39210 Federal Register / Vol. 65, No. 122 / Friday, June 23, 2000 / Notices

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

2 17 CFR 19b–4.

3Amex clarified the proposed rule change’s

purpose in a discussion between Bill Floyd-Jones,

Assistant General Counsel, Laurence McDonald,

Managing Director, Arne Michelson, Senior Vice

President, Amex, and Joshua Kans, Special Counsel,

Division of Market Regulation (‘‘Division’’),

Commission, on June 9, 2000.

4 17 CFR 240.11Ac1–4.

5The Amex Display Book (‘‘ADB’’) is an

electronic workstation at the trading post that keeps

track of limit orders and incoming market orders.

Various window-like screen applications allow the

specialist to view one or more issues at a time at

various levels of detail. Incoming limit orders

automatically enter the ADB. When a floor broker

gives the specialist a limit order, the specialist’s

clerk can enter the order into the ADB using the

keyborad. The ADB sorts the limit orders and

displays them in price/time priority.

6 In a gap pricing situation, an influx of orders

may cause a specialist to move the price of a

security to a new level. In that situation, immediate

display of a customer limit order could cause the

order to be filled at the limit price, and would

prevent the customer from obtaining the benefit of

the new price. Conversation between Bill FloydJones, Laurence McDonald, Arne Michelson, Amex,

and Joshua Kans, Division, Commission, June 9,

2000.

In cases where a customer limit order leads a

specialist to use ITS to send a commitment to trade

to another market center, immediate display of the

customer limit order in the specialist’s quote may

lead to the risk of a double execution and may

cause a locked market. In any event, according to

the Amex, an Amex specialist would not send a

commitment over ITS if the order could be filled

on the floor of Amex. Id.

(10), permit consideration for the

scheduled matters at the closed meeting.

The subject matters of the closed

meeting scheduled for Wednesday, June

28, 2000 will be:

Institution and settlement of

injunctive actions; and

Institution and settlement of

administrative proceedings of an

enforcement nature.

At times, changes in Commission

priorities require alterations in the

scheduling of meeting items. For further

information and to ascertain what, if

any, matters have been added, deleted

or postponed, please contact:

The Office of the Secretary at (202)

942–7070.

Dated: June 21, 2000.

Jonathan G. Katz,

Secretary.

[FR Doc. 00–16057 Filed 6–21–00; 12:25 pm]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–42952; File No. SR–Amex–

00–25]

Self-Regulatory Organizations; Notice

of Filing and Order Granting

Accelerated Approval to Proposed

Rule Change by American Stock

Exchange LLC Relating to the

Amendment of Exchange Rule 170

June 16, 2000.

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 May 3,

2000, 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 Amex. The Commission is

publishing this notice to solicit

comments on the proposed rule change

from interested persons and to approve

the order on an accelerated basis.3

I. Self-Regulatory Organization’s

Statement of the Terms of Substance of

the Proposed Rule Change

The Amex proposes to add new

Commentary .10 to Exchange Rule 170

to require Floor Official approval for the

deactivation of Quote Assist

enhancement to the Amex Display Book

by specialists on the equities floor.

Proposed new language is italicized.

* * * * *

.10 Each specialist shall keep active at

all times the quotation processing

facilities (known as ‘‘Quote Assist’’)

provided by the Exchange. A specialist

may deactivate the quotation processing

facilities as to a stock or a group of

stocks provided that Floor Official

approval is obtained. Such approval to

deactivate Quote Assist must be

obtained no later than three minutes

from the time of deactivation.

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

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. The 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

Statutory Basis for, the Proposed Rule

Change

(1) Purpose

In January 1997, Commission Rule

11Ac1–4 under the Act (‘‘Display

Rule’’) 4 became effective. The Display

Rule requires specialists to display

immediately, i.e., as soon as practicable,

which under normal market conditions

means no later than 30 seconds from the

time of receipt, the price and full size

of customer limit orders that would

improve the bid or offer in a security.

Subsequently, the Exchange

implemented an Amex Display Book 5

enhancement to compute and

disseminate a quote within the 30

second time frame. This enhancement,

known as ‘‘Quote Assist,’’ is designed to

help equities-floor specialists comply

with the Display Rule.

Quote Assist monitors the limit order

book for new orders and compares them

to the published quotation. When a new

order could improve the quote or

increase the size at a quoted price,

Quote Assist publishes a new quote 28

seconds after the order arrives if the

specialist has not already done so.

Quote Assist is always active at the

beginning of the trading day. A

specialist has the ability to deactivate

Quote Assist as to a particular stock or

stocks.

The Exchange proposes to add

Commentary .10 to Rule 170 to provide

that deactivation of Quote Assist will

require that the specialist review that

decision with a Floor Official. Floor

official approval would only be granted

in instances when there is an influx of

orders resulting in gap pricing, when

the specialist deactivates Quote Assist

in connection with an outgoing

commitment on the Intermarket Trading

System (‘‘ITS’’), or other unusual

circumstances.6 Approval by a Floor

Official to deactivate Quote Assist must

be obtained as soon as practicable and

must be obtained no later than three

minutes from the time of deactivation.

Floor Official approvals will be

documented on a Floor Official

approval form. If approval is not

obtained within three minutes from the

time of deactivation, the matter will be

reviewed as a market surveillance issue

by the Exchange.

The requirement to keep Quote Assist

active is not meant to serve as a

substitute for the actual posting of

quotes by equity specialists. The

Exchange represents that it will remind

its equity specialists that they are not to

rely solely on Quote Assist to generate

quotes, since this would not comply

with the Commission’s requirements for

limit order display. Rather, equity

Federal Register / Vol. 65, No. 122 / Friday, June 23, 2000 / Notices 39211

7 15 U.S.C. 78f(b).

8 15 U.S.C. 78f(b)(5).

9 In approving this proposal, the Commission has

considered its impact on efficiency, competition,

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

10 15 U.S.C. 78f(b)(5), 78k–1(a)(1)(C)(iii) and (iv).

11 15 U.S.C. 78f.

12 15 U.S.C. 78s(b)(2)

13 17 CFR 200.30–3(a)(12).

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

2 17 CFR 240.19b–4.

3 In Amendment No. 1, the Exchange clarified the

proposed rule change with respect to opening

transactions and made several changes to the text

of the proposed rule change. See Letter to Nancy

Sanow, Assistant Director, Division of Market

Regulation (‘‘Division’’), SEC, from Scott G. Van

Hatten, Legal Counsel Derivative Securities, Amex,

dated October 21, 1999.

4 In Amendment No. 2, the Exchange revised the

proposed surveillance agreement requirements. See

Letter to Nancy Sanow, Assistant Director, Division,

SEC, from Scott G. Van Hatten, Legal Counsel

Derivative Securities, Amex, dated December 16,

1999.

5 In Amendment No. 3, the Exchange amended

the text of proposed Amex Rule 916 to make it

Continued

specialists should always attempt to

reflect a limit order by manually quoting

the stock as soon as practicable even

though the Quote Assist feature is

active.

The Exchange believes that Quote

Assist provides valuable help to enable

equity specialists to comply with their

responsibilities under the Commission’s

Display Rule. The requirement that

Quote Assist generally remain active

throughout the day will ensure that

equity specialists avail themselves of

the tools provided for managing order

flow and updating quotes.

(2) Statutory Basis

The Exchange believes that the

proposed rule change is consistent with

Section 6(b) of the Act 7 in general, and

furthers the objectives of Section

6(b)(5) 8 in particular, in that it is

designed to prevent fraudulent and

manipulative acts and practices, to

promote just and equitable principles of

trade, to remove impediments to and

perfect the mechanism of a free and

open market and national market

system, and, in general, to protect

investors and the public interest; and is

not designed to permit unfair

discrimination between customers,

issuers, brokers and dealers.

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

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,

including whether the proposed rule

change is consistent with the Act.

Persons making written submissions

should file six copies thereof with the

Secretary, Securities and Exchange

Commission, 450 Fifth Street, N.W.,

Washington, D.C. 20549–0609. 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

Room in Washington, D.C. Copies of

such filing will also be available for

inspection and copying at the principal

office of the Amex. All submissions

should refer to the File No. SR–Amex–

00–25 and should be submitted by July

14, 2000.

IV. Commission’s Findings and Order

Granting Accelerated Approval of

Proposed Rule Change

The Commission has reviewed

carefully the Exchange’s proposed rule

change 9 and believes, for the reasons set

forth below, that the proposal is

consistent with the Act and the rules

and regulations thereunder applicable to

a national securities exchange.

Specifically, the Commission believes

the proposal is consistent with Sections

6(b)(5) and 11A(a)(1)(C)(iii) and (iv) of

the Act.10 Section 6(b)(5) requires that

the rules of an exchange be designed to

prevent fraudulent and manipulative

acts and practices and to remove

impediments to and perfect the

mechanism of a free and open market

and a national market system. In

enacting Section 11A, Congress found

that it is in the public interest and

appropriate for the protection of

investors and the maintenance of fair

and orderly markets to assure the

availability to brokers, dealers and

investors of information with respect to

quotations for and transactions in

securities, and to assure the

practicability of brokers executing

investors’ orders in the best market.

The Commission finds that the

proposed rule change will promote the

quality of quotation information and

promote the proper handling of

customer limit orders by limiting the

ability of specialists to deactivate Quote

Assist. In approving the proposed rule

change, however, the Commission notes

that Quote Assist does not relieve

specialists of their responsibility to

reflect limit orders by manually quoting

the stock as soon as practicable.

The Commission finds good cause for

approving the proposed rule change

prior to the 30th day after the date of

publication of notice thereof in the

Federal Register, because the proposal

facilitates compliance with the Display

Rule. The Commission believes,

therefore, that granting accelerated

approval of the proposed rule change is

appropriate and consistent with Section

6 of the Act.11

It is therefore ordered, pursuant to

Section 19(b)(2) of the Act,12 that the

proposed rule change (SR–Amex–00–

25) is hereby approved on an

accelerated basis.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.13

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 00–15877 Filed 6–22–00; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–42947; File No. SR–AMEX–

99–37]

Self-Regulatory Organizations; Notice

of Filing and Order Granting

Accelerated Approval of Proposed

Rule Change and Amendment Nos. 1,

2, 3, 4, 5 and 6 by the American Stock

Exchange LLC Relating to the Trading

of Options on Trust Issued Receipts

June 15, 2000.

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

September 13, 1999, the American Stock

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

filed with the Securities and Exchange

Commission (‘‘SEC’’ or ‘‘Commission’’)

the proposed rule change as described

in Items I and II below, which Items

have been prepared by the Exchange.

Amendment Nos. 1, 2, 3, 4, 5 and 6 were

filed on October 22, 1999,3 December

20, 1999,4 January 5, 2000,5 April 28,