[Federal Register Volume 61, Number 86 (Thursday, May 2, 1996)]
[Notices]
[Pages 19650-19651]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-10925]



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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-37146; File No. SR-Amex-96-13]


Self-Regulatory Organizations; Notice of Filing of Proposed Rule 
Change by the American Stock Exchange, Inc. Relating to Amendments to 
Rule 117 (Trading Halts Due to Extraordinary Market Volatility) and 
Rule 1 (Hours of Business)

April 26, 1996.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''), 15 U.S.C. Sec. 78s(b)(1), notice is hereby given that on 
April 11, 1996, 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, II, 
and III 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 Exchange proposes to amend Exchange Rule 117 (Trading Halts Due 
to Extraordinary Market Volatility) to reduce from one hour to thirty 
minutes the time period during which trading on the Exchange is halted 
due to a decline in the Dow Jones Industrial Average (``DJIA'') * of 
250 points and to reduce from two hours to one hour the time period for 
a halt due to a decline in the DJIA of 400 points. In addition, the 
Exchange proposes to amend Amex Rule 1 (Hours of Trading) to permit 
closing transactions after 4:00 p.m. where the Exchange has determined 
to permit such transactions pursuant to Rule 117.
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    * ``Dow Jones Industrial Average'' is a service mark of Dow 
Jones & Company, Inc.
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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 IV 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
    Amex Rule 117--the Exchange's ``circuit breaker'' rule--provides 
that trading in securities on the Exchange shall halt and not reopen 
for one hour if the DJIA falls 250 points or more below its closing 
value on the previous trading day. The rule provides further that 
trading on the Exchange shall halt for two hours if the DJIA falls 400 
points or more. The Exchange proposes to shorten from one hour to 
thirty minutes

[[Page 19651]]

the duration of a trading halt due to a 250 point decline in the DJIA, 
and to shorten from two hours to one hour the duration of a halt due to 
a 400 point decline in the DJIA.
    Commentary .03 to Rule 117 also provides that if the DJIA declines 
250 points at or after 3:00 p.m. or 400 points at or after 2:00 p.m., 
trading in securities shall halt for the remainder of the day. However, 
if the 250 point level is reached between 3:00 p.m. and 3:30 p.m., or 
the 400 point level is reached between 2:00 p.m. and 3:00 p.m., the 
Exchange may use abbreviated reopening procedures to either permit 
trading to reopen before 4:00 p.m. or to establish closing prices. The 
Exchange proposes to amend Commentary .03 to provide that the Exchange 
may use abbreviated reopening procedures to establish new last sale 
prices in the event the 250 point level is reached at or after 3:30 
p.m., or if the 400 point level is reached at or after 3:00 p.m.
    Because such closing transactions may need to be effected after 
4:00 p.m., the Exchange is proposing to amend Rule 1 (Hours of 
Business) to provide that closing transactions may be permitted after 
4:00 p.m. where the Exchange has determined to permit such transactions 
pursuant to Rule 117.
    Rule 117 was approved by the Commission on a pilot basis on October 
19, 1988 \1\ and has been extended annually since then, with the most 
recent extension expiring on October 31, 1996.\2\ The Exchange proposes 
to adopt amendments to Rule 117 to coincide with the year-to-year pilot 
program. The Exchange proposes to amend Rule 1 on a permanent basis.
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    \1\ See Securities Exchange Act Release No 26198 (Oct. 19, 
1988), 53 FR 41637 (Oct. 24, 1988).
    \2\ See Securities Exchange Act Release No. 36414 (Oct. 25, 
1995), 60 FR 55630 (Nov. 1, 1995).
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    The Exchange believes the proposed amendments are an appropriate, 
measured response to the significant technological progress made by the 
securities markets and the broker-dealer community since 1988 in 
efficiently accommodating large order imbalances that may occur under 
volatile market conditions. The shortened time periods should now 
provide sufficient opportunity for market participants to evaluate 
market conditions and will avoid unnecessary delays in resumption of 
trading.
    In connection with abbreviated reopening procedures to establish 
new last sale prices under Rule 117, Commentary .03, the Amex will 
examine whether additional procedures to facilitate a single trade 
auction are appropriate. Such procedures would be filed by the Exchange 
pursuant to Rule 19b-4.
2. Statutory Basis
    The proposed rule change is consistent with Section 6(b) of the 
Act, in general, and furthers the objectives of Section 6(b)(5), in 
particular, in that the proposed rule change is designed to promote 
just and equitable principles of trade, to remove impediments to and 
perfect the mechanism of a free and open market and a national market 
system and, in general, to protect investors and the public interest.

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
impose any inappropriate 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 either solicited or received.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Within 35 days of the 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 self-regulatory organization consents, the Commission will:
    (A) By order approve the 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. 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. Sec. 552, will be available for inspection and copying at 
the Commission's Public Reference Section, 450 Fifth Street, N.W., 
Washington, D.C. 20549. 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-96-13 and should be 
submitted by May 23, 1996.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 96-10925 Filed 5-1-96; 8:45 am]
BILLING CODE 8010-01-M