Self-Regulatory Organizations; Notice of Filing of Proposed Rule Change by the American Stock Exchange, Inc., Relating to the Off-Site Storage of Customer Options Account Information

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-34811; File No. SR-Amex-94-37]

Self-Regulatory Organizations; Notice of Filing of Proposed Rule

Change by the American Stock Exchange, Inc., Relating to the Off-Site

Storage of Customer Options Account Information

October 7, 1994.

Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934

(``Act''), 15 U.S.C. 78s(b)(1), notice is hereby given that on

September 12, 1994, the American Stock Exchange, Inc. (``Amex'' or

``Exchange'') filed with the Securities and Exchange Commission

(``SEC'' or ``Commission'') the proposed rule change as described in

Items I, II, and III below, which Items have been prepared by the self-

regulatory organization. The Commission is publishing this notice to

solicit comments on the proposed rule change from interested persons.

I. Self-Regulatory Organization's Statement of the Terms of

Substance of the Proposed Rule Change

Currently, paragraph (b), ``Maintenance of Customer Records,'' of

Amex Rule 922, ``Supervision of Accounts,'' requires that background

and financial information of customers who have been approved for

options transactions be maintained at both the branch office servicing

the customer's account and at the principal supervisory office with

jurisdiction over the branch office. Amex Rule 922(b) also requires

that copies of account statements be maintained at both the branch

office supervising the accounts and at the principal supervisory office

with jurisdiction over the branch for the most recent six-month period.

The Amex proposes to amend Exchange Rule 922(b) to provide that the

customer information and account statements currently maintained at the

principal supervisory office may be maintained at a location other than

the principal supervisory office if the documents and information are

readily accessible and promptly retrievable.

The text of the proposal 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 self-regulatory organization

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 self-regulatory organization

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

(a) Purpose

Presently, the rules of all the options exchanges and the National

Association of Securities Dealers, Inc. (``NASD'') uniformly require

that both the branch office servicing an options customer's account and

the principal supervisory office having jurisdiction over the branch

office retain account statements and other financial and background

information for the account for supervisory purposes. With the advances

in data storage and retrieval capability available through optical

disks, fax machines, microfiche and computer, coupled with the

escalating costs of storing records on-site, many member organizations

prefer to store documents away from their principal supervisory

offices. In this connection, an increasing number of member

organizations have asked and received permission from the self-

regulatory organizations (``SROs'') to store the required customer

option account documents off-site so long as they are readily

accessible and promptly retrievable. In view of the number of requests

received by the SROs to store customer options information off-site,

the Options Self-Regulatory Council (``OSRC'')\1\ has asked each of the

options exchanges and the NASD to consider amending their rules to

permit the principal supervisory office to store customer account

information off-site.

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\1\The OSRC is a committee comprised of representatives from

each of the options exchanges and the NASD.

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The Exchange believes that these off-site storage arrangements are

consistent with the record retention requirement rules, provided the

documents are readily accessible and promptly retrievable. In this

regard, the proposed rule will not compromise the supervisory

obligations of a member firm since the firm will still be required to

maintain customer option account documents and information at the

branch office servicing the customer's account. To ensure compliance

with the provisions of the rule, the Amex states that it will

periodically examine the document retrieval capabilities of member

firms using off-site document storage arrangements.

(b) Basis

The Amex believes that the proposed rule change is consistent with

Section 6(b) of the Act, in general, and furthers the objectives of

Section 6(b)(5), 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.

(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 after the 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 reason for so finding or (ii) as to

which the self-regulatory organization 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

Interested persons are invited to submit written data, views and

arguments concerning the foregoing. 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 November 7,

1994.

For the Commission, by the Division of Market Regulation,

pursuant to delegated authority.\2\

\2\17 CFR 200.30-3(a)(12) (1993).

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Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 94-25552 Filed 10-14-94; 8:45 am]

BILLING CODE 8010-01-M