an ``account'' would be deemed to
be any account in which the same person or persons is directly or
indirectly interested.
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Proposed Rule 103(c)(3) will thereafter require that the Floor
member must execute the liquidating order entered pursuant to Rule
103(c)(2) before he or she can execute any other order for the same
account on the same side of the market as that liquidating order.
Pursuant to proposed Commentary .01 to Rule 103, the provisions of Rule
103(c) (2) and (3) will not apply, however, to the execution of: an
order to liquidate or cover a position carried over from a previous
trading session; a position assumed as part of a strategy relating to
bona fide arbitrage; or a position assumed in reliance on the exemption
for block positioners.
Proposed Commentary .02 to Rule 103 sets forth examples of how the
provisions of Rule 103(c) (2) and (3) will operate, while proposed
Commentary .03 to Rule 103 details the types of orders that a Floor
member may handle simultaneously, without violating rule 103's
prohibition against a member choosing whether a transaction will be a
purchase or sale.
These new changes are intended to address trading situations where
a Floor member, representing at the same time buy and sell orders at
the minimum variation for the same customer, may be perceived as having
a time and place advantage over other market participants in that he or
she may be able to trade for the same customer without leaving the
Trading Crowd. By requiring the entry of a new liquidating
[[Page 6591]]
order, these amendments should minimize any such perceived advantage.
It should be noted that the proposed changes will not apply to options
trading, and Rule 950 will be amended accordingly. In addition, the
proposed changes also will not apply to system orders.
2. Statutory Basis
The proposed rule change is consistent with Section 6(b) \3\ of the
Act in general and furthers the objectives of Section 6(b)(5) \4\ in
particular in that the rules are designed to promote just and equitable
principles of trade, remove impediments to and perfect the mechanism of
a free and open market and, in general, to protect investors and the
public interest.
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\3\ 15 U.S.C. Sec. 78f(b).
\4\ 15 U.S.C. Sec. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition
The proposed rule change will impose no burden on competition.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants or Others.
No written comments were solicited or received with respect to the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing
for Commission Action
Within 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. Persons making written submissions
should file six copies thereof with the Secretary, Securities and
Exchange Commission, 450 Fifth Street, N.W., Washington, D.C. 20549.
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. Sec. 552, will be available for inspection and copying in
the Commission's Public Reference Room in Washington, D.C. Copies of
such filing will also be available for inspection and copying at the
principal office of the Amex. All submissions should refer to File No.
SR-Amex-97-02 and should be submitted by [insert date 21 days from date
of publication].
For the Commission by the Division of Market Regulation,
pursuant to delegated authority.\5\
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\5\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 97-3428 Filed 2-11-97; 8:45 am]
BILLING CODE 8010-01-M
