[Federal Register Volume 62, Number 62 (Tuesday, April 1, 1997)]
[Notices]
[Pages 15552-15553]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-8229]


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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-38437; File No. SR-Amex-97-14]


Self-Regulatory Organizations; Notice of Filing of Proposed Rule 
Change by the American Stock Exchange, Inc. Relating to Trading in One 
Sixteenth of a Dollar

March 25, 1997.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ notice is hereby given that on March 17, 1997, the 
American Stock Exchange, Inc. (``Amex'' or ``Exchange'') filed with the 
Securities and Exchange Commission (``SEC'' or ``Commission'') the 
proposed rule change as described in Items I, II, and III below, which 
Items have been prepared by the self-regulatory organization. 
Subsequently, the Exchange submitted Amendment No. 1 to the proposed 
rule change.\2\ The Commission is publishing this notice to solicit 
comments on the proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ Letter from James F. Duffy, Executive Vice President and 
General Counsel, Amex, to Anthony P. Pecora, Attorney, Division of 
Market Regulation, SEC, dated March 24, 1997 (``Amendment No. 1''). 
In addition to correcting a typographical oversight, Amendment No. 1 
enhanced the Amex's discussion concerning the filing's impact on the 
Intermarket Trading System and its burden on competition.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Amex proposes to amend Exchange Rule 127 (Minimum Fractional 
Changes) to permit trading in sixteenths in Amex securities selling at 
$10 and higher.
    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.

[[Page 15553]]

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Amex proposes to amend Amex Rule 127 (Minimum Fractional 
Changes) to provide a significant expansion in the number of Amex 
securities traded in fractions of \1/16\ of $1.00. In 1992, the 
Commission approved sixteenths trading for Amex securities selling 
under $5 and above $0.25.\3\ In 1995, the Commission approved an 
expansion of these parameters to allow sixteenths trading in Amex 
securities selling under $10.\4\
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    \3\ Securities Exchange Act Release No. 31118 (Aug. 28, 1992), 
57 FR 40484 (Sept. 3, 1992) (approving SR-Amex-91-07).
    \4\ Securities Exchange Act Release No. 35537 (Mar. 27, 1995), 
60 FR 16894 (Apr. 3, 1995) (approving File No. SR-Amex-95-02).
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    The Exchange has determined to extend the benefits of trading in 
sixteenths to Amex equity securities priced at $10 and over, which 
currently includes approximately 50% of Amex's equity list.\5\ The 
Exchange believes that trading in sixteenths will promote investor 
protection by, among other things, enhancing the already significant 
potential for price improvement available on the Amex to both retail 
and professional orders.
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    \5\ Standard and Poor's Depositary Receipts<Register> 
(``SPDRs<Register>'') and S&P MidCap 400 SPDRs<SUP>TM will continue 
to trade in \1/64\'s.
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    On March 18, 1997, the Amex discussed the proposed expansion of 
trading in sixteenths with the Intermarket Trading System (``ITS'') 
participants and with the Securities Industry Automation Corporation 
(``SIAC''). The ITS Operating Committee voted unanimously to instruct 
SIAC to make necessary enhancements to the ITS host system to 
accommodate the proposed expanded sixteenths trading. SIAC also agreed 
to coordinate with the ITS participants regarding any required testing 
and changes to the participants' internal systems.\6\
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    \6\ The Commission notes that the tests conducted March 22, 1997 
involving the Amex, the Boston Stock Exchange, the Nasdaq Stock 
Market, and the Pacific Stock Exchange were successful. Amendment 
No. 1, supra note 2.
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2. Statutory Basis
    The Exchange believes the proposed rule change is consistent with 
Section 6(b) \7\ of the Act in general and furthers the objectives of 
Section 6(b)(5) \8\ in particular in that it is designed to promote 
just and equitable principles of trade, to facilitate transactions in 
securities and, in general, to protect investors and the public 
interest.
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    \7\ 15 U.S.C. 78f(b).
    \8\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange believes the proposed rule change will impose no 
burden on competition. Indeed, the Exchange believes an expansion of 
trading in sixteenths will enhance competition by permitting trading in 
all Amex equity securities by all ITS participants in narrower trading 
fractions, with the potential for significant price improvement for 
investors. The proposed rule change will require SIAC to modify the 
host system and may require individual ITS participant markets to 
modify their own systems to permit trading in sixteenths via ITS in 
Amex securities priced $10 and higher. No competitive issue is raised 
by these system changes, however, as expanded sixteenths trading will 
not commence until the SIAC and participant system changes have been 
effected.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received from members, Participants, or Others

    The Exchange has neither solicited nor received written comments.

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, NW., Washington, DC 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 Section, 450 Fifth Street, NW., 
Washington, DC 20549. Also, copies of such filing will be available for 
inspection and copying at the principal office of the Amex. All 
submissions should refer to File No. SR-Amex-97-14 and should be 
submitted by April 22, 1997.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\9\
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    \9\ 17 C.F.R. 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 97-8229 Filed 3-31-97; 8:45 am]
BILLING CODE 8010-01-M