Federal Register / Vol. 63, No. 10 / Thursday, January 15, 1998 / Notices 2437

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

2See Securities Exchange Act Release No. 33892

(April 11, 1994), 59 FR 18433 (April 18, 1994)

(release approving the Registered Options

Representative exam).

3This examination was previously referred to as

the Put and Call Option Questionnaire for Listed

Personnel.

4 In 1997 the Series 7 examination began to cover

standardized options.

5See Exchange Rule 920.

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

7 15 U.S.C. 78f(c)(3)(A).

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–39530; File No. SR–Amex–

97–45]

Self-Regulatory Organizations; Notice

of Filing and Order Granting

Accelerated Approval of Proposed

Rule Change by the American Stock

Exchange, Inc. Relating to Options

Qualification Examinations

January 8, 1998.

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

Securities Exchange Act of 1934

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

November 19, 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 and II 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 and to grant

accelerated approval on the proposed

rule change.

I. Self-Regulatory Organization’s

Statement of the Terms of Substance of

the Proposed Rule Change

The Exchange is proposing to

discontinue the use of its Listed Put and

Call Option Questionnaire for

Registered Personnel, and instead,

require affected individuals to

satisfactorily complete the Series 42

examination administered by the

National Association of Securities

Dealers, Inc. (‘‘NASD’’).2

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 statutory 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 III 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 is proposing to

discontinue its Listed Put and Call

Option Questionnaire for Registered

Personnel.3 This examination has been

administered to an Amex member or

registered employee who was registered

and approved by the Exchange prior to

1977,4 and who wishes to engage in a

public options business.5 The Listed Put

and Call Option Questionnaire had been

administered by the broker-dealer

member organization with which the

individual was associated, which would

then certify to the Exchange that the

applicant had satisfactorily completed

the examination.

The Exchange is proposing that, in

lieu of the Listed Put and Call Option

Questionnaire, members and registered

employees seeking to become qualified

to engage in a public options business,

pursuant to Exchange Rule 920(b)

satisfactorily complete the Series 42

examination administered by the NASD.

This examination is currently in use by

the NASD, and prior to the Exchange’s

proposed termination of the Listed Put

and Call Option Questionnaire, affected

individuals were able to take either of

the examinations in order to become

options qualified. The Exchange,

therefore, believes that the proposed

termination of the Listed Put and Call

Questionnaire examination will result

in greater industry-wide consistency in

the qualification testing of registered

personnel.

2. Statutory Basis

The proposed rule change is

consistent with Section 6(b) of the Act,

specifically Section 6(b)(5) in that the

proposal, in general, protects investors

and the public interest by helping to

assure member competence. In addition,

the proposal furthers the objectives of

Section 6(c)(3)(A) because it is designed

to set standards of training, experience

and competence and to examine and

verify the qualifications of its members

and associated persons of its members.

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. 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 the file number in the

caption above and should be submitted

by February 5, 1998.

IV. Commission’s Findings and Order

Granting Accelerated Approval of

Proposed Rule Change

The Commission finds that the

Exchange’s proposal is consistent with

the requirements of the Act and the

rules and regulations thereunder

applicable to a national securities

exchange. Specifically, the Commission

finds that the proposed rule change is

consistent with Section 6(b)(5) of the

Act,6 which requires that an exchange

have rule that, in general, protect

investors and the public interest.

Moreover, the Commission finds the

proposed rule change consistent with

Section 6(c)(3)(A) of the Act 7 in that the

proposal is designed to ensure that

members, and those persons associated

with members, meet certain standards of

training, experience and competence.

The Commission believes that

replacing the Listed Put and Call Option

Questionnaire for Registered Personnel

with the NASD’s series 42 will provide

more consistency in educating and

examining for competence for those

who wish to engage in a public options
2438 Federal Register / Vol. 63, No. 10 / Thursday, January 15, 1998 / Notices

8 15 U.S.C. 78s(b)(2).

9 17 CFR 200.30–3(a)(12).

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

2 17 CFR 240.19b–4.

3Amendment No. 1 discusses the composition of

the trust securities, the basis for the mandatory

termination date of the Trust, applicable trading

halt procedures, and applicable equity rules. See

letter from Michael Cavalier, Associate General

Counsel, Legal and Regulatory Policy, Amex, to

Sharon Lawson, Senior Special Counsel, Market

Regulation, Commission, dated December 3, 1997.

4See Securities Exchange Act Release No. 31591

(December 11, 1992), 57 FR 60253 (December 18,

1992) (‘‘SPDRs Order’’).

5 ‘‘PDRs’’ is a service mark of PDR Services Corp.

6See SPDRs Order, supra note 4.

7See Securities Exchange Act Release No. 35534

(March 24, 1995), 60 FR 16686 (March 31, 1995).

‘‘Standard & Poor’s 500,’’ ‘‘Standard & Poor’s

MidCap 400 Index,’’ ‘‘Standard & Poor’s Depositary

Receipts,’’ ‘‘SPDRs,’’ ‘‘Standard & Poor’s MidCap

400 Depositary Receipts’’ and ‘‘MidCap SPDRs’’ are

trademarks of The McGraw-Hill Companies, Inc.

and are being used by the Exchange and the

Sponsor under license among Standard & Poor’s, a

division of The McGraw-Hill Companies, Inc., the

Exchange and the Sponsor. ‘‘SPDRs’’ and ‘‘MidCap

SPDRs’’ are not sponsored, endorsed, sold, or

promoted by S&P, and S&P makes no representation

regarding the advisability of investing in SPDRs or

MidCap SPDRs.

8 ‘‘Dow Jones Industrial AverageSM,’’ ‘‘DJIASM,’’

‘‘Dow JonesSM’’ and ‘‘DIAMONDS’’ are each

trademarks and service marks of Down Jones &

Company, Inc. (‘‘Dow Jones’’) and have been

licensed for use for certain purposes by the

Exchange and the Sponsor. DIAMONDS are not

sponsored, endorsed, sold or promoted by Dow

Jones, and Dow Jones makes no representation

regarding the advisability of investing in such

product.

9The description of the DJIA included herein is

based on materials prepared by Dow Jones and

submitted by Amex in its proposed rule filing.

10A price-weighted index is an index in which

component stocks are weighted according to their

price.

11Currently, the divisor is recalculated after the

close of business on the day prior to the occurrence

business. The Listed Put and Call

Option Questionnaire and the Series 42

both consist of 50 multiple choice

questions. The Series 42, however, has

a question bank of 307 questions so a

person who has failed the exam is

unlikely to receive the same series of

questions upon re-testing, thereby

assuring that an individual is properly

tested for his competency in the subject

matter. Moreover, the Commission

believes that because the Series 42 is

only given at designated and secured

testing sites the integrity of the

examination process is protected.

The Commission therefor finds good

cause for approving the proposed rule

change (SR–Amex–97–45) prior to the

thirtieth day after date of publication of

notice thereof in the Federal Register.

It is Therefore Ordered, pursuant to

Section 19(b)(2),8 that the proposed rule

change be, and hereby is, approved.

For the Commission by the Division of

Market Regulation, pursuant to delegated

authority.9

Jonathan G. Katz,

Secretary.

[FR Doc. 98–1038 Filed 1–14–98; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–39525; File No. SR–Amex–

97–29]

Self-Regulatory Organizations;

American Stock Exchange, Inc.; Order

Granting Approval and Notice of Filing

and Order Granting Accelerated

Approval of Amendment No. 1 to the

Proposed Rule Change Relating to

Listing and Trading of DIAMONDSSM

Trust Units

January 8, 1998.

I. Introduction

On August 11, 1997, 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

list and trade under Amex Rules 1000

et seq. DIAMONDSSM, units of

beneficial interest in the DIAMONDS

Trust. In addition, the Exchange

proposes to adopt Amex Rule 1005,

‘‘Down Jones Indexes,’’ relating to

license and warranty issues.

Notice of the proposed rule change,

together with the substance of the

proposal, was published for comment in

Securities Exchange Act Release No.

39143 (September 29, 1997), 62 FR

51917 (October 3, 1997). No comments

were received on the proposal. The

Exchange filed Amendment No. 1 to the

proposed rule filing on December 3,

1997.3 This order approves the

proposed rule filing as amended.

II. Description

On December 11, 1992,4 the

Commission approved Amex Rules 1000

et seq. to accommodate trading on the

Exchange of Portfolio Depositary

Receipts (‘‘PDRsSM’’), securities which

represent interests in a unit investment

trust (‘‘Trust’’) operating on an open-end

basis and that hold a portfolio of

securities. The Trust sponsor

(‘‘Sponsor’’) for each series of PDRs is

PDR Services Corporation, a whollyowned subsidiary of Amex.5 Each Trust

is intended to provide investors with an

instrument that closely tracks the

underlying securities portfolio, that

trades like a share of common stock, and

that pays to PDR holders periodic

dividends proportionate to those paid

with respect to the underlying portfolio

of securities, less certain expenses, as

described in the applicable Trust

prospectus. The first Trust to be formed

in connection with the issuance of PDRs

was based on the Standard & Poor’s 500

Index (‘‘S&P 500 Index’’), known as

Standard & Poor’s Depositary Receipts

(‘‘SPDRs’’), which have been trading on

the Exchange since January 29, 1993.6 In

1995, the Commission approved Amex’s

listing and trading of PDRs based on the

Standard & Poor’s MidCap 400 IndexTM

(‘‘MidCap SPDRs’’).7

The Exchange now proposes to list

and trade under Rules 1000 et seq.

DIAMONDSSM, units of beneficial

interest in the DIAMONDS Trust.8 The

Sponsor will enter into a trust

agreement with the Trustee, State Street

Bank and Trust Company, in accordance

with Section 26 of the Investment

Company Act of 1940 (‘‘1940 Act’’). A

distributor will act as underwriter of

DIAMONDS on an agency basis. All

orders to create DIAMONDS in Creation

Unit size aggregations must be placed

with the distributor, and it will be the

responsibility of the distributor to

transmit such orders to the Trustee. The

distributor is a registered broker-dealer,

and a member of the National

Association of Securities Dealers, Inc.

The Dow Jones Industrial Average 9

The DJIA is a price-weighted stock

index consisting of 30 stocks traded on

the New York Stock Exchange

(‘‘NYSE’’).10 The DJIA is called an

‘‘average’’ because originally it was

calculated by adding up the component

stock prices and then dividing by the

number of stocks. The method remains

the same today, but the divisor (the

number that is divided into the total of

the stock prices) has been increased to

eight significant digits to minimize

distortions due to rounding. The DJIA

divisor is adjusted due to corporate

actions that change the price of any of

its component shares. The most frequent

reason for such an adjustment is a stock

split. For example, suppose a company

in the DJIA issues one new share for

each share outstanding. After this twofor-one ‘‘split,’’ each share of stock is

worth half what it was immediately

before, other things being equal. But

without an adjustment in the divisor,

this split would produce a distortion in

the DJIA. An adjustment must be made

to compensate so that the ‘‘average’’ will

remain unchanged. At Dow Jones, this

adjustment is handled by changing the

divisor.11