Federal Register / Vol. 66, No. 250 / Monday, December 31, 2001 / Notices 67585

13 17 CFR 200.30–3(a)(12).

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

2 17 CFR 240.19b–4.

3The proposal was originally filed pursuant to

Section 19(b)(3)(A) of the Act, 15 U.S.C.

78s(b)(3)(A) and Rule 19b–4(f)(5) thereunder, 17

CFR 240.19b–4(f)(5). Amendment No. 1 converted

the filing to a proposal submitted pursuant to

Section 19(b)(2) under the Act, 15 U.S.C. 78s(b)(2).

Amendment No. 2 made various clarifying changes

to the proposal that are incorporated in the

description herein.

4A rotational wheel is necessary because the

allocation of the contracts in a trade exactly

according to the percentages set forth in the

accompanying table is not always possible, as in the

case, for example, where the percentages would

yield a fractional value for each trader. Telephone

conversation between Claire P. McGrath, Vice

President and Special Counsel, Amex, and Ira L.

Brandriss, Special Counsel, Division of Market

Regulation (‘‘Division’’), Commission, on October

17, 2001.

5As indicated above, the specialist would have

the ability to determine on a trade-by-trade basis

whether to use QT or to allocate the contracts

manually. However, once QT was turned on, it

would be assumed to remain on, and would be used

to allocate contracts in all four of the functions

designated below unless the specialist informed the

crowd that he was turning it off. Telephone

conversation between Claire P. McGrath, Amex, and

Ira L. Brandriss, Division, Commission, on

November 21, 2001.

For the Commission, by the Division

of Market Regulation, pursuant to

delegated authority.13

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 01–32082 Filed 12–28–01; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–45180; File No. SR–Amex–

2001–65]

Self-Regulatory Organizations; Notice

of Filing of Proposed Rule Change by

the American Stock Exchange LLC

Relating to the Implementation of

Quick Trade

December 20, 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 August

22, 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 Exchange.

On October 19, 2001, and December 4,

2001, respectively, the Amex filed

Amendment Nos. 1 and 2 to the

proposed rule change.3 The Commission

is publishing this notice to solicit

comments on the proposed rule change,

as amended, from interested persons.

I. Self-Regulatory Organization’s

Statement of the Terms of Substance of

the Proposed Rule Change

The Amex proposes to implement

Quick Trade, an enhancement to the

Amex Order File and Amex Options

Display Book.

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 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

Currently, for orders executed through

the specialist’s book (known as the

Amex Order Display Book or AODB) in

which registered options traders are

some or all of the contra-parties, the

specialist or his clerk must manually

allocate the contracts to those

participating registered options traders.

For option classes with large trading

crowds, this can be a very time

consuming process that can delay the

processing of trades. As the Exchange

continues to develop a number of

competitive initiatives to further

enhance the processing of customer

option orders, it is now proposing to

develop and implement Quick Trade, an

enhancement to the Amex Order File

(AOF) and AODB that will automate the

process of allocating trades to

participating registered options traders.

Quick Trade would provide for the

efficient allocation of executed contracts

as set forth below. Registered options

traders would be able to log onto the

Quick Trade (‘‘QT’’) wheel through

AOF. While registered options would

not be required to participate in QT,

they would be encouraged to sign on

and remain on QT throughout the

trading day. Each registered options

trader signed on to QT would have the

ability to advise the specialist prior to

the usage of QT on any given trade that

he does not want to receive an

allocation through QT. In such a

situation and in the situation where a

registered options trader not signed on

to QT wishes to participate in a given

trade, the specialist would be unable to

use QT to allocate the trade and the

allocation would occur using the same

manual process used today.

At the opening and throughout the

trading day the QT wheel 4 would be

activated to allocate contracts among

registered options traders and the

specialist in accordance with specific

ratios set forth below.

ALLOCATION RATIO

Number of traders on Quick

Trade

Approximate

number of

contracts allocated to

the specialist

(In percent)

Approximate

number of

contracts allocated to

the traders

(as a group)

(In percent)

1 ........................ 60 40

2–4 .................... 40 60

5–7 .................... 30 70

8–15 .................. 25 75

16 or more ........ 20 80

The QT wheel would provide for the

automatic allocation of contracts to the

specialist and registered options traders

at various times during the trading day

when QT is used for the following four

AODB features. Registered options

traders who have signed on to QT

would be allocated trades whenever QT

is used for any of these four AODB

functions: 5

• Quick Opening for pre-opening

quantity allocations by class;

• Block Window for post-opening

quantity allocations by series;

• The Auto-Match feature for

executions when there is an imbalance;

and

• Sweep of the Book allocation of

contracts from multiple order

executions.

Quick Openings

A specialist opens trading in each

option series by establishing an opening

price for that series and executing all

market and marketable limit orders at

this price. If after all opening orders

have been executed an imbalance exists,

QT would automatically allocate the

imbalance of executed contracts to the

specialist and the registered options

traders signed on to QT in accordance

with the ratios set forth above.

Block Window

The Block Window permits a

specialist, in situations when there are

limit orders on the book at various

prices, to execute such limit orders at a

single price. For example, the specialist

has limit orders on the book to sell at

67586 Federal Register / Vol. 66, No. 250 / Monday, December 31, 2001 / Notices

6See Securities Exchange Act Release No. 42652

(April 7, 2000) 65 FR 20235 (April 14, 2000).

7QT would allocate the order(s) for each series

separately. Telephone conversation between Claire

P. McGrath, Amex, and Ira L. Brandriss, Division,

Commission, on December 5, 2001.

8 15 U.S.C. 78f(b). 9 15 U.S.C. 78f(b)(5). 10 17 CFR 200.30–3(a)(12).

$5.00, $5.05, $5.10, $5.15, and $5.20; in

aggregate these orders represent 50

contracts. The specialist has determined

to buy all 50 contracts at $5.20. The

contracts would be allocated by QT to

the specialist and registered traders in

accordance with the ratios set forth

above.

Auto-Match

The Auto-Match feature currently in

AODB, which automatically matches

and executes market and marketable

limit orders that have by-passed the

Exchange’s automatic execution system

(‘‘Auto-Ex’’) with limit orders on the

AODB, would be modified to include

registered trader participation when an

imbalance exists.6 Imbalances would be

distributed among the specialist and

registered traders according to the above

allocation ratio. For example, the best

bid is represented by a limit order to

buy 10 contracts in an option class

whose Auto-Ex eligible size is 20

contracts. A market order of 20 contracts

to sell by-passes Auto-Ex and is routed

to the AODB; 10 contracts are matched

and executed with the limit order. The

remaining 10 contracts would be

allocated through QT to the specialists

and registered traders.

Sweep of the Book

The Sweep of the Book function

allows a specialist to simultaneously

execute orders in multiple series at the

quoted market. Following

implementation of Quick Trade,

contracts executed through the Sweep of

the Book function would be

automatically allocated by QT on a per

series basis to the specialist and

registered traders in accordance with

the above allocation ratio.7

The Exchange believes that

implementation of Quick Trade would

increase the Exchange’s competitiveness

while furthering the efficient processing

of customer option orders. Further, the

Exchange believes that Quick Trade

would enhance the fair and orderly

allocation of orders executed on the

Exchange especially during times of

high trading volume by automating the

allocation process.

2. Statutory Basis

The Exchange believes that the

proposed rule change is consistent with

Section 6(b) of the Act 8 in general and

furthers the objectives of Section 6(b)(5)

of the Act 9 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

No written comments were solicited

or received with respect to 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

Room. Copies of the filing will also be

available for inspection and copying at

the principal offices of the Amex. All

submissions should refer to File No.

SR–Amex–2001–65 and should be

submitted by January 22, 2002.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.10

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 01–32084 Filed 12–28–01; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–45181; File No. SR–NASD–

00–12]

Self-Regulatory Organizations; Notice

of Filing of Proposed Rule Change and

Amendments Nos. 1 and 2 Thereto by

the National Association of Securities

Dealers, Inc. Concerning Amendments

to Rules Governing Member

Communications with the Public

December 20, 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 9,

2000, NASD Regulation, Inc. (‘‘NASD

Regulation’’) filed with the Securities

and Exchange Commission (‘‘SEC or

‘‘Commission’’) the proposed rule

change as described in Items I, II, and

III below, which Items have been

prepared by NASD Regulation.3 On

August 8, 2001, NASD Regulation filed

Amendment No. 1 to the proposed rule

change.4 On December 12, 2001, NASD

Regulation filed Amendment No. 2 to

the proposed rule change. The

Commission is publishing this notice to

solicit comments on the proposed rule

change, as amended, from interested

persons.

I. Self-Regulatory Organization’s

Statement of the Terms of Substance of

the Proposed Rule Change

NASD Regulation is proposing to

amend Rule 2210 and the Interpretive

Materials thereunder, promulgate new

Rule 2211, and renumber existing Rule

2211, of the National Association of

Securities Dealers, Inc. (‘‘NASD’’ or

‘‘Association’’). Below is the text of the

proposed rule change. Proposed new

language is italicized; proposed

deletions are in brackets.