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Notice

Self-Regulatory Organizations; Notice of Filing and Immediate Effectiveness of Proposed Rule Change and Amendment Nos. 1 and 2 by the American Stock Exchange LLC to Suspend Transaction Charges for Certain Exchange Traded Funds

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Start Preamble August 20, 2002.

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 July 26, 2002, the American Stock Exchange LLC (“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 Exchange. The Amex amended the proposed rule change on August 14, 2002.[3] On August 15, 2002, the Amex again amended the proposed rule change.[4] The Exchange filed the proposal pursuant to Section 19(b)(3)(A) of the Act,[5] and Rule 19b-4(f)(6) Start Printed Page 55049thereunder,[6] which renders the proposal effective upon filing with the Commission.[7] The Commission is publishing this notice to solicit comments on the proposed rule change, as amended, from interested persons.

I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change

The Exchange proposes to suspend Exchange transaction charges for the Lehman 1-3 year Treasury Bond Fund; iShares Lehman 7-10 year Treasury Bond Fund; Lehman 20+ year Treasury Bond Fund; and iShares GS $ InvesTop Corporate Bond Fund for (1) customer orders, and (2) until August 31, 2002, specialist, Registered Trader and broker-dealer orders. The text of the proposed rule change is available at the 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 Exchange included statements concerning the purpose of and basis for its proposal and discussed any comments it received regarding the proposal. The text of these statements may be examined at the places specified in Item IV below. The Amex 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 is suspending transaction charges for transactions in the iShares Lehman 1-3 year Treasury Bond Fund (Symbol: SHY); iShares Lehman 7-10 year Treasury Bond Fund (Symbol: IEF); iShares Lehman 20+ year Treasury Bond Fund (Symbol: TLT); and iShares GS $ InvesTopTM Corporate Bond Fund (Symbol: LQD) ( Funds ) for (1) customer orders indefinitely, and (2) until August 31, 2002, specialist, Registered Trader, and broker-dealer orders.

Off-Floor orders (i.e., customer and broker-dealer) in these securities currently are charged $.006 per share ($.60 per 100 shares), capped at $100 per trade (16,667 shares). Orders entered electronically into the Amex Order File (System Orders) from off the Floor for up to 5,099 shares are currently not assessed a transaction charge, but System Orders over 5,099 shares currently are subject to a $.006 per share transaction charge, capped at $100 per trade. Exchange transaction charges applicable to customer orders are now suspended. The suspension for customer orders is for an indefinite time period, and the Exchange will file a proposed rule change if it determines to end the suspension and impose transaction charges for customer orders in these securities.

Specialists in these securities are charged $0.0063 ($.63 per 100 shares), capped at $300 per trade (47,619 shares). Registered Traders in these securities are charged $.0073 ($.73 per 100 shares), capped at $350 per trade (47,945 shares). Transaction charges for specialist, Registered Trader, and broker-dealer orders are suspended until August 31, 2002.

The Exchange believes a suspension of fees for these securities is appropriate to enhance the competitiveness of executions in these securities on the Amex. The Exchange will reassess the fee suspension as appropriate, and will file a proposed rule change for any modification to the fee suspension with the Commission.

The Exchange is amending the Equities Fee Schedule to indicate that transaction charges have been suspended for the Funds. In addition, the Amex is amending the Equities Fee Schedule to refer to the suspension of transaction charges for specified Exchange Traded Funds and HOLDRs, as previously filed with the Commission.[8]

2. Statutory Basis

The Exchange believes that the proposal is consistent with Section 6(b) of the Act [9] in general, and furthers the objectives of Section 6(b)(4)[10] in particular in that it is intended to assure the equitable allocation of reasonable dues, fees, and other charges among its members and issuers and other persons using its facilities.

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

The Exchange believes that the proposed rule change will impose no burden on competition.[11]

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

Because the foregoing proposed rule change does not:

(i) Significantly affect the protection of investors or the public interest;

(ii) Impose any significant burden on competition; and

(iii) Become operative for 30 days from the date on which it was filed, or such shorter time as the Commission may designate, it has become effective pursuant to Section 19(b)(3)(A) of the Act [12] and Rule 19b-4(f)(6) thereunder.[13] At any time within 60 days of the filing of the proposed rule change,[14] 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.

The Amex has requested that the Commission waive the 30-day operative delay. The Commission believes waiving the 30-day operative delay is consistent with the protection of investors and the public interest. Acceleration of the operative date will permit the Amex to suspend these fees immediately. For these reasons, the Commission designates the proposal to be effective and operative upon filing with the Commission.[15]

Start Printed Page 55050

IV. Solicitation of Comments

Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposal is consistent with the Act. Persons making written submissions should file six copies thereof with the Secretary, Securities and Exchange Commission, 450 Fifth Street, NW, Washington, DC 20549-0609. 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 the Amex. All submissions should refer to file number SR-Amex-2002-64 and should be submitted by September 17, 2002.

For the Commission, by the Division of Market Regulation, pursuant to delegated authority.[16]

Start Signature

Margaret H. McFarland,

Deputy Secretary.

End Signature End Preamble

Footnotes

3.  See August 12, 2002 letter from Geraldine Brindisi, Vice President and Corporate Secretary, Amex, to Nancy Sanow, Assistant Director, Division of Market Regulation (“Division”), Commission, and attachments (“Amendment No. 1”). Amendment No. 1 completely replaced and superseded the original filing.

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4.  See August 14, 2002 letter from Geraldine Brindisi, Vice President and Corporate Secretary, Amex, to Nancy Sanow, Assistant Director, Division, Commission, and attachments (“Amendment No. 2”). In Amendment No. 2, the Amex added the text of the Regulatory Fee to the Equity Fee Schedule. The text was inadvertently omitted from Amendment No. 1. For purposes of calculating the 60-day abrogation period, the Commission considers the period to have commenced on August 15, 2002, the date the Amex filed Amendment No. 2.

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7.  Rule 19b-4(f)(6) under the Act requires the Amex to provide the Commission with five business days notice of its intention to file a non-controversial proposed rule change. The Amex did not provide such notice, but the Commission has decided to waive the notice requirement. The Amex asked the Commission to waive the 30-day operative delay. See Rule 19b-4(f)(6)(iii). 17 CFR 240.19b-4(f)(6)(iii).

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8.  See Securities Exchange Act Release Nos. 44698 (August 14, 2001), 66 FR 43926 (August 21, 2001)(for SPDRs®, Nasdaq 100® Index Tracking Stock, DIAMONDS® and iShares S&P 500 Index Fund); and 45773 (April 17, 2002), 67 FR 20558 (April 25, 2002)(for MidCap SPDRsTM, Select Sector SPDRs and HOLDRsTM).

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11.  Although there are inconsistencies in the Amex's original filing, Amendment No. 1, and Amendment No. 2 with regard to the Amex's Statement on Burden on Competition, the Amex confirmed that it believes the proposed rule change will impose no burden on competition. August 19, 2002 telephone conversation between Michael Cavalier, Associate General Counsel, Amex, and Joseph Morra, Special Counsel, Division of Market Regulation, Commission.

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14.  See footnote 4, supra.

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15.  For purposes only of accelerating the operative date of this proposal, the Commission has considered the proposed rule's impact on efficiency, competition, and capital formation. 15 U.S.C. 78c(f).

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[FR Doc. 02-21772 Filed 8-26-02; 8:45 am]

BILLING CODE 8010-01-P