[Federal Register Volume 61, Number 90 (Wednesday, May 8, 1996)]
[Notices]
[Pages 20871-20872]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-11449]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-37161; File No. SR-Amex-96-10]
Self-Regulatory Organizations; Notice of Filing of Proposed Rule
Change by the American Stock Exchange, Inc. Relating to the
Implementation of a Wireless Data Communications Infrastructure
May 2, 1996.
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
27, 1996, 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. 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 American Stock Exchange, Inc. proposes to amend Exchange Rules
60 and 220 and to adopt a policy regarding the use of wireless data
communications devices at the Exchange (``Wireless Communications
Policy'').
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 has undertaken the development of an infrastructure
(``Infrastructure'') to accommodate the use of wireless data
communications devices on the Trading Floor. In connection with the
implementation of the Infrastructure, the Exchange seeks to amend Rule
220 to explicitly provide that the Exchange may regulate communications
between points on the Floor. The Exchange also seeks to adopt a
detailed policy (``Wireless Communications Policy'') regarding the use
of wireless data communications devices at the Exchange. The Wireless
Communications Policy will address the following issues:
1. The ability of the Exchange to administer wireless data
communications on a real time basis (e.g., the implementation of a
protocol for prioritizing and/or managing message traffic during
periods of extraordinary use);
2. Surveillance of wireless data communications;
3. Member, member firm and Exchange preservation of records of
orders and trades;
4. Security with respect to confidential wireless transmissions and
access to the Infrastructure;
5. Review and approval of member and member firm applications to
use wireless data communications devices;
6. The fair allocation of a finite resource (i.e., radio frequency
bandwidth);
7. Exchange fees and allocation of expenses associated with the
implementation, operation of, and enhancements to, the Infrastructure;
8. Sanctions for violations of the Exchange's Wireless
Communications Policy;
9. Inspection and oversight of wireless data communications
technology; and
10. The design and implementation of the Infrastructure.
The Wireless Communications Policy furthers the policy in Article
IV, Section 1(e) of the Exchange Constitution which currently provides
that the Exchange shall not be liable for any damages sustained by a
member or member organization growing out of the use or enjoyment by
such member or member organization of the facilities afforded by the
Exchange to members for the conduct of their business. This provision,
as well as similar provisions at other exchanges, reflect the common
understanding that exchanges should not bear the risk of liability
associated with member firm use of their systems. Accordingly, the
Exchange will not be liable to member firms with respect to their use
of the Infrastructure.
In addition, the Exchange proposes to adopt new Commentary .03 to
Rule 60 which will provide that, in connection with member or member
organization use of any electronic system, service, or facility
provided by the Exchange to members for the conduct of their business
on the Exchange: (i) the Exchange may expressly provide in the contract
with any vendor providing all or part of such electronic system,
[[Page 20872]]
service, or facility to the Exchange, that such vendor and its
subcontractors shall not be liable to members or member organizations
for any damages sustained by a member or member organization growing
out of the use or enjoyment of such electronic system, service, or
facility by the member or member organization, and (ii) members and
member organizations shall indemnify the Exchange and any vendor and
subcontractor covered by subsection (i) above with regard to any third
party claims relating to the member or member organization's use of
such electronic system, service or facility. This will provide needed
protection for both the Exchange and vendors that may be retained by
the Exchange to provide various services for use by member firms. If
the Exchange does not have the flexibility to negotiate such liability
protection, it will become increasingly difficult to find vendors
willing to provide the Exchange with the essential services that it
needs.
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) in that it is
designed to prevent fraudulent acts and practices, promote just and
equitable principles of trade, remove impediments to and perfect the
mechanisms of a free and open market, and, in general, protect
investors and the public interest.
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 that is not necessary or appropriate
in furtherance of the purposes of the Act.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received from Members, Participants or Others
The Exchange has not solicited written comments on the proposed
rule change. The Exchange, however, received three written responses to
a letter dated February 29, 1996, addressed to all members and member
firms regarding the implementation of the Infrastructure and
anticipated user fees for wireless data communications devices on the
Floor. The three responses to the Exchange's letter concerned
objections to the proposed fee structure. Upon further consideration
and analysis, the Exchange decided that the specifics of the per device
fee will not be determined until the fall of 1997, giving the Exchange
a period of time to observe the Infrastructure in operation. A per
device fee will not be imposed prior to that time. In addition, once
imposed, the monthly fee will be capped at $250 per device.
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 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 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, N.W., Washington, D.C. 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. Sec. 552, will be available for inspection and copying at
the Commission's Public Reference Section, 450 Fifth Street, N.W.,
Washington, D.C. 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-96-10 and should be
submitted by May 29, 1996.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 96-11449 Filed 5-7-96; 8:45 am]
BILLING CODE 8010-01-M
