[Federal Register Volume 60, Number 145 (Friday, July 28, 1995)]
[Notices]
[Pages 38869-38870]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-18603]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-36010; File No. SR-Amex-95-27]
Self-Regulatory Organizations; Notice of Filing and Order
Granting Accelerated Approval of Proposed Rule Change by the American
Stock Exchange, Inc. Relating to a Three Month Extension of Its Pilot
Program That Amended Rule 109 to Permit Specialists to Grant Stops in a
Minimum Fractional Change Market
July 21, 1995.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''), 15 U.S.C. Sec. 78s(b)(1), notice is hereby given that on
July 6, 1995, the American Stock Exchange, Inc. (``Amex'' or
``Exchange'') filed with the Securities and Exchange Commission
(``Commission'') 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 Exchange requests a three month extension of a pilot program
that amended Exchange Rule 109 to permit a specialist, upon request, to
grant stops in a minimum fractional change market.\1\
\1\ The Amex received approval to amend Rule 109, on a pilot
basis, in Securities Exchange Act Release No. 30603 (Apr. 17, 1992),
57 FR 15340 (Apr. 27, 1992) (File No. SR-Amex-91-05) (``1992
Approval Order''). The Commission subsequently extended the Amex's
pilot program in Securities Exchange Act Release Nos. 32185 (Apr. 21
1993), 58 FR 25681 (Apr. 27, 1993) (File No. SR-Amex-93-10) (``April
1993 Approval Order``); 32664 (July 21, 1993), 58 FR 40171 (July 27,
1993) (File No. SR-Amex-93-22) (``July 1993 Approval Order''); 33791
(Mar. 21, 1994), 59 FR 14432 (Mar. 28 1994) (File No. SR-Amex-93-47)
(``1994 Approval Order''); and 35310 (Jan. 31, 1995), 60 FR 7236
(Feb. 7, 1995) (File No. SR-Amex-95-01) (``January 1995 Approval
Order'').
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The text of the proposed rule change is available at 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 statement may be examined at
the places specified in Item III below. The self-regulatory
organization has prepared summaries, set forth in Sections A, B, and C
below, of the most significant aspect of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
On January 31, 1995, the Commission extended its pilot approval of
amendments to Exchange Rule 109 until July 21, 1995.\2\ The amendments
permit a specialist, upon request, to grant a stop \3\ in a minimum
fractional change market \4\ for any order of 2,000 shares or less, up
to a total of 5,000 shares for all stopped orders, provided there is an
order imbalance, without obtaining prior Floor Official approval. A
Floor Official, however, must authorize a greater order size of
aggregate share threshold.
\2\ See January 1995 Approval Order, supra, note 1.
\3\ An agreement to ``stop'' stock at a specified price
constitutes a guarantee by the member who grants the stop that the
order of the member who accepts the stop will be executed at the
stop price or better. See Amex Rule 109(a).
\4\ Amex Rule 127 sets forth the minimum fractional changes for
securities traded on the Exchange.
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During the course of the pilot program, the Exchange has closely
monitored compliance with the rule's requirements, analyzed the impact
on orders on the specialist's book resulting from the execution of
stopped orders at a price that is better than the stop price, and
reviewed market depth in a stock when a stop is granted in a minimum
fractional change market. The Exchange believes that the amendments to
Rule 109 have provided a benefit to investors by providing an
opportunity for price improvement, while increasing market depth and
continuity without adversely affecting orders on the specialist's book.
The Exchange is therefore proposing a three month extension of the
pilot program that amended Exchange Rule 109.
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 mechanisms of a free
and open market, and, in general, to protect investors and the public
interest. The Exchange believes that the proposed amendments to Rule
109 are consistent with these objectives in that they are designed to
allow stops, in minimum fractional change market, under limited
circumstances that provide for the possibility of price improvement to
customers whose orders are granted stops.
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. 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 Exchange. All
submissions should refer to File No. SR-Amex-95-27 and should be
submitted by August 18, 1995.
[[Page 38870]]
IV. Commission's Findings and Order Granting Accelerated Approval of
Proposed Rule Change
The Commission finds that the proposed rule change is consistent
with the requirements of the Act and the rules and regulations
thereunder applicable to a national securities exchange and, in
particular, with Section 6(b)(5) \5\ and Section 11(b) \6\ of the Act.
The Commission believes that the amendments to rule 109 should further
the objectives of Section 6(b)(5) and Section 11(b) through pilot
program procedures designed to allow stops, in minimum fractional
change markets, under limited circumstances that provide the
possibility of price improvement to customers whose orders are granted
stops.
\5\ 15 U.S.C. 78f (1988 & Suppl. V 1993).
\6\ 15 U.S.C. 78k (1988).
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In the orders approving the pilot procedures,\7\ the Commission
asked the Amex to study the effects of stopping stock in a minimum
fractional change market. The Exchange has submitted to the Commission
several monitoring reports regarding the amendments to Rule 109. The
Commission believes that the monitoring reports, especially the latest
report, provide useful information regarding the effectiveness of the
program during the pilot period. The Commission, however, finds that
additional time is necessary to evaluate carefully and comprehensively
the information provided by the Exchange and the Amex's use of its
pilot procedures. Accordingly, the Commission believes that it is
reasonable to extend the pilot program until October 21, 1995, to avoid
compromising the benefit that investors might receive under Rule 109,
as amended, while the Commission is considering whether to permanently
approve the pilot program.\8\
\7\ See supra, note 1.
\8\ See Securities Exchange Act Release No. 35909 (June 28,
1995), 60 FR 34562 (July 3, 1995) (notice of filing of proposed rule
change relating to permanent approval of Amex's pilot program for
stopping stock in a minimum fractional change market).
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The Commission finds good cause for approving the proposed rule
change prior to the thirtieth day after the date of publication of the
notice of filing thereof. This will permit the pilot program to
continue on an uninterrupted basis. In addition, the procedures the
Exchange proposes to continue using are the identical procedures that
were published in the Federal Register for the full comment period and
were approved by the Commission. No comments were received at that
time.
It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\9\ that the proposed rule change (SR-Amex-95-27) is hereby
approved on a pilot basis until October 21, 1995.
\9\ 15 U.S.C. 78s(b)(2) (1988).
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\10\
\10\ 17 CFR 200.30-3(a)(12) (1994).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 95-18603 Filed 7-27-95; 8:45 am]
BILLING CODE 8010-10-M