[Federal Register Volume 59, Number 66 (Wednesday, April 6, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-8164]
[[Page Unknown]]
[Federal Register: April 6, 1994]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-33835; File No. SR-Amex-92-41]
Self-Regulatory Organizations; Notice of Filing of Proposed Rule
Change by American Stock Exchange, Inc. Relating to Priority of Agency
Orders to Cross Blocks of 25,000 Shares or More
March 30, 1994.
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 November
23, 1992, the American Stock Exchange, Inc. (``Amex'' or ``Exchange'')
filed with the Securities and Exchange Commission (``Commission'' or
``SEC'') the proposed rule change as described in Items I, II and III
below, which Items have been prepared by the self-regulatory
organization. On March 30, 1994, the Exchange submitted to the
Commission Amendment No. 1 to the proposed rule change in order to
increase the minimum size of agency crosses that would be entitled to
priority under this proposal from 10,000 to 25,000 shares.\1\ The
Commission is publishing this notice to solicit comments on the
proposed rule change from interested persons.
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\1\See letter from Geraldine M. Brindisi, Corporate Secretary,
Amex, to Diana Luka-Hopson, Branch Chief, Division of Market
Regulation, SEC, dated March 28, 1994 (``Amendment No. 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 add Commentary .02 to Rule 126(g) to provide
for priority of agency orders to cross 25,000 shares or more; and to
amend existing Commentary .01 to Rule 126(g) (size precedence for
orders to cross 25,000 shares or more) to limit it to circumstances
where one or both sides of a cross is for the account of a member or
member organization. The text of the proposed rule change is available
at the Office of the 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 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 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
The Exchange proposes to add new Commentary .02 to Rule 126(g), to
allow a member who has an order to buy and an order to sell 25,000
shares or more of the same security, where neither order is for the
account of a member or a member organization, to cross those orders at
a price that is at or within the prevailing quotation without the
transaction being broken up at the cross price. Thus, the member's bid
or offer would be entitled to priority at such cross price,
irrespective of pre-existing bids or offers at that price. The
proposal, therefore, is intended to facilitate execution of agency
cross transactions on the Exchange. In addition, confining the proposed
size priority threshold to block size orders of 25,000 shares or more
would limit the effects of the rule primarily to actively traded,
liquid securities.
The member would be required to follow the crossing procedures of
Rule 151 and make a public bid and offer on behalf of both sides of the
cross. However, unlike existing block cross procedures under Rule
126(g), Commentary .01,\2\ such an order would not be required to be on
parity with other orders on the Floor; that is, it would not be
required that the priority of earlier bids and offers first be removed,
by means of a sale, before effecting the cross.
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\2\See infra, note 3.
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The proposal furthers the important auction market principle of
price improvement by allowing another member to trade with either the
bid or offer side of the cross transaction to provide a price that is
better than the proposed cross price; however, the other member could
not trade with the cross bid or offer at a price which is the same as
the cross price. The member who is providing a better price to one side
of the cross transaction would be required to trade with all other
market interest having priority at that price before trading with any
part of the cross transaction. A transaction effected at the cross
price in reliance on Commentary .02 would be printed as ``stopped
stock.''
To avoid conflict with the proposed agency cross rule, Commentary
.01 of Rule 126(g) would be amended so as to afford size precedence to
orders to cross 25,000 shares or more only when members or member
organizations are involved as principal on one or both sides of the
cross. As is currently the case, such orders to cross would be entitled
to precedence only when they are on parity with other orders on the
Floor.\3\
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\3\Specifically, the Amex proposal would clarify that, in order
to claim size precedence, both sides of the cross must be
represented at the specialist's post when a sale clearing the Floor
takes place.
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2. Statutory Basis
The proposed rule change is consistent with Section 6(b) of the Act
in general and furthers the objective(s) of Section 6(b)(5) in
particular in that it is designed 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 regulating, clearing, settling, processing
information with respect to, and facilitating transactions in
securities, and, in general, to protect investors and the public
interest.
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. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Within 35 days of the publication of this notice in the Federal
Register or within such other period (i) as the Commission may
designate up to 90 days of such date if it finds such longer period to
be appropriate and publishes its reasons for so finding or (ii) as to
which the self-regulatory organization consents, the Commission will:
(A) by order approve the proposed rule change, or
(B) institute proceedings to determine whether the proposed rule
change should be disapproved.
IV. 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 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-92-41 and should be
submitted by April 27, 1994.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 94-8164 Filed 4-5-94; 8:45 am]
BILLING CODE 8010-01-M
