[Federal Register Volume 63, Number 91 (Tuesday, May 12, 1998)]
[Notices]
[Pages 26231-26233]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-12557]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-39959; File No. SR-AMEX-98-16]
Self-Regulatory Organizations; Notice of Filing of Proposed Rule
Change by the American Stock Exchange, Inc., Relating to the
Announcement of Closing Rotations in Equity Options After 4:02 p.m.
May 5, 1998.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on April 8, 1998, the American Stock Exchange, Inc. (``Amex'' or ``the
Exchange''), filed with the Securities and Exchange Commission (``SEC''
or ``the Commission'') the proposed rule change as described in Items
I, II, and III below, which Items have been prepared by the Amex. 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 Exchange Rule 1 to permit closing
[[Page 26232]]
rotations in equity options to be announced after 4:02 p.m. Language
proposed to be deleted is in brackets.
Hours of Business
Rule 1 No change.
* * * Commentary
.01 No change.
.02 Options Trading after 4:02 p.m.--The Board has determined that
no option series shall freely trade after 4:02 p.m. except that broad
stock index group options shall freely trade until 4:15 p.m. each
business day. However, one trading rotation in any class of options
contracts may be effected even though employment of the rotations will
result in the effecting of transactions on the Exchange after 4:02
p.m., provided:
(1) No change.
(2) Such rotation was initiated due to unusual market conditions
pursuant to Rule 918, and: (i) Notice of such rotation is publicly
disseminated no later than the commencement of the rotation or 4:00
p.m. (N.Y. time), whichever is earlier; or (ii) notice of such rotation
is publicly disseminated after 4:00 p.m. [but before 4:02 p.m.], and
the rotation does not commence until five minutes after news of such
rotation is publicly disseminated.
(3) No change.
If prior to 4:02 p.m., a trading rotation is in progress and a Senior
Floor Official and a Floor Official determine that a final trading
rotation is needed to assure a fair and orderly market, the rotation in
progress shall be halted and such final rotation begun as promptly as
possible after 4:02 p.m. Any trading rotation commenced after 4:02 p.m.
must be approved by a Senior Floor Official.
.03 through .04 No change.
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 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
On May 14, 1997, the Exchange received approval to move the close
of equity options trading from 4:10 p.m. to 4:02 p.m.\3\ This change
was prompted by improvements in dissemination of closing prices in the
underlying securities, the limited ability of public customers to reach
as quickly as professional traders to news announcements in the last
ten minutes of trading, and the difficulties experienced by options
specialists and registered traders trying to make orderly options
markets without the ability to hedge or otherwise offset market risk
with transactions in the underlying stock. Following receipt of
approval, Rule 1 was amended to reflect this change to 4:02 p.m.
Inadvertently, however, the provision that permits a closing rotation
\4\ to be initiated due to unusual market conditions, was severely
limited when the rule was changed to require that notice of the closing
rotation had to be publicly disseminated before 4:02 p.m. As currently
written, the rule gives Floor Officials only two minutes to assess an
unusual market condition, determine whether it is appropriate to have a
closing rotation and disseminate the news of the rotation to the
public.
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\3\ Securities Exchange Act Release No. 38640, (May 14, 1997),
62 FR 28081 (May 22, 1997).
\4\ A closing rotation is a trading procedure to determine
appropriate closing prices or quotes for each series of options on
an underlying stock.
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The Exchange now proposes that Rule 1 by amended to permit the
announcement of closing rotations in equity options after 4:02 p.m.
provided such a rotation does not begin sooner than five minutes after
the announcement of the closing rotation is disseminated. Permitting
the announcement of closing rotations after 4:02 p.m. will allow the
Exchange to more effectively address unusual market conditions by
increasing its flexibility in the timing of announcing and commencing
closing rotations. Further, such an amendment would conform Rule 1 to
other exchanges' rules concerning the announcement of closing
rotations.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with Section 6(b) of the Act \5\ in general and furthers the objectives
of Section 6(b)(5),\6\ 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 engage 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.
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\5\ 15 U.S.C. 78f(b).
\6\ 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 inappropriate 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 date of publication of this notice in the
Federal Register or within such longer 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 Amex consents, the Commission will:
(A) By order approve such 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, 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, 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 in the
Commission's Public Reference Section, 450 Fifth Street, N.W.,
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 the file number in the caption above and
should be submitted by June 2, 1998.
[[Page 26233]]
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\7\
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\7\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 98-12557 Filed 5-11-98; 8:45 am]
BILLING CODE 8010-01-M
