Federal Register / Vol. 66, No. 32 / Thursday, February 15, 2001 / Notices 10539

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

2 17 CFR 240.19b–4

3 17 CFR 240.19b(f)(6).

4Since the proposal rule change was filed with

the Commission, the Exchange made a technical

change to the text of proposed Amex Rule 934(a)

to insert the word ‘‘and.’’ The change does not

affect the substance of the rule. Telephone

conversation between Claire McGrath, Vice

President and Special Counsel, Amex, and Jennifer

Colihan, Special Counsel, Division of Market

Regulation, Commission, on February 6, 2001.

5Currently, only market and marketable limit

orders up to specifically established sizes are

eligible for execution through Auto-Ex; however,

the Exchange has a proposal pending before the

Commission that would allow the automatic

execution of non-marketable limit orders that

improve the best price available on the Exchange

by automatically executing such limit order if the

current best bid/offer quote on another market is

better than the Amex quote by a predefined number

of ticks. (See SR-Amex 00–29.)

For premium payment years

beginning in

The assumed

interest rate is

January 2001 ........................ 4.67

February 2001 ...................... 4.71

Multiemployer Plan Valuations

Following Mass Withdrawal

The PBGC’s regulation on Duties of

Plan Sponsor Following Mass

Withdrawal (29 CFR part 4281)

prescribes the use of interest

assumptions under the PBGC’s

regulation on Allocation of Assets in

Single-employer Plans (29 CFR part

4044). The interest assumptions

applicable to valuation dates in March

2001 under part 4044 are contained in

an amendment to part 4044 published

elsewhere in today’s Federal Register.

Tables showing the assumptions

applicable to prior periods are codified

in appendix B to 29 CFR part 4044.

Issued in Washington, DC, on this 12th day

of February 2001.

John Seal,

Acting Executive Director, Pension Benefit

Guaranty Corporation.

[FR Doc. 01–3882 Filed 2–14–01; 8:45 am]

BILLING CODE 7708–01–P

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–43938; File No. SR-Amex–

01–03]

Self-Regulatory Organizations; Notice

of Filing and Immediate Effectiveness

of Proposed Rule Change by the

American Stock Exchange LLC

Relating to the Prohibition Against

Members Functioning as Market

Makers and the Entry of Electronically

Generated Orders Into the Exchange’s

Order Routing System

February 7, 2001.

Pursuant to Section 19(b)(1) of the

Securities Exchange Act of 1934 1 (the

‘‘Act’’) and Rule 19b–4 thereunder 2,

notice is hereby given that on February

1, 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, II, and III below, which Items

have been prepared by the Exchange.

The Exchange has designated the

proposed rule change as constituting a

‘‘non-controversial’’ rule change under

paragraph (f)(6) of Rule 19b–4 under the

Act,3 which renders the proposal

effective upon receipt of this filing by

the Commission. 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 Amex proposes to adopt new

Rule 934, which restricts the entry of

certain option limit orders and prohibits

the entry of orders that are created and

communicated electronically without

manual input into the Exchange’s order

routing and execution systems. The text

of the proposed rule change is available

at the Office of the Secretary, Amex and

at the Commission.

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 Amex 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 the

Statutory Basis for, the Proposed Rule

Change

1. Purpose

The Exchange proposes to adopt new

Rule 934 restricting the entry of certain

option limit orders and of orders that

are created and communicated

electronically without manual input

into the Exchange’s electronic order

routing and delivery system (Amex

Order File—AOF), which routes orders

of up to 250 option contracts to the

Exchange’s electronic order execution

and processing systems (i.e., Auto-Ex

and the Amex Options Display Book or

AODB).

The proposed new rule provides that

members, acting as either principal or

agent, may not permit the entry of

orders into the electronic order routing

system if the orders are limit orders for

the account or accounts of the same or

related beneficial owners and the limit

orders are entered in such a manner that

the member of the beneficial owner(s)

effectively is operating as a market

maker by holding itself out as willing to

buy and sell such securities on a regular

or continuous basis. In determining

whether a member or beneficial owner

effectively is operating as a market

maker, the Exchange will consider,

among other things, the simultaneous or

near-simultaneous entry of limit orders

to buy and sell the same security; the

multiple acquisition and liquidation of

positions in the security during the

same day; and the entry of multiple

limit orders at different prices in the

same security.4

The proposed rule would also

prohibit members from entering orders

that are created and communicated

electronically without manual input and

if such orders are eligible for execution

through the Exchange’s Automatic

Execution System (‘‘Auto-Ex’’).5 Orders

entered by customers or associated

persons of members will be deemed to

involve manual input if the terms of the

order are entered into an order-entry

screen or there is a manual selection of

a displayed order against which an offsetting order should be sent. It should

be noted that members shall not be

prohibited from electronically

communicating to the Exchange orders

entered by customers into front-end

communication systems (e.g., Internet

gateways, online networks, etc.).

The Exchange states that its business

model depends upon specialists and

registered options traders for

competition and liquidity. To encourage

participation by these market makers,

the Exchange needs to limit the ability

of non-specialists/registered traders to

compete on preferential terms within its

automated systems. In addition,

customer orders are provided with

certain benefits such as automatic

execution, priority of bids and offers

and firm quote guarantees, and thus

should not be allowed to act as market

makers. The proposed rule will prevent

non-specialist/registered trader

members and their customers from

reaping the benefits of market making

activities without any of the

concomitant obligations such as

providing continuous quotations during

10540 Federal Register / Vol. 66, No. 32 / Thursday, February 15, 2001 / Notices

6 In approving a similar proposal currently in

place at the Chicago Board Options Exchange

(‘‘CBOE’’), the Commission noted that allowing

electronic order entry into ORS (the counterpart to

Amex’s AOF) could give automated customers a

significant advantage over market makers. See

Securities Exchange ACt Release No. 43285

(September 12, 2000), 65 FR 56972 (September 20,

2000).

7 15 U.S.C. 78f(b).

8 15 U.S.C. 78f(b)(5).

9 15 U.S.C. 78s(b)(3)(A).

10 17 CFR 240.19b–4(f)(6).

11For purposes only of accelerating the operative

date of this proposal, the Commission has

considered the proposed rule’s impact on

efficiency, competition, and capital formation. 15

U.S.C. 78c(f).

12See Securities Exchange Act Release No. 42455

(February 24, 2000), 65 FR 11388 (March 2, 2000)

(approving application of ISE for registration as a

national securities exchange).

13See Securities Exchange Act Release No. 43285

(September 12, 2000), 65 FR 56972 (September 20,

2000) (approving SR–CBOE–00–01).

14See Securities Exchange Act Release No. 43328

(September 22, 2000), 65 FR 58834 (October 2,

2000) (approving SR–PCX–00–13).

15See Securities Exchange Act Release No. 43376

(September 28, 2000), 65 FR 58834 (October 5,

2000) (approving SR–Phlx–00–79).

16 15 U.S.C. 78f(b)(8).

17 17 CFR 200.30–3(a)(12).

all market conditions. The proposed

rule is designed to prevent certain

members and customers from obtaining

an unfair advantage by acting as

unregistered specialists and traders

while having priority over the

specialists and registered traders by

virtue of their customer status.

Permitting members or customers to

enter multiple limit orders to such an

extent that they are effectively acting as

market makers in an option, while at the

same time giving them priority over all

other orders on the book, would give

such members and customers an

inordinate advantage over the market

participants. In addition, allowing

electronically generated and

communicated orders to be routed

directly through the Exchange systems

and to Auto-Ex would give customers

with such electronic systems a

significant advantage over specialists

and registered traders. In the Exchange’s

view, these circumstances reduce the

incentive to engage in market making on

the Exchange, which could reduce

liquidity and competition and could

undercut the Exchange’s business

model.6 Lastly, the Exchange notes that

computer generated orders can still be

sent to the Exchange for execution,

however, they may not be sent for

execution through the Exchange’s order

routing system. Instead, such orders will

be routed to the trading crowd and

represented in open outcry.

2. Statutory Basis

The proposed rule change is

consistent with Section 6(b) of the Act 7

in general and furthers the objectives of

Section 6(b)(5) 8 in particular in that it

is disigned to prevent fradulent 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

Written comments were neither

solicited nor received with respect to

the proposed rule change.

III. Date of Effectiveness of the

Proposed Rule Change and Timing for

Commission Action

The proposed rule change has been

filed by the Exchange as a ‘‘noncontroversial’’ rule change pursuant to

Section 19(b)(3)(A) of the Act 9 and

subparagraph (f)(6) of Rule 19b–4

thereunder.10 Because the foregoing

proposed rule change: (i) Does not

significantly affect the protection of

investors or the public interest; (ii) does

not impose any significant burden on

competition; and (iii) by its terms, does

not become operative for 30 days after

the date of the filing, or such shorter

time as the Commission may designate

if consistent with the protection of

investors and the public interest;

provided that the Exchange has given

the Commission written notice of its

intent to file the proposed rule change

at least five business days prior to the

filing date of the proposed rule change,

it has become effective pursuant to

Section (19(b)(3)(A) of the Act and Rule

19b–4(f)(6).

The Exchange has requested that the

Commission accelerate the operative

date of the proposal. In addition, the

Exchange provided the Commission

with written notice of its intent to file

the proposed rule change, along with a

brief description and text of the

proposed rule change, more than five

business days prior to the date of the

filing of the proposed rule change. The

Commission finds that it is appropriate

to accelerate the operative date of the

proposal and designate the proposal to

become operative today.11

The Commission finds good cause for

accelerating the operative date of the

proposed rule change. The Commission

notes that it has approved similar

proposals filed by the ISE,12 the

CBOE,13 the Pacific Exchange, Inc.

(‘‘PCX’’),14 and the Philadelphia Stock

Exchange, Inc. (‘‘Phlx’’).15 Approval of

this proposal on an accelerated basis

will enable the Amex to compete on an

equal basis with these other exchanges

and thus is consistent with Section

6(b)(8) of the Act.16

At any time within 60 days of the

filing of the proposed rule change, the

Commission may summarily abrogate

such rule change if it appears to the

Commission that such action is

necessary or appropriate in the public

interest, for the protection of investors,

or otherwise in furtherance of the Act.

IV. Solicitation of Comments

Interested persons are invited to

submit written data, views and

arguments concerning the foregoing,

including whether the proposed rule 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

Section. 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 number

SR–Amex–01–03 and should be

submitted by March 8, 2001.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.17

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 01–3802 Filed 2–14–01; 8:45 am]

BILLING CODE 8010–01–M