[Federal Register Volume 65, Number 122 (Friday, June 23, 2000)]
[Notices]
[Pages 39211-39215]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-15903]


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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,

[[Page 39212]]

2000,\6\ May 4, 2000,\7\ and May 12, 2000,\8\ respectively. The 
Commission is publishing this notice to solicit comments on the 
proposed rule change from interested persons and to grant accelerated 
approval to the proposed rule change, as amended.
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    \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 consistent with the purpose 
section of the proposed rule change. See Letter to Nancy Sanow, 
Assistant Director, Division, SEC, from Scott G. Van Hatten, Legal 
Counsel Derivative Securities, Amex, dated January 4, 2000.
    \6\ In Amendment No. 4, the Exchange added an additional 
maintenance requirement for options on HOLDRs, a kind of trust 
issued receipt, requiring that the market capitalization of the 
securities underlying the options and composing the HOLDR must 
constitute at least 80 percent of the market capitalization of the 
HOLDR. The Exchange further noted that the prospectus and product 
description delivery requirements applicable to HOLDRs, will apply 
to an exercise or assignment of options on HOLDRs. The Exchange also 
represented that it has the necessary capacity to trade the new 
series of options generated by options on HOLDRs. See Letter to 
Nancy Sanow, Assistant Director, Division, SEC, from Scott G. Van 
Hatten, Legal Counsel Derivative Securities, Amex, dated April 27, 
2000.
    \7\ In Amendment No. 5, the Exchange added an additional 
maintenance requirement for options on HOLDRs, requiring that at 
least 80 percent of the number of securities held by a HOLDR trust 
underlie standardized options. See Letter to Nancy Sanow, Assistant 
Director, Division, SEC, from Scott G. Van Hatten, Legal Counsel 
Derivative Securities, Amex, dated May 3, 2000.
    \8\ In Amendment No. 6, the Exchange clarified the maintenance 
criterion added in Amendment No. 4, that the Exchange will not open 
additional series of options on any HOLDR should the weight of all 
those securities that are options eligible be less than 80 percent. 
See Letter to Nancy Sanow, Assistant Director, Division, SEC, from 
Scott G. Van Hatten, Legal Counsel Derivative Securities, Amex, 
dated May 11, 2000.
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I. Self-Regulatory Organization's Statement of the Terms of 
Substance of the Proposed Rule Change

    The Exchange proposes to trade standardized equity options on trust 
issued receipts. The text of the proposed rule change follows. 
[Bracketing] indicates text to be deleted and italics indicate text to 
be added.
Rule 915   Criteria for Underlying Securities
    (a) through (b)--No change.
    * * * Commentary
    .01 through .06--No change.
    .07  Securities deemed appropriate for options trading shall 
include shares or other securities (``Trust Issued Receipts'') that are 
principally traded on a national securities exchange or through the 
facilities of a national securities association and reported as a 
national market security, and that represent ownership of the specific 
deposited securities held by a trust, provided:
    (a)(i) the Trust Issued Receipts meet the criteria and guidelines 
for underlying securities set forth in Commentary .01 to this Rule 915; 
or
    (ii) the Trust Issued Receipts must be available for issuance or 
cancellation each business day from the trust in exchange for the 
underlying deposited securities; and
    (b) any ADRs in the portfolio on which the Trust is based for which 
the securities underlying the ADRs' primary markets are in countries 
that are not subject to comprehensive surveillance agreements, do not 
in the aggregate represent more than 20% of the weight of the 
portfolio.
Rule 916  Withdrawal of Approval of Underlying Securities
    No change.
    * * * Commentary
    .01-.08 No change.
    .09  Absent exceptional circumstances, securities initially 
approved for options trading pursuant to Commentary .07 under Rule 915 
(such securities are defined and referred to in that Commentary as 
``Trust Issued Receipts'') shall not be deemed to meet the Exchange's 
requirements for continued approval, and the Exchange shall not open 
for trading any additional series of option contracts of the class 
covering such Trust Issued Receipts, whenever the Trust Issued Receipts 
are delisted and trading in the Receipts is suspended on a national 
securities exchange, or the Trust Issued Receipts are no longer traded 
as national market securities through the facilities of a national 
securities association. In addition, the Exchange shall consider the 
suspension of opening transactions in any series of options of class 
covering Trust Issued Receipts in any of the following circumstances:
    (1) In accordance with the terms of paragraphs 1 through 7 of 
Commentary .01 of this Rule 916 in the case of options covering Trust 
Issued Receipts when such options were approved pursuant to paragraph 
(a)(i) of Commentary .07 of Rule 915;
    (2) The trust has more than 60 days remaining until termination and 
there are fewer than 50 record and/or beneficial holders of Trust 
Issued Receipts for 30 or more consecutive trading days; \9\
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    \9\ The Exchange has confirmed that ``Trust Issued Receipts'' 
should be capitalized in the proposed rule text. Telephone 
conversation between Heather Traeger, Attorney, Division, SEC, and 
Scott G. Van Hatten, Legal Counsel Derivative Securities, Amex, on 
June 14, 2000.
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    (3) The trust has fewer than 50,000 receipts issued and 
outstanding;
    (4) The market value of all receipts issued an outstanding is less 
than $1,000,000; or
    (5) Such other event shall occur or condition exist that in the 
opinion of the Exchange makes further dealing in such options on the 
Exchange inadvisable.
    .10  For Holding Company Depositary Receipts (HOLDRs), the Exchange 
will not open additional series of options overlying HOLDRs (without 
prior Commission approval) if: (1) the proportion of securities 
underlying standardized equity options to all securities held in a 
HOLDRs trust is less than 80% (as measured by their relative weightings 
in the HOLDRs trust); or (2) less than 80% of the total number of 
securities held in a HOLDRs trust underlie standardized equity options.
* * * * *

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 Exchange 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 exchange 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
    The purpose of the proposed rule change is to provide for the 
trading of options and FLEX \10\ equity options on exchange-listed 
trust issued receipts.\11\ Trust issued receipts are exchange-listed 
securities representing beneficial ownership of the specific deposited 
securities represented by the receipts. They are negotiable receipts 
issued by a trust representing securities of issuers that have been 
deposited and are held on behalf of the holders of the trust issued 
receipts. Trust issued receipts, which trade in round lots of 100, and 
multiples thereof, may be issued after their initial offering through a 
deposit with the trustee of the required number of shares of common 
stock of the underlying issuers. This characteristic

[[Page 39213]]

of trust issued receipts is similar to that of exchange-traded fund 
shares which also may be created on any business day upon deposit of 
the requisite securities comprising a creation unit.\12\ The trust will 
only issue receipts upon the deposit of the shares of underlying 
securities that are represented by a round-lot of 100 receipts. 
Likewise, the trust will cancel, and an investor may obtain, hold, 
trade or surrender trust issued receipts in a round-lot and round lot 
multiples of 100 receipts. Following their initial issuance, trust 
issued receipts will be traded on the Exchange like other equity 
securities, subject to equity trading rules.
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    \10\ FLEX equity options provide investors with the ability to 
customize basic option features including size, expiration date, 
exercise style, and certain exercise prices.
    \11\ The Exchange's proposal to list and trade Trust Issued 
Receipts was approved by the Commission on September 21, 1999. See 
Securities Exchange Act Release No. 41892, (September 21, 1999), 64 
FR 52559 (September 29, 1999).
    \12\ The Exchange received approval to trade options on fund 
shares on July 1, 1998. See Securities Exchange Act Release No. 
40157 (July 1, 1998), 63 FR 37426 (July 10, 1998).
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    Generally, options on trust issued receipts are proposed to be 
traded on the Exchange pursuant to the same rules and procedures that 
apply to trading in options on equity securities or indexes of equity 
securities. However, the Exchange is also proposing to list FLEX Equity 
options on trust issues receipts. The Exchange will list option 
contracts covering 100 trust issued receipts, the minimum required 
round lot trading size for the underlying receipts. Strike prices for 
the contracts will be set to bracket the trust issued receipts at the 
same intervals that apply to standardized equity options (i.e., 2\1/2\ 
point intervals for underlying equity values up to $25; 5 point 
intervals for underlying equity values greater than $25 up to $200; and 
10 point intervals for underlying equity values greater than $200). The 
proposed position and exercise limits for options on trust issued 
receipts would be the same as those established for stock options, as 
set forth in Amex Rules 904 and 905. The Amex anticipates that most 
options on trust issued receipts will initially qualify for the lowest 
position limit. However, as with standardized equity options, 
applicable position limits will be increased for options if the volume 
of trading in the trust issued receipts increases to meet the 
requirements of a higher limit. As is currently the case for all FLEX 
Equity options, no position and exercise limits will be applicable to 
FLEX Equity options overlying trust issued receipts.
    The listing and maintenance standards proposed for options on trust 
issued receipts are set forth in proposed Commentary .07 under Amex 
Rule 915 and in proposed Commentary .09 under Amex Rule 916, 
respectively. Pursuant to the proposed initial listing standards, Amex 
will list only trust issued receipts that are principally traded on a 
national securities exchange or through the facilities of a national 
securities association and reported as national market securities. In 
addition, the initial listing standards require that either: (i) The 
trust issued receipts meet the uniform options listing standards in 
Commentary .01 to Amex Rule 915, which include criteria covering the 
minimum public float, trading volume, and share price of the underlying 
security in order to list the option; \13\ or (ii) the trust issued 
receipts must be available for issuance or cancellation each business 
day from the trust in exchange for the underlying deposited securities.
    In addition, listing standards for options on trust issued receipts 
will require that any American Depositary Receipts (ADRs) in the 
portfolio on which the Trust is based for which the securities 
underlying the ADRs' primary markets are in countries that are not 
subject to comprehensive surveillance agreements will not in the 
aggregate represent more than 20 percent of the weight of the 
portfolio.
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    \13\ Specifically, Commentary .01 to Amex Rule 915 requires the 
underlying security to have a public float of 7,000,000 shares, 
2,000 holders, trading volume of 2,400,000 shares in the preceding 
12 months, a share price of $7.50 for the majority of the business 
days during the three calendar months preceding the date of the 
selection, and that the issuer of the underlying security is in 
compliance with the Act.
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    The Exchange's proposed maintenance standards provide that if a 
particular series of trust issued receipts should cease to trade on an 
exchange or as national market securities in the over-the-counter 
market, there will be no opening transactions in the options on the 
trust issued receipts, and all such options will trade on a 
liquidation-only basis (i.e., only closing transactions to permit the 
closing of outstanding open options will be permitted). In addition, 
the Amex will consider the suspension of opening transactions in any 
series of options of the class covering trust issued receipts if: (i) 
The options fail to meet the uniform equity option maintenance 
standards in Commentary .01 to Amex Rule 916,\14\ when the options were 
listed pursuant to the equity option listing standards of Commentary 
.01 to Amex Rule 915; \15\ (ii) the trust has more than 60 days 
remaining until termination and there are fewer than 50 record and/or 
beneficial holders of trust issued receipts for 30 or more consecutive 
trading days; (iii) the trust has fewer than 50,000 receipts issued and 
outstanding; (iv) the market value of all receipts issued and 
outstanding is less than $1,000,000; or (v) such other event shall 
occur or condition exists that in the opinion of the Exchange, makes 
further dealing in such options on the Exchange inadvisable. 
Furthermore, the Exchange will not open additional series of options on 
any HOLDR, without prior Commission approval, if: (1) The proportion of 
securities underlying standardized equity options to all securities 
held in a HOLDRs trust is less than 80 percent (as measured by their 
relative weightings in the HOLDRs trust); \16\ or (2) less than 80 
percent of the number of securities held by a HOLDR trust underlie 
standardized options.
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    \14\ Specifically, Commentary. 01 to Amex Rule 916 provides that 
an underlying security will not meet the Exchange's requirements for 
continued listing when, among other things: (i) There are fewer than 
6,300,000 publicly-held shares; (ii) there are fewer than 1,600 
holders; (iii) trading volume was less than 1,800,000 shares in the 
preceding twelve months; and (iv) the share price of the underlying 
security closed below $5 on a majority of the business days during 
the preceding 6 months.
    \15\ The Exchange notes that even if options on trust issued 
receipts were not listed under the uniform equity option listing 
standards, Amex Rules 1200 et seq. require a minimum number of trust 
issued receipts to be outstanding before trading in a series of 
trust issued receipts may commence. In addition, the Amex has 
represented that although there is no comparable public float 
maintenance standard for the underlying trust issued receipt, as a 
practical matter there can never be trading in a series of trust 
issued receipts in which there is less than one round-lot 
outstanding, since trust issued receipts may only be issued and 
cancelled in round lots, and if the last outstanding round lot 
should ever be cancelled, the series (and the options on that 
series) will cease to trade.
    \16\ The Exchange represents that the weight of each security in 
a HOLDR trust will be determined by calculating the summation of the 
number of shares of each security (represented in a single HOLDR) 
and underlying options multiplied by its respective share price 
divided by the summation of the number of shares of all securities 
(represented in a single HOLDR) multiplied by their respective share 
prices. See Amendment No. 6, supra note 8.
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    Options on trust issued receipts will be physically-settled and 
will have the American-style exercise feature used on all standardized 
equity options, and not the European-style feature. The Exchange, 
however, also proposes to trade FLEX Equity options which will be 
available with both the American-style and European-style exercise 
feature, as well as other FLEX Equity features.\17\
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    \17\ An American-style option may be exercised at any time prior 
to its expiration. A European-style option, however, may be 
exercised only on its expiration date.
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    The proposed margin requirements for options on trust issued 
receipts are at the same levels that apply to options generally under 
Amex Rule 462, except, with respect to trust issued receipts based on a 
broad-based portfolio, minimum margin must be deposited and maintained 
equal to 10 percent of the current market value of the option plus 15 
percent of the market value of

[[Page 39214]]

equivalent units of the underlying security value. Trust issued 
receipts that hold securities based upon a narrow-based portfolio must 
have options margin that equals at least 100 percent of the current 
market value of the contract plus 20 percent of the market value of 
equivalent units of the underlying security value. In this respect, the 
margin requirements proposed for options on trust issued receipts are 
comparable to margin requirements that currently apply to broad-based 
and narrow-based index options.
    The Exchange believes it has the necessary systems capacity to 
support the additional series of options that would result from the 
introduction of options on HOLDRs, and it has been advised that the 
Options Price Reporting Authority (``OPRA'') also will have the 
capacity to support these additional series in light of the capacity 
allocation in place at the OPRA processor.\18\
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    \18\ See Amendment No. 4, supra note 6, and letter from Joseph 
P. Corrigan, Executive Director, OPRA, to Nancy Sanow, Assistant 
Director, Division, SEC, dated April 26, 2000.
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2. Statutory Basis
    The proposed rule change is consistent with Section 6(b) of the Act 
\19\ in general and furthers the objectives of Section 6(b)(5) \20\ 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.
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    \19\ 15 U.S.C. 78f(b).
    \20\ 15 U.S.C. 78f(b)(5).
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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 Statements 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, as amended, 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 at the Commission's Public Reference Room. 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-99-37 and should be submitted by [July 14, 2000].

IV. Commission's Findings and Order Granting Accelerated Approval 
of Proposed Rule Change

    The Commission finds that the proposed rule change, as amended, is 
consistent with the requirements of Section 6(b)(5) of the Act \21\ and 
the rules and regulations thereunder applicable to a national 
securities exchange. Specifically, the Commission finds that providing 
for the listing and trading of options and FLEX Equity options on 
Exchange-traded trust issued receipts should give investors a better 
means to hedge their positions in the underlying trust issued receipts. 
Further, the Commission believes that pricing of the underlying trust 
issued receipts may become more efficient and market makers in these 
shares, by virtue of enhanced hedging opportunities, may be able to 
provide deeper and more liquid markets. In sum, the Commission believes 
that options on trust issued receipts likely will engender the same 
benefits to investors and the marketplace that exist with respect to 
options on common stock, thereby serving to promote the public 
interest, remove impediments to a free and open securities market, and 
promote efficiency, competition, and capital formation.\22\
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    \21\ 15 U.S.C. 78f(b)(5).
    \22\ In approving this rule, the Commission notes that it has 
also considered the proposed rule's impact on efficiency, 
competition, and capital formation. 15 U.S.C. 78c(f).
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    As a general matter, the Commission believes that a regulatory 
system designed to protect public customers must be in place before the 
trading of sophisticated financial instruments, such as options on 
trust issued receipts, can commence trading on a national securities 
exchange. The Commission notes that the trading of standardized 
exchange-traded options occurs in an environment that is designed to 
ensure, among other things, that: (1) The special risks of options are 
disclosed to public customers; (2) only investors capable of evaluating 
and bearing the risks of options trading are engaged in such trading; 
and (3) special compliance procedures are applicable to options 
accounts. With regard to position and exercise limits, the Commission 
finds that it is appropriate to adopt the tiered approach used in 
setting position and exercise limits for standardized stock options. 
This approach should serve to minimize potential manipulation and 
market impact concerns. In addition, the Commission believes that the 
rationale for allowing FLEX Equity options generally to trade without 
position and exercise limits is equally applicable in the context of 
FLEX Equity options on trust issued receipts. Accordingly, because 
options and Flex Equity options of trust issued receipts will be 
subject to the same regulatory regime as the other options and FLEX 
Equity options currently traded on the Amex, the Commission believes 
that adequate safeguards are in place to ensure the protection of 
investors in options and Flex Equity options on trust issued receipts.
    The Commission also believes that it is appropriate to permit the 
Amex to list and trade options, including FLEX Equity options, on 
exchange-traded trust issued receipts given that these options must 
meet specific requirements related to the protection of investors.\23\ 
First, the Exchange's listing and delisting criteria for options on 
trust issued receipts are adequate. With regard to initial listing, the 
proposal requires that either: (1) The underlying trust issued receipts 
meet the Amex's uniform options listing standards; or (2) the trust 
issued receipts must be available for issuance or cancellation each 
business day from the trust in exchange for the underlying deposited 
securities. This listing requirement should ensure that there exists 
sufficient supply of the underlying trust issued receipts so that a 
short call writer, for example, will have the ability to secure 
delivery of the trust issued receipts upon exercise of the option.
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    \23\ The Commission notes, and Amex has verified, that holders 
of options on trust issued receipts who exercise and receive the 
underlying trust issued receipts must receive, like any purchaser of 
trust issued receipts, a product description or prospectus, as 
appropriate. See Amendment No. 4, supra note 6.
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    With respect to continued listing, options listed pursuant to the 
uniform

[[Page 39215]]

options listing standards will have to meet the options maintenance 
listing standards. The maintenance criteria provide that an underlying 
security will not meet the Exchange's requirements for continued 
listing when, among other things: (1) The trust has more than 60 days 
remaining until termination and there are fewer than 50 record and/or 
beneficial holders of trust issued receipts for 30 or more consecutive 
trading days; (2) the trust has fewer than 50,000 receipts issued and 
outstanding; or (3) the market value of all receipts issued and 
outstanding is less than $1,000,000. The Commission believes these 
criteria will help to ensure than a minimum level of liquidity will 
exist for options on trust issued receipts to control against 
manipulation and allow for the maintenance of fair and orderly markets. 
Furthermore, the Exchange will not open additional series or options on 
any HOLDR, without prior Commission approval, if: (1) The proportion of 
securities underlying standardized equity options to all securities 
held in a HOLDRs trust is less than 80 percent (as measured by their 
relative weightings in the HOLDRs trust); or (2) less than 80 percent 
of the number of securities held by a HOLDR trust underlie standardized 
options. The Commission believes that these additional criteria will 
ensure that a very significant portion of the individual component 
securities of the HOLRDs trust will be options eligible (either by 
market capitalization weighting or by total number of component 
securities), thereby assuring that the component securities for the 
most part will satisfy minimum thresholds previously approved by the 
Commission.
    The Commission also believes that the surveillance standard 
developed by the Amex for options on trust issued receipts is adequate 
to address the concerns associated with the listing and grading of such 
securities. Specifically, the Amex has proposed to limit to 20 percent 
of the weight of the portfolio any component securities that are ADRs 
when the primary market for the securities underlying those ADRs' are 
in countries that are not subject to comprehensive surveillance 
agreements.
    As a general matter, the Commission believes that comprehensive 
surveillance agreements provide an important deterrent to manipulation 
because they facilitate the availability of information needed to fully 
investigate a potential manipulation, if it were to occur. These 
agreements are especially important in the context of derivative 
products based on foreign securities because they facilitate the 
collection of necessary regulatory, surveillance and other information 
from foreign jurisdictions. In evaluating the current proposal, the 
Commission believes that requiring comprehensive surveillance 
agreements to be in place between the Amex and the primary markets for 
ADRs that comprise 20 percent or more of the weight of the underlying 
portfolio upon which trust issued receipts are based provides an 
adequate mechanism for the exchange of surveillance sharing information 
necessary to detect and deter possible market manipulations. Further, 
as to the domestically-traded trust issued receipts themselves and the 
domestic stocks in the underlying portfolio upon which trust issued 
receipts are based, the Intermarket Surveillance Group (``ISG'') 
Agreement \24\ will be applicable to the trading of options on trust 
issued receipts.
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    \24\ ISG was formed on July 14, 1983, to, among other things, 
coordinate more effectively surveillance and investigative 
information sharing arrangements in the stock and options markets. 
See Intermarket Surveillance Group Agreement, July 14, 1983.
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    Finally, the Commission believes that it is appropriate to require 
minimum margin of 100 percent of the current market value of the option 
plus 15 percent of the market value of the underlying security value 
for options on trust issued receipts based on a broad-based portfolio. 
Moreover, the Commission believes that requiring minimum margin of 100 
percent of the current market value of the option plus 20 percent of 
the market value of the underlying security value for options on trust 
issued receipts based on a narrow-based portfolio is appropriate. The 
Commission notes that these margin requirements for options on trust 
issued receipts are comparable to margin requirements that currently 
apply to broad-based and narrow-based index options.
    Amex has requested that the Commission find good cause for 
approving the proposed rule change, as amended, prior to the thirtieth 
day after the day of publication of notice in the Federal Register. The 
Commission believes the proposal is similar to the proposal to list and 
trade options on exchange-traded fund shares previously reviewed and 
approved by the Commission.\25\ The Commission also notes that there 
were no comment letters on the initial trust issued receipts filing. 
Furthermore, the Commission finds that the proposal raises no new 
regulatory issues and should benefit holders of trust issued receipts 
by permitting them to use options to manage the risks of their 
positions in the receipts. Accordingly, the Commission finds good cause 
to accelerate approval of the proposed rule change, as amended.
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    \25\ See Securities Exchange Act Release No. 40157 (July 1, 
1998), 63 FR 37426 (July 10, 1998).
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    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\26\ that the proposed rule change (SR-AMEX-99-37), as amended, is 
hereby approved on an accelerated basis.
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    \26\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\27\
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    \27\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 00-15903 Filed 6-22-00; 8:45 am]
BILLING CODE 8010-01-M