[Federal Register Volume 66, Number 106 (Friday, June 1, 2001)]
[Notices]
[Pages 29848-29850]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-13754]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-44341; File No. SR-Amex-2001-17]


Self-Regulatory Organizations; Notice of Filing of Proposed Rule 
Change by the American Stock Exchange LLC Increasing Regular 
Memberships and Creating Two-Year Permits

May 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 19, 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 Amex. The Exchange 
submitted Amendment Nos. 1, 2, and 3 to the proposed rule change on May 
3, 2001,\3\ May 16, 2001,\4\ and May 18, 2001,\5\ respectively. 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\ Letter from Ivonne Natal, Assistant General Counsel, Amex, 
to Nancy Sanow, Assistant Director, Division of Market Regulation 
(``Division''), Commission, dated April 30, 2001 (``Amendment No. 
1''). Amendment No. 1 states that on April 30, 2001, a majority of 
the regular and options principal members, voting as a single class, 
voted in favor of the proposed rule change.
    \4\ Letter from Ivonne Natal, Assistant General Counsel, Amex, 
to Nancy Sanow, Assistant Director, Division, Commission, dated May 
14, 2001 (``Amendment No. 2''). Amendment No. 2 requests the 
Commission to consider the Plan on a pilot basis for a minimum of 
two years and a maximum of four years, in the event the Seat Fund 
Committee exercises its discretion to extend the Plan. Amendment No. 
2 also states that there are approximately 300 members trading 
equities on the Exchange floor.
    \5\ Letter from Ivonne Natal, Assistant General Counsel, Amex, 
to Nancy Sanow, Assistant Director, Division, Commission, dated May 
17, 2001 (``Amendment No. 3''). Amendment No. 3 clarifies that the 
administrative fee that the Amex would receive for administering the 
Plan would be $750.00 per sale/lease and that the administrative fee 
will be collected out of the sale proceeds, prior to their 
distribution to the members. Amendment No. 3 also states that Amex 
members and the Board of Governors have approved this fee.
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I. Self-Regulatory Organization's Statement of the Terms of 
Substance of the Proposed Rule Change

    The Amex proposes to increase the number of regular memberships and 
create 25 two-year permits as a result of a Regular Seat and Two-Year 
Permit Offering Plan (the ``Plan''). The text of the proposed rule 
change is set forth below. New language is in italics. Deletions are in 
brackets.

AMERICAN STOCK EXCHANGE CONSTITUTION

Article IV

Admission to Membership

Number of Regular Memberships

    SEC. 1(a)(1) Regular Membership--There shall be up to 889[864] 
regular memberships in the Exchange, inclusive of any regular 
memberships created through the options principal membership upgrade 
program. The number of regular memberships shall be increased only if 
the Board of Governors requests The Amex Membership Corporation to 
issue additional regular memberships. Any such issuance of additional 
regular memberships shall require the approval of a majority of the 
regular and options principal members voting together as a single class 
at a meeting called for the purpose of considering the request that new 
regular memberships be issued.
    (2)-(3) No change.
    (b)-(h) No change.
    (i) Two-Year Permits
    (1) There shall be maximum of twenty-five two-year permits. Two-
year permits shall expire two years from the effective date of the 
membership, but may be renewed for an additional two years at the 
discretion of the Exchange's Seat Fund Committee. Two-year permits are 
non-transferable. The price for two-year permits will be determined by 
the Exchange's Seat Fund Committee at the beginning of a 120-day 
offering period, but shall not be less than $14,000. A two-year permit 
will automatically terminate in the event the holder goes out of 
business or is delinquent in payment of dues, fines, fees, charges and 
any other financial responsibility owed to the Exchange for more than 
thirty (30) consecutive days. In the event a two-year permit holder 
goes out of business, any monies for unpaid dues, fines, fees, charges 
and any other financial responsibility due to the Exchange or any other 
creditor, will be collected by the Exchange out of the proceeds of the 
sale of the two-year permits.
    (2) Requirements for Issuance
    A two-year permit holder must:
    (i) be at least the minimum age of majority required to be 
responsible for his contracts in each jurisdiction in which he conducts 
business:
    (ii) agree that his primary occupation will be the transaction of 
business on the Floor of the Exchange in his capacity as a permit 
holder; and
    (iii) obtain a waiver letter from their clearing firms waiving 
their right to file a claim against the permit should the permit holder 
owe them money or,

[[Page 29849]]

alternatively, a guarantee from another member acceptable to the 
Exchange's Seat Fund Committee; and 
    (iv) meet such other qualifications as may be specified in the plan 
approved by the regular members of the Exchange providing for the 
offering of such permits. Applications must be approved by the Exchange 
in accordance with the provisions of Section 1(g) of this Article IV. 
No person whose application for a permit has been approved by the 
Exchange shall be admitted to the privileges thereof until he shall 
have signed the Constitution of the Exchange. By such signature he 
shall pledge himself to abide by the Constitution as the same has been 
or shall be from time to time amended and by all rules, regulations, 
requirements, orders, directions or decisions adopted or made in 
accordance therewith.
    (3) Rights and Obligations
    A two-year permit holder shall have all the rights, privileges and 
obligations of a regular member, but shall have no distribution or 
voting rights.
    (j) [i] Class C Trading Rights
    No change.
    (k) [j] New Trading Rights
    No change.
* * * * *

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 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 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
    During the last few years, volume on the trading floor of the 
Exchange has increased dramatically, while memberships have remained 
unchanged. Exchange members have identified a need for the issuance of 
additional seats.
    In response to the apparent need for additional seats and to allow 
Exchange members to remain competitive and afford customers an optimal 
level of service, the Exchange is proposing to issue 25 additional 
regular seats and 25 two-year permits pursuant to the Plan, to be 
allocated as determined by the Exchange's Seat Fund Committee 
(``Committee''). The Committee would determine the sale price for 
regular seats and two-year permits and the effective date of the Plan. 
The price for regular seats would be at least $600,000. The price for 
two-year permits would be at least $14,000, per month. Authority to 
resolve and reach a final determination on any and all issues relating 
to the administration of the Plan would be vested in the Committee.
    The Committee would be able to renew the two-year permits once for 
an additional two years, but the permits would be non-transferable. A 
two-year permit would terminate if the holder went out of business. 
Monies owed to the Exchange by a two-year permit holder who went out of 
business would be collected by the Exchange out of the proceeds of sale 
of regular seats and two-year permits under the Plan. Any regular seats 
offered but not sold would be permitted to be converted into two-year 
permits as determined by the Committee. The two-year permits would have 
no distribution or voting rights.
    All prospective seat and/or permit holders would be required to be 
approved by the Exchange prior to the sale of a seat or the transfer of 
a permit. The Exchange would receive a $750 administrative fee for each 
seat/permit for administering the sale/transfer for prospective seat/
permit owners.
    Prior to any seat sale or permit transfer, a non-member or a 
person/organization that was not currently the owner of a regular 
membership would be required to meet all requirements currently 
applicable to regular or two-year permit holders. If the purchaser of a 
seat intended to lease the seat pursuant to a special transfer 
agreement or transfer the seat to a nominee, the lessee or nominee 
would also be required to meet all Exchange requirements. All 
applicable fees due by persons/organizations that are not owners of 
regular memberships or members of the Exchange would be required to be 
paid before the sale of any seat or transfer of any permit.
    Sale proceeds will be distributed to all seat owners at a date to 
be determined by the Committee. The Ex-date for determining 
distribution of sale proceeds to owners would be the date of approval 
of the Plan by the Commission.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with section 6(b) of the Act \6\ in general and furthers the objectives 
of section 6(b)(2) \7\ in particular in that it is designed to provide 
that any registered broker or dealer or natural person associated with 
a registered broker or dealer may become a member of such exchange and 
any person may become associated with a member thereof.
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    \6\ 15 U.S.C. 78f(b).
    \7\ 15 U.S.C. 78f(b)(2).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
result in 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 Exchange 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 
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 Exchange 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 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

[[Page 29850]]

Room. Copies of the filing 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-2001-17 and should be submitted by June 
22, 2001.

    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. 01-13754 Filed 5-31-01; 8:45 am]
BILLING CODE 8010-01-M