[Federal Register Volume 59, Number 193 (Thursday, October 6, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-24792]
[[Page Unknown]]
[Federal Register: October 6, 1994]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-34763; File No. SR-Amex-94-35]
Self-Regulatory Organizations; Filing of Proposed Rule Change by
American Stock Exchange, Inc. Relating to Amendments to Rule 179
Regarding Automatic Cancellation of Open Orders in Expiring Equity
Securities
September 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
September 6, 1994, 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 Amex is proposing to amend Rule 179 to expand the categories of
expiring equity securities as to which open orders are automatically
cancelled prior to commencing ``next day'' and ``cash'' trading. The
text of the proposed rule change is available at the Office of the
Secretary, the 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
Amex Rule 179 provides time frames during which orders in expiring
rights and warrants must be for ``next day'' delivery or for ``cash''
settlement, rather than for ``regular way'' five-day delivery. The rule
was amended last year to provide for the automatic cancellation of open
``regular way'' and ``next day'' orders in expiring rights and warrants
prior to commencing ``next day'' and ``cash'' trading in those
securities.\1\ The normal ticker notice provided by the Exchange with
respect to expiring rights and warrants provides ample notice to
members and member organizations regarding such cancellations, thereby
given them the opportunity to replace their cancelled orders if they
wish to do so. Substituted ``next day'' and ``cash'' orders are treated
as new orders and are not entitled to retain the priority on the
specialist's book of the cancelled ``regular way'' order. This
amendment has resulted in a significant reduction in ``DKs''\2\ and has
facilitated accurate clearance and settlement in these securities.
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\1\See Securities Exchange Act Release No. 32320 (May 17, 1993),
58 FR 30078 (May 25, 1993) (approving File No. SR-Amex-92-31).
\2\A ``DK'' is an uncompared securities transaction. For further
discussion of Amex procedures regarding resolution of DKs, see Amex
Rule 731.
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The Exchange is now proposing that Rule 179 be further amended to
expand the categories of expiring securities as to which open orders
are automatically cancelled prior to commencing ``next day'' and
``cash'' trading to include any expiring equity security.\3\ The
amendment would be applicable, for example, to preferred stock,\4\
Contingent Value Rights, Stock Index Return Securities, Equity Linked
Securities (``ELKS''), Yield Enhanced Equity Linked Debt Securities
(``YEELDS'') and other similar securities. These securities would
generally change to ``next day'' delivery and ``cash'' in accordance
with the time frames applicable to rights. Thus, during the five
business days preceding the final day for trading in such security,
every order therein entered on a specialist's book must be for ``next
day'' delivery, and, on final day for trading in such security, every
order therein entered on the specialist's book must be for ``cash.''
However, when appropriate, the Exchange may establish different time
frames for particular types of expiring equity securities.
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\3\The Amex has clarified that the proposed rule change would
apply to expiring securities that are not options and that are
subject to the trading rules for equity securities, as opposed to
debt securities. Telephone conversation between Stuart Diamond,
Director, Rulings Department, Amex, and Linda Tarr, Special Counsel,
Amex, and Beth Stekler, Attorney, Division of Market Regulation,
SEC, on September 27, 1994.
\4\The Amex proposal would provide for automatic cancellation of
open orders in redeemable preferred stock. Telephone conversation
between Stuart Diamond, Director, Rulings Department, Amex, and
Linda Tarr, Special Counsel, Amex, and Beth Stekler, Attorney,
Division of Market Regulation, SEC, on September 27, 1994.
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The extension of the automatic cancellation provisions of the rule
to these securities can be expected to provide comparable benefits,
i.e., a reduction in ``DKs'' and clearance and settlement errors.
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, to remove impediments to and perfect the mechanism of a free and
open market, 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-94-35 and should be
submitted by October 27, 1994.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 94-24792 Filed 10-5-94; 8:45 am]
BILLING CODE 8010-01-M