Self-Regulatory Organizations; Notice of Filing of Proposed Rule Change by the American Stock Exchange, Inc. Relating to Its After-Hours Trading Facility

Federal RegisterMar 29, 1994

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-33802; File No. SR-Amex-93-15]

Self-Regulatory Organizations; Notice of Filing of Proposed Rule

Change by the American Stock Exchange, Inc. Relating to Its After-Hours

Trading Facility

March 22, 1994.

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

(``Act''),\1\ and rule 19b-4 thereunder,\2\ notice is hereby given that

on April 21, 1993, 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.\3\

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

\2\17 CFR 240.19b-4 (1991).

\3\Concurrently with this notice, the Commission is also

publishing for comment proposals submitted by the New York Stock

Exchange, Inc. (``NYSE''), the Boston Stock Exchange, Inc.

(``BSE''), the Chicago Stock Exchange, Inc. (``CHX''), the

Philadelphia Stock Exchange, Inc. (``Phlx'') and the Pacific Stock

Exchange, Inc. (``PSE''), to request permanent approval for their

respective programs which provide for executions of securities after

regular trading hours. See File Nos. SR-NYSE-93-50; BSE-93-24; SR-

CHX-93-23; SR-Phlx-94-8; and SR-PSE-94-2.

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

Substance of the Proposed Rule Change

The Exchange requests permanent approval of its pilot After-Hours

Trading (``AHT'') facility.\4\ Originally approved in 1991, the AHT

facility has been extended on a temporary basis, most recently until

April 30, 1994.\5\

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\4\As originally filed, File No. SR-Amex-93-15 requested

permanent approval of Amex's pilot After-Hours Trading facility. On

January 4, 1994, the Amex amended the filing with an additional

request for a three month extension of the pilot until April 30,

1994, in order to give the Commission adequate time to consider the

request for permanent approval and requested that the extension be

granted accelerated approval. See letter from William Floyd-Jones,

Jr., Amex, to Sandra Sciole, Special Counsel, Commission, dated

December 23, 1993. That extension was approved in Securities

Exchange Act Release No. 33561. See infra note 5.

\5\The Commission partially approved the Exchange's AHT facility

in 1991. See Securities Exchange Act Release No. 29515 (August 2,

1991), 56 FR 37736 (August 8, 1991). The Commission subsequently

approved extensions of the Exchange's AHT facility. See Securities

Exchange Act Release No. 32363 (May 25, 1993), 58 FR 31558 (June 3,

1993) and 33561 (February 1, 1994), 59 FR 5789 (February 8, 1994)

(order granting partial accelerated approval to File No. SR-Amex-93-

15).

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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

1. Purpose

In August 1991, the Commission partially approved the Exchange's

AHT facility on a temporary basis.\6\ This facility permits the

execution of coupled and single-sided closing price orders after the

close of the 9:30 a.m. to 4 p.m. trading session. Commencing at 4:15

p.m., single-sided round lot orders for equity securities can be

entered through the Exchange's PER system or left with the specialist

or the specialist's authorized representative for matching and

execution at 5 p.m. at the Exchange's last closing regular way price.

Coupled buy and sell round lot, odd lot and partial round lot orders

also can be entered through the PER system, or left with the specialist

for execution at 5 p.m. against each other at the Exchange's last

regular way price. Members are permitted to designate good 'till

canceled (``GTC'') limit orders entered during the regular trading

session as eligible for execution in the AHT session. Such orders are

marked ``GTX'' and migrate to the AHT facility for possible

execution.\7\

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\6\See Securities Exchange Act Release No. 29515 (August 2,

1991), 56 FR 37736 (August 8, 1991) (order approving File No. SR-

Amex-91-15) (Amex AHT Approval Order).

\7\The Commission notes that the Amex's AHT facility enables

members, not including specialists, to enter both proprietary and

agency orders in any Exchange traded equity security, including

stocks, rights, warrants, primes and scores, ADRs, and non-option

equity derivative products, for execution at the Exchange's last

closing regular way price.

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The Commission stated in its order approving the AHT facility that

it would review the operation of the facility during the temporary

approval period. In this regard, the Commission asked the Exchange to

assemble date on the operation of the facility which the Exchange

submitted under separate cover. It is the Exchange's opinion that the

system has functioned well during the temporary approval period and

that the operation of the system has not had any adverse affects upon

the development of the national market system.\8\ In the order

extending the pilot until April 30, 1994, the Commission requested that

the Exchange submit to the Commission by March 15, 1994, an updated

report concerning the pilot activity through February 28, 1994. This

updated report will assist the Commission in considering the Exchange's

request for permanent approval prior to the April 30, 1994 expiration

of the pilot program.

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\8\File No. SR-Amex-93-15 also requests Commission approval for

specialist participation in the AHT facility for investment trust

securities listed pursuant to Section 118B of the Exchange's Listing

Guidelines. The previous pilot and extension orders temporarily

approved only the portion of the AHT proposal which establishes the

AHT facility and which allows members, not including specialists, to

enter proprietary and agency orders in Exchange-traded equities. The

Commission has not approved on a pilot basis the portion of the

proposed rule change which allows specialists to participate in any

way for their own accounts in the AHT facility. See File No. SR-

Amex-93-15. See also Securities Exchange Act Release Nos. 32363 and

33561, supra note 5.

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2. Statutory Basis

The proposed rule change is consistent with Section 6(b) of the Act

of 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, promote just and equitable principles of trade, remove

impediments to and perfect the mechanism of a free and open market and

a national market system, and, in general, 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 of the

proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing

for Commission Action

Within 35 days of the date of 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 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 Room, 450 Fifth Street, NW., Washington,

DC 20549. Copies of the 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-93-15 and should be submitted by April 19,

1994.

For the Commission, by the Division of Market Regulation,

pursuant to delegated authority.\9\

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\9\17 CFR 200.30-3(a)(12) (1991).

[FR Doc. 94-7277 Filed 3-28-94; 8:45 am]

BILLING CODE 8010-01-M

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-33800; File No. SR-BSE-93-24]

Self-Regulatory Organizations; Filing of Proposed Rule Change by the

Boston Stock Exchange, Inc. (``BSE'') Relating to the Facilitation of

GTX Orders

March 22, 1994.

Pursuant to section 19(b)(1) of the Securities Exchanges Act of

1934 (``Act''), 15 U.S.C. 78s(b)(1), notice is hereby given that on

December 23, 1993, the Boston Stock Exchange, Inc. (``BSE'' 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.\1\

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\1\Concurrently with this notice, the Commission is also

publishing for comment proposals submitted by the New York Stock

Exchange, Inc., the American Stock Exchange Inc., the Chicago Stock

Exchange, Inc., the Philadelphia Stock Exchange, Inc. and the

Pacific Stock Exchange, Inc., to request permanent approval for

their respective programs which provide for executions of securities

after regular trading hours. See File Nos. SR-NYSE-93-50; SR-CHX-93-

23; SR-Amex-93-15; SR-Phlx-94-8; and SR-PSE-94-2.

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

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Substance of the Proposed Rule Change

The Exchange requests permanent approval of its pilot program for

the facilitation of customer ``GTX'' orders (good until cancelled,

executable through crossing session) after the close of the 9:30 a.m.

to 4 p.m. trading session.\2\ On February 1, 1994, the Commission

approved an extension of the BSE's pilot program until April 30,

1994.\3\

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\2\On June 13, 1991, the Commission approved, on a pilot basis,

File No. SR-BSE-91-04, which established BSE procedures for

providing primary market protection after regular trading hours for

customer limit orders. See Securities Exchange Act Release No. 29301

(June 13, 1993), 56 FR 28182 (order approving File No. SR-BSE-91-04)

(BSE Approval Order). The BSE procedures provide primary market

protection for customer GTX orders in securities listed on the NYSE

and on the Amex and traded during the after-hours sessions on those

Exchanges. The New York Stock Exchange (``NYSE'') initiated its Off-

Hours trading (``OHT'') Crossing Sessions in June 1991. See

Securities Exchange Act Release No. 29237 (May 24, 1991), 56 FR

24853 (approving File Nos. SR-NYSE-90-52 and NYSE-90-53). The

American Stock Exchange, Inc. (``Amex'') established an after-hours

trading facility in August 1991. See Securities Exchange Act Release

No. 29515 (August 2, 1991), 56 FR 37736 (approving File No. SR-Amex-

91-15). The Commission approved extensions of the NYSE, Amex and BSE

pilots, as well as pilots by other regional exchanges until January

31, 1994 and further extended the pilots until April 30, 1994. See

Securities Exchange Act Release Nos. 32365 (May 25, 1993), 58 FR

31560 (June 3, 1993), and 33562 (February 8, 1994), 59 FR 5792

(February 8, 1994).

\3\See Securities Exchange Act Release No. 33562, supra note 2.

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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

1. Purpose

The purpose of the proposed rule change is to request permanent

approval of the proposed rule which expires on April 30, 1994, and

which permits Exchange specialists to provide primary market price

protection to limit orders through the acceptance of cancellations and

issuance of trade reports after the close of the 9:30 a.m. to 4 p.m.

trading session in order to accommodate certain member orders

designated as GTX orders. The GTX order is an unconditioned good until

canceled (``FTC'') order designated by the entering broker as

executable at 5:00 p.m. at the primary market closing price. This pilot

does not establish a separate after-hours trading session on the

Exchange.

Under the pilot program, pursuant to the BSE's Execution Guarantee

Rule, if an issue has traded at the limit price in a primary market's

after-hours trading session, the specialist is required to fill GTX

orders after the close of the 9:30 a.m. to 4:00 p.m. trading session

based on volume that prints in the primary market's after-hours trading

session, unless it can be demonstrated to the primary market or the

broker and specialist agree to a specific volume-related or other

criteria requiring a fill.\4\

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\4\The BSE Execution Guarantee Rule states, among other things,

that all agency limit orders will be filled if the issue is trading

on the primary market at the limit price unless it can be

demonstrated that such order would not have been executed if it had

been transmitted to the primary market, or the broker and specialist

agree to a specific volume-related or other criteria requiring a

fill. See BSE Rules of the Board, Chapter II, Section 33.01. In

effect, pursuant to this rule, if an issue has traded at the limit

price in a primary market's after-hours trading session, the BSE

specialist must fill limit orders, designated as executable after

the BSE close by the GTX designation, based on volume that prints in

the primary market's after-hours session. See Securities Exchange

Act Release No. 29301, supra note 2.

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Procedurally, the Exchange's BEACON system\5\ scans each

specialist's limit order books for limit orders designated as GTX and

priced at the primary market closing price. All such orders become

eligible for execution at the primary market closing price up to the

amount of the volume that prints in the primary market's after-hours

trading session. GTX orders on the specialists' books retain priority

among themselves and are entitled to an execution based on that

priority. Any eligible GTX orders that are not due a report based on

prints in the primary market's after-hours trading session remain on

the specialists' books and retain their priority in the next day's

regular trading session.

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\5\BEACON, the Boston Exchange Automated Communications Order

Routing Network, routes orders in eligible stocks from member firms

to the BSE. BEACON allows orders to be transmitted from member firms

to a BSE specialist's post where they are displayed on the

specialist's terminal together with the automatically assigned

BEACON quote at which the order would be automatically executed. The

order is displayed on the specialist's terminal for up to 15 seconds

to permit the specialist to intervene in the automatic execution of

the order should be or she wish to improve on the BEACON quotation.

When the specialist does not intervene, the order automatically will

be executed at the BEACON quote. See Securities Exchange Act Release

No. 27012 (July 10, 1989), 54 FR 30487 (July 20, 1989).

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Eligible GTX orders that are due an execution are manually executed

and reported to the Consolidated Tape as regular way transactions after

the primary market prints its 5:00 p.m. transactions.

In addition, the proposed pilot defines one-sided and two-sided

single stock orders in the event that the Exchange chooses to adapt its

current proposed procedures to provide for the acceptance, execution

and reporting of such orders at a future date.\6\ The Commission

requested in its order extending the pilot until April 30, 1994, that

the Exchange submit to the Commission by March 15, 1994, an updated

report concerning the pilot activity through February 28, 1994. This

updated report will assist the Commission in considering the Exchange's

request for permanent approval prior to the April 30, 1994 expiration

of the pilot program.

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\6\While the BSE pilot program includes definitions of one-sided

and two-sided single stock orders, the BSE currently does not effect

such orders after the regular chose of business. Under current

procedures, the BSE only effects transactions after-hours in order

to provide primary market protection to GTX orders held on a BSE

specialist's book.

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2. Statutory Basis

The proposed rule change will advance the objectives of section

6(b)(5) of the Act in that it is designed to promote just and equitable

principles of trade, foster cooperation and coordination with persons

engaged in facilitating transactions in securities, and remove

impediments to and perfect the mechanism of a free and open market and

a national market system. This is accomplished through the ability of

the Exchange to compete with the primary markets in protecting limit

orders that are sent to the BSE that may have been eligible for an

after-hours execution if they had been sent to the primary market, and

in effect allows the Exchange to compete with the primary markets in

regard to this new order type. The proposed rule gives Exchange

specialists the ability to provide additional liquidity to that

provided in the primary markets,\7\ thus advancing the objective of

public order protection. Because of this ability to compete with the

primary markets and to protect customer limit orders, the concept of a

free and national market system is strengthened.

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\7\A regional specialist may send a mirror order to the primary

market to aid in determining whether an after-hours execution is

due. In such situations, the regional specialist would not be

providing additional liquidity, but would be protecting his or her

customers' limit orders.

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

The Exchange does not believe that the proposed rule will impose

any burden on competition that is not necessary or appropriate in

furtherance of the purposes of the Act.

C. Self-Regulatory Organization's Statement on Comments on the Proposed

Rule Change Received From Members, Participants or Others

The Exchange has neither solicited nor received comments on the

proposed rule.

III. Date of Effectiveness of the Proposed Rule Change and Timing

for Commission Action

Within 35 days of the date of 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 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