[Federal Register Volume 65, Number 240 (Wednesday, December 13, 2000)]
[Notices]
[Pages 77942-77943]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-31682]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-43660; File No. SR-Amex-00-57]
Self-Regulatory Organizations; Notice of Filing of Proposed Rule
Change by the American Stock Exchange LLC to Increase to One Hundred
the Maximum Permissible Number of Equity and Index Option Contracts
Executable Through AUTO-EX
December 4, 2000.
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 November 28, 2000, 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 Amex. The
Commission is publishing this notice to solicit comments on the
proposed rule change from interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of
Substance of the Proposed Rule Change
The Amex proposes to increase to one hundred the maximum
permissible number of equity and index option contracts in an order
executable through its automatic execution system, AUTO-EX. 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.
[[Page 77943]]
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
In 1985, the Exchange implemented the AUTO-EX system, which
automatically executes public customer market and marketable limit
orders in options at the best bid or offer displayed at the time the
order is entitled into the Amex Order File (``AOF''). There are,
however, limitations on the number of option contracts that can be
entered into or executed by these systems. AOF, which handles limit
orders routed to the specialist's book as well as orders routed to
AUTO-EX, was recently increased to allow for the entry of orders of up
to 250 option contracts.\3\ Generally, however, AUTO-EX is only
permitted to execute equity option orders and index option orders of up
to seventy-five contracts.\4\ Thus, market and marketable limit orders
of more than seventy-five contracts are generally routed by AOF to the
specialist's book.
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\3\ See Securities Exchange Act Release No. 42128 (November 10,
1999), 64 FR 63836 (November 22, 1999).
\4\ See Securities Exchange Act Release No. 43516 (November 3,
2000), 65 FR 69079 (November 15, 2000). While the maximum
permissible number of contracts in an index option order executable
through AUTO-EX is generally seventy-five contracts, there are a few
exceptions: The Institutional, Japan and S&P MidCap 400 Indexes
allow ninety-nine contract orders. The Exchange proposes to increase
the applicable parameter from ninety-nine to one hundred for the
Institutional, Japan and S&P MidCap 400 indices to eliminate any
potential for confusion over the permissible parameters applicable
to AUTO-EX eligible orders for both equity and index options.
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The Exchange now proposes to increase to one hundred the maximum
permissible number of equity and index option contracts in an order
that can be executed through the AUTO-EX system. It is proposed that
this increase to one hundred in permissible order size for AUTO-EX be
implemented on a case-by-case basis for an individual option class or
for all option classes when two floor governors or senior floor
officials deem such an increase appropriate. Currently, the Amex posts
applicable quote size parameters on its web page. Generally, these
parameters provide that displayed quotes are for twenty contracts for
equity options and for thirty contracts for index options and are set
on a class-by-class basis. However, pursuant to Exchange Rule 958A, the
order size for AUTO-EX will remain at ten contracts for equity and
index options, or such larger size currently in effect and as indicated
on the Exchange's web page.\5\ The Exchange represents that it has
sufficient systems capacity necessary to accommodate implementation of
the proposed increase.
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\5\ Amex Rule 958A, referred to as the ``Firm Quote Rule,''
requires Exchange specialists to sell (buy) at least ten (10)
contracts at the offer (bid) which is displayed when a buy (sell)
order reaches the trading post where the option class is located for
trading.
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The Exchange represents that AUTO-EX has been extremely successful
in enhancing execution and operational efficiencies during emergency
situations and during other, non-emergency situations for certain
option classes. The Exchange believes that automatic executions of
orders for up to one hundred contracts will allow for the quick,
efficient execution of public customer orders.
2. Statutory Basis
The proposed rule change is consistent with section 6(b) \6\ of the
Act in general and furthers the objectives of section 6(b)(5) \7\ 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.
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\6\ 15 U.S.C. 78f(b).
\7\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition
The Amex 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
The Commission invites interested persons 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 Amex. All submissions should refer to File No.
SR-Amex-00-57 and should be submitted by January 3, 2001.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\8\
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\8\ 17 CFR 200.30(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 00-31682 Filed 12-12-00; 8:45 am]
BILLING CODE 8010-01-M