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Notice

Self-Regulatory Organizations; Notice of Filing and Immediate Effectiveness of Proposed Rule Change and Amendment No. 1 Thereto by the American Stock Exchange LLC To Renumber Commentary .02 to Rule 131 and Amend a Reference Thereto in Commentary .06 to Rule 155

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Start Preamble July 14, 2003.

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 June 10, 2003, 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 Exchange filed the proposal pursuant to section 19(b)(3)(A) of the Act,[3] and Rule 19b-4(f)(3) thereunder,[4] which renders the proposal effective upon filing with the Commission. On June 12, 2003, the Start Printed Page 43408Exchange filed Amendment No. 1 to the proposed rule change.[5] 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 renumber Rule 131, Commentary .02, as approved in Release No. 34-47960,[6] as Rule 131, Commentary .03. The text of the proposed rule change is set forth below. Proposed new language is in italics; proposed deletions are in [brackets].

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Types of Orders

Rule 131

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Commentary [.02] .03

(a) “Market at 4:00 p.m.” orders. An order in Portfolio Depositary Receipts or Index Fund Shares that trade on the Exchange until 4:15 p.m. may be designated as “market at 4 p.m.” to denote that it is a market order which is to be executed at or as close as practicable to the close of the regular equity trading session on the exchange (normally 4 p.m. Eastern Time).

(b) Where a member is holding simultaneously both buy and sell “market at 4 p.m.” orders, and where there is an imbalance between the buy and sell “market at 4 p.m.” orders, the member shall, at 4 p.m. or as close as practicable to 4 p.m., execute the imbalance against the prevailing bid or offer on the Exchange, as appropriate. (An imbalance of buy orders would be executed against the offer. An imbalance of sell orders would be executed against the bid.) The member shall then pair off the remaining “market at 4 p.m.” orders at the price of the immediately preceding sale described above.

(c) Where the aggregate size of buy “market at 4:00 p.m.” orders equals the aggregate size of sell “market at 4:00 p.m.” orders in a given security, the buy and sell orders shall be paired off at the midpoint of the then prevailing bid and offer in that security on the Exchange. In the event that that midpoint consists of a number including a fraction of a cent, then the price of the transaction shall be at the next higher one cent increment above the midpoint.

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Precedence Accorded to Orders Entrusted to Specialists

Rule 155

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Commentary

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.06 Notwithstanding anything in Commentaries .03 and .04 above to the contrary, “market at 4 p.m.” orders entered with the specialist in Portfolio Depositary Receipts and Index Fund Shares (see Rule 131, Commentary [.02] .03) shall be executed at one price at 4 p.m. or as close as practicable to 4 p.m. and shall have priority over limit orders priced at the execution price.

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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 Exchange 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 Exchange 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

On June 2, 2003, the Commission approved a proposed rule change in Release No. 34-47960 relating to “market at 4 p.m.” orders for Exchange Traded Funds that added Commentary .02 to Rule 131 and Commentary .06 to Rule 155.[7] The Exchange proposes to amend Rule 131, Commentary .02 as approved in Release No. 34-47960 to renumber it as Rule 131, Commentary .03. The Exchange also proposes to amend Rule 155, Commentary .06 to change the reference therein from Rule 131, Commentary .02 to Rule 131, Commentary .03. These changes would correct the erroneous numbering of two distinct provisions as Rule 121, Commentary .02, as approved in Release No. 34-47960 and Release No. 34-47658.[8]

2. Statutory Basis

The Exchange believes that the proposed rule change is consistent with the provisions of section 6(b) of the Act,[9] in general, and furthers the objectives of section 6(b)(5)[10] in particular, in that 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, to protect investors and the public interest and is not designed to permit unfair discrimination between customers, issuers, brokers, or dealers.

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

The Exchange does not believe that the proposed rule change, as amended, will impose any burden on competition.

C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others

Written comments were neither solicited nor received with respect to the proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action [11]

The proposed rule change has become effective pursuant to section 19(b)(3)(A)(i) of the Act [12] and subparagraph (f)(1) of Rule 19b-4 thereunder [13] because it constitutes a stated policy, practice, or interpretation with respect to the meaning, administration, or enforcement of an existing rule of the Exchange. At any Start Printed Page 43409time 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, 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, 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 Exchange. All submissions should refer to file number SR-Amex-2003-59 and should be submitted by August 12, 2003.

Start Signature

For the Commission, by the Division of Market Regulation, pursuant to delegated authority.[14]

Margaret H. McFarland,

Deputy Secretary.

End Signature End Preamble

Footnotes

5.  In Amendment No. 1, the Exchange amended the proposal to replace Exhibit A as originally filed with a revised Exhibit A (i) to correct the text of Rule 131, Commentary .03 (as re-numbered) and (ii) to amend the text of Rule 155, Commentary .06, to change the reference therein from Rule 131, Commentary .02 to Rule 131, Commentary .03. See letter dated June 11, 2003, from Claire McGrath, Senior Vice President and Deputy General Counsel, Exchange, to Nancy Sanow, Assistant Director, Division of Market Regulation, Commission. For purposes of calculating the 60-day period within which the Commission may summarily abrogate the proposed rule change under section 19(b)(3)(C) of the Act, the Commission considers that the period to commence on June 12, 2003, the date the Exchange filed Amendment No. 1. See 15 U.S.C. 78s(b)(3)(C).

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6.  See Securities Exchange Act Release No. 47960 (June 2, 2003), 68 FR 34440 (June 9, 2003) (SR-Amex-2003-17).

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8.  See Securities Exchange Act Release No. 47658 (April 10, 2003), 68 FR 19041 (April 17, 2003) (SR-Amex-2003-18).

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11.  At the Exchange's request, the Commission corrected the rationale and the citation to the section of the Act pursuant to which the proposed rule change has become immediately effective. Telephone conversation between Michael Cavalier, Associate General Counsel, Exchange, and Ann E. Leddy, Attorney, Division of Market Regulation, Commission (July 9, 2003).

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[FR Doc. 03-18528 Filed 7-21-03; 8:45 am]

BILLING CODE 8010-01-P