[Federal Register Volume 64, Number 42 (Thursday, March 4, 1999)]
[Notices]
[Pages 10515-10516]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-5375]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-41091; File No. SR-Amex-99-07]
Self-Regulatory Organizations; Notice of Filing of Immediate
Effectiveness of Proposed Rule Change by the American Stock Exchange
LLC Relating to an Amendment to Amex Rule 901C Regarding the Listing
and Trading of Generic Narrow-Based Index Options
February 23, 1999.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of
1934, as amended \1\ (the ``ACT'') and Rule 19b-4 thereunder,\2\ notice
is hereby given that on February 9, 1999, the American Stock Exchange
LLC (``Amex'' Or ``Exchange'') filed with the Securities and Exchange
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. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of
Substance of the Proposed Rule Change
The Amex proposes to amend Rule 901C to provide for the trading of
narrow-based stock index options pursuant to new Rule 19b-4(e) \3\
under the Act.
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\3\ Securities Exchange Act Release No. 40761 (December 8,
1998), 63 FR 70952 (December 22, 1998) (``New Products Release'').
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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 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 proposes to amend Amex Rule 901C to provide for the
trading of narrow-based stock index options pursuant to new Rule 19b-
4(e) under the Act. Amex Rule 901C currently provides that the Exchange
may trade options on a new narrow-based index pursuant to Section
19(b)(3)(A) \4\ of the Act provided the index meets the generic
criteria set forth in Amex Rule 901C. As discussed in the Commission
release adopting new Rule 19b-4(e), however, the Exchange would no
longer be required to submit, pursuant to new Rule 19b-4(e) under the
Act, a proposed rule change to trade options on a new narrow-based
index provided the index meets the generic criteria set forth in
Exchange Rule 901C.
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\4\ 15 U.S.C. 78s(b)(3)(A).
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In its release adopting new Rule 19b-4(e), the Commission noted
that in order to rely on the amendment and not submit filings pursuant
to Section 19(b)(3)(A)for options that satisfy the criteria of the
Generic Narrow-Based Index Option Approval Order,\5\ an SRO could
submit a proposed rule change for Commission approval to eliminate the
Section 19(b)(3)(A) rule filing requirement from its existing rules.\6\
Accordingly, to enable the Exchange to use new Rule 19b-4(e), the
Exchange proposes to eliminate the Section 19(b)(3)(A) rule filing
requirement from Rule 901C. The Exchange represents that use of new
Rule 19b-4(e) will be in accordance with the terms and conditions set
forth in the order approving the Rule.
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\5\ Securities Exchange Act Release No. 34157 (June 3, 1994) 59
FR 30062 (June 10, 1994).
\6\ See New Products Release at note 89.
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The Exchange also proposes to amend Rule 901C to change the term
``Chinese wall'' to ``fire wall.'' The Exchange believes that the use
of the term fire wall is appropriate and more accurately describes the
informational barriers commonly used in the securities industry.
Finally, the Exchange notes that the release adopting new Rule 19b-
4(e) does not become effective until February 22, 1999. Accordingly,
the Exchange will not provide for the trading of options on any narrow-
based index pursuant to new Rule 19b-4(e) until after February 22,
1999, because, pursuant to Section 19(b)(3)(A) and Rule 19b-4(f)(6) \7\
of the Act, this proposal to amend Rule 901C will become operative
until thirty days after the date of its filing with the Commission.
Therefore, this proposal will not become operative until March 11,
1999.
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\7\ 17 CFR 240.19b-4(f)(6). Former paragraph (e) under Rule 19b-
4 was redesignated paragraph (f) when the New Products Release
promulgating new paragraph (e) became effective on February 22,
1999.
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The Exchange proposes that the following provisions of the Amex
Rules be amended as set forth below. [Bracketing] indicates text to be
deleted and italicizing indicates text to be added.
Designation of Stock Index Options
Rule 901C. (a)-(c) No change.
Commentrary
.01 No change.
.02 The Exchange has received approval, pursuant to [Section 19(b)
of] the Securities Exchange Act of 1934 (``Act''), to list options on
stock industry index groups pursuant to Rule 19b-4(e) [Section
19(b)(3)(A)] of the Act provided [The Securities and Exchange
Commission stated in its Approval Order that a proposal to list options
on stock industry index groups can be effective upon its filing with
the Commission provided the Exchange (i) sends a draft of its filing to
the Commission at least one week before formally filing the document
pursuant to Rule 19b-4 of the Act; (ii) proposes to commence trading in
options on the stock industry index group not earlier than 30 days
after the date of the filing;
[[Page 10516]]
and (iii)] each of the following criteria are satisfied:
(a) No change.
(b) Index Calculation--The index will be calculated based on either
the capitalization weighting, price weighting or equal-dollar weighting
methodology. Indexes based upon the equal-dollar weighting method will
be rebalanced at least quarterly. If the index is maintained by a
broker-dealer, the broker-dealer shall erect a ``fire [Chinese] wall''
around the personnel who have access to information concerning changes
and adjustments to the index and the index shall be calculated by a
third party who is not a broker-dealer. The current index value will be
disseminated every 15 seconds over the Consolidated Tape Association's
Network B.
(c) No change.
(d) Maintenance of the Index--Once approved for options trading
pursuant to Rule 19b-4(e) [Section 19b(3)(A)], the index must
continuously maintain the standards set forth above, except that:
(1) No change.
(2) No change.
(3) No change.
(4) No change.
(2) Statutory 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) in particular
in that it is designated 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.
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
The foregoing rule change has become effective pursuant to Section
19(b)(3)(A) and Rule 19b-4(f)(6) of the Act. The proposed rule change
does not significantly affect the protection of investors or the public
interest; does not impose any significant burden on competition; and
does not become operative prior to 30 days after the date the proposed
rule change was filed with the Commission. In addition, the Amex
provided the Commission with written notice of its intent to file the
proposed rule change, along with a brief description and text of the
proposed rule change, at least five business days prior to the date of
filing the proposed rule change as required by Rule 19b-4(f)(6).
At any time within 60 days of the filing of such 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.
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, NW., Washington, DC 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 4 U.S.C. 552, will be available for inspection and copying in the
Commission's Public Reference Room in Washington, DC. 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-99-07 in the caption above and should be submitted by
March 25, 1999.
For the Commission by the Division of Market Regulation,
pursuant to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 99-5375 Filed 3-3-99; 8:45 am]
BILLING CODE 8010-01-M
