16894 Federal Register / Vol. 60, No. 63 / Monday, April 3, 1995 / Notices

1 15 U.S.C. 78s(b)(1) (1988).

2 17 CFR 240 240.19b–4 (1994).

3 In 1992, the Commission approved amendments

to Amex Rule 127 to provide that securities selling

between $.25 and $5 could be traded in sixteenths.

See Securities Exchange Act Release No. 31118

(August 28, 1992), 57 FR 40484 (September 3,

1992).

4The Consolidated Tape, operated by the

Consolidated Tape Association (‘‘CTA’’), compiles

last sale reports in certain listed securities from all

exchanges and market makers trading such

securities and disseminates these reports to vendors

on a consolidated basis. Amex-listed stocks and

qualifying regional-listed stocks are reported on

CTA Tape B.

5The Amex will verify that the other ITS

participants have completed any necessary system

modifications before trading securities priced

between $5 and $10 in sixteenths. See letter from

Arne G. Michelson, Amex, to ITS Operating

Committee, dated March 7, 1995.

6 15 U.S.C. 78f(b) and 78k–1 (1988).

[FR Doc. 95–8107 Filed 3–31–95; 8:45 am]

BILLING CODE 7710–FW–P

[Docket No. A95–7; Order No. 1050]

Toronto, Iowa 52343–0066; (Deb

Bartels, et al., Petitioners); Notice and

Order Accepting Appeal and

Establishing Procedural Schedule

Under 39 U.S.C. § 404(b)(5)

Issued: March 29, 1995.

Docket Number: A95–7

Name of Affected Post Office: Toronto,

Iowa 52343–0066

Name(s) of Petitioner(s): Deb Bartels, et

al.

Type of Determination: Closing

Date of Filing of Appeal Papers: March

24, 1995

Categories of Issues Apparently Raised:

1. Effect on postal services [39 U.S.C.

§ 404(b)(2)(C)].

2. Effect on the community [39 U.S.C.

§ 404(b)(2)(A)].

After the Postal Service files the

administrative record and the

Commission reviews it, the Commission

may find that there are more legal issues

than those set forth above. Or, the

Commission may find that the Postal

Service’s determination disposes of one

or more of those issues.

The Postal Reorganization Act

requires that the Commission issue its

decision within 120 days from the date

this appeal was filed (39 U.S.C. § 404

(b)(5)). In the interest of expedition, in

light of the 120-day decision schedule,

the Commission may request the Postal

Service to submit memoranda of law on

any appropriate issue. If requested, such

memoranda will be due 20 days from

the issuance of the request and the

Postal Service shall serve a copy of its

memoranda on the petitioners. The

Postal Service may incorporate by

reference in its briefs or motions, any

arguments presented in memoranda it

previously filed in this docket. If

necessary, the Commission also may ask

petitioners or the Postal Service for

more information.

The Commission Orders

(a) The Postal Service shall file the

record in this appeal by April 10, 1995.

(b) The Secretary of the Postal Rate

Commission shall publish this Notice

and Order and Procedural Schedule in

the Federal Register.

By the Commission.

Margaret P. Crenshaw,

Secretary.

March 24, 1995—Filing of Appeal letter

March 29, 1995—Commission Notice and

Order of Filing of Appeal

April 18, 1995—Last day of filing of petitions

to intervene [see 39 C.F.R. § 3001.111(b)]

April 28, 1995—Petitioners’ Participant

Statements or Initial Brief [see 39 C.F.R.

§ 3001.115(a) and (b)]

May 18, 1995—Postal Service’s Answering

Brief [see 39 C.F.R. § 3001.115(c)]

June 2, 1995—Petitioners’ Reply Brief should

Petitioners choose to file one [see 39 C.F.R.

§ 3001.115(d)]

June 9, 1995—Deadline for motions by any

party requesting oral argument. The

Commission will schedule oral argument

only when it is a necessary addition to the

written filings [see 39 C.F.R. § 3001.116]

July 22, 1995—Expiration of the

Commission’s 120-day decisional schedule

[see 39 U.S.C. § 404(b)(5)]

[FR Doc. 95–8108 Filed 3–31–95; 8:45 am]

BILLING CODE 7710–FW–P

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–35537; File No. SR–Amex–

95–02]

Self-Regulatory Organizations;

American Stock Exchange, Inc.; Order

Granting Approval to Proposed Rule

Change Relating to Minimum

Fractional Changes

March 27, 1995.

On January 31, 1995, the American

Stock Exchange, Inc. (‘‘Amex’’ or

‘‘Exchange’’) submitted to the Securities

and Exchange Commission (‘‘SEC’’ or

‘‘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

increase from $5 to $10 the price level

below which equity securities are traded

in sixteenths.

The proposed rule change was

published for comment in Securities

Exchange Act Release No. 35338

(February 7, 1995), 60 FR 8432

(February 14, 1995). No comments were

received on the proposal.

The rule change amends Amex Rule

127 to allow the minimum fractional

changes in sixteenths ($.0625) for all

securities priced between $.25 and $10.

Amex Rule 127 will continue to provide

that the minimum fractional change for

dealings in securities priced below $.25

will be in thirtyseconds ($.03125), and

for securities priced above $10 the

minimum fractional change will

continue to be in eighths ($.125).3

At the time of publication of the

Commission release noticing this

proposal, the Intermarket Trading

System (‘‘ITS’’) was not equipped to

accommodate trading in sixteenths for

stocks priced above $5. However, at the

February 1995 meeting of the ITS

Operating Committee, the ITS

participants approved enhancements to

ITS to permit trading in sixteenths for

Tape B securities 4 priced under $10.

The Amex represents that these system

modifications have been made and that

the system now is able to accommodate

trading all Amex securities priced below

$10 in sixteenths.5

The Commission finds that the

proposed rule change to increase from

$5 to $10 the price level below which

equity securities are traded in sixteenths

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 Sections 6(b)

and 11A.6 The Commission believes the

proposal is consistent with the Section

6(b)(5) requirements that the rules of an

exchange be designed to promote just

and equitable principles of trade, to

prevent fraudulent and manipulative

acts, and, in general, to protect investors

and the public interest. Additionally,

the Commission believes that the

proposal is consistent with Section 11A,

which requires the Commission to

facilitate the establishment of a national

market system. Pursuant to Section 11A,

a national market system should assure,

among other things, fair competition

between the exchanges, economically

efficient execution of securities

transactions and the practicability of

brokers executing investors’ orders in

the best market.

The Commission believes that market

quality should be enhanced by applying

a minimum fractional change of 1⁄16,

rather than 1⁄8, to securities selling

below $10. The Commission believes

that decreasing such trading variations

should help to produce more accurate

pricing of such securities and can result

in tighter quotations. In addition, if the

quoted markets are improved by the
Federal Register / Vol. 60, No. 63 / Monday, April 3, 1995 / Notices 16895

7The rule change is consistent with the

recommendation of the Division of Market

Regulation (the ‘‘Division’’) in its Market 2000

Study, in which the Division noted that the 1⁄8

minimum variation can cause artificially wide

spreads and hinder quote competition by

preventing offers to buy or sell at prices inside the

prevailing quote. See Division of Market Regulation,

SEC, Market 2000: An Examination of Current

Equity Market Developments (January 1994), at 18.

8The Amex estimates that the rule change will

increase the number of securities traded in

sixteenths from 362 securities (approximately 37%

of Amex-listed securities) to 589 securities

(approximately 60% of Amex-listed securities).

These estimates were made by the Exchange as of

February 3, 1995.

9 15 U.S.C. 78s(b)(2) (1988).

10 17 CFR 200.30–3(a)(12) (1994).

1 15 U.S.C. 78s(b)(1) (1988).

2 17 CFR 240.19b–4 (1994).

3The Commission notes that the CBOE currently

does not trade any securities pursuant to Chapter

30 of the CBOE rules except for SuperShares, which

are traded in thirtyseconds. Therefore, the Rule

change will not impact any transactions presently

effected on the Exchange.

4See Securities Exchange Act Release No. 35537

(March 27, 1995) (File No. SR–Amex–95–02)

(‘‘Amex Order’’).

5 Division of Market Regulation, SEC, Market

2000: An Examination of Current Equity Market

Developments (January 1994), at 18 (‘‘Market 2000

Study’’).

6 ITS is a subsystem of the National Market

System approved by the Commission pursuant to

Section 11A of the Act, 15 U.S.C. § 78k–1 (1988).

It facilities intermaket trading in exchange-listed

equity securities based on the current quotation

information emanating from the linked markets. For

a discussion of ITS, see Market 2000 Study, supra

note 2, at App. II. Participants of ITS include the

Amex, Boston Stock Exchange, CBOE, Chicago

Stock Exchange, Cincinnati Stock Exchange, New

York Stock Exchange, Pacific Stock Exchange,

Philadelphia Stock Exchange, and the National

Association of Securities Dealers.

reduced minimum tick fluctuations, the

change could result in added benefits to

the market such as increased liquidity

in stocks priced below $10.7 The

Commission believes that decreasing

such trading variations should help to

produce more accurate pricing of such

securities and can result in tighter

quotations.

Furthermore, the Amex represents

that approximately 60% of all equity

securities presently traded on the Amex

sell for under $10 per share.8 The

Commission believes that the tighter

quotation resulting from trading these

securities in sixteenths should provide

customers with the most competitive

market and the best possible execution

of their transactions in securities priced

below $10.

In addition, the Commission believes

that the proposal should lead to

increased competition between the

exchanges pursuant to Section 11A of

the Act. As noted above, ITS

participants will have the capability to

trade in sixteenths in Amex-listed

securities. By ensuring that all ITS

participants can quote in sixteenths,

customers should be able to receive a

better, more competitive price in

securities priced below $10.

It is therefore ordered, pursuant to

Section 19(b)(2) of the Act,9 that the

proposed rule change (SR–Amex–95–

02) is approved.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.10

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 95–8089 Filed 3–31–95; 8:45 am]

BILLING CODE 8010–01–M

[Release No. 34–35538; File No. SR–CBOE–

95–18]

Self-Regulatory Organizations; Notice

of Filing and Order Granting

Accelerated Approval of Proposed

Rule Change by the Chicago Board

Options Exchange, Inc. Relating to

Fractional Changes for Bids and Offers

in Stocks Priced Below $10

March 27, 1995.

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 6,

1995, the Chicago Board Options

Exchange, Inc. (‘‘CBOE’’ 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.

I. Self-Regulatory Organization’s

Statement of the Terms of Substance of

the Proposed Rule Change

The CBOE proposes to amend its rule

respecting the permissible fractional

changes that may be made for bids and

offers in stocks and related instruments

that are priced below $10 per share.

The Exchange requests the

Commission to find good cause,

pursuant to section 19(b) (2) of the Act,

for approving the proposed rule change

prior to the thirtieth day after

publication in the Federal Register.

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 III below.

The self-regulatory organization has

prepared summaries, set forth in Section

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 proposed rule change increases

from $1 to $10 the price level below

which stocks or other designated

instruments may be traded in

sixteenths, i.e., 1/16 of $1 ($.0625).

CBOE Rule 30.33, Fractional Changes

for Bids and Offers, currently requires

bids and offers in stocks (and other

instruments that may be traded on the

Exchange pursuant to Chapter 30 of the

CBOE Rules) with a price of $1 or less

to be made at a variation of at least 1⁄8

of ($.125).3 Currently, the rule only

permits variations of as little as 1⁄16 of

$1 for bids and offers in stocks and

other instruments that have a price

below $1 but above $.25 per share. Bids

and offers in stocks with prices of less

than $.25 per share may be varied by as

little as 1⁄32 of $1 per share ($.03125).

The Exchange believes that by

increasing the number of stocks and

other instruments eligible to be traded

in sixteenths, the Exchange will be

better able to compete for listings in

instruments, such as warrants. In fact,

the Exchange’s proposal is identical to

a proposal of the American Stock

Exchange (‘‘Amex’’), which recently was

approved by the Commission.4 The

Exchange believes that trading in

sixteenths will improve the market for

securities trading under $10 by

promoting greater liquidity and

providing for superior executions of

retail and professional orders. Also, the

proposal is responsible to the

recommendations of the Division of

Market Regulation in its Market 2000

Study that the exchanges convert to a

minimum variation of one-sixteenth as

soon as possible.5

In 1992, participants of the

Intermarket Trading System (ITS’’)6 met

to discuss the need to make changes to

the ITS to accommodate increased

trading of securities priced sixteenths.

The Exchange anticipates that further