[Federal Register Volume 66, Number 83 (Monday, April 30, 2001)]
[Notices]
[Pages 21421-21423]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-10609]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-44211; File No. SR-AMEX-2001-14]


Self-Regulatory Organizations; Notice of Filing of a Proposed 
Rule Change by the American Stock Exchange LLC Relating to Members' 
Written Proposals to List Equity Option Classes

April 23, 2001.
    Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on March 8, 2001, the American Stock Exchange LLC (``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 Exchange. The 
Exchange submitted an amendment to the proposed rule change on April 
17, 2001.\3\ The Commission is publishing this notice to solicit 
comments on the proposed rule change, as amended, from interested 
persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ <IT>See <RM>letter from Claire P. McGrath, Vice President 
and Special Counsel, Derivative Securities, Amex, to Elizabeth King, 
Associate Director, Division of Market Regulation, Commission, dated 
April 16, 2001 (``Amendment No. 1''). Amendment No. 1 revises 
proposed Commentary .08 to Amex Rule 915 to require the Amex to 
maintain a record of any bona fide business considerations it relies 
upon in denying or placing limitations or conditions upon a proposed 
listing.
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I. Self-Regulatory Organization's Statement of the Terms of 
Substance of the Proposed Rule Change

    The Amex proposes to adopt Commentary .08 to Amex Rule 915 to 
provide procedures for members to submit written proposals requesting 
the listing for trading on the Amex of any equity option class. The 
text of the proposed rule change is set forth below. All language is 
being added.
* * * * *

Rule 915  Criteria for Underlying Securities

* * * * *

Commentary

* * * * *
    <IT>.08  Members or member organizations may submit written 
proposals requesting the Exchange to review listing and trading any 
equity option class. The written proposal should include a discussion 
of how the proposed option and its underlying security comply with the 
criteria set forth in paragraph (a) below and with the considerations 
set forth in paragraph (b). Written proposals received prior to 1:00 
p.m. will be considered to be received on that business day and 
proposals received after 1:00 p.m. will be deemed to have been received 
on the next business day.
    (a) Listing Criteria--To be eligible to be considered for listing 
on the Exchange, the underlying security must meet the criteria and 
guidelines set forth in Rule 915 and its Commentary for options on 
equity securities.
    (b) Listing Considerations--In determining whether to list and 
trade an option class proposed pursuant to Commentary, the Exchange may 
consider any or all of the following factors:
    (i) If the proposed option is already traded on another exchange, 
the consolidated trading volume and trends in such volume over near and 
long-term;
    (ii) The level and nature of the share and/or trade volume for the 
underlying security and trends in such volume over near and long-term;
    (iii) If the underlying security is listed (or is a prospective 
listed security) on the Amex, or an affiliated of the Amex, the views 
of the issuer of such security;
    (iv) The price, price volatility, and spread of the underlying 
security, its ``short interest'' (i.e., the total amount of the 
underlying equity security that has been sold short and has not yet 
been repurchased to close out short positions in the security) and the 
ability of members and investors to borrow the underlying security;
    (v) The industry the underlying security represents in order to: 
(i) maintain diversity among various industries and issuers selected 
for options trading; or (ii) provide investors with the ability to use 
standardized options in industry sectors with growing and developing 
investor interest; and
    (vi) The impact the listing could have on bona fide strategies or 
businesses of the Exchange or any of its affiliates.
    The Exchange shall review and make a determination regarding a 
member's listing proposal within twenty-five days of receipt of the 
proposal. If the determination is not to list the proposed option class 
or to limit or condition the listing of the option in any way, then the 
Exchange shall, in writing within the twenty-five day period, inform 
the member submitting the proposal the basis for denial of the proposal 
or the basis for any limitation or condition put on its acceptance. If 
the Exchange relies upon the impact the listing could have on bona fide 
strategies or businesses of the Exchange or its affiliates as a factor 
for denying, limiting or conditioning the proposed listing, the 
Exchange shall maintain a record of the bona fide business or strategic 
considerations supporting its decision.
    These procedures will not alter or have any impact on the 
Exchange's rules, procedures or decisions for allocating and/or 
reallocating to a specialist unit those options the Exchange determines 
to list and trade.
    In addition, the Exchange's interpretation regarding threats, 
harassment and retaliation set forth in Rule 16, Commentary .01 shall 
apply to the listing proposals made by members pursuant to this 
Commentary .08.
<RM>* * * * *

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 Amex 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

[[Page 21422]]

statements may be examined at the places specified in Item IV below. 
The Amex 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 proposes to adopt Commentary .08 to Amex Rule 915 to 
provide procedures for members to submit written proposals requesting 
the listing for trading on the Exchange of any equity option class.\4\ 
Commentary .08 would require the underlying security to meet the 
criteria and guidelines set forth in Amex Rule 915 and its Commentary 
before it can be considered for listing on the Exchange. The written 
proposal would be required to include a discussion of how the proposed 
listing complies with the criteria set forth in Amex Rule 915 and its 
Commentary and the factors set forth below. If a proposal is submitted 
after 1:00 p.m. on a business day, it would be considered submitted on 
the following business day. If the underlying security meets the 
eligibility criteria and guidelines, the Exchange would consider the 
following factors in determining to list the proposed option:
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    \4\ As part of a settlement of an enforcement action by the 
Commission, four of the five options exchanges, including the Amex, 
are required to adopt rules to codify listing procedures to be 
carried out when a member or member organization requests the 
exchange to list options not currently trading on the exchange. 
<IT>See <RM>Order Instituting Public Administrative Proceeding 
Pursuant to Section 19(h)(1) of the Securities Exchange Act of 1934, 
Making Findings and Imposing Remedial Sanctions, Securities Exchange 
Act Release No. 43268 (September 11, 2000).
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    <bullet> If the proposed option is already traded on another 
exchange, the consolidated trading volume and trends in such volume 
over the near and long-term;
    <bullet> The level and nature of the share and/or trade volume for 
the underlying security and trends in such volume over the near and 
long-term;
    <bullet> If the underlying security is listed (or is a prospective 
listed security) on the Exchange, or on an affiliate of the Exchange, 
the views of the issuer of such security;
    <bullet> The price, price volatility, and spread of the underlying 
security, its ``short interest'' (<IT>i.e., <RM>the total amount of the 
underlying equity security that has been sold short and has not yet 
been repurchased to close out short positions in the security) and the 
ability of members and investors to borrow the underlying security.
    <bullet> The industry the underlying security represents in order 
to: (i) Maintain diversity among various industries and issuers 
selected for options trading; or (ii) provide investors with the 
ability to use standardized options in industry sectors with growing 
and developing investor interest; and
    <bullet> The impact the listing could have on bona fide strategies 
or businesses of the Exchange or any of its affiliates. The Amex would 
be required to maintain a record of any bona fide business 
considerations it relies upon in denying or placing limitations or 
conditions upon a proposed listing.\5\
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    \5\ <IT>See <RM>Amendment No. 1, <IT>supra <RM>note 3.
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    The Exchange would be required to review and make a determination 
regarding a member's listing proposal within 25 days of receipt of the 
proposal. If the Exchange decides not to list the proposed option class 
or to limit or condition the listing of the option in any way, the 
Exchange would be required, in writing and within the 25 day period, to 
inform the member of the basis for denial of the proposal or the basis 
for any limitation or condition put on its acceptance.
    The proposed rule change would not limit the Exchange's right on 
its own determination to research, identify, and propose to the Stock 
Selection Committee, as it does today, the listing of options on 
securities that meet the listing criteria set forth in Amex Rule 915 
and its Commentary. The proposed procedures would not alter or have any 
impact on the Exchange's rules, procedures or decisions for allocating 
and/or reallocating to a specialist unit those options the Exchange 
determines to list. In addition, proposed Commentary .08 would 
reference the anti-harassment rule set forth in Amex Rule 16, 
Commentary .01, to prohibit threats, harassment, and retaliation 
against any person or entity making or advocating a listing proposal or 
beginning to make markets in any option class on any exchange or other 
market.
2. Statutory Basis
    The Exchange believes that the proposed rule change, as amended, is 
consistent with section 6(b) of the Act \6\ in general and furthers the 
objectives of section 6(b)(5) \7\ in particular in that it is designed 
to promote just and equitable principles of trade, remove impediments 
to a free and open market and a national market system, and protect 
investors and the public interest.
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    \6\ 15 U.S.C. 78f(b).
    \7\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Amex does not believe that the proposed rule change, as 
amended, will impose any burden on competition that is not necessary or 
appropriate in furtherance of the purposes of the Act.

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

    The Amex did not solicit or receive written comments on 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 
<CS>Federal Register <RM>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 Amex 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, including whether the proposed rule 
change, as amended, is consistent with the Act. Persons making written 
submissions should file six copies thereof with the Secretary, 
Securities and Exchange Commission, 450 Fifth Street, NW., Washington, 
DC 20549-0609. 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. Copies of such 
filings will also be available for inspection and copying at the 
principal office of the Amex. All submissions should refer to the File 
No. SR-Amex-2001-14 and should be submitted by May 21, 2001.


[[Page 21423]]


    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\8\
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    \8\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 01-10609 Filed 4-27-01; 8:45 am]
BILLING CODE 8010-01-M