03-6246. Self-Regulatory Organizations; Order Approving a Proposed Rule Change and Amendment No. 1 Thereto by the American Stock Exchange LLC Relating to its Marketing Performance Standards for Exchange Specialists

March 7, 2003.

On May 30, 2002, the American Stock Exchange LLC (“Amex” or “Exchange”) filed with the Securities and Exchange Commission (“Commission”), pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”)^[1] and rule 19b-4 thereunder,^[2] a proposed rule change to adopt marketing performance standards for Exchange specialists. On January 27, 2003, the Exchange filed Amendment No. 1 to the proposed rule change.^[3] The proposed rule change, as amended, was published for public comment in the Federal Register on February 5, 2003.^[4] The Commission received no comments on the proposal. This order approves the proposed rule change, as amended.

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.^[5] Specifically, the Commission believes that the proposal is consistent with section 6(b)(5) of the Act,^[6] which requires, among other things, that the Exchange's procedures be designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, and, in general, to protect investors and the public interest.

The Commission believes that the Exchange's marketing performance standards should help promote a better understanding of the needs of listed companies and certain member organizations of the Exchange, as well as an understanding of the specialist's function, the operations of the Exchange market, and the markets that are maintained in the issuers' stocks. In addition, the standards will help specialists to perform their functions better by receiving input on performance by issuers and member firms.^[7]

The Commission further notes that, to ensure that specialist contacts can occur without the distractions of a normal business day and that such communications will fall within the scope of permissible disclosures as provided by Exchange rules, specialists will be required to either make contacts off the Exchange Floor, or, if on the Exchange Floor, outside of regular auction market business hours. Finally, specialists will be required to maintain records of these contacts, which will be reviewed by Amex staff.

It is therefore ordered, pursuant to section 19(b)(2) of the Act,^[8] that the proposed rule change (SR-Amex-2002-48) is approved.

For the Commission, by the Division of Market Regulation, pursuant to the delegated authority.^[9]

Margaret H. McFarland,

Deputy Secretary.

Footnotes

1.  15 U.S.C. 78s(b)(1).

2.  17 CFR 240.19b-4.

3.  See letter from William Floyd-Jones, Assistant General Counsel, Amex, to Katherine England, Assistant Director, Division of Market Regulation, Commission, dated January 14, 2003 (“Amendment No. 1”). Amendment No. 1 clarified in the proposed rule text that contacts by exchange specialists to issuers or representatives of member organizations will be conducted either off the Exchange floor or, if on the Exchange floor, outside of normal auction market business hours.

4.  Securities Exchange Act Release No. 47281 (January 29, 2003), 68 FR 5941.

5.  In approving this proposal, the Commission has considered its impact on efficiency, competition, and capital formation. 15 U.S.C. 78c(f).

6.  15 U.S.C. 78f(b)(5).

7.  The Performance Committee would be responsible for taking appropriate remedial action in the event that a specialist fails to meet the objective marketing standards.

8.  15 U.S.C. 78s(b)(2).

9.  17 CFR 200.30-3(a)(12).