[Federal Register Volume 61, Number 145 (Friday, July 26, 1996)]
[Notices]
[Pages 39169-39170]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-19037]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-37460; File No. SR-Amex-96-21]
Self-Regulatory Organizations; Order Granting Accelerated
Approval of Proposed Rule Change by the American Stock Exchange, Inc.
Relating to Dissemination of Indications in Connection With Circuit
Breaker Trading Halts Under Rule 117
July 19, 1996.
I. Introduction
On June 17, 1996, the American Stock Exchange, Inc. (``Amex'' or
``Exchange'') submitted to the Securities and Exchange Commission
(``SEC'' or ``Commission''), pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4
thereunder,\2\ a proposed rule change to implement guidelines for
dissemination of indications to the consolidated tape in connection
with the resumption of trading following a ``circuit breaker'' trading
halt pursuant to the Amex's Rule 117.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
The proposed rule change was published for comment in Securities
Exchange Act Release No. 37356 (June 24, 1996), 61 FR 33786 (June 28,
1996). No comments were received on the proposals.\3\
---------------------------------------------------------------------------
\3\ The Commission notes that the comment period ends on July
19, 1996, and that as of yet, no comments have been received.
---------------------------------------------------------------------------
II. Description of the Proposal
The Exchange proposes to implement guidelines for the mandatory
dissemination of indications to the consolidated tape in connection
with the resumption of trading following a ``circuit breaker'' halt
pursuant to its Rule 117.\4\ The purpose of the proposed criteria is to
provide guidance to the Exchange's specialists as to the specific
[[Page 39170]]
circumstances under which they are required to disseminate indications
if a significant decline in the price of a stock from the previous last
sale on the Exchange is anticipated when trading resumes following a
circuit breaker halt.
---------------------------------------------------------------------------
\4\ The Commission notes that Rule 117--the Exchange's ``circuit
breaker'' rule--provides that trading in securities on the Exchange
shall halt (a ``Rule 117 halt'') and not reopen for one hour if the
Dow Jones Industrial Average (``DJIA'') falls 250 points or more
below its closing value on the previous trading day. The rule
provides further that trading on the Exchange shall halt for two
hours if the DJIA falls 400 points or more on that same day. Rule
117 was approved by the Commission on a pilot basis on October 17,
1988 and has been extended annually since then. See Securities
Exchange Act Release No. 36414 (Oct. 25, 1995), 60 FR 55630 (Nov. 1,
1995) (Commission's most recent order extending temporary approval
of Rule 117).
The Amex has filed a proposal to amend Rule 117 to reduce from
one hour to thirty minutes the time period during which trading is
halted due to a decline in the DJIA of 250 points below its closing
value on the previous trading day, and to reduce from two hours to
one hour the time period for a halt due to a 400 points decline in
the DJIA. See Securities Exchange Act Release No. 37146 (April 26,
1996), 61 FR 19650 May 2, 1996).
---------------------------------------------------------------------------
The Exchange proposed to implement the following guidelines:
Dissemination of an indication shall be mandatory prior to
the reopening of trading if such reopening will result in a price
change constituting the lesser of 10% or three points from the last
sale reported on the Amex, or five points if the previous reported last
sale in $100 or higher. No indications would be required if the price
change is less than one point.\5\
---------------------------------------------------------------------------
\5\ For example, if the last sale price of a stock was $6, and
the stock would reopen at a price change of \7/8\, no indication
would be required even though the price change was greater than 10%
of the last sale price because the price change was less than one
point.
---------------------------------------------------------------------------
If, on any day that a Rule 117 halt is in effect, trading
in a security has not reopened by one-half hour after the resumption of
trading on the Exchange, the matter should be treated as a delayed
opening, and would require an indication as well as a Floor Official's
supervision.
According to the Exchange, it has existing procedures which require
dissemination of indications prior to delayed openings and reopening
following regulatory or non-regulatory halts in individual securities.
The Exchange will continue to require dissemination of indications in
those situations.\6\
---------------------------------------------------------------------------
\6\ The Exchange noted that the proposed criteria are identical
to those currently in place at the New York Stock Exchange
(``NYSE'') in connection with circuit breaker halts under NYSE Rule
80B. See Securities Exchange Act Release No. 26419 (January 5,
1989), 54 FR 1041 (January 11, 1989).
---------------------------------------------------------------------------
III. Discussion
After careful consideration of the Amex's proposal to implement
guidelines for dissemination of indications to the consolidated tape in
connection with the resumption of trading following a ``circuit
breaker'' trading halt pursuant to the Amex's Rule 117, the Commission
finds that the proposal is consistent with the requirements of Section
6 \7\ of the Act and the rules and regulations thereunder applicable to
a national securities exchange. In particular, the Commission believes
the proposal is consistent with Section 6(b)(5) of the Act, which
requires, among other things, that the rules of an exchange be designed
to promote just and equitable principles of trade, and to remove
impediments to and perfect the mechanism of a free and open market and
a national market system, and, in general, to protect investors and the
public interest. The proposal will implement more specific guidelines
for the dissemination of indications of interest for a resumption of
trading following a ``circuit breaker'' halt. This will provide more
clarity as to the reopening procedures in these circumstances.
---------------------------------------------------------------------------
\7\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
The Commission finds good cause for approving the Exchange's
proposed rule change prior to the thirtieth day after the date of
publication of notice of filing thereof in the Federal Register. The
proposal is virtually identical to procedures that have been in place
for several years at the NYSE. In addition, clarification of
dissemination procedures will help provide more certainty to the Amex
procedures, which is important in the maintenance of fair and orderly
markets. Therefore, the Commission believes that granting accelerated
approval of the proposed rule change is appropriate and consistent with
Sections 6 and 19(b)(2) of the Act.
It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\8\ that the proposed rule change (SR-Amex-96-21) is approved.
\8\ 15 U.S.C. 78s(b)(2).
---------------------------------------------------------------------------
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\9\
---------------------------------------------------------------------------
\9\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 96-19037 Filed 7-25-96; 8:45 am]
BILLING CODE 8010-01-M
