[Federal Register Volume 61, Number 90 (Wednesday, May 8, 1996)]
[Notices]
[Pages 20871-20872]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-11449]



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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-37161; File No. SR-Amex-96-10]


Self-Regulatory Organizations; Notice of Filing of Proposed Rule 
Change by the American Stock Exchange, Inc. Relating to the 
Implementation of a Wireless Data Communications Infrastructure

May 2, 1996.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''), 15 U.S.C. 78s(b)(1), notice is hereby given that on March 
27, 1996, the American Stock Exchange, Inc. (``Amex'' or ``Exchange'') 
filed with the Securities and Exchange Commission (``Commission'' or 
``SEC'') 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 American Stock Exchange, Inc. proposes to amend Exchange Rules 
60 and 220 and to adopt a policy regarding the use of wireless data 
communications devices at the Exchange (``Wireless Communications 
Policy'').

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
    The Exchange has undertaken the development of an infrastructure 
(``Infrastructure'') to accommodate the use of wireless data 
communications devices on the Trading Floor. In connection with the 
implementation of the Infrastructure, the Exchange seeks to amend Rule 
220 to explicitly provide that the Exchange may regulate communications 
between points on the Floor. The Exchange also seeks to adopt a 
detailed policy (``Wireless Communications Policy'') regarding the use 
of wireless data communications devices at the Exchange. The Wireless 
Communications Policy will address the following issues:
    1. The ability of the Exchange to administer wireless data 
communications on a real time basis (e.g., the implementation of a 
protocol for prioritizing and/or managing message traffic during 
periods of extraordinary use);
    2. Surveillance of wireless data communications;
    3. Member, member firm and Exchange preservation of records of 
orders and trades;
    4. Security with respect to confidential wireless transmissions and 
access to the Infrastructure;
    5. Review and approval of member and member firm applications to 
use wireless data communications devices;
    6. The fair allocation of a finite resource (i.e., radio frequency 
bandwidth);
    7. Exchange fees and allocation of expenses associated with the 
implementation, operation of, and enhancements to, the Infrastructure;
    8. Sanctions for violations of the Exchange's Wireless 
Communications Policy;
    9. Inspection and oversight of wireless data communications 
technology; and
    10. The design and implementation of the Infrastructure.
    The Wireless Communications Policy furthers the policy in Article 
IV, Section 1(e) of the Exchange Constitution which currently provides 
that the Exchange shall not be liable for any damages sustained by a 
member or member organization growing out of the use or enjoyment by 
such member or member organization of the facilities afforded by the 
Exchange to members for the conduct of their business. This provision, 
as well as similar provisions at other exchanges, reflect the common 
understanding that exchanges should not bear the risk of liability 
associated with member firm use of their systems. Accordingly, the 
Exchange will not be liable to member firms with respect to their use 
of the Infrastructure.
    In addition, the Exchange proposes to adopt new Commentary .03 to 
Rule 60 which will provide that, in connection with member or member 
organization use of any electronic system, service, or facility 
provided by the Exchange to members for the conduct of their business 
on the Exchange: (i) the Exchange may expressly provide in the contract 
with any vendor providing all or part of such electronic system,

[[Page 20872]]

service, or facility to the Exchange, that such vendor and its 
subcontractors shall not be liable to members or member organizations 
for any damages sustained by a member or member organization growing 
out of the use or enjoyment of such electronic system, service, or 
facility by the member or member organization, and (ii) members and 
member organizations shall indemnify the Exchange and any vendor and 
subcontractor covered by subsection (i) above with regard to any third 
party claims relating to the member or member organization's use of 
such electronic system, service or facility. This will provide needed 
protection for both the Exchange and vendors that may be retained by 
the Exchange to provide various services for use by member firms. If 
the Exchange does not have the flexibility to negotiate such liability 
protection, it will become increasingly difficult to find vendors 
willing to provide the Exchange with the essential services that it 
needs.
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) in that it is 
designed to prevent fraudulent acts and practices, promote just and 
equitable principles of trade, remove impediments to and perfect the 
mechanisms of a free and open market, and, in general, 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 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 has not solicited written comments on the proposed 
rule change. The Exchange, however, received three written responses to 
a letter dated February 29, 1996, addressed to all members and member 
firms regarding the implementation of the Infrastructure and 
anticipated user fees for wireless data communications devices on the 
Floor. The three responses to the Exchange's letter concerned 
objections to the proposed fee structure. Upon further consideration 
and analysis, the Exchange decided that the specifics of the per device 
fee will not be determined until the fall of 1997, giving the Exchange 
a period of time to observe the Infrastructure in operation. A per 
device fee will not be imposed prior to that time. In addition, once 
imposed, the monthly fee will be capped at $250 per device.

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 Amex. All 
submissions should refer to File No. SR-Amex-96-10 and should be 
submitted by May 29, 1996.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 96-11449 Filed 5-7-96; 8:45 am]
BILLING CODE 8010-01-M