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Self-Regulatory Organizations; Order Granting Approval to Proposed Rule Change and Amendment Nos. 1, 2 and 3 Thereto by the American Stock Exchange LLC Relating to the Review of a Floor Official's Market Decision

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Start Preamble December 20, 2002.

On February 14, 2001, the American Stock Exchange LLC (“Amex” or “Exchange”) filed with the Securities and Exchange Commission (“Commission”), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”) [1] and Rule 19b-4 thereunder,[2] a proposed rule change to amend Amex Rule 22 to change the procedure for reviewing a Floor Official's market decision and to eliminate the right of appealing a Floor Official's market decision or ruling to the Board of Governors (“Board”). The Amex amended the proposed rule change on August 27, 2001 [3] and October 8, 2002.[4]

The proposed rule change and Amendment Nos. 1 and 2 thereto were published for comment in the Federal Register on November 15, 2002.[5] The Start Printed Page 79669Commission received no comments on the proposal, as amended. On December 19, 2002, the Amex filed Amendment No. 3 to the proposed rule change.[6] In Amendment No. 3, the Amex corrected a typographical error in the proposed rule text by clarifying that there would be no change to Amex Rule 22(a) through (c).

The Commission finds that the proposed rule change, as amended, is consistent with the requirements of the Act and the rules and regulations thereunder applicable to a national securities exchange [7] and, in particular, the requirements of Section 6 of the Act [8] and the rules and regulations thereunder. The Commission finds specifically that the proposed rule change, as amended, is consistent with Section 6(b)(5) of the Act [9] because it is designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, to foster cooperation and coordination with persons engaged in facilitating transactions in securities, to remove impediments to and perfect the mechanism of a free and open market and a national market system, and, in general, to protect investors and the public interest.

Specifically, the Commission finds that the Amex's proposal, as amended, is a reasonable effort to ensure prompt review of Floor Officials' decisions. The Commission notes that the Amex provides for several levels of appeal of a Floor Official's decision. Further, decisions of a Floor Official made with the concurrence of a Senior Floor Official may also be appealed to a panel of three governors. The Commission believes that the process for review of Floor Officials' decisions will help to ensure that Floor Officials' decisions are fair and impartial, as well as prompt. In addition, the Commission notes that the proposed rule change, as amended, would leave unchanged any right that a member or its customer may have to submit a market dispute to arbitration.

For the foregoing reasons, the Commission finds that the proposed rule change, as amended, is consistent with the requirements of the Act and rules and regulations thereunder.

It is therefore ordered, pursuant to Section 19(b)(2) of the Act [10] , that the proposed rule change (File No. SR-Amex-2001-07) and Amendment Nos. 1, 2 and 3 are approved.

Start Signature

For the Commission, by the Division of Market Regulation, pursuant to delegated authority.[11]

Margaret H. McFarland,

Deputy Secretary.

End Signature End Preamble

Footnotes

3.  See letter from William Floyd-Jones, Jr., Assistant General Counsel, Amex, to Nancy Sanow, Assistant Director, Division of Market Regulation (“Division”), Commission, dated August 24, 2001, replacing Form 19b-4 in its entirety (“Amendment No. 1”).

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4.  See letter from William Floyd-Jones, Jr., Assistant General Counsel, Amex, to Nancy Sanow, Assistant Director, Division, Commission, dated October 7, 2002, replacing Form 19b-4 in its entirety (“Amendment No. 2”).

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5.  See Securities Exchange Act Release No. 34-46779 (November 6, 2002), 67 FR 69271.

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6.  See letter from William Floyd-Jones, Jr., Assistant General Counsel, Amex, to Nancy Sanow, Assistant Director, Division, Commission, dated December 18, 2002 (“Amendment No. 3”). This was a technical amendment and is not subject to notice and comment.

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7.  In approving this proposed rule change, the Commission notes that it 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. 02-32920 Filed 12-27-02; 8:45 am]

BILLING CODE 8010-01-P