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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-40533; File No. SR-AMEX-98-36]

Self-Regulatory Organizations; Notice of Filing and Immediate

Effectiveness of Proposed Rule Change by the American Stock Exchange,

Inc. Relating to the Extension of the Exchange's Pilot Program for

Specialists in Portfolio Depositary Receipts, Investment Trust

Securities and Index Fund Shares to Participate In the After-Hours

Trading Facility

October 8, 1998.

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 October 2, 1998, 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 person.

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

\2\ 17 CFR 240.19b-4.

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

Substance of the Proposed Rule Change

The Exchange is proposing to extend the pilot program permitting

specialists in Portfolio Depository Receipts (``PDRs'') \3\, investment

trust securities and Index Fund Shares to particpiate in the After-

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

to effect closing price coupled orders. The text of the proposed rule

change is available at the Office of the Secretary, Amex and at the

Commission.

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\3\ The Exchange currently lists three Portfolio Depository

Receipts: Depository Receipts on the Standard and Poor's

500 and Mid Cap Indexes and Depository Receipts

on the Dow Jones Industrial Average TM. The Exchange also

lists 17 Index Fund Shares which are commonly referred to as

WEBSsm. WEBS are shares issued by an open-end management

investment company that seeks 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 Canada 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. The Commission notes that due to certain restrictions imposed

by the Malaysian government WEBS based on the MSCI Malaysia Index

currently trade differently than the other WEBS trading on Amex.

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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 Exchange seeks an extension to October 31, 1998, of the pilot

program permitting specialists in PDRs, investment trust securities and

Index Fund Shares to participate in the AHT facility to ``clean-up''

order imabalances and to effect closing price coupled orders.

The Exchange believes that an 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. Investor interest in these securities is rapidly increasing,

and specialist participant in the AHT session provides necessary

liquidity after the close of the regular trading session. In addition,

the market price of these exchange traded funds 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 transaction occurring outside the Amex). The

specialist in the Amex listed securities 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 AHF facility in PDRs, investment

trust securities and Index Fund Shares in the manner previously

approved by the Commission on a pilot basis does not raise any market

integrity issues. 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 his needs and may cancel the order if he believes

that the closing price does not suit his objectives.

2. Statutory Basis

The Exchange believes the proposed rule change is consistent with

Section

[[Page 55661]]

6(b) \4\ of the Act, in general, and furthers the objectives of Section

6(b)(4),\5\ 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.

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\4\ 15 U.S.C. 78f(b).

\5\ 15 U.S.C. 78f(b)(4).

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

The Exchange does not believe that the proposed rule change would

impose any inappropriate burden on competition.

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

The foregoing rule change is concerned solely with the

administration of the Exchange and, therefore, has become effective

pursuant to Section 19(b)(3)(A) of the Act \6\ and subparagraph (e) of

Rule 19b-4 thereunder.\7\ 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.

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

\7\ 17 CFR 240.19b-4(e)(3).

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IV. Solicitation of Comments

Interested persons are invited to submit written data, views, and

arguments concerning the foregoing, including whether the proposed rule

change is consistent with the Act. 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 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 in the

Commission's Public Reference Room. Copies of such filing will also be

available for inspection and copying at the principal office of Amex.

All submissions should refer to the File No. SR-AMEX-98-36 and should

be submitted by November 6, 1998.

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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Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 98-27821 Filed 10-15-98; 8:45 am]

BILLING CODE 8010-01-M