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Self-Regulatory Organizations; Order Approving Proposed Rule Change by the American Stock Exchange LLC Relating to the Limitation of Liability of the Options Clearing Corporation to Exchange Members

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Information about this document as published in the Federal Register.

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Start Preamble September 29, 2003.

On May 30, 2003, the American Stock Exchange LLC (“Amex” or “Exchange”) submitted to 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 establish Amex Rule 945. This Rule would provide that the Options Clearing Corporation (“OCC”) would have no liability to Amex members, with respect to the use, non-use, or inability to use the Options Intermarket Linkage (“Linkage”), and that Linkage is a facility or service afforded by the Exchange for the purposes of Article IV, Section 1(e) of the Amex Constitution. The proposed rule change was published for comment in the Federal Register on August 19, 2003.[3] The Commission received no comments on the proposed rule change. This order approves the proposed rule change.

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 [4] and, in particular, the requirements of Section 6(b) of the Act [5] and the rules and regulations thereunder. The Commission finds that the rule change is consistent with Section 6(b)(5) of the Act,[6] which requires, among other things, that the rules of the Exchange be designed to foster cooperation and coordination with persons engaged in regulation, 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 notes that the Amex, along with the other exchanges that are Participants in the Linkage Plan, entered into an agreement with the OCC, which operates the central core or “hub” to and from which all Linkage orders are routed.[7] In the Agreement, the Amex committed to file a proposed rule change with the Commission that would limit the liability of the OCC to Amex members.

The Commission believes that this proposed rule change should foster cooperation and promote a relationship between the Amex and the OCC that is conducive to the effective operation of the Linkage. Further, the Commission believes that the Amex's proposal to characterize the Linkage as a facility or service of the Exchange for the purposes Start Printed Page 57494of Article IV, Section 1(e) of the Amex Constitution is reasonable.

It Is Therefore Ordered, pursuant to Section 19(b)(2) of the Act,[8] that the proposed rule change (File No. SR-Amex-2003-54) be, and it hereby is, approved.

Start Signature

For the Commission, by the Division of Market Regulation, pursuant to delegated authority.[9]

Margaret H. McFarland,

Deputy Secretary.

End Signature End Preamble

Footnotes

3.  Securities Exchange Act Release No. 48319 (August 12, 2003), 68 FR 49825.

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4.  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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7.  Linkage Project and Facilities Management Agreement (“the Agreement”) (January 30, 2003).

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[FR Doc. 03-25117 Filed 10-2-03; 8:45 am]

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