67 FR 7 pgs. 1377-1378 - Self-Regulatory Organizations; Notice of Filing and Immediate Effectiveness of Proposed Rule Change by the American Stock Exchange LLC Relating to the Pilot Program Eliminating Position and Exercise Limits for Certain Broad Based Index Options
Type: NOTICEVolume: 67Number: 7Pages: 1377 - 1378
Docket number: [Release No. 34-45234; File No. SR-AMEX-2001-109]
FR document: [FR Doc. 02-633 Filed 1-9-02; 8:45 am]
Agency: Securities and Exchange Commission
Official PDF Version: PDF Version
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-45234; File No. SR-AMEX-2001-109]
Self-Regulatory Organizations; Notice of Filing and Immediate Effectiveness of Proposed Rule Change by the American Stock Exchange LLC Relating to the Pilot Program Eliminating Position and Exercise Limits for Certain Broad Based Index Options
January 3, 2002.
Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 (the "Act),"1and Rule 19b-4 thereunder,2notice is hereby given that on December 26, 2001, the American Stock Exchange LLC ("Amex" or the "Exchange") filed with the Securities and Exchange Commission ("SEC" or "Commission") the proposed rule change as described in Items I and II 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 Act3which renders the proposal effective upon receipt of this filing by the Commission.4The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons and to grant accelerated approval to the proposed rule change.
Footnotes:
1 15 U.S.C. 78s(b)(1).
2 17 CFR 240.19b-4
3 17 CFR 240.19b-4(f)(6).
4 The Exchange has represented that the proposed rule change: (i) Will not significantly affect the protection of investors or the public interest, (ii) will not impose any significant burden on competition; and (iii) will not become operative for 30 days after the date of this filing, unless otherwise accelerated by the Commission. The Exchange also has provided at least five business days notice to the Commission of its intent to file this proposed rule change, as required by Rule 19b-4 under the Act. id.
I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change
The Exchange seeks a six-month extension of the pilot program that provides for the elimination of position and exercise limits for the Major Market ("XMI") and Institutional ("XII") broad-based index options, as well as FLEX Options.
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 Statutory Basis for, the Proposed Rule Change
1. Purpose
On February 1, 1999, The Commission approved the elimination of position and exercise limits for the XMI and XII index options, as well as FLEX options on these indexes on a two-year basis (the "Pilot Program").5The Pilot Program originally ended on February 1, 2001 with an extension for six months approved on July 3, 2001.6The purpose of this proposed rule change is to request a six-month extension of the Pilot Program.7
Footnotes:
5 See Securities Exchange Act Release No. 41011, 64 FR 6405 (February 9, 1999) ("Original Approval Order").
6 See Securities Exchange Act Release No. 44507, 66 FR 36348 (July 11, 2001).
7 By separate filing, the Exchange intends to seek permanent approval by the Commission of the Pilot Program.
The Original Approval Order required the Exchange to submit a report to the Commission regarding the status of the Pilot Program so that the Commission could use this information to evaluate any effects of the program.8The Exchange submitted the required report to the Commission on May 22, 2001 in connection with the first six-month extension of the Pilot Program. The report indicated that from February 1, 1999 through March 30, 2001, no customer and/or firm accounts reached a level of 100,000 or more options contracts in XMI or XII options. The Amex during the review period and the extended pilot program did not discover any instances where an account maintained an unusually large unhedged position. Accordingly, because the Exchange has not experienced any aberrations due to the large unhedged positions during the operation of the Pilot Program, it requests that the effectiveness of the Pilot Program be extended for an additional six months until July 3, 2002.
Footnotes:
8 The Commission requests that the Amex update the Commission on any problems that have developed with the pilot since the last extension, including any compliance issues, and whether there have been any large unhedged positions that have raised concerns for the Amex. In addition, the Commission expects that the Amex will take prompt action, including timely communication with the Commission and other marketplace self-regulatory organizations responsible for oversight of trading in component stocks, should any unanticipated adverse market effects develop. See also Original Approval Order.
2. Basis
The proposed rule change is consistent with section 6(b) of the Act9in general and furthers the objects of section 6(b)(5)10in 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.
Footnotes:
9 15 U.S.C. 78f(b).
10 15 U.S.C. 78f(b)(5).
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
The foregoing rule change has become immediately effective pursuant to section 19(b)(3)(A) of the Act11and Rule 19b-4(f)(6) thereunder12because it: (i) Does not significantly affect the protection of investors or the public interest; (ii) does not impose any significant burden on competition; and (iii) does not, by its terms, 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; and 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.
Footnotes:
11 15 U.S.C. 78s(b)(3)(A).
12 17 CFR 240.19b-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 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 on January 4, 2002.13Acceleration of the operative date will allow the Exchange to continue its Pilot Program without interruption. Further the Commission has approved a similar pilot program proposed by another options exchange.14
Footnotes:
13 For 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).
14 See Securities Exchanges Act Release No. 44335 (May 22, 2001), 66 FR 29369 (May 30, 2001) (SR-CBOE-2001-26).
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 it 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 provision 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 No. SR-AMEX-2001-109 and should be submitted by January 31, 2002.
For the Commission by the Division of Market Regulation, pursuant to delegated authority.15
Footnotes:
15 17 CFR 200.30-3(a)(12).
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 02-633 Filed 1-9-02; 8:45 am]
BILLING CODE 8010-01-M