[Federal Register Volume 62, Number 37 (Tuesday, February 25, 1997)]
[Notices]
[Pages 8466-8467]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-4604]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-38310; International Series Release No. 1054; File No.
SR-AMEX-96-36]
Self-Regulatory Organizations; American Stock Exchange, Inc.;
Order Granting Approval to Proposed Rule Change and Amendment No. 1
Thereto Relating to the Policy of the Amex Regarding Information
Obtained Pursuant to the SEC's Memorandum of Understanding With the
CONSOB
February 19, 1997.
I. Introduction
On October 2, 1996, the American Stock Exchange, Inc. (``Amex'' or
``Exchange'') submitted to the Securities and Exchange Commission
(``SEC'' or ``Commission''), pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (``Act''),\1\ a proposed rule change to
adopt an official Exchange policy concerning the circumstances and
conditions under which the Exchange, in order to carry out its market
surveillance and enforcement functions for derivative products
containing Italian component securities, may obtain access to
information regarding activity on the Italian securities markets
obtained by the SEC pursuant to the Commission's Memorandum of
Understanding (``MOU'') with the Commissione Nazionale per le Societa e
la Borsa (``CONSOB''). Amex submitted Amendment No. 1 to the filing on
November 12, 1996,\2\ which made several clarifications to the original
filing.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ On November 12, 1996, Amex submitted Amendment No. 1 to its
proposed rule filing, making several clarifications to the original
filing. See Letter from Claire P. McGrath, Managing Director and
Special Counsel, Amex, to Michael Walinskas, Senior Special Counsel,
Division, Commission, dated November 7, 1996.
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The proposed rule change was published for comment in the Federal
Register on December 2, 1996.\3\ No comments were received on the
proposal. This order approves the proposal, as amended.
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\3\ Securities Exchange Act Release No. 37973 (November 22,
1996), 61 FR 63884.
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II. Description of the Proposal
The Amex does not have a surveillance sharing agreement with the
Milan exchange, which is an unincorporated association and is not able
under Italian law to enter into such an arrangement. Therefore, Amex
submitted this rule filing to enable the Exchange to carry out its
market surveillance and enforcement functions for derivative products
containing Italian component securities by seeking the necessary
information about activity on the Italian securities markets from the
SEC pursuant to the SEC's MOU with CONSOB. The Exchange's proposed
policy details the circumstances and conditions under which the
Exchange may obtain access to such information from the SEC. By
adopting this policy, therefore, the Exchange believes it will be in a
position to list derivative products containing Italian component
securities because it will be able to have access to information on the
underlying securities which it may need for enforcement or market
surveillance purposes.\4\
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\4\ This filing only addresses trading requirements relating to
necessary surveillance sharing procedures.
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The Exchange's proposed policy provides that the Exchange will
advise the SEC of information it needs regarding activity on the
Italian securities markets for market surveillance and enforcement
purposes. The SEC, in turn, may request the CONSOB's assistance,
pursuant to the MOU, in gaining access to such information. The
Exchange will use such information it may receive from the SEC only for
the purposes of conducting market surveillance and enforcement
proceedings. The Exchange will limit distribution of such information
to officers and directors of the Exchange and other employees directly
responsible for conducting market surveillance and enforcement
proceedings relating to the matter in connection with which the SEC
provided the information to the Exchange. The Exchange also will
undertake to maintain the confidentiality of the information and to
take appropriate disciplinary action in the event it learns of a breach
of such confidentiality, including referral to the SEC for any action
the SEC deems necessary or appropriate.
By adopting a policy that provides access to information on the
underlying securities for market surveillance and enforcement purposes,
the Exchange will be able to list options and other derivative products
containing Italian component securities, provided that all other
applicable product listing standards are met. Therefore, the Exchange
believes that the proposed rule change could potentially provide
investors with the opportunity to invest in such products and hedge
their exposure to the Italian securities market.
III. Discussion
After careful review, the Commission finds that the proposed rule
hang is consistent with the requirements of the Act, and the rules and
regulations thereunder applicable to a national securities exchange. In
particular, the Commission believes that the proposal is consistent
with Section 6(b) of the Act, in general, and Section 6(b)(5),\5\ in
particular, as it is designed to facilitate transactions in securities,
to promote just and equitable principles of trade, and to protect
investors and the public interest.\6\.
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\5\15 U.S.C. 78f(b) and 78f(b)(5).
\6\ In approving the rule, the Commission has considered the
proposed rule's impact on efficiency, competition, and capital
formation. 15 U.S.C. 78c(f).
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Specifically, the Commission believes that, since the Amex does not
and cannot have a surveillance sharing agreement with the Milan
Exchange, the Amex's adoption of the proposed policy will enable the
Exchange to carry out its market surveillance and enforcement functions
for derivative products containing Italian component securities by
seeking the necessary information about activity on the Italian
securities markets from the SEC per the latter's MOU with the CONSOB.
The Commission believes that the Exchange's proposed policy adequately
details the circumstances and conditions under which the Exchange may
obtain access to such information from the SEC.
The Commission believes that, under the Exchange's proposed policy,
the Exchange will advise the SEC of information it needs regarding
activity on the Italian securities markets for market surveillance and
enforcement purposes. The Commission, in turn, may request the CONSOB's
assistance, pursuant to the MOU, in gaining access to such information.
The Commission notes that the Exchange will use such information it may
receive from the SEC only for the purposes of conducting market
surveillance and enforcement proceedings. The Commission also
[[Page 8467]]
notes that the Exchange will limit distribution of such information to
officers and directors of the Exchange and other employees directly
responsible for conducting market surveillance and enforcement
proceedings relating to the matter in connection with which the SEC
provided the information to the Amex. In view of the importance of
maintaining the confidentiality of this information, the SEC believes
that the officers and/or directors overseeing the exchange employees
conducting the relevant market surveillance and enforcement proceedings
would be responsible for ensuring the confidentiality of the
information provided by the SEC pursuant to the MOU with the CONSOB and
should take reasonable measures to ensure that the information does not
become available to unauthorized persons. Thus, the Commission believes
that the Exchange will undertake to maintain the confidentiality of
such information and to take appropriate disciplinary action in the
event it learns of a breach of such confidentiality, including referral
to the SEC for any action the SEC deems necessary or appropriate.
The Commission believes that the Amex, by adopting a policy that
provides access to information on the underlying securities for market
surveillance and enforcement purposes, will be in a position to list
options and other derivative products containing Italian component
securities, provided that all other applicable product listing
standards are met. Therefore, the Exchange's proposed rule change could
potentially provide investors with the opportunity to invest in such
products and hedge their exposure to the Italian securities market.
Accordingly, the Commission believes that the proposed rule change is
consistent with and furthers the objectives of Section 6(b)(5) of the
Act, in that it is designed to perfect the mechanisms of a free and
open market and to protect investors and the public interest.
IV. Conclusion
It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\7\ that the proposed rule change (SR-AMEX-96-36) is approved, as
amended.
\7\ 15 U.S.C. 78s(b)(2).
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For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\8\
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\8\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 97-4604 Filed 2-24-97; 8:45 am]
BILLING CODE 8010-01-M
