Self-Regulatory Organizations; Notice of Filing of Proposed Rule Change by American Stock Exchange, Inc. Relating to Rescission of Rules 560 and 570 and Amendment of Rule 550, Commentary .02

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-33750; File No. SR-Amex-94-02.]

Self-Regulatory Organizations; Notice of Filing of Proposed Rule

Change by American Stock Exchange, Inc. Relating to Rescission of Rules

560 and 570 and Amendment of Rule 550, Commentary .02

March 10, 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 February

16, 1994, the American Stock Exchange, Inc. (``Amex'' or ``Exchange'')

filed with the Securities and Exchange Commission (``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

The Amex is proposing to rescind Rule 560 which regulates special

offerings and bids, rescind Rule 570 which regulates Exchange

distributions and acquisitions and amend Commentary .02 to Rule 550 to

delete its reference to Rules 560 and 570.

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 placed 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

1. Purpose

In April 1993, the Commission rescinded its Rule 10b-2, an early

anti-fraud rule dating from 1937.\1\ The rule's purpose was to prevent

persons participating in the distribution of a security from

stimulating the purchase of the security on an exchange by paying

compensation to any person for soliciting such purchases. The rule

permitted an exemption for ``special offerings'' with a ``plan'' filed

with the Commission by an exchange.\2\ The Exchange's plan is found in

Amex Rules 560 and 570, which are on-Floor procedures for distributing

or acquiring blocks of stock when the regular market cannot absorb or

supply the selling or buying interest within a reasonable time and at a

reasonable price.\3\.

---------------------------------------------------------------------------

\1\See Securities Exchange Act Release No. 32100 (April 2,

1993), 58 FR 18145 (April 8, 1993) (File No. S7-37-92) (``Rule 10b-2

Rescission Order'').

\2\The Commission amended Rule 10b-2 in 1942 to permit an

exemption for special offerings under a plan filed with the

Commission by an exchange. See Securities Exchange Act Release No.

3146 (February 6, 1942).

\3\The Commission notes that Amex Rule 560 specifies a minimum

share size of 1,000 with a value of $25,000. In today's market,

1,000 shares with a value of $25,000 is not a quantity of stock that

cannot readily be absorbed in the regular auction market. In

addition, Rule 560 predates Amex block trading rules, such as Amex

Rule 24, which defines a block of stock as 10,000 shares or more.

---------------------------------------------------------------------------

In rescinding Rule 10b-2, the Commission indicated that the Rule

was no longer necessary, given the current capacity of the markets and

the existence of other anti-fraud provisions of the federal securities

laws (e.g., Rules 10b-5 and 10b-6);\4\ and in fact, Amex Rules 560 and

570 have not been utilized for more than eleven years.\5\ With the

rescission of Commission Rule 10b-2, Amex Rules 560 and 570 have become

obsolete. Further, the Securities Industry Automation Corporation

(``SIAC'') still reserves two ``condition codes'' to identify exchange

acquisitions and exchange distributions on its high speed vendor line

and low speed ticker, which it would like to utilize for other

conditions. Accordingly, the Exchange is proposing to rescind Amex

Rules 560 and 570 and amend Rule 550, Commentary .02 to delete its

reference to these rules.\6\

---------------------------------------------------------------------------

\4\17 CFR 240.10b-5 and 240.10b-6 (1993).

\5\The Commission stated in its order rescinding Rule 10b-2 that

Rule 10b-2 was obsolete and that the activities with which the Rule

was concerned were sufficiently addressed by the general antifraud

and anti-manipulation provisions of the federal securities laws. See

Rule 10b-2 Rescission Order, supra note 1, at 18146. In addition,

the Commission noted that there have been no special offerings and

exchange distributions of the Amex since 1982. Id. at 18145.

\6\The New York Stock Exchange has made similar changes to its

analogous rules. See Securities Exchange Act Release No. 32822

(August 31, 1993), 58 FR 47484 (September 9, 1993).

---------------------------------------------------------------------------

2. Statutory 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) in particular

in that it is designed to promote just and equitable principles of

trade, remove impediments to, and perfect the mechanism of a free and

open market and protect investors and the public interest.

B. Self-Regulatory Organization's Statement on Burden on Competition

The proposed rule change will impose no 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 of the publication of this notice in the Federal

Register or within such other 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 reasons for so finding or (ii) as to

which the self-regulatory organization consents, the Commission will:

(A) By order approve the 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 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 No. SR-Amex-94-02 and should be

submitted by April 6, 1994.

For the Commission, by the Division of Market Regulation,

pursuant to delegated authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 94-6116 Filed 3-15-94; 8:45 am]

BILLING CODE 8010-01-M