On December 18, 2002, the American Stock Exchange LLC (“Amex”) filed with the Securities and Exchange Commission (“Commission”), pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”)  and rule 19b-4 thereunder, a proposed rule change to amend Amex rule 152 to provide that a member that fails to execute an order may be compelled to take or supply the securities named in the order. The proposed rule change was published for comment in the Federal Register on March 20, 2003. The Commission received no comments on the proposal.
After careful review, the Commission finds that the proposed rule change is consistent with the requirements of the Act and the rules and regulations thereunder applicable to a national securities exchange. Specifically, the Commission finds that the proposal is consistent with section 6(b)(5) of the Act, which requires, among other things, that the Amex's rules be 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 regulating, clearing, settling, processing information with respect to, and 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.
The Commission believes that the Amex's proposal to explicitly provide that a member that has failed to execute an order may be compelled to take or supply the securities in the order should highlight the significant obligations of members in the handling of any order entrusted to them and their responsibility to correct transactions on behalf of their customers in cases of error. Furthermore, the Amex has noted that the consent provisions outlined in Amex rule 152(a) would continue to apply to the error transactions conducted under Amex rule 152(a)(1). Consequently, the Commission believes that the Amex's proposal would continue to reflect that, unless otherwise agreed, an agent is subject to a duty not to deal with his principal as an adverse party in a transaction connected with his agency without the principal's knowledge.
It is therefore ordered, pursuant to section 19(b)(2) of the Act, that the proposed rule change (File No. SR-Amex-2002-108) be, and it hereby is, approved.Start Signature
For the Commission, by the Division of Market Regulation, pursuant to delegated authority.
Margaret H. McFarland,
4. In approving this proposal, the Commission has considered the proposed rule's impact on efficiency, competition, and capital formation. 15 U.S.C. 78c(f).Back to Citation
6. The Commission also notes that the proposed Amex rule is identical to the New York Stock Exchange, Inc.'s rule. See NYSE rule 91(a).Back to Citation
[FR Doc. 03-10821 Filed 5-1-03; 8:45 am]
BILLING CODE 8010-01-P