[Federal Register Volume 63, Number 37 (Wednesday, February 25, 1998)]
[Notices]
[Pages 9620-9621]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-4759]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-39679; International Series No. 1119; File No. SR-AMEX-
98-05]
Self-Regulatory Organizations; Notice of Filing and Immediate
Effectiveness of Proposed Rule Change by the American Stock Exchange,
Inc. Relating to the Adoption of a Definition of ``Foreign Broker-
Dealer''
February 18, 1998.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ notice is hereby given that on February 3, 1998, the
American Stock Exchange, Inc. (the ``Amex'' or the ``Exchange'') filed
with the Securities and Exchange Commission (the ``Commission'') the
proposed rule change as described in Items I, II, and III 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.
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\1\ 15 U.S.C. 78s(b)(1).
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Amex proposes to adopt a definition of ``foreign broker-
dealer'' for use in certain of its rules and policies for the trading
of option contracts. The text of the proposed rule change is available
at the Office of Secretary, 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 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 placed specified in
Item IV 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
The Exchange has currently in place certain rules and policies for
the trading of option contracts that distinguish between orders for
broker-dealers and orders for customers who are not broker-dealers.
Specifically, Exchange Rule 958A provides that only non-broker-dealers
are eligible for the guaranteed minimum execution of ten contracts at
the displayed bid or offer; Rule 950(c) allows a Registered Options
Trader who is establishing or increasing a position to retain priority
over or have parity with an off-floor order for the account of a
broker-dealer; and Exchange policy (as codified in Exchange Rule 933
pursuant to this proposal) allows only non-broker-dealer orders to be
executed through its automatic execution system. The Exchange therefore
proposes to adopt a definition of foreign broker-dealer substantially
to ensure that foreign broker-dealer orders under the above-mentioned
rules shall receive the same treatment as U.S. broker-dealer orders, as
opposed to customer treatment. The definition has been designed to
provide an objective standard for the enforcement of applicable option
rules and to substantially resemble the definition adopted by the
Pacific Exchange (``PCX''), Philadelphia Stock Exchange (``Phlx''), and
Chicago Board Options Exchange (``CBOE'').\2\
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\2\ Exchange Act Release No. 38420 (March 19, 1997), 62 FR 14488
(March 26, 1997) (PCX); Exchange Act Release No. 39382 (December 2,
1997), 62 FR 64903 (December 9, 1997) (Phlx); and Exchange Act
Release No. 39604 (January 30, 1998), 63 FR 6247 (February 6, 1998)
(CBOE).
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In light of the current globalization of the securities market,
Amex believes that Exchange rules which treat broker-dealers in a
different manner than other market participants should be applied
consistently so that foreign broker-dealers trading options on the Amex
do not have an unfair competitive advantage over U.S. broker-dealers.
Moreover, regulating all broker-dealers equally helps to ensure that
the specialist's volume guarantees pursuant to Rule 958A and the use of
automatic execution systems are not exhausted by broker-dealer
competitors to the detriment of public customers. Similarly, allowing
Registered Options Traders to retain priority over or have parity with
foreign as well as domestic broker-dealers will enhance their ability
to fulfill their market-making responsibilities.
(2) Basis
The proposed rule change is consistent with Section 6(b) of the Act
in general and furthers the objectives of Section 6(b)(5) \3\ in
particular in that it is designed to prevent fraudulent and
manipulative acts and practices, to promote just and equitable
principles of trade, and is not designed to permit unfair
discrimination between customers, issuers, brokers or dealers.
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\3\ 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
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
Because the foregoing proposed rule change: (1) Does not
significantly affect the protection of investors or the public
interest; (2) does not impose any significant burden on competition;
(3) does not become operative for 30 days from February 3, 1998, the
date on which it is filed, and the Exchange provided the Commission
with written notice of its intent to file the proposed rule change at
least five business days prior to the filing date, it has become
effective pursuant to Section 19(b)(3)(A) of the Act and Rule 19b-
4(e)(6) thereunder.\4\ At any time within 60 days of the filing of the
proposed rule change, the Commission may summarily abrogate such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in the furtherance of the purposes of the Act.
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\4\ 17 CFR 240.19b-4(e)(6).
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[[Page 9621]]
IV. 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. 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. 552, will be available for inspection and copying in the
Commission's Public Reference Section, 450 Fifth Street, N.W.,
Washington, D.C. 20549. 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 number SR-AMEX-98-05 and should be
submitted by March 18, 1998.
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. 98-4759 Filed 2-24-98; 8:45 am]
BILLING CODE 8010-01-M
