Self-Regulatory Organizations; American Stock Exchange, Inc.; Order Granting Accelerated Approval of a Proposed Rule Change and Amendment Nos. 2 and 3, and Filing and Order Granting Accelerated Approval of Amendment No. 4 to the Proposed Rule Change Relating to the Listing and Trading of Options on the Mexico Index

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-34500; International Series Release No. 397; File No.

SR-Amex-94-20]

Self-Regulatory Organizations; American Stock Exchange, Inc.;

Order Granting Accelerated Approval of a Proposed Rule Change and

Amendment Nos. 2 and 3, and Filing and Order Granting Accelerated

Approval of Amendment No. 4 to the Proposed Rule Change Relating to the

Listing and Trading of Options on the Mexico Index

August 8, 1994.

On June 3, 1994, the American Stock Exchange, Inc. (``Amex'' or

``Exchange'') submitted to the Securities and Exchange Commission

(``SEC'' or ``Commission''), pursuant to Section 19(b)(1) of the

Securities and Exchange Act of 1934 (``Act''),\1\ and Rule 19b-4

thereunder,\2\ a proposed rule change to list and trade options on the

Mexico Index (``Mexico Index'' or ``Index''). On June 27, 1994, the

Exchange filed Amendment No. 1 to the proposed rule change, the subject

matter of which was superseded with the filing of Amendment No. 2

(``Amendment No. 2''), which was filed on July 7, 1994.\3\ Amendment

No. 1 was formally withdrawn on July 8, 1994.\4\ On July 11, 1994, the

Exchange filed Amendment No. 3 (``Amendment No. 3'') to the proposed

rule change to provide for certain standards to be used in conjunction

with the maintenance of the Index, as described below.\5\ On July 12,

1994, the Exchange filed Amendment No. 4 (``Amendment No 4'') to the

proposed rule change to amend the applicable position limits from

10,500 contracts to 7,500.\6\

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\1\15 U.S.C. Sec. 78s(b)(1) (1988).

\2\17 CFR Sec. 249.19b-4 (1991).

\3\See Letter from Howard Baker, Senior Vice President,

Derivative Securities, Amex, to Michael Walinskas, Derivative

Products Regulation, SEC, dated July 7, 1994. In the original

proposal, the Amex sought approval for the listing of options based

upon a Mexico Index that was capitalization-weighted and based upon

shares of twenty Mexican stocks or American Depositary Receipts

(``ADRs'') traded on the New York Stock Exchange, Amex or that were

National Market securities. The Amex proposed that the Index be

classified as a broad-based index. Amendment No. 2 supersedes the

original proposal and Amendment No. 1.

\4\See Letter from Howard A. Baker, Senior Vice President,

Derivative Securities, Amex, to Michael Walinskas, Derivative

Products Regulation, SEC, dated July 8, 1994.

\5\See Letter from Howard A. Baker, Senior Vice President,

Derivative Securities, Amex, to Michael Walinskas, Derivative

Products Regulation, SEC, dated July 11, 1994.

\6\See Letter from Claire McGrath, Managing Director and Special

Counsel, Derivative Securities, Amex, to Michael Walinskas,

Derivative Products Regulation, SEC, dated July 12, 1994.

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Notice of the proposed rule change and Amendment Nos. 2 and 3 was

published for comment and appeared in the Federal Register on July 15,

1994.\7\ No comments were received on the proposal. This order approves

the proposal and Amendment Nos. 2, 3 and 4.

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\7\See Securities Exchange Act Release No. 34356 (July 12,

1994), 59 FR 36235.

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I. Description of the Proposal

The Amex has developed a new index called the Mexico Index, based

entirely on the value of shares or related American Depositary Receipts

(``ADRs'') of widely held Mexican companies traded on the NYSE, Amex,

or that are National Market (``NM'') securities traded through the

National Association of Securities Dealers Automated Quotation system

(``NASDAQ''). The Index contains securities of highly-capitalized

companies with major business interests in Mexico. The Exchange states

that these companies have been drawn from a variety of industries,

including construction, telecommunications, banking, shipping, tobacco,

media, and food and beverage, to reflect the diversity of the Mexican

market.

Index Calculation and Maintenance

The Index is calculated using a ``modified'' equal dollar weighting

methodology. In an attempt to more closely approximate the industry

weightings within the Mexico stock market, the two highest capitalized

components within the Index are given higher weightings, 24% and 12%,

respectively, while the eight remaining Index components are weighted

equally at 8%. Accordingly, as of the market close on June 17, 1994, a

portfolio of ten Mexican component securities was established

representing a hypothetical investment (rounded to the nearest whole

share) of $24,000 in the largest capitalized component in the Index,

$12,000 in the second largest, and $8,000 in each of the remaining

Index components. The value of the Index equals the current market

value (i.e., based on U.S. primary market prices) of the sum of the

assigned number of shares of each of the Index components divided by

the Index divisor. The Index divisor has been established to yield the

benchmark value of 175.00 at the close of trading on July 22, 1994.\8\

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\8\See Letter from Howard A. Baker, Senior Vice President,

Derivative Securities, Amex, to Michael Walinskas, Derivative

Products Regulation, SEC, dated August 3, 1994. The Amex initially

proposed to utilize a divisor calculated to yield the value of

231.00 at the close of trading on June 17, 1994.

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Each quarter thereafter, following the close of trading on the

third Friday of March, June, September and December, the Index

components will be ranked in descending market capitalization order and

the Index portfolio adjusted by changing the number of whole shares of

each component so that the largest capitalized Index component once

again represents 24% of the Index value, the second largest component

represents 12%, and each of the remaining components represent 8%. If

the number of components in the Index increases to greater than ten,

the Amex will continue to weight the two components with the highest

market capitalizations 24% and 12%, respectively. The remaining

components will then be weighted equally.\9\ For example, if two new

components are added to the Index, the two securities with the highest

market capitalizations will be assigned a 24% and 12% weighting,

respectively, while the remaining ten Index components will be assigned

a 6.4% weighting.

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\9\See Amendment No. 3.

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If it becomes necessary to remove an Index component, the exchange

will either add an Index component having characteristics that will

permit the Index to remain within the maintenance criteria specified in

the Generic Narrow-Based Index Approval Order (and also contained in

exchange Rule 901C),\10\ or will permit the Index to be calculated

based upon the remaining components (but no fewer than nine) until the

next quarterly rebalancing, at which time the Exchange will replace the

component so that the Index will continue to have at least ten

components.\11\ The Exchange has chosen to rebalance following the

close of trading on the quarterly expiration cycle because it allows an

option contract to be held for up to three months without a change in

the Index portfolio. If necessary, a divisor adjustment is made at the

rebalancing to ensure continuity of the Index's value. The newly

adjusted portfolio becomes the basis for the Index's value on the first

trading day following the quarterly adjustment.

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\10\See Securities Exchange Act Release No. 34157 (June 3,

1994), 59 FR 30062 (June 10, 1994) (``Generic Narrow Based Index

Approval Order'').

\11\See Amendment No. 3.

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The Amex states that it has routine experience making regular

quarterly adjustments to a number of its indexes and has not

encountered investor confusion regarding the adjustments, since they

are done on a regular basis and timely, proper, and adequate notice is

given to market participants. Particularly, an information circular is

distributed to all Exchange members notifying them of the quarterly

changes. This circular is also sent by facsimile to the Exchange's

contacts at the major options firms, mailed to recipients of the

Exchange's options related information circulars, and made available to

subscribers of the Options News Network. In addition, the Exchange will

include in its promotional and marketing materials for the Index a

description of the ``modified'' equal dollar weighting methodology.

As noted above, the number of shares of each component in the Index

portfolio remain fixed between quarterly reviews except in the event of

certain types of corporate actions such as the payment of a dividend

other than an ordinary cash dividend, a stock distribution, stock

splits, reverse stock splits, rights offering distribution,

reorganization, recapitalization, or similar event with respect to the

Index component securities. In a merger or consolidation of an issuer

of an Index component, if the component remains in the Index, the

number of shares of that component in the Index portfolio may be

adjusted, to the nearest whole share, to maintain the component's

relative weight in the Index at the level immediately prior to the

corporate action. Further, if the Exchange replaces an Index component

at a time other than at a quarterly rebalancing, it will do so in the

following manner: if one of the two highest weighted Index components

is replaced, the Exchange will determined the weighting of the Index

component being replaced and assign the same weighting to the newly

added component. If one of the equally weighted Index components is

replaced, the average dollar value of the remaining Index components

within that tier will be calculated and the resulting figure used to

determine the assigned Index portfolio shares, to the nearest whole

share. In all cases, the divisor will be adjusted, if necessary, to

ensure Index continuity, and the Index will be rebalanced at the next

regularly scheduled rebalancing.\12\

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\12\See Letter from Nathan Most, Senior Vice President, New

Products Development, Amex, to Michael Walinskas, Derivative

Products Regulation, SEC, dated August 3, 1994, This Letter also

withdraws that portion of Amendment No. 3 as it relates to the

replacement of Index components.

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The Amex will calculate and maintain the Index and, pursuant to

Exchange Rule 901C(b), may at any time or from time to time substitute

Index component securities, or adjust the number of components included

in the Index, based on changing conditions in Mexico. However, the

Exchange will not decrease the number of Index components to greater

than nine or increase the number of components to greater than thirteen

without prior Commission approval.\13\

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\13\See Amendment No. 3.

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The value of the Index will be calculated continuously and

disseminated every 15 seconds over the Consolidated Tape Association's

Network B.

Expiration and Settlement

The Exchange proposes to trade cash-settled, European-style Index

options (i.e., exercises are permitted at expiration only). The

Exchange also proposes that Mexico Index options will have trading

hours from 9:30 a.m. to 4:15 p.m. EST. As with other index options

traded on the Amex, the options on the Index will expire on the

Saturday following the third Friday of the expiration month

(``Expiration Friday''). The last trading day in an option series will

normally be the second to last business day preceding the Saturday

following the third Friday of the expiration month (normally a

Thursday). Trading in expiring options will cease at the close of

trading on the last trading day.

The Index value for purposes of settling a specific Mexico Index

option will be calculated based upon the primary exchange regular way

opening sale prices for the Index component securities. In the case of

NM securities, the first reported sale price will be used. As trading

begins in each of the Index's component securities, its opening sale

price is used to calculate the Index settlement value. The Index

settlement value can be determined once all of the components have

opened. If any of the components do not open for trading on the last

trading day before expiration, then the prior day's last sale price is

used in the Index settlement value calculation.

The Exchange plans to list options series with expirations in the

three near-term calender months and in the two additional calendar

months in the March cycle. In addition, longer term option series

having up to thirty-six months to expiration may be traded. In lieu of

such long-term options on a full-value Index level, the Exchange may

instead list long-term, reduced-value put and call options based on

one-tenth (1/10th) the Index's full-value. In either event, the

interval between expiration months for either a full-value or reduced-

value long-term option will not be less than six months.

Eligibility and Maintenance Standards for Index Components

The Exchange has represented that it will ensure that the Index

initially and thereafter satisfies the initial listing and maintenance

criteria set forth in the Generic Narrow-Based Index Approval Order. In

choosing among Index component securities that meet the initial minimum

criteria set forth in the Generic Narrow-Based Index Approval Order (as

well as Exchange Rule 901C), the Exchange will select components that:

(1) have a minimum market value of at least U.S. $75 million, except

that for each of the lowest weighted component securities in the Index

that in the aggregate account for no more than 10% of the weight of the

Index, the market value may be at least $50 million; (2) have an

average monthly trading volume in the U.S. markets over the previous

six-month period of not less than one million shares (or ADRs) except

that for each of the lowest weighted component securities in the Index

that in the aggregate account for no more than 10% of the weight of the

Index, the trading volume shall be at least 500,000 shares in each of

the last six months; (3) have at least 90% of the numerical Index value

and at least 80% of the total number of component securities meeting

the current criteria for standardized option trading set forth in

Exchange Rule 915; and (4) are reported securities that trade on either

the NYSE, Amex (subject to the limitations of Rule 901C), or are NM

securities. In addition, no individual stock in the Index may represent

more than 25% of the Index weight (at the time of rebalancing) and the

five highest weight stocks may not constitute more than 60% of the

Index weight (at the time of rebalancing).

The Amex will ensure that not more than 20% of the weight of the

Index is represented by ADRs overlying foreign securities that are not

subject to comprehensive surveillance sharing agreements.\14\

Currently, one component ADR, accounting for 8% of the Index value, has

the majority of its trading volume occurring on the Bolsa Mexicana de

Valores, an exchange with which the Amex does not currently have in

place an effective information sharing agreement.

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\14\See Amendment No. 3: Also, see infra note 23.

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If the Index fails at any time to satisfy the maintenance criteria

set forth in the Generic Narrow-Based Index Approval Order and Exchange

Rule 901C, the Exchange will immediately notify the Commission of that

fact and will not open for trading any additional series of options of

the Index unless such failure is determined by the Exchange not to be

significant and the Commission concurs in that determination, or unless

the continued listing of options on the Mexico Index has been approved

by the Commission under Section 19(b)(2) of the Exchange Act.\15\

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\15\See Amendment No. 3.

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Exchange Rules Applicable to Stock Index Options

Amex Rules 900C through 980C will apply to the trading of regular

and long-term contracts based on the Index. These Rules cover issues as

such as surveillance, exercise prices, and position limits.

Surveillance procedures currently used to monitor trading in each of

the Exchange's other index options will also be used to monitor trading

in options on the Index. The Index is deemed to be a Stock Index option

under Rule 901C(a) and a Stock Index Group under Rule 900C(b)(1). With

respect to Rule 903C(b), the Exchange proposes to list near-the-money

(i.e., within ten points above or below the current index value)

options series on the Index at 2\1/2\ point strike (exercise) price

intervals when the value of the Index is below 200 points. In addition,

the Exchange proposes to establish, pursuant to Rule 904C(c), a

position limit of 7,500 contracts on the same side of the market.\16\

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\16\See Amendment No. 4.

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The Exchange seeks to have the ability to utilize its Auto-Ex

system for orders in the Index options of up to 50 contracts. Auto-Ex

is the Exchange's automated execution system which provides for the

automatic execution of market and marketable limit orders at the best

bid or offer at the time the order is entered. The Amex believes the

ability to use Auto-Ex for orders of up to 50 contracts will provide

customers with deep, liquid markets as well as expeditious executions.

The Amex represents that it has the necessary systems capacity to

support new series that would result from the introduction of Mexico

Index Options.\17\

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\17\See Letter from Edward Cook, Jr., Managing Director,

Information Technology, Amex, to Michael Walinskas, Derivative

Products Regulation, SEC, dated July 8, 1994. Additionally, the

Options Price Reporting Authority (``OPRA'') has stated that it has

the necessary systems capacity to support those new series of index

options that would result from the introduction of Index options and

Index LEAPS. See Memorandum from Joe Corrigan, Executive Director,

OPRA, to Charles Faurot, Managing Director, Market Data Services,

Amex, dated July 8, 1994.

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II. Discussion

The Commission finds that the proposed rule change is consistent

with the requirements of the Act and the rules and regulations

thereunder applicable to a national securities exchange and, in

particular, the requirements of Section 6(b)(5).\18\ Specifically, the

Commission finds that the trading of Mexico Index options, including

full-value and reduced-value Index LEAPS, will serve to promote the

public interest and help to remove impediments to a free and open

securities market by providing investors with a means of hedging

exposure to market risk associated with Mexican securities.\19\

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\18\15 U.S.C. Sec. 78f(b)(5) (1988).

\19\Pursuant to Section 6(b)(5) of the Act, the Commission must

predicate approval of any new option proposal upon a finding that

the introduction of such new derivative instrument is in the public

interest. Such a finding would be difficult for a derivative

instrument that served no hedging or other economic function,

because any benefits that might be derived by market participants

likely would be outweighted by the potential for manipulation,

diminished public confidence in the integrity of the markets, and

other valid regulatory concerns. In this regard, the trading of

listed Index options and full-value Index LEAPS will provide

investors with a hedging vehicle that should reflect the overall

movement of Mexican stocks and ADRs in the U.S. securities markets.

The Commission also believes that these Index options will provide

investors with a means by which to make investment decisions

regarding Mexican securities traded in the U.S. securities markets,

allowing them to establish positions or increase existing positions

in such markets in a cost effective manner. Moreover, the Commission

believes that the reduced-value Index LEAPS, which will be traded on

an index computed at one-tenth the value of the Mexico Index, will

serve the needs of retail investors by providing them with the

opportunity to use a long-term option to hedge their portfolios from

long-term market moves, at a reduced cost.

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The trading of options on the Mexico Index, including full-value

and reduced-value Index LEAPS, however, raises several concerns, namely

issues related to index design, customer protection, surveillance, and

market impact. The Commission believes, for the reasons discussed

below, that the Amex adequately has addressed these concerns.

A. Index Design and Structure

The Commission finds that the Mexico Index is a narrow-based index.

The Mexico Index is composed of only ten securities, all of which

represent Mexico companies.\20\ Accordingly, in light of the limited

number of components in the Index, the Commission believes it is proper

to classify the Mexico Index as narrow-based and apply Amex's rules

governing narrow-based index options to trading in the Index options.

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\20\The reduced-value Mexico Index, which is composed of the

same component securities as the Index and calculated by dividing

the Index value by ten, is identical to the Mexico Index.

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The Commission also finds that the large capitalizations, Liquid

markets, and relative weightings of the Index's component securities

significantly minimize the potential for manipulation of the Index.

First, the overwhelming majority of the components that comprise the

Index are actively traded, with an average daily trading volume for the

period from November, 1993 through May, 1994, ranging from a high of

430,000 shares per day to a low of 106,000 shares per day. Second, the

market capitalizations of the securities in the Index are very large,

ranging, during the same period, from a high of $31 billion to a low of

$156.92 billion, with the mean and median being $6.77 billion and $1.94

billion, respectively. Third, although the Index is only comprised of

ten component securities, no one particular security or group of

securities dominates the Index. Specifically, no one stock or ADR

comprises more than 24 percent of the Index's total value and the

percentage weighting of the five largest issues in the Index account

for 60 percent of the Index's value. Fourth, at least 90 percent of the

securities in the Index, by weight, and at least 80 percent of the

number of components of the Index, must be eligible for standardized

options trading. This proposed maintenance requirement will ensure that

the Index is substantially comprised of options-eligible securities.

Fifth, if the Amex increases the number of component securities to more

than thirteen or decreases that number to less than nine, the Amex will

be required to seek Commission approval pursuant to Section 19(b)(2) of

the Act before listing new strike price or expiration month series of

Mexico Index options and Index LEAPS. This will help protect against

material changes in the composition and design of the Index that might

adversely affect the Amex's obligations to protect investors and to

maintain fair and orderly markets in Mexico Index options and Index

LEAPS. Sixth, the Amex will be required to ensure that each component

of the Index is subject to last sale reporting pursuant to Rule 11Aa3-1

of the Act.\21\ This will further reduce the potential for manipulation

of the value of the Index. Finally, the Commission believes that the

expense of attempting to manipulate the value of the Mexico Index in

any significant way through trading in component stocks, ADRs, or

securities underlying ADRs (or options on those securities) coupled

with, as discussed below, existing mechanisms to monitor trading

activity in those securities, will help deter such illegal activity.

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\21\ See Amendment No. 3.

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Furthermore, the Commission notes that the Amex has agreed to apply

the initial listing and maintenance standards set forth in the Generic

Narrow Based Index Approval Order to the Index and Index options. These

standards are reasonably designed to ensure the protection of investors

and the public interest. Specifically, the Commission finds that the

generic standards covering minimum capitalization, monthly trading

volume, and relative weightings of component stocks are designed to

ensure that the trading markets for component stocks are adequately

capitalized and sufficiently liquid, and that no one stock or stock

group dominates an Index. Thus, the Commission believes that the

satisfaction of these requirements significantly minimizes the

potential for manipulation of the Index.

B. Customer Protection

The Commission believes that a regulatory system designed to

protect public customers must be in place before the trading of

sophisticated financial instruments, such as Mexico Index options

(including full-value and reduced-value Mexico LEAPS), can commence on

a national securities exchange. The Commission notes that the trading

of standardized exchange-traded options occurs in an environment that

is designed to ensure, among other things, that: (1) the special risks

of options are disclosed to public customers; (2) only investors

capable of evaluating and bearing the risks of options trading are

engaged in such trading; and (3) special compliance procedures are

applicable to options accounts. Accordingly, because the Index options

and Index LEAPS will be subject to the same regulatory regime as the

other standardized options currently traded on the Amex, the Commission

believes that adequate safeguards are in place to ensure the protection

of investors in Mexico Index options and full-value and reduced-value

Mexico Index LEAPS.

C. Surveillance

The Commission believes that a surveillance sharing agreement

between an exchange proposing to list a security index derivative

product and the exchange(s) trading the securities underlying the

derivative product is an important measure for surveillance of the

derivative and underlying securities markets. Such agreements ensure

the availability of information necessary to detect and deter potential

manipulations and other trading abuses, thereby making the security

index product less readily susceptible to manipulation.\22\ In this

regard, the Amex, NYSE, and NASD are all members of the ISG, which

provides for the exchange of all necessary surveillance

information.\23\ Further, as to present and future ADR components of

the Index, either the Exchange will have comprehensive surveillance

sharing agreements with the primary foreign markets for the securities

underlying the ADRs or the U.S. will be the relevant market for

surveillance purposes.\24\

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\22\Securities Exchange Act Release No. 31243 (September 28,

1992), 57 FR 45849 (October 5, 1992).

\23\If the prices of the ADR components, or the composition of

the Index, should change so that greater than 20% of the weight of

the Index would be represented by ADRs whose underlying securities

were not the subject of a comprehensive surveillance sharing

agreement with the Amex, then it would be difficult for the

Commission to reach the conclusions reached in this order and the

Commission would have to determine whether it would be suitable for

the Exchange to continue to trade options on this Index. The Amex

should, accordingly, notify the Commission immediately if more than

20% of the numerical value of the Index is represented by ADRs whose

underlying securities are not subject to a comprehensive

surveillance sharing agreement. Such a change in the current

relative weights of the Index or in the composition of the Index may

warrant the submission of a rule filing pursuant to Section 19 of

the Act. In determining whether a particular ADR is subject to a

comprehensive surveillance sharing agreement, see, e.g., Securities

Exchange Act Release Nos. 31531 (November 27, 1992), 57 FR 57250

(December 3, 1992); and 33554 (January 31, 1994), 59 FR 5622

(February 7, 1994).

\24\See Securities Exchange Act Release Nos. 31531 (November 27,

1992), 57 FR 57250 (December 3, 1992); and 33554 (January 31, 1994),

59 FR 5622 (February 7, 1994).

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D. Market Impact

The Commission believes that the listing and trading of Mexico

Index options, including full-value and reduced-value Index LEAPS, on

the Amex will not adversely impact the underlying securities markets.

First, as described above, for the most part, no one security or group

of securities dominates the Index. Second, because at least 90% of the

numerical value of the Index and at least 80% of the components of the

Index must be accounted for by securities that meet the Exchange's

options listing standards, and because each of the component securities

must be subject to last sale reporting pursuant to Rule 11Aa3-1 of the

Act,\25\ the component securities generally will be actively-traded,

highly-capitalized securities. Third, the 7,500 contract position and

exercise limits applicable to Index options and Index LEAPS will serve

to minimize potential manipulation and market impact concerns.

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\25\See Amendment No. 3.

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The Commission believes that settling expiring Mexico Index options

(including full-value and reduced-value Index LEAPS) based on the

opening prices of component securities is consistent with the Act. As

noted in other contexts, valuing options for exercise settlement on

expiration based on opening prices rather than closing prices may help

reduce adverse effects on markets for securities underlying options on

the Index.\26\ Lastly, the Commission believes the ability to use Auto-

Ex for orders of up to 50 contracts will provide customers with liquid

markets and efficient executions.

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\26\See Securities Exchange Act Release No. 30944 (July 21,

1992), 57 FR 33376 (July 28, 1992).

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The Commission finds that the proposed rule change is consistent

with the requirements of the Act and the rules and regulations

thereunder applicable to a national securities exchange, and, in

particular, the requirements of Section 6(b)(5).\27\ In particular, the

Commission believes the proposal is consistent with the Section 6(b)(5)

requirement that the rules of an exchange be designed to promote just

and equitable principles of trade and not to permit unfair

discrimination between customers, issuers, brokers, and dealers.

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\27\15 U.S.C. Sec. 78f(b)(5) (1988).

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The Commission finds good cause for approving the proposed rule

change, as amended, and Amendment No. 4 to the Exchange's proposed rule

change prior to the thirtieth day after the date of publication of

notice of filing thereof in the Federal Register. Amendment No. 4

clarifies that the Exchange will apply its current rules to determine

applicable position limits for the Index options and, therefore, raises

no new or unique regulatory issues. Furthermore, the Commission notes

that the Amex did not realize the proposal would have been eligible for

filing, pursuant to Section 19(b)(3)(A) of the Act, under the Generic

Narrow Based Index Approval Order. Accordingly, because the

effectiveness of the proposal was therefore delayed, in part, by

confusion over the proper method under which to file, and considering

the proposal has already been subject to a 21-day comment period, and

no comments were received, the Commission believes it is consistent

with Sections 19(b)(2) and 6(b)(5) of the Act to approve the proposed

rule change, as amended, on an accelerated basis.

III. Solicitation of Comments

Interested persons are invited to submit written data, views and

arguments concerning Amendment No. 4. Persons making written

submissions should file six copies thereof with the Secretary,

Securities and Exchange Commission, 450 Fifth Street NW., Washington,

DC 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 at the Commission's Public Reference Section, 450 Fifth Street

NW., Washington, DC. Copies of such filing will also be available for

inspection and copying at the principal office of the above-mentioned

self-regulatory organization. All submissions should refer to the file

number in the caption above and should be submitted by September 2,

1994.

It therefore is Ordered, pursuant to Section 19(b)(2) of the

Act,\28\ that the proposed rule change, as amended, (SR-AMEX-94-20) is

approved.

\28\15 U.S.C. Sec. 78s(b)(2) (1988).

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For the Commission, by the Division of Market Regulation,

pursuant to delegated authority.\29\

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\29\17 CFR Sec. 200.30-3(a)(12) (1993).

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Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 94-19743 Filed 8-11-94; 8:45 am]

BILLING CODE 8010-01-M