Federal Register / Vol. 66, No. 35 / Wednesday, February 21, 2001 / Notices 11073

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

2 17 CFR 240.19b–4.

3See January 23, 2001 letter from Michael

Cavalier, Associate General Counsel, Legal and

Regulatory, Amex, to Nancy Sanow, Assistant

Director, Division of Market Regulation, SEC

(‘‘Amendment No. 1’’). At the Commission’s

request, the Amex filed Amendment No. 1, which

asks that the proposal be implemented on a oneyear pilot program basis.

4See Securities Exchange Act Release No. 26550

(February 15, 1989), 54 FR 7655 (February 22, 1989)

(SR–Amex–88–30).

5 Id.

6 15 U.S.C. 78f(b).

7 15 U.S.C. 78f(b)(5).

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–43954; File No. SR–AMEX

01–01]

Self-Regulatory Organizations; Notice

of Filing of Proposed Rule Change and

Amendment No. 1 by the American

Stock Exchange LLC Relating to

Amendments to Rule 126(g) and

Precedence Based on Size

February 12, 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 January

18, 2001, the American Stock Exchange

LLC (‘‘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 Exchange.

On February 5, 2001, the Amex

amended the proposal.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 amend Amex

Rule 126(g), Commentary .01, to reduce

from 25,000 to 5,000 shares the

minimum size block cross that will be

permitted to establish size precedence.

The text of the proposed rule change is

below. Proposed new language is in

italics. Proposed deletions are in

brackets.

Rule 126 Precedence of Bids and

Offers

Commentary .01

Order to cross 5,000 [25,000], shares

or more, where one or both sides of such

cross is for the account of a member or

member organization, will be permitted

to establish precedence based on size so

long as the orders are represented at the

post when a sale removing all bids and

offers from the Floor takes place. Once

the precedence of such orders of 5,000

[25,000] shares or more has been

established, the broker handling the

cross must then bid and offer the

security in accordance with Rule 152.

* * * * *

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

Exchange 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

In 1989, the Commission approved on

a permanent basis Amex Rule 126(g),

Commentary .01, which provides that

orders to cross 25,000 shares or more

will be permitted to establish

precedence over other bids and offers.4

Procedures under Rule 126(g),

Commentary .01 permit size precedence

for crosses of 25,000 shares or more to

be established when no other order has

price or time priority. When an order

has time priority, a sale removing all

bids and offers from the floor must

occur before parity is established, and

the order to cross can be accorded

precedence based on size. Thus, in

order to obtain precedence, orders to

cross 25,000 shares or more must have

been presented at the specialist’s post

when the sale removing all bids and

offers from the floor had taken place.

Once size precedence has been

established, the broker handling the

cross must then bid and offer the

security in accordance with Amex Rule

152.5

The Exchange is proposing to reduce

from 25,000 to 5,000 shares the

minimum size block cross that will be

permitted to establish size precedence.

The block cross procedures under Amex

Rule 126(g) have facilitated executions

of large size orders on the Amex as one

transaction at a single price, without

such orders losing shares to other orders

in the trading crowd or on the

specialist’s book due to Exchange parity

rules. In addition, by facilitating the

execution of large blocks on the Amex,

the proposed rule change will reduce

member firms’ incentive to route such

orders to regional exchanges or the third

market in order to avoid losing an

excessive number of shares to other

orders under existing Amex parity rules.

The Exchange notes that, with the startup of decimal pricing in equities, with

a minimum price variation of one cent,

it will be less expensive for members to

break up proposed block crosses on the

Amex Floor, which may result in such

crosses being routed to markets in

which size precedence is not taken into

account in the manner required by

Amex rules.

The Exchange believes it is

appropriate to permit block size orders

of 5,000 shares to establish size

precedence. The proposal will bring

Amex rules more in line with the New

York Stock Exchange (‘‘NYSE’’) size

precedence rules (e.g., NYSE Rule 72),

but Amex rules will continue to be more

conservative than NYSE rules in that

size precedence will be accorded only to

crosses, and only when such orders

involve 5,000 shares or more. In

addition, confining the Exchange’s size

precedence threshold to 5,000 shares

will continue to limit the effects of the

rule primarily to active, liquid issues.

2. Statutory Basis

The Amex believes the proposed rule

change is consistent with Section 6(b) of

the Act 6 in general and furthers the

objectives of Section 6(b)(5) 7 in

particular in that it 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 believes the proposed

rule change will impose no 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

11074 Federal Register / Vol. 66, No. 35 / Wednesday, February 21, 2001 / Notices

8 17 CFR 200.30–3(a)(12).

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

2 17 CFR 240.19b–4.

3See Securities Exchange Act Release No. 34089

(May 19, 1994), 59 FR 27301 (May 26, 1994) (SR–

Amex–92–41) (approval order).

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.

The Amex has requested accelerated

approval of the proposed rule change.

While the Commission will not grant

accelerated approval at this time, the

Commission will consider granting

accelerated approval of the proposal at

the close of an abbreviated comment

period of 15 days from the date of

publication of the proposal in the

Federal Register.

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 such filing will also be

available for inspection and copying at

the principal office of the Exchange. All

submissions should refer to file number

SR–Amex–01–01 and should be

submitted by March 8, 2001.

For the Commission by the Division of

Market Regulation, pursuant to delegated

authority.8

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 01–4261 Filed 2–20–01; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–43950; File No. SR–Amex–

01–02]

Self-Regulatory Organizations; Notice

of Filing of Proposed Rule Change by

the American Stock Exchange LLC to

Amend Amex Rule 126(g),

Commentary .02 Regarding Agency

Cross Transactions

February 12, 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 February

5, 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.

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

Amex Rule 126(g), Commentary .02, to

reduce the number of shares that may be

crossed on an agency basis under the

rule from 25,000 shares to 5,000 shares.

The text of the proposed rule change is

below. Proposed new language is in

italics. Proposed deletions are in

brackets.

Rule 126 Precedence of Bids and

Offers

Commentary .02

When a member has an order to buy

and an order to sell an equivalent

amount of the same security, and both

orders are of 5,000 [25,000] shares or

more and are for the accounts of persons

who are not members or member

organizations, the member may ‘‘cross’’

those orders at a price at or within the

prevailing quotation. The member’s bid

or offer shall be entitled to priority at

such cross price, irrespective of preexisting bids or offers at that price. The

member shall follow the crossing

procedures of Rule 151, and another

member may trade with either the bid

or offer side of the cross transaction

only to provide a price which is better

than the cross price as to all or part of

such bid or offer. A member who is

providing a better price to one side of

the cross transaction must trade with all

other market interest having priority at

that price before trading with any part

of the cross transaction. No member

may break up the proposed cross

transaction, in whole or in part, at the

cross price. A transaction effected at the

cross price in reliance on this

Commentary .02 shall be printed as

‘‘stopped stock’’.

* * * * *

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

Exchange 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 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

Amex Rule 126, ‘‘Precedence of Bids

and Offers,’’ sets out rules governing

priority and precedence of bids and

offers on the Exchange Floor, and

generally provides that bids and offers

are entitled to precedence based on

time, with members bidding at the

highest price (offering at the lowest

price) entitled to be on parity and divide

executions at their price after a previous

sale removes all bids and offers from the

Floor. Commentary .02 to Amex Rule

126(g) 3 applies only to agency crosses

(referred to herein as ‘‘clean crosses’’) to

buy and sell orders of 25,000 shares or

more (that is, both orders for accounts

of non-members). This commentary

provides that a member may cross those

orders at a price at or within the

prevailing quotation, with such orders

entitled to priority at the cross price

over previously entered bids and offers.

When crossing these orders, the member

must follow the crossing procedures of

Amex Rule 151 and another member

may trade with either the bid or offer

side of the cross to provide

improvement to all or part of the bid or

offer. In addition, the member must

trade with all other market interest

having time priority at that price before