[Federal Register Volume 65, Number 188 (Wednesday, September 27, 2000)]
[Notices]
[Pages 58135-58136]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-24733]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-43305; File No. SR-Amex-00-36]


Self-Regulatory Organizations; Order Approving a Proposed Rule 
Change by the American Stock Exchange LLC Creating an Options Principal 
Membership Seat Upgrade Program

September 19, 2000.

I. Introduction

    On June 30, 2000, the American Stock Exchange LLC (``Exchange'' or 
``Amex''), submitted to the Securities and Exchange Commission 
(``Commission''), pursuant to Section 19(b)(1) of the Securities 
Exchange Act of 1934

[[Page 58136]]

(``Act'') \1\ and Rule 19b-4 thereunder,\2\ a proposed rule change 
creating an options principal membership seat upgrade program. The 
proposed rule change was published for comment in the Federal Register 
on August 7, 2000.\3\ The Commission received no comments on the 
proposal. This order approves the proposal.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ Securities Exchange Act Release No. 42803 (July 31, 2000), 
65 FR 48262.
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II. Description of the Proposal

    The Exchange believes that the recent increase in the number of 
securities listed on the Exchange, especially options and Exchange-
traded funds, has led to a greater demand for specialists and brokers 
to handle the increased volume. Specialists and brokers are required to 
be regular members of the Exchange. To accommodate the growing need for 
more specialists and brokers, the Exchange has proposed a voluntary 
Options Principal Membership (``OPM'') Seat Upgrade Program 
(``Program''), with the potential for upgrading 203 options principal 
memberships into regular memberships.
    The one-time fee to upgrade an OPM membership to a regular 
membership under the proposed Program will be $30,000 or $36,000, 
depending on whether the OPM owner elects to participate in the Program 
within 120 days of the effective date of the Program.\4\
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    \4\ OPM owners that elect to upgrade to a regular membership 
within 240 days would be entitled to pay on a monthly basis for 12 
months. Program participants who are delinquent in their installment 
payments by more than sixty days would forfeit all payments made to 
date and their seats would revert to OPM status. After 240 days from 
Program effectiveness, an OPM owner would be required to pay a lump 
sum payment of $36,000 at the time of election.
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    The Program would be in effect for 18 months. At the end of the 18 
month period, the Program would terminate unless the Exchange elects to 
continue it.\5\ Fund proceeds, less administrative costs to the 
Exchange, would be distributed equally to regular seat owners of record 
at the time of distribution (excluding regular seat owners who upgraded 
their OPM seats). Interest on fund deposits would accrue to the regular 
members.
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    \5\ At that time, the Exchange could consider changing the terms 
of the Program, including raising the cost of upgrading an OPM seat. 
The Commission notes and the Exchange acknowledges that it would be 
required to file a proposed rule change with the Commission pursuant 
to Section 19(b) of the Act if it decides to extend or make any 
changes to the Program. Telephone call between Ivonne Lugo, 
Assistant General Counsel, Amex, and Sonia Patton, Attorney, 
Division of Market Regulation (``Division''), Commission, on July 
13, 2000.
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III. Discussion

    The Commission finds that the proposed rule change is consistent 
with the Act and the rules and regulations under the Act applicable to 
a national securities exchange and, in particular, the requirements of 
Section 6(b) of the Act.\6\ Specifically, the Commission finds that the 
proposed rule change is consistent with Section 6(b)(5),\7\ in that it 
is designed to facilitate securities transactions and to remove 
impediments to and perfect the mechanism of a free and open market.\8\ 
The Commission believes that the proposed rule change will enable the 
Exchange to respond to the growing demand for more specialists and 
brokers to handle increased volume on the Exchange, which should help 
to facilitate securities transactions and remove impediments to a free 
and open market. In addition, the Commission believes the Program may 
help to enhance the depth and liquidity of the Amex market by bringing 
additional capital and market participants to the trading floor. 
Finally, the Commission believes that the Program should assist public 
customers in getting better executions of their orders by providing 
them with additional firms through which orders to the Amex can be 
routed.
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    \6\ 15 U.S.C. 78f(b).
    \7\ 15 U.S.C. 78f(b)(5).
    \8\ In approving this rule change, the Commission has considered 
the proposal's impact on efficiency, competition, and capital 
formation. 15 U.S.C. 78c(f).
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IV. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\9\ that the proposed rule change (SR-Amex-00-36) is approved.
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    \9\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\10\
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    \10\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 00-24733 Filed 9-26-00; 8:45 am]
BILLING CODE 8010-01-M