Federal Register / Vol. 62, No. 29 / Wednesday, February 12, 1997 / Notices 6591

3 15 U.S.C. § 78f(b).

4 15 U.S.C. § 78f(b)(5).

5 17 CFR 200.30–3(a)(12).

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

2 17 CFR 240.19b–4

3Securities Exchange Act Release No. 37924

(Nov. 6, 1996), 61 FR 58270.

4Letter from Claudia Crowley, Special Counsel,

Amex, to Michael Walinskas, Senior Special

Counsel, Division of Market Regulation, SEC, dated

January 31, 1997.

order, these amendments should

minimize any such perceived

advantage. It should be noted that the

proposed changes will not apply to

options trading, and Rule 950 will be

amended accordingly. In addition, the

proposed changes also will not apply to

system orders.

2. Statutory Basis

The proposed rule change is

consistent with Section 6(b) 3 of the Act

in general and furthers the objectives of

Section 6(b)(5) 4 in particular in that the

rules are designed to promote just and

equitable principles of trade, remove

impediments to and perfect the

mechanism of a free and open market

and, in general, to protect investors and

the public interest.

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. Date of Effectiveness of the

Proposed Rule Change and Timing for

Commission Action

Within 35 days of the date of

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 such 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 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 File No. SR–Amex–97–

02 and should be submitted by [insert

date 21 days from date of publication].

For the Commission by the Division of

Market Regulation, pursuant to delegated

authority.5

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 97–3428 Filed 2–11–97; 8:45 am]

BILLING CODE 8010–01–M

[Release No. 34–38238; File No. SR–AMEX–

96–39]

Self-Regulatory Organizations;

American Stock Exchange, Inc.; Order

Granting Approval to Proposed Rule

Change Relating to Various Updates to

Amex Trading Rules and Company

Guide Section 402.

February 4, 1997.

On October 16, 1996, the American

Stock Exchange, Inc. (‘‘Amex’’ or

‘‘Exchange’’) submitted to the Securities

and Exchange Commission

(‘‘Commission’’), pursuant to Section

19(b)(1) of the Securities Exchange Act

of 1934 (‘‘Act’’) 1 and Rule 19b–4

thereunder,2 a proposed rule change to

incorporate various minor updates and

clarifications into the Exchange’s rules

and Company Guide.

The proposed rule change was

published for comment in the Federal

Register on November 13, 1996.3 No

comments were received on the

proposal. Subsequently, the Exchange

clarified its rationale for the

modification of Amex Rule 126, which

governs order precedence.4 This order

approves the proposal.

The Exchange proposed that the

following minor housekeeping changes

be made:

A. Rule 135—delete the reference to

sales sheets published by ‘‘Francis

Emory Fitch, Inc.’’ because the

Exchange no longer utilizes this

company’s service.

B. Rule 152—delete the reference to

Rule 570 because Rule 570 was

rescinded.

C. Rule 340—change the reference to

the Exchange’s ‘‘Market Operations

Division’’ to the ‘‘Exchange.’’

D. Rule 171—remove the prohibition

against specialist units of less than three

natural persons to conform with a

comparable NYSE provision.

E. Rule 904—change the reference to

the Exchange’s ‘‘Membership

Compliance Division’’ to the

‘‘Exchange.’’

F. Rule 950—delete Rule 170 from the

list of rules that are applicable in their

entirety to option transactions because

all of that rule’s commentary is not

applicable (paragraph (n) of Rule 950

already specifies which portions of Rule

170 are applicable).

G. Section 402 of the Company

Guide—add Bloomberg Business News

to the list of approved services for

disclosure of material information.

In addition, the Exchange proposed a

change to Amex Rule 126, which

provides generally that the highest bid

and lowest offer have priority in

execution. When bids or offers are made

at the same price, priority is determined

by the time order in which they were

placed. If bids and offers are made

simultaneously at the same price, they

are on parity and, as such, are entitled

to share equally in an execution at the

specified price. Amex Rule 108, which

governs parity and priority at openings,

contains similar provisions. In addition,

Amex Rule 108 grants a specialist’s

agency limit orders a preference over

other orders on parity whenever there is

a substantial accumulation of orders on

the book at a limit price equal to the

proposed opening price. Under these

circumstances, the specialist is entitled

to execute its agency limit orders at the

following percentages: 60% when there

is one broker on parity, 40% when there

are 2–5 brokers on parity, and 30%

when there are 6 or more brokers on

parity.

The Exchange believes that

procedures similar to those contained in

Amex Rule 108 should be utilized

throughout the trading day. Thus, under

the current proposal, when a specialist

has a substantial accumulation of

agency orders on its book and there are

also floor brokers in the trading crowd

that are on parity with those orders, the

specialist’s orders would be entitled to

the same percentage of shares of the

contra side order as is currently

provided for in Amex Rule 108. The

Exchange believes that keying the
6592 Federal Register / Vol. 62, No. 29 / Wednesday, February 12, 1997 / Notices

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

6 15 U.S.C. 78f(b)(5).

7 In making this finding, the Commission notes

that the proposal should increase efficiency by

eliminating a source of confusion among Amex

members and removing outdated provisions. See 15

U.S.C 78c(f) (noting that it is in the public interest

to consider whether an action will promote

efficiency, competition, or capital formation).

8See, e.g., NYSE Rule 72. NYSE Rule 72 permits

the largest bid (offer) to ‘‘size out’’ other smaller

bids (offers) that are on parity with it. However, all

bids (offers) in ‘‘the book’’ that are on parity with

the larger bids (offers) in the trading crowd are

aggregated for precedence purposes to facilitate the

ability of the book to compete with the trading

crowd for contra side order flow. Moreover, a

specialist may further increase the opportunity for

bids (offers) in the book to size out bids (offers) in

the trading crowd by combining his bid (offer) for

his own account with the bids (offers) in the book,

if he so chooses. NYSE Rule 108.10.

9 15 U.S.C. 78s(b)(2).

10 17 CFR 200.30–3(a)(12). 1 15 U.S.C. 78s(b)(1).

percentage of contra side shares allotted

to the specialist’s orders to the number

of competing floor brokers on parity

would divide the specified execution as

equally as possible, while providing an

easy to use formula whose

implementation is not unduly

disruptive to trading. In addition, the

Amex believes this change would

facilitate the ability of the specialist,

who normally represents multiple

customer orders, to compete with floor

brokers in the trading crowd, who

normally only represent one customer

order each.

The final aspect of the proposal

concerns the adjustment of stop limit

orders when a security is quoted exdivided, ex-distribution, ex-rights, or exinterest. When a security is quoted exdivided, ex-distribution, ex-rights, or exinterest (except for stock dividends and

distributions), Amex Rule 132(a)

generally provides that a specialist must

reduce all open orders to buy and open

stop orders to sell by the cash value of

the payment or rights. However, there

occasionally has been some confusion

concerning stop limit orders because the

rule does not specifically provide that

both the limit and the stop price must

be reduced. Therefore, the Exchange

proposes to amend paragraph (a) to

provide such specificity. This change

also will conform Amex Rule 132 to

New York Stock Exchange (‘‘NYSE’’)

Rule 118.

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

Specifically, the Commission believes

the proposal is consistent with the

Section 6(b)(5) 6 requirements that the

rules of an exchange be designed to

prevent fraudulent and manipulative

acts and practices, to promote just and

equitable principles of trade, to facilitate

transactions in securities, and, in

general, to protect investors and the

public interest.7

The Commission supports the Amex’s

efforts to continue to review the form

and substance of its regulations. In this

regard, the Commission agrees with the

Exchange’s assertion that the proposed

to Amex rules 135, 152, 340, 171, 904,

and 950 will eliminate or update

requirements that no longer serve a

meaningful regulatory purpose. In

addition, the Commission believes that

adding Bloomberg Business News to the

Exchange’s list of approved services for

disclosure of material information

should facilitate the dissemination of

important information, thereby

enhancing the quality of the markets.

The Commission also believes the

changes concerning the precedence of

orders are consistent with the Act.

These changes should allow specialists,

who often represent many orders, to

compete more equitably with traders in

the crowd, who often represent only one

order. The Commission believes it is

reasonable for the Exchange to conclude

that the percentages selected should

divide the specified execution in an

equitable manner, while providing an

easy to use formula whose

implementation should not disrupt

trading. Moreover, the Commission

believes this practice serves the function

addressed by procedures in place at

other exchanges that facilitate the

execution of customer limit orders.8

Finally, the Commission believes it is

appropriate to require specialists to

adjust open stop limit orders to sell

when a security is quoted ‘‘ex’’ to

ensure that these orders will continue to

be handled according to the sellers’

original intentions and to preserve the

ability of these orders to obtain the best

price available. Moreover, for the

purposes of Amex Rule 132(a), open

stop limit orders to sell and open stop

orders to sell are essentially the same.

The only difference between these

orders is that a stop limit order to sell

places a floor on an acceptable

execution price whereas a stop order to

sell will accept whatever the current

market price is after a transaction occurs

at or below the stop order’s sell price.

It is therefore ordered, pursuant to

Section 19(b)(2) of the Act,9 that the

proposed rule change (SR–Amex–96–

39) is approved.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.10

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 97–3430 Filed 2–11–97; 8:45 am]

BILLING CODE 8010–01–M

[Release No. 34–38237; File No. SR–CHX–

97–01]

Self-Regulatory Organizations; Notice

of Filing and Immediate Effectiveness

of Proposed Rule Change by the

Chicago Stock Exchange, Incorporated

Relating to Specialist Fees

February 4, 1997.

Pursuant to Section 19(b)(1) of the

Securities Exchange Act of 1934

(‘‘Act’’), 1 notice is hereby given that on

January 17, 1997, the Chicago Stock

Exchange, Incorporated (‘‘CHX’’ 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, pursuant to Rule 19b–

4 of the Act, submits a proposed rule

change amending the CHX’s Schedule of

Fees relating to specialists effective

February 1, 1997. The text of the

proposed rule change is as follows [new

text is italicized; deleted text is

bracketed]:

Membership Dues and Fees * * *

(b) Registration Fee:

Firm or Corporation—No change in text.

Office (other than principal)—No

change in text.

Officers or Partners—No change in

text.m

Salesmen—No change in text.

[Specialist—Fees will be determined

based upon the monthly round lot

activity of an issue on the MSE, and

shall be paid monthly, according to

the following:

The 300 most active issues shall be

charged at a rate of $400 per year.

All other issues shall be charged at a

rate of $100 per year.]

Specialist Assignment—There shall also

be an assignment fee of $500 per

issue upon the approval by the

Committee on Specialist

Assignment and Evaluation of an

application of a member or member

organization to act as specialist in a