[Federal Register Volume 62, Number 240 (Monday, December 15, 1997)]
[Notices]
[Pages 65727-65728]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-32650]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-39411; File No. SR-Amex-97-40]


Self-Regulatory Organizations; Notice of Filing of Proposed Rule 
Change by the American Stock Exchange, Inc. Relating to Proposed 
Revisions to the Exchange's Policy Regarding the Use of Wireless Data 
Communications Devices

December 8, 1997.
    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 October 
29, 1997, 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 is proposing to amend its policy regarding the use of 
wireless data communications devices on the trading floor. 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
    The Exchange has undertaken to build an infrastructure 
(``Infrastructure'') to support wireless data communications on the 
Trading Floor by members and Exchange staff. On September 26, 1996, the 
Commission approved various rule changes and a policy regarding the use 
of wireless data communications devices on the Trading Floor (the 
``Wireless Communications Policy'').
    The Exchange developed the Wireless Communications Policy based 
upon a design for the Infrastructure that called for all wireless data 
transmissions to pass through a gateway (``Gateway''). This would have 
permitted the Exchange to make a record of all wireless communications 
and to unilaterally ``throttle'' all, or selected, member 
communications in the event that such transmissions used a 
disproportionate amount of the available radio frequency or threatened 
to exceed available radio frequency capacity.
    In late 1996, the Exchange reviewed the design of the 
Infrastructure. During this review, the Exchange determined that there 
was no immediate need for throttling and that it was unclear when it 
might become necessary. The Exchange concluded that since there was no 
need for throttling, there was no need for a Gateway and that, if and 
when necessary, throttling could be accomplished by the member firms 
without a Gateway. As a result of this review, the Exchange determined 
that since the Gateway was unnecessary, costly for both the Exchange 
and its members, and difficult to develop and implement, the Exchange 
would build the Infrastructure without a Gateway. The Exchange, 
accordingly, is now proposing to modify the Wireless Communications 
Policy to reflect the redesign of the Infrastructure to eliminate the 
Gateway.
    As noted above, the Gateway would have permitted the Exchange to 
record all wireless communications. This would have created a data base 
at the Exchange that would have largely duplicated records already 
maintained by member firms pursuant to SEC and Exchange rules. The 
elimination of the Gateway will eliminate this duplicative data base. 
The revised Wireless Communications Policy, accordingly, will state 
that members that have developed wireless technology will be 
responsible for maintaining such records as may be required by Exchange

[[Page 65728]]

rules and policies and federal securities laws as in effect from time 
to time. The elimination of the record keeping capabilities of the 
Gateway will not cause any diminution of the Exchange's surveillance 
capabilities as the Exchange will retain the same access to member 
books and records that it currently possesses.
    With respect to ``throttling,'' the Revised Wireless Communications 
Policy states that the Exchange's staff may request members to reduce 
radio traffic if and when required because a particular user is using 
more than its fair share of radio frequency capacity or overall usage 
in reaching its maximum. Members will be obligated to comply 
immediately with any such request and their ability to send wireless 
communications may be immediately terminated if they fail to comply 
with such a directive. The Exchange also proposes some further changes 
to the Wireless Communications Policy to enhance it in light of the 
Exchange's experience with wireless technology since the Policy was 
first adopted. These proposed changes include a requirement that 
members using wireless technology maintain a record of orders and 
quotes initiated on the Floor and transmitted to other markets, a 
statement that members do not acquire a property interest in their 
assigned band width, a requirement that affiliates be treated as a 
single entity for purposes of band width assignment and a reduction in 
the number of hand held terminals that the system is able to support in 
view of anticipated demand for this capacity.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act \1\ in general and furthers the objectives 
of Section 6(b)(5) \2\ in particular in that it is designed to prevent 
fraudulent acts and practices, promote just and equitable principles of 
trade, remove impediments to and perfect the mechanisms of a free and 
open market, and, in general, protect investors and the public 
interest.
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    \1\ 15 U.S.C. 78f(b).
    \2\ 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 inappropriate 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 either solicited or received.

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 longer 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, 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. 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-97-40 and 
should be submitted by January 5, 1998.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 97-32650 Filed 12-12-97; 8:45 am]
BILLING CODE 8010-01-M