[Federal Register Volume 60, Number 81 (Thursday, April 27, 1995)]
[Unknown Section]
[Pages 20780-20781]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-10331]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-35635; File No. SR-Amex-95-11]
Self-Regulatory Organizations; Notice of Filing and Order
Granting Accelerated Approval of Proposed Rule Change by the American
Stock Exchange, Inc. Relating to Amendments to Rule 170 Pertaining to
Specialists' Liquidating Transactions
April 21, 1995.
Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''), 15 U.S.C. 78s(b)(1), notice is hereby given that on March 6,
1995, the American Stock Exchange, Inc. (``Amex'' or ``Exchange'')
filed with the Securities and Exchange Commission (``Commission'') the
proposed rule change as described in Items I and II 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.
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Amex requests a three-month extension of a pilot program that
amended Exchange Rule 170 to permit a specialist to effect a
liquidating transaction on a zero minus tick, in the case of a ``long''
position, or a zero plus tick, when covering a ``short'' position,
without Floor Official approval. The pilot program also amended Rule
170 to set forth the affirmative action that specialists are required
to take subsequent to effecting various types of liquidating
transactions.\1\
\1\The Commission approved the pilot program in Securities
Exchange Act Release No. 33957 (April 22, 1994), 59 FR 22188 (April
29, 1994) (``1994 Approval Order'').
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The Exchange requests accelerated approval of the proposed rule
change to enable the pilot, which would otherwise expire on April 22,
1995, to continue on an uninterrupted basis.
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 III 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
Statutory Basis for, the Proposed Rule Change
1. Purpose
On April 22, 1994, the Commission approved, on a one-year pilot
basis, amendments to Exchange Rule 170 to permit a specialist to effect
a liquidating transaction on a zero minus tick, in the case of a
``long'' position, or a zero plus tick, when covering a ``short''
position, without Floor Official approval.\2\ The amendments also set
forth the affirmative action that specialists are required to take
subsequent to effecting various types of liquidating transactions.
\2\See 1994 Approval Order, supra note 1.
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During the course of the pilot program, the Exchange has monitored
compliance with the requirements of the Rule and is in the process of
preparing a report summarizing the results of its surveillance. In
order to permit the pilot program to continue without interruption
while the Exchange completes its report, it is proposing that the pilot
program be extended for three months.
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 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, protect investors and the
public interest. The proposed rule change also is consistent with
Section 11(b) of the Act which allows exchanges to promulgate rules
relating to specialists in order to maintain fair and orderly markets.
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. 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, 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
[[Page 20781]] provisions of 5 U.S.C. 552, will be available for
inspection and copying at the Commission's Public Reference Section,
450 Fifth Street, NW., Washington, DC 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 No. SR-Amex-95-11 and
should be submitted by May 18, 1995.
IV. Commission's Findings and Order Granting Accelerated Approval of
Proposed Rule Change
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, and, in
particular, with sections 6(b)(5) and 11 of the Act.\3\ The Commission
believes the proposal is consistent with the Section 6(b)(5)
requirements that the rules of an exchange be 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, protect
investors and the public interest. The Commission also believes that
the proposal is consistent with section 11(b) of the Act and Rule 11b-1
thereunder,\4\ which allow exchanges to promulgate rules relating to
specialists in order to maintain fair and orderly markets.\5\
\3\15 U.S.C. 78f and 78k (1988).
\4\17 CFR 240.11b-1 (1994).
\5\See 1994 Approval Order, supra note 1, for a description of
Amex Rule 170 procedures and the Commission's rationale for
approving those procedures on a pilot basis. The discussion in the
aforementioned order is incorporated by reference into this order.
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Under the current pilot program, a specialist may liquidate a
position by selling stock on a direct minus tick or by purchasing stock
on a direct plus tick only if such transactions are reasonably
necessary for the maintenance of a fair and orderly market and only if
the specialist has obtained the prior approval of a Floor Official.
Liquidations on a zero minus or a zero plus tick, which previously
required Floor Official approval, can be effected under the pilot
procedures without a Floor Official's approval, but continue to be
subject to the restriction that they be effected only when reasonably
necessary to maintain a fair and orderly market. In addition, the
specialist must maintain a fair and orderly market during the
liquidation.
After the liquidation, a specialist is required to re-enter the
market on the opposite side of the market from the liquidating
transaction to offset any imbalances between supply and demand. During
any period of volatile or unusual market conditions resulting in a
significant price movement in a specialist's specialty stock, the
specialist's re-entry into the market must reflect, at a minimum, his
or her usual level of dealer participation in the specialty stock. In
addition, during such periods of volatile market conditions or unusual
price movements, re-entry into the market following a series of
transactions must reflect a significant level of dealer participation.
In our 1994 Approval Order,\6\ the Commission asked the Amex to
submit a report setting forth the criteria developed by the Exchange to
determine whether liquidating transactions effected by specialists
pursuant to the pilot were necessary and appropriate in connection with
fair and orderly markets. The Commission also asked the Amex to provide
information regarding the Exchange's monitoring of liquidating
transactions effected by specialists on any destabilizing tick. In
addition, the Commission asked the Amex to provide the following
information in its report: (1) A review of all liquidating transactions
effected by specialists on any destabilizing ticks; (2) a review of
liquidating transactions by specialists to determine that the required
Floor Official approval was obtained where necessary; and (3) a review
of liquidating transactions in light of dealer participation levels and
re-entry into the market in terms of timing and support.\7\
\6\See supra note 1.
\7\In the 1994 Approval Order, supra note 1, the Commission
requested that the Amex submit the report in January 1995. Pursuant
to the three-month extension of the pilot being approved herein, the
Commission now requests that the Amex submit the report in May 1995.
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During the three month extension of the pilot, the Amex will
prepare the report discussed above and submit the data to the
Commission for its consideration of whether the pilot program should be
granted permanent approval. The Commission expects the Amex to continue
to monitor compliance with the pilot program procedures during the
three month extension and report any non-compliance with the rule and
the action the Amex has taken as a result of such non-compliance.
The Commission finds good cause for approving the proposed rule
change prior to the thirtieth day after the date of publication of
notice of filing thereof. This will permit the pilot program to
continue on an uninterrupted basis. In addition, the Exchange proposes
to continue using the identical procedures contained in the pilot
program. The rule change that implemented the pilot program was
published in the Federal Register for the full comment period,\8\ and
no comments were received. Furthermore, the Commission approved a
similar rule change for the NYSE also without receiving comments on the
proposal.\9\
\8\See Securities Exchange Act Release No. (August 25, 1993), 58
FR 45926 (August 31, 1993).
\9\See Securities Exchange Act Release No. 31797 (January 29,
1993), 58 FR 7277 (February 5, 1993).
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It Therefore is Ordered, pursuant to Section 19(b)(2) of the
Act,\10\ that the proposed rule change is approved for a three month
period ending on July 21, 1995.
\10\15 U.S.C. 78s(b)(2) (1988).
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For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 95-10331 Filed 4-26-95; 8:45 am]
BILLING CODE 8010-01-M
