1936 Federal Register / Vol. 62, No. 9 / Tuesday, January 14, 1997 / Notices

3 15 U.S.C. § 78s(b)(3)(A).

4 17 CFR 19b–4(e).

5 17 CFR 200.30–3(a)(12).

1An ‘‘approved person’’ is a person or entity that

controls a member or member organization or that

is engaged in a securities or kindred business and

is controlled by or under common control with a

member or member organization. See Article I,

Section 3(g) of the Exchange Constitution.

2The approved persons of Exchange specialists

may obtain relief from the restrictions of Rule

950(n) by establishing an Exchange approved

information barrier pursuant to Rule 193. In

practice, however, it has generally proven

impractical for all but the largest broker-dealers to

establish information barriers that would satisfy the

requirements of Rule 193.

3Chicago Board Option Exchange Rule 8.81(a),

Pacific Stock Exchange Rule 6.83(a), Philadelphia

Stock Exchange Rule 1020(e).

III. Date of Effectiveness of the

Proposed Rule Change and Timing for

Commission Action

The foregoing rule change establishes

or changes a due, fee or other charge

imposed by the Exchange and therefore,

has become effective pursuant to

Section 19(b)(3)(A) of the Act 3 and

subparagraph (e) of Rule 19b–4 4

thereunder. At any time within 60 days

of the filing of such proposed fee

change, the Commission may summarily

abrogate such fee change if it appears to

the Commission that such action is

necessary or appropriate in the public

interest, for the protection of investors,

or otherwise in furtherance of the

purposes of the Act.

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 fee change that are

filed with the Commission, and all

written communications relating to the

fee 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, DC.

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–96–48 and should be

submitted by January 27, 1997.

For the Commission by the Division of

Market Regulation, pursuant to delegated

authority.5

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 97–807 Filed 1–13–97; 8:45 am]

BILLING CODE 8010–01–M

[Release No. 34–38128; File No. SR–AMEX–

96–46]

Self-Regulatory Organizations; Notice

of Filing of Proposed Rule Change by

the American Stock Exchange, Inc.

Relating to Amending Rule 170 to

Permit Options Specialist

Organizations and Their Approved

Persons to Engage in Market Making

Activities on Other Options Exchanges

in the Options in Which They Are

Registered on the AMEX

January 6, 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 November 27,

1996, 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 selfregulatory 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 proposes to amend

Exchange Rule 950(n) to permit options

specialist organizations and their

approved persons to engage in market

making activities on other options

exchanges in the options in which they

are registered on the AMEX.

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

Exchange Rule 950(n) currently

prohibits AMEX options specialists and

their ‘‘approved persons’’ 1 from

effecting transactions in specialty

options except insofar as reasonably

necessary to satisfy their specialist

obligations on the Exchange. Thus,

among its several consequences, Rule

950(n) prohibits an AMEX specialist

organization and its approved persons

from acting as a market maker in a

specialty option on the floor of another

options market.2 The other options

exchanges have rules that are similar to

AMEX Rule 950(n) with respect to

persons that perform functions similar,

or identical, to those of a specialist.3

However, it is the Exchange’s

understanding that not all those markets

interpret their rules in the same manner

as the AMEX. Thus, the Exchange has

observed Registered Options Traders

(‘‘ROTs’’) on its Floor trading as market

makers in options in which affiliates of

such ROTs perform a specialist function

on another exchange.

The restrictions on the trading

activities of options specialists and their

approved persons have their origin in

the Exchange’s and the New York Stock

Exchange’s equity trading rules. The

AMEX extended these restrictions to

listed options at the outset of the

Exchange’s option program in the mid1970s in order to expeditiously

commence trading options using a

combination specialist/competitive

market maker system. While these

restrictions reflect historical regulatory

concerns, the federal securities laws do

not require that trading by specialists

and their approved persons in specialty

securities should be limited to that

necessary to the specialist function on

any one market. In many respects,

moreover, the policy reasons behind the

trading restrictions on equity specialists

are not compelling in the context of

options due to the derivative pricing of

these securities. In addition, the

limitations contained in Rule 950(n) on

principal trading by the affiliates of

options specialists predate multiple

trading of listed options. When you add

to these factors the extraordinary level

of self-regulatory organization

surveillance of specialists and market

makers, the Exchange believes that the
Federal Register / Vol. 62, No. 9 / Tuesday, January 14, 1997 / Notices 1937

4As proposed, these policies and procedures will

not be subject to pre-approval by the Exchange.

Telephone conversation between Bill Floyd-Jones,

Assistant General Counsel, AMEX, and Heather

Seidel, Attorney, Division of Market Regulation,

Commission, on January 2, 1997.

5See Broker-Dealer Policies and Procedures

Designed to Segment the Flow and Prevent the

Misuse of Material Nonpublic Information,

Securities and Exchange Commission Division of

Market Regulation, March 1990.

6 15 U.S.C. 78f(b)(5) 7 17 CFR 200.30–3(a)(12). 1 15 U.S.C. § 78s(b)(1).

prophylactic restrictions on trading

represented by Rule 950(n) are not

essential to ensure compliance with

standards of fair dealing.

For the foregoing reasons, the

Exchange believes that it is appropriate

to permit Exchange specialist

organizations and their affiliates to

engage in market making in specialty

options on the floor of other options

exchanges. This measure will eliminate

a regulatory disparity between the rules

of the Exchange and other markets. To

ensure that specialist organizations and

their affiliates do not intentionally trade

ahead of, or otherwise disadvantage,

orders on the AMEX limit order book,

the Exchange will require any AMEX

member organization that seeks to act as

a market maker on the floor of another

options exchange in an option in which

they are a specialist on the AMEX to

implement policies and procedures

designed to prevent the misuse of

information regarding limit orders on

the AMEX limit order book.4 These

policies and procedures will not have to

conform to the specific requirements of

Rule 193. Instead, the Exchange

proposes to adopt the approach used by

Congress in enacting Sections 15(f) and

21A of the Act, and by the Commission

in adopting Rule 14(e)(3) under the Act,

which require firms to adopt

information barriers, but do not legislate

the design of these internal controls.5

The Exchange believes that specialist

firms and their affiliates should have the

ability (subject to Exchange oversight) to

structure information barriers that are

appropriate to the structure of their

firms.

2. Statutory Basis

The proposed rule change is

consistent with Section 6(b) of the Act

in general and furthers the objectives of

Section 6(b)(5) 6 in particular in that it

is designed to prevent fraudulent and

manipulative acts and practices,

promote just and equitable principles of

trade, remove impediments to and

perfect the mechanism of a free and

open market and a national market

system, and, in general, protect

investors and the public interest.

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 sand 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

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–96–46 and should be

submitted by January 27, 1997.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.7

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 97–862 Filed 1–13–97; 8:45 am]

BILLING CODE 8010–01–M

[Release No. 34–38125; File No. SR–CHX–

96–32]

Self-Regulatory Organizations; Notice

of Filing and Immediate Effectiveness

of Proposed Rule Change Relating to

a Fee Waiver by the Chicago Stock

Exchange, Incorporated

January 6, 1997.

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

Securities Exchange Act of 1934 (the

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

December 17, 1996, 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 proposes to waive

certain member charges in its

Membership Dues and Fees Schedule.

Specifically, the Exchange proposes to

waive all membership dues for the

month of December. The Exchange also

proposes to waive all floor telephone

booth and post space charges for the

fourth quarter of 1996 (i.e., October,

November and December).

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.