Self-Regulatory Organizations; Notice of Filing and Immediate Effectiveness of Proposed Rule Change by the American Stock Exchange, Inc., Relating to a One-Year Extension of the Exchange's Pilot Program for Specialists in Portfolio Depositary Receipts and Investment Trust Securities to Participate in the After-Hours Trading Facility and to Extend the Pilot Program to Index Fund Shares

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-37529; File No. SR-Amex-96-30]

Self-Regulatory Organizations; Notice of Filing and Immediate

Effectiveness of Proposed Rule Change by the American Stock Exchange,

Inc., Relating to a One-Year Extension of the Exchange's Pilot Program

for Specialists in Portfolio Depositary Receipts and Investment Trust

Securities to Participate in the After-Hours Trading Facility and to

Extend the Pilot Program to Index Fund Shares

August 6, 1996.

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

(``Act''),\1\ notice is hereby given that on July 31, 1996, 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 and II 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.

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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 text of the proposed rule change is available at the Amex and

at the Commission.

[[Page 41815]]

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 Exchange seeks a one year extension of the pilot program

permitting specialists in Portfolio Depositary Receipts (``PDRs'') and

investment trust securities listed pursuant to Section 118B of the

Exchange's Company Guide \2\ to participate in the After-Hours Trading

(``AHT'') facility to ``clean-up'' order imbalances and to effect

closing price coupled orders.\3\ The Exchange also seeks to extend the

pilot program to Index Fund Shares.\4\

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\2\ The Exchange currently lists two Portfolio Depositary

Receipts, viz., Standard and Poor's Depositary Receipts on the S&P

500 and MidCap Indexes (``SPDRs''); and two investment trust

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

Guidelines: LOR Index Trust SuperUnits and LOR Money Market

SuperUnits.

\3\ According to the Exchange, there was no trading volume in

the AHT for SPDRs and investment trust securities from June 1995 to

June 1996. The Exchange, nevertheless, is optimistic that there

could be after hours trading in these securities (particularly if

SPDRs could be used as the cash component of an exchange for

physical transaction). The Commission notes that in the last

approval order extending the pilot, the Commission requested that

the Exchange submit a report describing its experience with the

pilot program. See Securities Exchange Act Release No. 36123 (Aug.

18, 1995), 60 FR 44519 (Aug. 28, 1995) (extending Amex's pilot

program permitting specialists to participate in the After-Hours

Trading Facility in PDRs and investment trust securities until

August 29, 1996). According to the Exchange, it has not submitted

such a report because there has been no trading in the AHT for SPDRs

and investment trust securities.

\4\ The Exchange currently lists 16 Index Fund Shares, which are

commonly referred to as WEBSsm. WEBS are shares issued by an

open-end management investment company that seek to provide

investment results that correspond generally to the price and yield

performance of a specified foreign or domestic equity market index.

The Exchange currently lists WEBS based on the following Morgan

Stanley Capital International (``MSCI'') indices: MSCI Australia

Index; MSCI Austria Index; MSCI Belgium Index; MSCI Canda Index;

MSCI France Index; MSCI Germany Index; MSCI Hong Kong Index; MSCI

Italy Index; MSCI Japan Index; MSCI Malaysia Index; MSCI Mexico

Index; MSCI Netherlands Index; MSCI Singapore (Free) Index; MSCI

Spain Index; MSCI Sweden Index; MSCI Switzerland Index; and MSCI

United Kingdom Index. (See SR-AMEX-95-43.)

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The Exchange believes that extension of the Exchange's pilot

program to permit specialists in PDRs, investment trust securities and

Index Fund Shares to participate in the AHT facility in order to

``clean-up'' order imbalances and effect closing price coupled orders

would benefit investors by providing additional liquidity to the listed

cash market for derivative securities based upon well known market

indexes. The market price of these securities is based upon

transactions largely effected in markets other than the Amex. (In the

case of Index Fund Shares, the market price of these securities is

based exclusively on transactions occurring outside the Amex.) The

specialist in the Amex listed derivatives has no unique access to

market sensitive information regarding the market for the underlying

securities or closing index values. The Exchange, therefore, believes

that specialist participation in the AHT facility in PDRs, investment

trust securities and Index Fund Shares in the manner previously

approved by the Commission does not raise any market integrity

issues.\5\ In addition, should a customer not care for an execution at

the closing price, the rules of the Exchange's AHT facility permit

cancellation of an order up to the close of the AHT session at 5:00

p.m. (Orders in the AHT facility are not executed until the 5:00 p.m.

close of the After-Hours session.) A customer, therefore, has

approximately 40 minutes to determine if an execution at the closing

price suits its needs, and may cancel its order if it believes that the

closing price does not suit it objectives.

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\5\ The Commission notes that as in the original pilot program,

specialists in PDRs, investment trust securities, and Index Fund

Shares may participate in a coupled closing price order as long as

the other side of the order is not for an account in which a member

or member organization has a direct or indirect interest. Moreover,

as with the original pilot program, the limit orders for PDRs,

investment trust securities, and Index Fund Shares may not migrate

from the specialist's limit order book to the AHT facility in order

to help prevent manipulation or misuse of specialists' information

regarding which limit orders are eligible for execution in the AHT

facility. See Securities Exchange Act Release No,. 36123, supra note

3.

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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) in particular in

that it is designed to prevent fraudulent 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 does not 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 written comments on

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 July 31, 1996, the date

on which it was 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 \6\ and Rule 19b-4(e)(6)

thereunder.\7\ Therefore, the pilot program will be extended until

August 29, 1997.

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\6\ 15 U.S.C. 78s(b)(3)(A).

\7\ 17 CFR 240.19b-4(e)(6).

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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 furtherance of the purposes of the Act.

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, 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

[[Page 41816]]

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, N.W., Washington, D.C. 20549.

Copies of such filing also will be available for inspection and copying

at the principal office of the Exchange. All submissions should refer

to File No. SR-Amex-96-30 and should be submitted by September 3, 1996.

For the Commission, by the Division of Market Regulation,

pursuant to delegated authority.\8\

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\8\ 17 CFR 200.30-3(a)(12).

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Jonathan G. Katz,

Secretary.

[FR Doc. 96-20456 Filed 8-9-96; 8:45 am]

BILLING CODE 8010-01-M