76506 Federal Register / Vol. 69, No. 244 / Tuesday, December 21, 2004 / Notices 

14See Securities Exchange Act Release No. 50015 

(July 14, 2004), 69 FR 43872 (July 22, 2004) (order 

approving File No. SR–ISE 2003–22); and CBOE 

Order, supra note 12.

15See Securities Exchange Act Release Nos. 

50538 (October 14, 2004), 69 FR 62105 (October 22, 

2004) (notice of filing and immediate effectiveness 

of File No. SR–PCX–2004–89); 50669 (November 

16, 2004), 69 FR 67968 (November 22, 2004) (notice 

of filing and immediate effectiveness of File No. 

SR–BSE–2004–47); and 50728 (November 23, 2004), 

69 FR 69982 (December 1, 2004) (notice of filing 

and immediate effectiveness of File No. SR–Phlx–

2004–74). 16 17 CFR 200.30–3(a)(12).

1 15 U.S.C. 78s(b)(l).

2 17 CFR 240.19b–4.

3See Securities Exchange Act Release No. 27753 

(March 1, 1990) 55 FR 8624 (March 8, 1990) (order 

approving File No. SR–Amex–89–29).

4Wachovia Corporation (‘‘Wachovia’’) and 

Standard & Poor’s, a division of The McGraw-Hill 

Companies, Inc., (‘‘S&P’’) have entered into a nonexclusive license agreement providing for the use 

of the S&P 500 by Wachovia and certain affiliates 

basis,14 and to rule changes adopted by 

the Pacific Exchange, Inc. (‘‘PCX’’), the 

Boston Stock Exchange, Inc. (‘‘BSE’’), 

and the Philadelphia Stock Exchange, 

Inc. (‘‘Phlx’’) that were effective on 

filing.15 Neither the ISE’s proposal nor 

the CBOE’s proposal received any 

comments. The Commission believes 

that the Amex’s proposal raises no new 

issues or regulatory concerns that the 

Commission did not consider in 

approving the ISE’s and the CBOE’s 

proposals. In addition, the Commission 

believes that allowing the Amex to 

implement $5 quotation spread 

parameters like those adopted by ISE, 

CBOE, PCX, BSE, and Phlx will help the 

Amex to compete with those exchanges. 

The Commission also believes that 

revising the paragraph numbering in 

Amex Rule 950–ANTE will ensure that 

the Amex’s rules are numbered 

correctly. For these reasons, the 

Commission designates that the 

proposal become operative immediately.

At any time within 60 days of the 

filing of the proposed rule change, the 

Commission may summarily abrogate 

such rule change if it appears to the 

Commission that the action is necessary 

or appropriate in the public interest, for 

the protection of investors, or would 

otherwise further the purposes of the 

Act. 

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. 

Comments may be submitted by any of 

the following methods: 

Electronic Comments 

• Use the Commission’s Internet 

comment form (http://www.sec.gov/

rules/sro.shtml); or 

• Send an E-mail to rulecomments@sec.gov. Please include File 

Number SR–Amex–2004–91 on the 

subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Jonathan G. Katz, Secretary, 

Securities and Exchange Commission, 

450 Fifth Street, NW., Washington, DC 

20549–0609. 

All submissions should refer to File 

Number SR–Amex–2004–91. This file 

number should be included on the 

subject line if e-mail is used. To help the 

Commission process and review your 

comments more efficiently, please use 

only one method. The Commission will 

post all comments on the Commission’s 

Internet Web site (http://www.sec.gov/

rules/sro.shtml). 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, NW., 

Washington, DC 20549. Copies of this 

filing also will be available for 

inspection and copying at the principal 

office of the Amex. All comments 

received will be posted without change; 

the Commission does not edit personal 

identifying information from 

submissions. You should submit only 

information that you wish to make 

available publicly. All submissions 

should refer to File Number SR–Amex–

2004–91 and should be submitted on or 

before January 11, 2005.

For the Commission, by the Division of 

Market Regulation, pursuant to delegated 

authority.16

Margaret H. McFarland, 

Deputy Secretary.

[FR Doc. 04–27835 Filed 12–20–04; 8:45 am] 

BILLING CODE 8010–01–P

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–50850; File No. SR–Amex–

2004–87] 

Self-Regulatory Organization; Notice of 

Filing and Order Granting Accelerated 

Approval of a Proposed Rule Change 

by the American Stock Exchange LLC 

Relating to the Listing and Trading of 

Contingent Principal Protected Notes 

Linked to the Performance of the 

Standard and Poor’s 500 Composite 

Stock Price Index 

December 14, 2004. 

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 November 

1, 2004, the American Stock Exchange 

LLC (‘‘Amex’’ or ‘‘Exchange’’) filed with 

the Securities and Exchange 

Commission (‘‘Commission’’) the 

proposed rule change as described in 

Items I and II below, which Items have 

been prepared by the Exchange. The 

Commission is publishing this notice to 

solicit comments on the proposed rule 

change from interested persons and is 

approving the proposal on an 

accelerated basis.

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes to list and 

trade contingent principal protected 

notes, the performance of which is 

linked to the Standard and Poor’s 500 

Composite Stock Price Index (‘‘S&P 

500’’ or ‘‘Index’’). 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, 

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 III below. 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 

Under Section 107A of the Amex 

Company Guide (‘‘Company Guide’’), 

the Exchange may approve for listing 

and trading securities that cannot be 

readily categorized under the listing 

criteria for common and preferred 

stocks, bonds, debentures, or warrants.3

Amex proposes to list for trading under 

Section 107A of the Company Guide 

notes linked to the performance of the 

S&P 500 that provide for contingent 

principal protection (‘‘Contingent 

Principal Protected Notes’’ or ‘‘Notes’’).4

Federal Register / Vol. 69, No. 244 / Tuesday, December 21, 2004 / Notices 76507

and subsidiaries in connection with certain 

securities including these Notes. S&P is not 

responsible for, and will not participate in the 

issuance and creation of, the Notes.

5The S&P 500 is a broad-based stock index which 

provides an indication of the performance of the 

U.S. equity market. The S&P 500 is a capitalizationweighted index reflecting the total market value of 

500 widely-held component stocks relative to a 

particular base period. The Index reflects the price 

of the common stocks of 500 companies without 

taking into account the value of the dividend paid 

on such stocks. The Index is computed by dividing 

the total market value of the 500 stocks by an Index 

divisor. The Index divisor keeps the Index 

comparable over time to its base period of 1941–

1943 and is the reference point for all maintenance 

adjustments. The securities included in the Index 

are listed on Amex or the New York Stock 

Exchange, Inc. (‘‘NYSE’’) or traded through The 

Nasdaq Stock Market, Inc. (‘‘Nasdaq’’). The Index is 

calculated and disseminated every 15 seconds to 

numerous market data vendors. Telephone 

conversation between Jeffrey P. Burns, Associate 

General Counsel, Amex, and Florence E. Harmon, 

Senior Special Counsel, Division of Market 

Regulation (‘‘Division’’), Commission, on December 

13, 2004.

6The initial listing standards for the Notes 

require: (1) A market value of at least $4 million; 

and (2) a term of at least one year. Because the 

Notes will be issued in $1,000 denominations, the 

minimum public distribution requirement of one 

million units and the minimum holder requirement 

of 400 holders do not apply. In addition, the listing 

guidelines provide that the issuer has assets in 

excess of $100 million, stockholder’s equity of at 

least $10 million, and pre-tax income of at least 

$750,000 in the last fiscal year or in two of the three 

prior fiscal years. In the case of an issuer who is 

unable to satisfy the earning criteria stated in 

Section 101 of the Company Guide, the Exchange 

will require the issuer to have the following: (1) 

Assets in excess of $200 million and stockholders’

equity of at least $10 million; or (2) assets in excess 

of $100 million and stockholders’ equity of at least 

$20 million.

7The Exchange’s continued listing guidelines are 

set forth in Sections 1001 through 1003 of Part 10 

to the Exchange’s Company Guide. Section 1002(b) 

of the Company Guide states that the Exchange will 

consider removing from listing any security where, 

in the opinion of the Exchange, it appears that the 

extent of public distribution or the aggregate market 

value has become so reduced as to make further 

dealings on the Exchange inadvisable. With respect 

to continued listing guidelines for distribution of 

the Notes, the Exchange will rely, in part, on the 

guidelines for bonds in Section 1003(b)(iv). Section 

1003(b)(iv) provides that the Exchange will 

normally consider suspending dealings in, or 

removing from the list, a security if the aggregate 

market value or the principal amount of bonds 

publicly held is less than $400,000.

8A negative return of the S&P 500, together with 

a Trigger Event, will reduce the redemption amount 

at maturity with the potential that the holder of the 

Note could lose the entire investment amount.

9A ‘‘market disruption event’’ is defined as the 

failure of the primary market or related markets to 

open for trading during regular trading hours or the 

occurrence or existence of any of the following 

events: (i) A trading disruption, if material, at any 

time during the one hour period that ends at the 

close of trading for a relevant exchange or related 

exchange; (ii) an exchange disruption, if material, 

at any time during the one hour period that ends 

at the close of trading for a relevant exchange or 

related exchange; or (iii) an early closure. A 

‘‘trading disruption’’ generally means any 

suspension of, or limitation imposed on trading by, 

the relevant exchange or related exchange or 

otherwise, whether by reason of movements in 

price exceeding limits permitted by the relevant 

exchange or related exchange or otherwise (i) 

relating to securities that comprise 20% or more of 

the level of the Index or (ii) in options contracts or 

futures contracts relating to the Index on any 

relevant related exchange. An ‘‘exchange 

disruption’’ means any event (other than a 

scheduled early closure) that disrupts or impairs 

the ability of market participants in general to (i) 

effect transactions in, or obtain market values on, 

any relevant exchange or related exchange in 

securities that comprise 20% or more of the level 

of the Index or (ii) effect transactions in options 

contracts or futures contracts relating to the Index 

on any relevant related exchange. A ‘‘related 

exchange’’ is an exchange or quotation system on 

which futures or options contracts relating to the 

Index are traded.

10Telephone conversation between Jeffrey P. 

Burns, Associate General Counsel, Amex, and 

Florence E. Harmon, Senior Special Counsel, 

Division, Commission, on December 13, 2004.

Wachovia will issue the Notes under the 

name ‘‘Trigger CAPITALS.’’ TM The 

Index is determined, calculated, and 

maintained solely by S&P.5 The Notes 

will provide for an uncapped 

participation in the positive 

performance of the S&P 500 during their 

term while also reducing the risk 

exposure to the principal investment 

amount as long as the Index does not at 

any time decline to or below a preestablished level to be determined at the 

time of issuance (‘‘Trigger Level’’). This 

Trigger Level will be a pre-determined 

percentage decline from the level of the 

Index at the close of the market on the 

date the Notes are priced for initial sale 

to the public (‘‘Index Starting Level’’). 

The Issuer expects that the Trigger Level 

will be approximately 75% of the Index 

Starting Level. A decline of the Index to 

the Trigger Level is referred to as a 

‘‘Trigger Event.’’

The Contingent Principal Protected 

Notes will conform to the initial listing 

guidelines under Section 107A 6 and 

continued listing guidelines under 

Sections 1001–10037 of the Company 

Guide. The Notes are senior nonconvertible debt securities of Wachovia. 

The principal amount of each Note is 

expected to be $1,000. The Notes will 

have a term of at least one (1) but no 

more than ten (10) years. The Notes will 

entitle the owner at maturity to receive 

at least 100% of the principal 

investment amount as long as the S&P 

500 never experiences a Trigger Event. 

In the case of a positive Index return, 

the holder would receive the full 

principal investment amount of the 

Note plus the product of $1,000 and the 

quotient of the Index Ending Level (as 

defined below) divided by the Index 

Starting Level. In the case of a negative 

Index return, if the Index declines but 

never reaches the Trigger Level, the 

holder will receive the principal 

investment amount of the Notes at 

maturity. If, however, the Notes 

experience a Trigger Event at any time 

during the term, the holder loses the 

‘‘principal protection’’ and will be 

entitled to receive a payment based on 

the percentage change of the Index, 

positive or negative. Thus, payment on 

the Notes prior to or at maturity may be 

less than the original issue price of the 

Notes. Accordingly, if the Index 

experiences a negative return and a 

Trigger Event, the Notes would be fully 

exposed to any decline in the level of 

the S&P 500.8 The Notes are not callable 

by the Issuer or redeemable by the 

holder.

The payment that a holder or investor 

of a Note will be entitled to receive 

(‘‘Maturity Payment Amount’’) will 

depend on the Index Starting Level and 

the relation of the level of the S&P 500 

at the close of the market on the fifth 

business day (‘‘Valuation Date’’) prior to 

maturity of the Notes (‘‘Index Ending 

Level’’). In addition, whether the Notes 

retain ‘‘principal protection’’ or are fully 

exposed to the performance of the Index 

is determined by whether the S&P 500 

experiences a Trigger Event at any time 

during the term of the Notes. In the 

event that the Valuation Date occurs on 

a non-trading day or if a market 

disruption event 9 occurs on such date, 

the Valuation Date will be the next 

trading day on which no market 

disruption event occurs.

If the percentage change of the Index 

is positive, the Maturity Payment 

Amount per Note will equal:

$1,000 × 



 



 Index Endi

Index Star

ng Level

ting Level

If the percentage change of the Index 

is zero or negative and the Index never 

experience a Trigger Event, the Maturity 

Payment Amount per Note will equal 

the principal investment amount of 

$1,000. 

If the Index experiences a Trigger 

Event at any time during the term, the 

Maturity Payment Amount per Note will 

equal:

$1,000 × 



 



 Index Endi

Index Star

ng Level

ting Level

The Notes are cash-settled in U.S. 

dollars and do not give the holder any 

right to receive a portfolio security, 

dividend payments, or any other 

ownership right or interest in the 

portfolio or index of securities 

comprising the S&P 500. The Notes do 

not pay interest.10 The Notes are 

designed for investors who want to 

participate or gain exposure to the S&P 

500 while partially limiting their 

investment risk and who are willing to 


EN21DE04.035</MATH> EN21DE04.036</MATH> 
76508 Federal Register / Vol. 69, No. 244 / Tuesday, December 21, 2004 / Notices 

11See e.g. Securities Exchange Act Release Nos. 

19907 (June 24, 1983), 48 FR 30814 (July 5, 1983) 

(approving the listing and trading of options on the 

S&P 500 Index); 31591 (December 18, 1992), 57 FR 

60253 (December 18, 1992) (approving the listing 

and trading of Portfolio Depositary Receipts based 

on the S&P 500 Index); 27382 (October 26, 1989), 

54 FR 45834 (October 31, 1989) (approving the 

listing and trading of Exchange Stock Portfolios 

based on the value of the S&P 500 Index); 30394 

(February 21, 1992), 57 FR 7409 (March 2, 1992) 

(approving the listing and trading of a unit 

investment trust linked to the S&P 500 Index) 

(SPDR); 47911 (May 22, 2003), 68 FR 32558 (May 

30, 2003) (approving the listing and trading of notes 

(Wachovia TEES) linked to the S&P 500); 47983 

(June 4, 2003), 68 FR 35032 (June 11, 2003) 

(approving the listing and trading of a CSFB 

Accelerated Return Notes linked to S&P 500); 48152 

(July 10, 2003), 68 FR 42435 (July 17, 2003) 

(approving the listing and trading of a UBS Partial 

Protection Note linked to the S&P 500); 48486 

(September 11, 2003), 68 FR 54758 (September 18, 

2003) (approving the listing and trading of CSFB 

Contingent Principal Protected Notes on the S&P 

500); 50019 (July 14, 2004), 69 FR 43635 (July 21, 

2004) (approving the listing and trading of Morgan 

Stanley PLUS Notes); and 50414 (September 20, 

2004), 69 FR 58001 (September 28, 2004) 

(approving the listing and trading of Wachovia 

Contingent Principal Protected Notes on the S&P 

500).

12See S&P Press Release dated March 1, 2004, 

available at www.standardandpoors.com.

13The Exchange clarified that S&P published 

procedures and float adjustment factors on 

September 28, 2004. Telephone conversation 

between Jeffrey P. Burns, Associate General 

Counsel, Amex, and Molly M. Kim, Attorney, 

Division, Commission, on December 2, 2004.

14Amex Rule 411 requires that every member, 

member firm or member corporation use due 

diligence to learn the essential facts, relative to 

every customer and to every order or account 

accepted.

15See Amex Rule 462 and Section 107B of the 

Company Guide.

16 15 U.S.C. 78f(b).

17 15 U.S.C. 78f(b)(5).

forego market interest payments on the 

Notes during such term. The 

Commission has previously approved 

the listing of securities and options 

linked to the performance of the S&P 

500.11

The Exchange notes that S&P 

announced a change to its methodology 

so that Index weightings are based on 

the ‘‘public float’’ of a component stocks 

and not those shares of stock that are 

not publicly traded.12 On March 1, 

2004, S&P announced that it intends to 

shift its major indexes, such as the S&P 

500, to a ‘‘float-adjusted’’ market 

capitalization index. In the floatadjusted market capitalization index, 

the value of the index will be calculated 

by multiplying the public float of each 

component by the price per share of the 

component. The result is then divided 

by the divisor. Accordingly, a floatadjusted market capitalization index 

will exclude those blocks of stocks that 

do not publicly trade from determining 

the weight for a stock in the index. The 

transition from a market capitalization 

weighted index to a float-adjusted 

capitalization weighted index will be 

implemented over an 18 month period. 

In September 2004, S&P published 

procedures and float adjustment factors, 

and began calculation of provisional 

float adjusted indexes.13 S&P started 

calculating a provisional index 

alongside the regular index, although 

there is still only one official set of 

index values. In March 2005, the nonprovisional index values will then shift 

to partial float adjustment, using float 

adjustment factors that represent half of 

the total adjustment, based on the 

information published in September 

2004. In September 2005, the shift to 

float adjustment will be completed so 

that official index values will be fully 

float-adjusted, and the provisional 

indexes will be discontinued.

As of October 18, 2004, the market 

capitalization of the securities included 

in the S&P 500 ranged from a high of 

approximately $359.7 billion to a low of 

approximately $505 million. The 

average daily trading volume for these 

same securities for the last six (6) 

months ranged from a high of 

approximately 9 million shares to a low 

of approximately 819,817 shares. The 

Exchange represents that the Index 

levels will be disseminated at least once 

every fifteen (15) seconds throughout 

the trading day. 

Because the Notes are issued in 

$1,000 denominations, the Amex’s 

existing debt floor trading rules will 

apply to the trading of the Notes. First, 

pursuant to Amex Rule 411, the 

Exchange will impose a duty of due 

diligence on its members and member 

firms to learn the essential facts relating 

to every customer prior to trading the 

Notes.14 Second, even though the 

Exchange’s debt trading rules apply, the 

Notes will be subject to the equity 

margin rules of the Exchange.15 Third, 

the Exchange will, prior to trading the 

Notes, distribute a circular to the 

membership providing guidance with 

regard to member firm compliance 

responsibilities (including suitability 

recommendations) when handling 

transactions in the Notes and 

highlighting the special risks and 

characteristics of the Notes. With 

respect to suitability recommendations 

and risks, the Exchange will require 

members, member organizations, and 

employees thereof recommending a 

transaction in the Notes: (1) To 

determine that such transaction is 

suitable for the customer and (2) to have 

a reasonable basis for believing that the 

customer can evaluate the special 

characteristics, and is able to bear the 

financial risks, of such transaction. In 

addition, Wachovia will deliver a 

prospectus in connection with the 

initial sales of the Notes.

The Exchange represents that its 

surveillance procedures are adequate to 

properly monitor the trading of the 

Notes. Specifically, Amex will rely on 

its existing surveillance procedures 

governing equities, which have been 

deemed adequate under the Act. In 

addition, the Exchange also has a 

general policy which prohibits the 

distribution of material, non-public 

information by its employees.

2. Statutory Basis 

The Exchange believes that the 

proposed rule change is consistent with 

Section 6 of the Act,16 in general, and 

furthers the objectives of Section 

6(b)(5),17 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 engaged 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.

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. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants or Others 

The Exchange did not receive any 

written comments on the proposed rule 

change. 

III. 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. 

Comments may be submitted by any of 

the following methods: 

Electronic Comments 

• Use the Commission’s Internet 

comment form (http://www.sec.gov/

rules/sro.shtml); or 

• Send an e-mail to rulecomments@sec.gov. Please include File 

Number SR–Amex–2004–87 on the 

subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Jonathan G. Katz, Secretary, 

Federal Register / Vol. 69, No. 244 / Tuesday, December 21, 2004 / Notices 76509

18 Id.

19See Securities Exchange Act Release Nos. 

47983 (June 4, 2003), 68 FR 35032 (June 11, 2003) 

(approving the listing and trading of a CSFB 

Accelerated Return Notes linked to S&P 500); 48152 

(July 10, 2003), 68 FR 42435 (July 17, 2003) 

(approving the listing and trading of a UBS Partial 

Protection Note linked to the S&P 500); 48486 

(September 11, 2003), 68 FR 54758 (September 18, 

2003) (approving the listing and trading of CSFB 

Contingent Principal Protected Notes on the S&P 

500); 50019 (July 14, 2004), 69 FR 43635 (July 21, 

2004) (approving the listing and trading of Morgan 

Stanley PLUS Notes); and 50414 (September 20, 

2004), 69 FR 58001 (September 28, 2004) 

(approving the listing and trading of Wachovia 

Contingent Principal Protected Notes on the S&P 

500).

20 15 U.S.C. 78f(b)(5). In approving this rule, the 

Commission notes that it has considered the 

proposed rule’s impact on efficiency, competition, 

and capital formation. 15 U.S.C. 78c(f).

21See Company Guide Section 107A.

22 15 U.S.C. 78l.

23See Securities Exchange Act Release Nos. 

44913 (October 9, 2001), 66 FR 52469 (October 15, 

2001) (order approving the listing and trading of 

notes whose return is based on the performance of 

the Nasdaq-100 Index) (File No. SR–NASD–2001–

73); 44483 (June 27, 2001), 66 FR 35677 (July 6, 

2001) (order approving the listing and trading of 

notes whose return is based on a portfolio of 20 

securities selected from the Amex Institutional 

Index) (File No. SR–Amex–2001–40); and 37744 

(September 27, 1996), 61 FR 52480 (October 7, 

1996) (order approving the listing and trading of 

notes whose return is based on a weighted portfolio 

of healthcare/biotechnology industry securities) 

(File No. SR–Amex–96–27).

24See supra, note 17.

25 15 U.S.C. 78f(b)(5) and 78s(b)(2).

26 Id.

27 17 CFR 200.30–3(a)(12).

Securities and Exchange Commission, 

450 Fifth Street, NW., Washington, DC 

20549–0609. 

All submissions should refer to File 

Number SR–Amex–2004–87. This file 

number should be included on the 

subject line if e-mail is used. To help the 

Commission process and review your 

comments more efficiently, please use 

only one method. The Commission will 

post all comments on the Commission’s 

Internet Web site (http://www.sec.gov/

rules/sro.shtml). 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, NW., 

Washington, DC 20549. Copies of such 

filing also will be available for 

inspection and copying at the principal 

offices of Amex. All comments received 

will be posted without change; the 

Commission does not edit personal 

identifying information from 

submissions. You should submit only 

information that you wish to make 

available publicly. All submissions 

should refer to File Number SR–Amex–

2004–87 and should be submitted on or 

before January 11, 2005. 

IV. Commission’s Findings and Order 

Granting Accelerated Approval of 

Proposed Rule Change 

After careful consideration, 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 the requirements of 

Section 6(b)(5) of the Act.18 The 

Commission notes that the proposal is 

similar to several approved instruments 

currently listed and traded on Amex.19

Accordingly, the Commission finds that 

the listing and trading of the Notes 

based on the Index is consistent with 

the Act and will promote just and 

equitable principles of trade, foster 

cooperation and coordination with 

persons engaged in regulating, clearing, 

settling, processing information with 

respect to and facilitating transactions 

securities, and, in general, protect 

investors and the public interest 

consistent with Section 6(b)(5) of the 

Act.20

The requirements of Section 107A of 

the Company Guide were designed to 

address the concerns attendant to the 

trading of hybrid securities, like the 

Notes. For example, Section 107A of the 

Company Guide provides that only 

issuers satisfying substantial asset and 

equity requirements may issue 

securities such as the Notes. In addition, 

the Exchange’s ‘‘Other Securities’’

listing standards further require that the 

Notes have a market value of at least $4 

million.21 The Commission also notes 

that the 500 component stocks that 

comprise the Index are reporting 

companies under the Act, and the Notes 

will be registered under Section 12 of 

the Act.22 Thus, by imposing the hybrid 

listing standards, suitability, disclosure, 

and compliance requirements noted 

above, the Commission believes Amex 

has addressed adequately the potential 

problems that could arise from the 

hybrid nature of the Notes.

In approving the product, the 

Commission recognizes that the Index is 

a capitalization-weighted index of 500 

companies listed on Nasdaq, NYSE, and 

Amex. Given the large trading volume 

and capitalization of the compositions 

of the stocks underlying the Index, the 

Commission believes that the listing and 

trading of the Notes that are linked to 

the Index should not unduly impact the 

market for the underlying securities 

compromising the Index or raise 

manipulative concerns. Moreover, the 

issuers of the underlying securities 

comprising the Index are subject to 

reporting requirements under the Act, 

and all of the component stocks are 

either listed or traded on, or traded 

through the facilities of, U.S. securities 

markets. 

The Commission also believes that 

any concerns that a broker-dealer, such 

as Wachovia, or a subsidiary providing 

a hedge for the issuer, will incur undue 

position exposure are minimized by the 

size of the Notes issuance in relation to 

the net worth of Wachovia.23

Finally, the Commission notes that 

the value of the Index will be widely 

disseminated, at least once every fifteen 

(15) seconds throughout the trading day. 

The Exchange represents that the Index 

will be determined, calculated, and 

maintained by S&P. 

The Commission finds good cause for 

approving the proposed rule change 

prior to the 30th day after the date of 

publication of the notice of filing thereof 

in the Federal Register. The Exchange 

has requested accelerated approval 

because this product is similar to 

several other instruments currently 

listed and traded on Amex.24 The 

Commission believes that the Notes will 

provide investors with an additional 

investment choice and that accelerated 

approval of the proposal will allow 

investors to begin trading the Notes 

promptly. Additionally, the Notes will 

be listed pursuant to Amex’s existing 

hybrid security listing standards as 

described above. Therefore, the 

Commission finds good cause, 

consistent with Section 19(b)(2) of the 

Act,25 to approve the proposal on an 

accelerated basis.

V. Conclusion 

It is therefore ordered, pursuant to 

section 19(b)(2) of the Act 26 that the 

proposed rule change (SR–Amex–2004–

87) is hereby approved on an 

accelerated basis.

For the Commission, by the Division of 

Market Regulation, pursuant to delegated 

authority.27

Margaret H. McFarland, 

Deputy Secretary.

[FR Doc. 04–27836 Filed 12–20–04; 8:45 am] 

BILLING CODE 8010–01–P