Federal Register / Vol. 66, No. 121 / Friday, June 22, 2001 / Notices 33585

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

2 17 CFR 240.19b–4.

3The S&P Industrial Index is a subset of the S&P

500 Index consisting of the largest 400 industrial

stocks of the S&P 500. The S&P Industrial Index is

calculated by starting with the S&P 500 Index and

then excluding financial, utility and transportation

stocks.

4As of May 31, 2001, the portfolio of securities

comprising the Industrial 15 Index are: Albertson’s

Inc.; ALLTEL Corporation; Avery Dennison

Corporation; Bristol-Myers Squibb Company; The

Clorox Company; ConAgra, Inc.; Emerson Electric

Co.; Hershey Food Corporation; The Gillette

Company; Johnson Controls, Inc.; The Mays

Department Stores Company; Newell Rubbermaid

Inc.; Pitney Bowes Inc.; Rohm and Haas Company;

and Textron Inc. Telephone conversation between

Jeffrey P. Burns, Senior Counsel, Amex, and Sapna

C. Patel, Attorney, Division of Market Regulation,

Commission, on June 15, 2001.

The portfolio of securities will include the fifteen

highest dividend yielding stocks from a group of

certain stocks in the S&P Industrial Index for that

year and the Amex will not have any discretion in

the selection process.

5See Securities Exchange Act Release No. 27753

(March 1, 1990), 55 FR 8626 (March 8, 1990) (order

approving File No. SR–Amex–89–29).

6Subject to the criteria in the prospectus

regarding the construction of the Index, the

Exchange has sole discretion regarding changes to

the Index due to annual reconstitutions and

adjustments to the Index and the multipliers of the

individual components.

7The initial listing standards for Industrial 15

Notes require: (1) A minimum public distribution

of one million units; (2) a minimum of 400

shareholders; (3) a market value of at least $4

million; and (4) a term of at least one year. In

addition, the listing guidelines provide that the

issuer have assets in excess of $100 million,

stockholder’s equity of at least $10 million, and pretax income of at least $750,000 in the last fiscal year

or in two of the three prior fiscal years. In the case

of an issuer which is unable to satisfy the earning

criteria stated in Section 101 of the Company

Guide, the Exchange will require the issuer to have

the following: (1) Assets in excess of $200 million

and stockholders’ equity of at least $10 million; or

(2) assets in excess of $100 million and

stockholders’ equity of at least $20 million.

8The Exchange’s continued listing guidelines are

set forth in Sections 1001 through 1003 of Part 10

to the Exchange’s Company Guide. Section 1002(b)

of the Company Guide states that the Exchange will

consider removing from listing any security where,

in the opinion of the Exchange, it appears that the

extent of public distribution or aggregate market

value has become so reduced to make further

dealings on the Exchange inadvisable. With respect

to continued listing guidelines for distribution of

the Industrial 15 Notes, the Exchange will rely, in

part, on the guidelines for bonds in Section

1003(b)(iv). Section 1003(b)(iv)(A) provides that the

Exchange will normally consider suspending

dealings in, or removing from the list, a security if

the aggregate market value or the principal amount

of bonds publicly held is less than $400,000.

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–44437; File No. SR–Amex–

2001–39]

Self Regulatory Organizations; Notice

of Filing and Order Granting

Accelerated Approval of a Proposed

Rule Change by the American Stock

Exchange LLC Relating to the Listing

and Trading of Industrial 15 Notices

June 18, 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 June 8,

2001, the American Stock Exchange LLC

(‘‘Amex’’ or ‘‘Exchange’’) filed with the

Securities and Exchange Commission

(‘‘SEC’’ or ‘‘Commission’’) the proposed

rule change as described in Items I and

II below, which Items have been

prepared by the Exchange. The

Commission is publishing this notice to

solicit comments on the proposed rule

change from interested persons and is

approving the proposal on an

accelerated basis.

I. Self-Regulatory Organization’s

Statement of the Terms of Substance of

the Proposed Rule Change

The Amex proposes to list and trade

notes, the return on which is based

upon an equal-dollar weighted portfolio

of securities representing the fifteen

highest dividend yielding stocks from a

group of certain stocks in the Standard

& Poor’s (‘‘S&P’’) Industrial Index 3 from

year to year that meet the additional

criteria set forth below (the ‘‘Industrial

15 Index’’ or ‘‘Index’’).4

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 III below. The Exchange 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

Under section 107A of the Amex

Company Guide (‘‘Company Guide’’),

the Exchange may approve for listing

and trading securities which cannot be

readily categorized under the listing

criteria for common and preferred

stocks, bonds, debentures, or warrants.5

The Amex proposes to list for trading

under section 107A of the Company

Guide notes based on the Industrial 15

Index (the ‘‘Industrial 15 Notes’’ or

‘‘Notes’’). The Industrial 15 Index will

be determined, calculated, and

maintained solely by the Amex.6

The Industrial 15 Notes will conform

to the initial listing guidelines under

Section 107 7 and continued listing

guidelines under sections 1001–1003 8

of the Company Guide. Industrial 15

Notes are senior non-convertible debt

securities of Merrill Lynch & Co., Inc.

(‘‘Merrill Lynch’’). The Industrial 15

Notes will have a term of not less than

one nor more than ten years. Industrial

15 Notices will entitle the owner at

maturity to receive an amount based

upon the percentage change between the

‘‘Starting Index Value’’ and ‘‘Ending

Index Value’’ (the ‘‘Redemption

Amount’’). The ‘‘Starting Index Value’’

is the value of the Industrial 15 Index

on the date on which the issuer prices

the Industrial 15 Notes issue for the

initial offering to the public. The

‘‘Ending Index Value’’ is the value of the

Industrial 15 Index over a period shortly

prior to the expiration of the Industrial

15 Notes. The Ending Index Value will

be used in calculating the amount

owners will receive upon maturity. The

Industrial 15 Notes will not have a

minimum principal amount that will be

repaid and, accordingly, payments on

the Notes prior to or at maturity may be

less than the original issue price of the

Industrial 15 Notes. During the

designated month each year, the

investors may have the right to require

the issuer to repurchase the Industrial

15 Notes at a redemption amount based

on the value of the Industrial 15 Index

at such repurchase date. Industrial 15

Notes are not callable by the issuer.

Industrial 15 Notes are cash-settled in

U.S. dollars and do not give the holder

any right to receive a portfolio security

or any other ownership right or interest

in the portfolio securities, although the

return on the investment is based on the

aggregate portfolio value of the

securities comprising the Industrial 15

Index.

The Industrial 15 Index will consist of

a portfolio of the fifteen qualifying

stocks (the ‘‘Qualifying Stocks’’) with

the highest dividend yields at the time

of initial composition or any

reconstitution of the Industrial 15 Index.

‘‘Qualifying Stocks’’ are those stocks

from the S&P Industrial Index that are

(1) in the top 75% of the Index, as

measured by market capitalization after

elimination of stocks included in the

Dow Jones Industrial Average (‘‘DJIA’’),

and (2) have an S&P Common Stock

Ranking of A or A+.

Components of the Industrial 15

Index approved pursuant to this filing

33586 Federal Register / Vol. 66, No. 121 / Friday, June 22, 2001 / Notices

9At the end of each day, the Industrial 15 Index

will be reduced by a pro rata portion of the annual

index adjustment factor, expected to be 1.5% (i.e.,

1.5%/365 days=0.0041% daily). This reduction to

the value of the Index will reduce the total return

to investors upon the exchange or at maturity. The

Amex represents that an explanation of this

deduction will be included in any marketing

materials, fact sheets, or any other materials

circulated to investors regarding the trading of this

product.

10The Exchange will publish a notice to advise

investors of changes to the securities underlying the

Index if any such changes are made following an

annual reconstitution.

11 If the issuer of a component security in the

Industrial 15 Index issues to all of its shareholders

publicly traded stock of another issuer, such new

securities will be added to the portfolio comprising

the Industrial 15 Index until the subsequent

anniversary date. The multiplier for the new

component will equal the product of the original

issuer’s multiplier and the number of shares of the

new component issued with respect to one share of

the original issuer.

will meet the following criteria: (1) A

minimum market value of at least $75

million, except that up to 10% of the

component securities in the Industrial

15 Index may have a minimum market

value of $50 million; (2) average

monthly trading volume in the last six

months of not less than 1,000,000

shares, except that up to 10% of the

component securities in the Industrial

15 Index may have an average monthly

trading volume of 500,000 shares or

more in the last six months; (3) 90% of

the Industrial 15 Index’s numerical

value and at least 80% of the total

number of component securities will

meet the then current criteria for

standardized option trading set forth in

Exchange Rule 915; and (4) all

components stocks will either be listed

on the Amex, the New York Stock

Exchange, Inc. (‘‘NYSE’’), or traded

through the facilities of the National

Association of Securities Dealers

Automated Quotation System

(‘‘NASDAQ’’) and reported National

Market System securities.

As of May 31, 2001, the market

capitalization of the securities that

would represent the Industrial 15 Index

would range from a high of $105.4

billion to a low to $6.1 billion. The

average monthly trading volume of

those same securities for the last six

months, as of the same date, ranged

from a high of 107.8 million shares to

a low of 8.9 million shares. Moreover,

as of May 31, 2001, all of the securities

that would comprise the Industrial 15

Index were eligible for standardized

options trading pursuant to Amex Rule

915.

At the outset, each of the securities in

the Industrial 15 Index will represent

approximately an equal percentage of

the Starting Index Value. Specifically,

each security included in the portfolio

will be assigned a multiplier on the date

of issuance so that the security

represents approximately an equal

percentage of the value of the entire

portfolio underlying the Industrial 15

Index on the date that the Industrial 15

Notes are priced for initial sale to the

public. The multiplier indicates the

number of shares (or fraction of one

share) of a security, given its market

price on an exchange or through

NASDAQ, to be included in the

calculation of the portfolio.

Accordingly, initially each of the fifteen

companies included in the Industrial 15

Index will represent approximately

6.67% of the total portfolio at the time

of issuance. The Industrial 15 Index will

initially be set to provide a benchmark

value of 100.00 at the close of trading

on the day the Notes are priced for

initial sale to the public.

The value of the Industrial 15 Index

at any time will equal: (1) The sum of

the products of the current market price

for each stock underlying the Industrial

15 Index and the applicable share

multiplier, plus (2) an amount reflecting

current calendar quarter dividends, and

less (3) a pro rata portion of the annual

index adjustment factor.9 Current

quarter dividends for any day will be

determined by the Amex and will equal

the sum of each dividend paid by the

issuer on one share of stock underlying

the Industrial 15 Index during the

current calendar quarter multiplied by

the share multiplier applicable to such

stock on the ex-dividend date.

As of the first day of the start of each

calendar quarter, the Amex will allocate

the current quarter dividends as of the

end of the immediately preceding

calendar quarter to each then

outstanding components of the

Industrial 15 Index. The amount of the

current quarter dividends allocated to

each stock will equal the percentage of

the value of such stock contained in the

portfolio of securities comprising the

Industrial 15 Index relative to the value

of the entire portfolio based on the

closing market price of such stock on

the last day in the immediately

preceding calendar quarter. The share

multiplier of each stock will be

increased to reflect the number of

shares, or portion of a share, that the

amount of the current quarter dividend

allocated to each stock can purchase of

each stock based on the closing market

price on the last day in the immediate

preceding calendar quarter.

As of the close of business on each

anniversary date (anniversary of the

date of the initial issuance of Industrial

15 Notes) through the applicable

anniversary date in the year preceding

the maturity of the Notes, the portfolio

of securities comprising the Industrial

15 Index will be reconstituted by the

Amex so as to include the fifteen

Qualifying Stocks in the S&P Industrial

Index having the highest dividend yield

on the second scheduled index business

day prior to such anniversary date. The

Exchange will announce such changes

to investors at least one day prior to the

anniversary date.10

The portfolio will be reconstituted

and rebalanced on the anniversary date

so that each stock in the Industrial 15

Index will represent 6.67% of the value

of the Industrial 15 Index. To effectuate

this, the share multiplier for each new

stock will be determined by the Amex

and will indicate the number of shares

or fractional portion thereof of each new

stock, given the closing market price of

such new stock on the anniversary date,

so that each new stock represents an

equal percentage of the Industrial 15

Index value at the close of business on

such anniversary date. For example, if

the Industrial 15 Index value at the

close of business on an anniversary date

was 150, then each of the fifteen new

stocks comprising the Industrial 15

Index would be allocated a portion of

the value of the Index equal to 10, and

if the closing market price of one such

new stock on the anniversary date was

20, the applicable share multiplier

would be 0.5. Conversely, if the

Industrial 15 Index value was 60, then

each of the fifteen new stocks

comprising the Industrial 15 Index

would be allocated a portion of the

value of the Industrial 15 Index equal to

4, and if the closing market price of one

such new stock on the anniversary was

20, the applicable share multiplier

would be 0.2. The last anniversary date

on which such reconstitution will occur

will be the anniversary date in the year

preceding the maturity of the Notes. As

noted above, investors will receive

information on the new portfolio of

securities comprising the Industrial 15

Index at least one day prior to each

anniversary date.

The multiplier of leach component

stock in the Industrial 15 Index will

remain fixed unless adjusted for

quarterly dividend adjustments, annual

reconstitutions or certain corporate

events, such as payment of a dividend

other than an ordinary cash dividend, a

distribution of stock of another issuer to

its shareholders,11 stock split, reverse

stock split, and reorganization.

The multiplier of each component

stock may be adjusted, if necessary, in

the event of a merger, consolidation,

dissolution or liquidation of an issuer or

in certain other events such as the

distribution of property by an issuer to

Federal Register / Vol. 66, No. 121 / Friday, June 22, 2001 / Notices 33587

12Amex Rule 411 requires that every member,

member firm or member corporation use due

diligence to learn the essential facts relative to

every customer and to every order or account

accepted.

13See Amex Rule 462 and Section 107B of the

Company Guide.

14 15 U.S.C. 78f(b).

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

16 Id.

17See Securities Exchange Act Release Nos.

44342 (May 23, 2001), 66 FR 29613 (May 31, 2001)

(accelerated approval order for the listing and

trading of Select Ten Notes); 42582 (March 27,

2000), 65 FR 17685 (April 4, 2000) (accelerated

approval order for the listing and trading of notes

linked to a basket of no more than twenty equity

securities) (File No. SR–Amex–99–42); 41546 (June

22, 1999), 64 FR 35222 (June 30, 1999) (accelerated

approval order for the listing and trading of notes

linked to a narrow based index with a non-principal

protected put option) (File No. SR–Amex–99–15);

39402 (December 4, 1997), 62 FR 65459 (December

12, 1997) (notice of immediate effectiveness for the

listing and trading non-principal protected

commodity preferred securities linked to certain

commodities indices) (File No. SR–Amex–97–47);

37533 (August 7, 1996), 61 FR 42075 (August 13,

1996) (accelerated approval order for the listing and

trading of the Top Ten Yield Market Index Target

Term Securities (‘‘MITTS’’)) (File No. SR–Amex–

96–28); 33495 (January 19, 1994), 59 FR 3883

(January 27, 1994) (accelerated approval order for

the listing and trading of Stock Upside Note

Securities) (File No. SR–Amex–93–40); 32840

(September 2, 1993), 58 FR 47485 (September 9,

1993) (accelerated approval order for the listing and

trading of MITTS on the NYSE) (File No. SR–

NYSE–93–31); and 32343 (May 20, 1993), 58 FR

30833 (May 27, 1993) (accelerated approval order

for the listing and trading of non-principal

protected notes linked to a single equity security)

(File No. SR–Amex–92–42).

shareholders. If the issuer of a stock

included in the Industrial 15 Index were

to no longer exist, whether by reason of

a merger, acquisition or similar type of

corporate transaction, a value equal to

the stock’s final value will be assigned

to the stock for the purpose of

calculating the Industrial 15 Index value

prior to the subsequent anniversary

date. For example, if a company

included in the Industrial 15 Index were

acquired by another company, a value

will be assigned to the company’s stock

equal to the value per share at the time

the acquisition occurred. If the issuer of

stock included in the Industrial 15

Index is in the process of liquidation or

subject to a bankruptcy proceeding,

insolvency, or other similar

adjudication, such security will

continue to be included in the Industrial

15 Index so long as a market price for

such security is available or until the

subsequent anniversary date. If a market

price is no longer available for an

Industrial 15 Index stock due to

circumstances including but not limited

to, liquidation, bankruptcy, insolvency,

or any other similar proceeding, then

the security will be assigned a value of

zero when calculating the Industrial 15

Index for so long as no market price

exists for that security or until the

subsequent anniversary date. If the stock

remains in the Industrial 15 Index, the

multiplier of that security in the

Industrial 15 Index may be adjusted to

maintain the component’s relative

weight in the Industrial 15 Index at the

level immediately prior to the corporate

action. In all cases, the multiplier will

be adjusted, if necessary, to ensure

Industrial 15 Index continuity.

The Exchange will calculate the

Industrial 15 Index and, similar to other

stock index values published by the

Exchange, the value of the Index will be

calculated continuously and

disseminated every fifteen seconds over

the Consolidated Tape Association’s

Network B. The Index value will equal

the sum of the products of the most

recently available market prices and the

applicable multipliers for the

component securities.

Because Industrial 15 Notes are linked

to a portfolio of equity securities, the

Amex’s existing equity floor trading

rules will apply to the trading of

Industrial 15 Notes. First, pursuant to

Amex Rule 411, the Exchange will

impose a duty of due diligence on its

members and member firms to learn the

essential facts relating to every customer

prior to trading Industrial 15 Notes.12

Second, Industrial 15 Notes will be

subject to the equity margin rules of the

Exchange.13 Third, the Exchange will,

prior to trading Industrial 15 Notes,

distribute a circular to the membership

providing guidance with regard to

member firm compliance

responsibilities (including suitability

recommendations) when handling

transactions in Industrial 15 Notes and

highlighting the special risks and

characteristics of the Industrial 15

Notes.

2. Statutory Basis

The Exchange believes that the

proposed rule change is consistent with

Section 6 of the Act 14 in general and

furthers the objectives of Section

6(b)(5) 15 in particular in that it is

designed to prevent fraudulent and

manipulative acts and practices, to

promote just and equitable principles of

trade, to foster cooperation and

coordination with persons engaged in

facilitating transactions in securities,

and to remove impediments to and

perfect the mechanism of a free and

open market and a national market

system.

B. Self-Regulatory Organization’s

Statement on Burden on Competition

The Exchange does not believe that

the proposed rule change will impose

any burden on competition.

C. Self-Regulatory Organization’s

Statement on Comments on the

Proposed Rule Change Received From

Members, Participants, or Others

The exchange did not receive any

written comments on the proposed rule

change.

III. 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, N.W.,

Washington, D.C. 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 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–2001–39 and should be

submitted by July 13, 2001.

IV. Commission’s Findings and Order

Granting Accelerated Approval of

Proposed Rule Change

After careful consideration, the

Commission finds that the proposed

rule change is consistent with the

requirements of the Act and the rules

and regulations thereunder applicable to

a national securities exchange, and, in

particular, with the requirements of

section 6(b)(5) of the Act.16 The

Commission finds that this proposal is

similar to several approved instruments

currently listed and traded on the Amex

and the NYSE.17 Accordingly, the

Commission finds that the listing and

trading of Industrial 15 Notes is

consistent with the Act and will

promote just and equitable principles of

trade, foster cooperation and

coordination with persons engaged in

regulating, clearing, settling, processing

information with respect to, and

facilitating transactions in securities,

and, in general, protect investors and

33588 Federal Register / Vol. 66, No. 121 / Friday, June 22, 2001 / Notices

18 15 U.S.C. 78f(b)(5). In approving this rule, the

Commission notes that it has considered the

proposed rule’s impact on efficiency, competition,

and capital formation. 15 U.S.C. 78c(f).

19See Company Guide Section 107A.

20The companies that comprise the Industrial 15

Index are reporting companies under the Act.

21See supra note 17.

22 15 U.S.C. 78f(b).

23 15 U.S.C. 78s(b)(2).

24 17 CFR 200.30–3(a)(12).

the public interest consistent with

section 6(b)(5) of the Act.18

Industrial 15 Notes are not leveraged

instruments; however, their price will

still be derived and based upon the

underlying linked security.

Accordingly, the level of risk involved

in the purchase or sale of Industrial 15

Notes is similar to the risk involved in

the purchase or sale of traditional

common stock. Nonetheless, because

the final rate of return of Industrial 15

Notes is derivatively priced, based on

the performance of a portfolio of

securities, and the components of the

Industrial 15 Index are more likely to

change each year, over the terms of the

Industrial 15 Notes, than products

previously issued, there are several

issues regarding the trading of this type

of product.

The Commission notes that the

Exchange’s rules and procedures that

address the special concerns attendant

to the trading of hybrid securities will

be applicable to Industrial 15 Notes. In

particular, by imposing the hybrid

listing standards, suitability, disclosure,

and compliance requirements noted

above, the Commission believes the

Exchange has addressed adequately the

potential problems that could arise from

the hybrid nature of Industrial 15 Notes.

Moreover,the Exchange will distribute a

circular to its membership calling

attention to the specific risks associated

with Industrial 15 Notes.

In approving the product, the

Commission recognizes that the

components are likely to change each

year over the life of the product.

Nevertheless, the Commission believes

that this is acceptable because the Amex

has clearly stated its guidelines and

formula for replacing components from

a specific group of well-known and

highly capitalized securities. Each year,

as noted above, the portfolio of

securities comprising the Industrial 15

Index will represent the fifteen highest

dividend yielding Qualifying Stocks in

the S&P Industrial Index. Amex will do

the calculation for replacements based

on a set formula to determine which of

the S&P Industrial Index securities will

be in the Index for the following year.

The Commission believes that within

these confines the potential frequent

changes in the components of the

Industrial 15 Index are reasonable and

will meet the expectation of investors.

In addition, the Commission notes

that the Industrial 15 Notes. are nonprincipal protected. The Notes may not

have a minimum principal amount that

will be repaid and that payments on the

Notes prior to or at maturity may be less

than the original issue price of the

Industrial 15 Notes. The Commission

also recognizes that during the

designated month Industrial 15 Notes at

a redemption amount based on the

value of the Industrial 15 Index at such

repurchase date.

The Commission notes that Industrial

15 Notes are dependent upon the

individual credit of the issuer, Merrill

Lynch. To some extent this credit risk

is minimized by the Exchange’s listing

standards in section 107A of the

Company Guide which provide the only

issuers satisfying substantial asset and

equity requirements may issue

securities such as Industrial 15 Notes. In

addition, the Exchange’s hybrid listing

standards further require that Industrial

15 Notes have at least $4 million in

market value.19 In any event, financial

information regarding Merrill Lynch, in

addition to the information on the

issuers of the underlying securities

comprising the Industrial 15 Index, will

be publicly available.20

The Commission also has a systemic

concern, however, that a broker-dealer,

such as Merrill Lynch, or a subsidiary

providing a hedge for the issuer will

incur position exposure. As discussed

in the prior approval orders for similar

instruments (e.g.,the Select Ten Notes),

the Commission believes this concern is

minimal given the size of Industrial 15

Notes issuance in relation to the net

worth of Merrill Lynch.

The Commission also believes that the

listing and trading of Industrial 15 Notes

should not unduly impact the market

for the underlying securities comprising

the Industrial 15 Index. First, the

underlying securities comprising the

S&P Industrial Index, from which the

Industrial 15 Index components are

selected, are well-capitalized, highly

liquid stocks. Second, because all of the

components of the Industrial 15 Index

will be equally weighted, initially and

immediately following each annual

reconstitution of the Industrial 15 Index,

no single stock or group of stocks will

likely dominate the Industrial 15 Index.

Finally, the issuers of the underlying

securities comprising the Industrial 15

Index, are subject to reporting

requirements under the Act, and all of

the portfolio securities are either listed

or traded on, or traded through the

facilities of, U.S. securities markets.

Additionally, the Amex’s surveillance

procedures will serve to deter as well as

detect any potential manipulation.

Finally, the Commission notes that

the value of the Industrial 15 Index will

be disseminated at least once every

fifteen seconds throughout the trading

day. The Commission believes that

providing access to the value of the

Industrial 15 Index at least once every

fifteen seconds throughout the trading

day is extremely important and will

provide benefits to investors in the

product.

The Commission finds good cause for

approving the proposed rule change

prior to the thirtieth day after the date

of publication of notice thereof in the

Federal Register. The Amex has

requested accelerated approval because

this product is similar to several other

instruments currently listed and traded

on the Amex and the NYSE.21 In

determining to grant the accelerated

approval for good cause, the

Commission notes that the Industrial 15

Index is a portfolio of highly capitalized

and actively traded securities similar to

hybrid securities products that have

been approved by the Commission for

U.S. exchange trading. Additionally,

Industrial 15 Notes will be listed

pursuant to existing hybrid security

listing standards as described above.

Moreover, the Index’s applicable equaldollar weighting methodology is a

commonly applied index calculation

method. Based on the above, the

Commission finds, consistent with

Section 6(b) of the Act,22 that there is

good cause for accelerated approval of

the product.

V. Conclusion

It is therefore ordered, pursuant to

section 19(b)(2) of the Act,23 that the

proposed rule change (SR–Amex–2001–

39), is hereby approved on an

accelerated basis.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.24

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 01–15725 Filed 6–21–01; 8:45 am]

BILLING CODE 8010–01–M