I. Introduction

On June 30, 2000, the American Stock Exchange LLC (“Exchange” or “Amex”), submitted to the Securities and Exchange Commission (“Commission”), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 ( printed page 58136) (“Act”) ^[1] and Rule 19b-4 thereunder,^[2] a proposed rule change creating an options principal membership seat upgrade program. The proposed rule change was published for comment in the Federal Register on August 7, 2000.^[3] The Commission received no comments on the proposal. This order approves the proposal.

II. Description of the Proposal

The Exchange believes that the recent increase in the number of securities listed on the Exchange, especially options and Exchange-traded funds, has led to a greater demand for specialists and brokers to handle the increased volume. Specialists and brokers are required to be regular members of the Exchange. To accommodate the growing need for more specialists and brokers, the Exchange has proposed a voluntary Options Principal Membership (“OPM”) Seat Upgrade Program (“Program”), with the potential for upgrading 203 options principal memberships into regular memberships.

The one-time fee to upgrade an OPM membership to a regular membership under the proposed Program will be $30,000 or $36,000, depending on whether the OPM owner elects to participate in the Program within 120 days of the effective date of the Program.^[4]

The Program would be in effect for 18 months. At the end of the 18 month period, the Program would terminate unless the Exchange elects to continue it.^[5] Fund proceeds, less administrative costs to the Exchange, would be distributed equally to regular seat owners of record at the time of distribution (excluding regular seat owners who upgraded their OPM seats). Interest on fund deposits would accrue to the regular members.

III. Discussion

The Commission finds that the proposed rule change is consistent with the Act and the rules and regulations under the Act applicable to a national securities exchange and, in particular, the requirements of Section 6(b) of the Act.^[6] Specifically, the Commission finds that the proposed rule change is consistent with Section 6(b)(5),^[7] in that it is designed to facilitate securities transactions and to remove impediments to and perfect the mechanism of a free and open market.^[8] The Commission believes that the proposed rule change will enable the Exchange to respond to the growing demand for more specialists and brokers to handle increased volume on the Exchange, which should help to facilitate securities transactions and remove impediments to a free and open market. In addition, the Commission believes the Program may help to enhance the depth and liquidity of the Amex market by bringing additional capital and market participants to the trading floor. Finally, the Commission believes that the Program should assist public customers in getting better executions of their orders by providing them with additional firms through which orders to the Amex can be routed.

IV. Conclusion

It is therefore ordered, pursuant to Section 19(b)(2) of the Act,^[9] that the proposed rule change (SR-Amex-00-36) is approved.