Self-Regulatory Organizations; Notice of Filing and Immediate Effectiveness of Proposed Rule Change by the American Stock Exchange, Inc. Relating to the Adoption of a Definition of ``Foreign Broker- Dealer''

[Federal Register Volume 63, Number 37 (Wednesday, February 25, 1998)]
[Notices]
[Pages 9620-9621]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-4759]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-39679; International Series No. 1119; File No. SR-AMEX-
98-05]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by the American Stock Exchange, 
Inc. Relating to the Adoption of a Definition of ``Foreign Broker-
Dealer''

February 18, 1998.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ notice is hereby given that on February 3, 1998, the 
American Stock Exchange, Inc. (the ``Amex'' or the ``Exchange'') filed 
with the Securities and Exchange Commission (the ``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.
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    \1\ 15 U.S.C. 78s(b)(1).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Amex proposes to adopt a definition of ``foreign broker-
dealer'' for use in certain of its rules and policies for the trading 
of option contracts. The text of the proposed rule change is available 
at the Office of 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 placed 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 has currently in place certain rules and policies for 
the trading of option contracts that distinguish between orders for 
broker-dealers and orders for customers who are not broker-dealers. 
Specifically, Exchange Rule 958A provides that only non-broker-dealers 
are eligible for the guaranteed minimum execution of ten contracts at 
the displayed bid or offer; Rule 950(c) allows a Registered Options 
Trader who is establishing or increasing a position to retain priority 
over or have parity with an off-floor order for the account of a 
broker-dealer; and Exchange policy (as codified in Exchange Rule 933 
pursuant to this proposal) allows only non-broker-dealer orders to be 
executed through its automatic execution system. The Exchange therefore 
proposes to adopt a definition of foreign broker-dealer substantially 
to ensure that foreign broker-dealer orders under the above-mentioned 
rules shall receive the same treatment as U.S. broker-dealer orders, as 
opposed to customer treatment. The definition has been designed to 
provide an objective standard for the enforcement of applicable option 
rules and to substantially resemble the definition adopted by the 
Pacific Exchange (``PCX''), Philadelphia Stock Exchange (``Phlx''), and 
Chicago Board Options Exchange (``CBOE'').\2\
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    \2\ Exchange Act Release No. 38420 (March 19, 1997), 62 FR 14488 
(March 26, 1997) (PCX); Exchange Act Release No. 39382 (December 2, 
1997), 62 FR 64903 (December 9, 1997) (Phlx); and Exchange Act 
Release No. 39604 (January 30, 1998), 63 FR 6247 (February 6, 1998) 
(CBOE).
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    In light of the current globalization of the securities market, 
Amex believes that Exchange rules which treat broker-dealers in a 
different manner than other market participants should be applied 
consistently so that foreign broker-dealers trading options on the Amex 
do not have an unfair competitive advantage over U.S. broker-dealers. 
Moreover, regulating all broker-dealers equally helps to ensure that 
the specialist's volume guarantees pursuant to Rule 958A and the use of 
automatic execution systems are not exhausted by broker-dealer 
competitors to the detriment of public customers. Similarly, allowing 
Registered Options Traders to retain priority over or have parity with 
foreign as well as domestic broker-dealers will enhance their ability 
to fulfill their market-making responsibilities.
(2) Basis
    The proposed rule change is consistent with Section 6(b) of the Act 
in general and furthers the objectives of Section 6(b)(5) \3\ in 
particular in that it is designed to prevent fraudulent and 
manipulative acts and practices, to promote just and equitable 
principles of trade, and is not designed to permit unfair 
discrimination between customers, issuers, brokers or dealers.
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    \3\ 15 U.S.C. 78f(b)(5).
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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

    Because the foregoing proposed rule change: (1) Does not 
significantly affect the protection of investors or the public 
interest; (2) does not impose any significant burden on competition; 
(3) does not become operative for 30 days from February 3, 1998, the 
date on which it is filed, and the Exchange provided the Commission 
with written notice of its intent to file the proposed rule change at 
least five business days prior to the filing date, it has become 
effective pursuant to Section 19(b)(3)(A) of the Act and Rule 19b-
4(e)(6) thereunder.\4\ 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 the furtherance of the purposes of the Act.
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    \4\ 17 CFR 240.19b-4(e)(6).

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[[Page 9621]]

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, N.W., Washington, D.C. 20549. 
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, 450 Fifth Street, N.W., 
Washington, D.C. 20549. 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-98-05 and should be 
submitted by March 18, 1998.
    For the Commission by the Division of Market Regulation, 
pursuant to delegated authority.\5\
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    \5\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 98-4759 Filed 2-24-98; 8:45 am]
BILLING CODE 8010-01-M