24638 Federal Register / Vol. 72, No. 85 / Thursday, May 3, 2007 / Notices 

1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

3 See Securities Exchange Act Release No. 55479 

(March 15, 2007), 72 FR 13540 (‘‘Notice’’). 

4 See Section 1009(j) of the Amex Company 

Guide. Section 1009 generally sets forth the 

suspension and delisting procedures, timelines, and 

requirements applicable to issuers identified as 

being below certain continued listing standards. For 

example, an issuer of particular securities that 

receives notification from the Exchange that it is 

below the continued listing criteria for such 

securities must publicly announce receipt of such 

notification and the policies and standards upon 

which the determination is based. 

5 See, e.g., Section 1003(b)(i) of the Amex 

Company Guide (in the case of common stock, 

requiring the number of shares publicly held to be 

no less than 200,000, the total number of public 

shareholders to be no less than 300, and the 

aggregate market value of shares publicly held to be 

no less than $1,000,000 for more than 90 

consecutive days). See also Sections 1003(b)(ii)–(v) 

of the Amex Company Guide (setting forth the 

applicable distribution and market value 

requirements for warrants, preferred stock, bonds, 

and closed-end funds, respectively). 

6 See Section 1003(b)(i)(A) of the Amex Company 

Guide. 

7 See proposed Section 1003(g) of the Amex 

Company Guide. The Commission notes that under 

proposed Section 1003(g), if in the above example 

the units are no longer freely separable into 

common stock, there would be no aggregation of 

units with the common stock for purposes of 

evaluating whether the units and common stock 

meet the continued listing standards. 

8 In approving this proposed rule change, the 

Commission notes that it has considered the 

proposed rule’s impact on efficiency, competition, 

and capital formation. See 15 U.S.C. 78c(f). 

9 15 U.S.C. 78f(b)(5). 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–55675; File No. SR–Amex– 

2006–114] 

Self-Regulatory Organizations; 

American Stock Exchange LLC; Order 

Granting Approval to a Proposed Rule 

Change as Modified by Amendment 

No. 1 Thereto Clarifying the Continued 

Listing Standards for Units 

April 26, 2007. 

I. Introduction 

On December 4, 2006, the American 

Stock Exchange LLC (‘‘Amex’’ or 

‘‘Exchange’’) filed with the Securities 

and Exchange Commission 

(‘‘Commission’’) the proposed rule 

change pursuant to Section 19(b)(1) of 

the Securities Exchange Act of 1934 

(‘‘Act’’) 1 and Rule 19b–4 thereunder.2

On February 22, 2007, Amex filed 

Amendment No. 1 to the proposed rule 

change. The proposed rule change, as 

amended, was published for comment 

in the Federal Register on March 22, 

2007 for a 21-day comment 

period.3 The Commission received 

no comments on the proposal. This 

order approves the proposed rule 

change, as modified by Amendment No. 

1. 

II. Description of the Proposal 

Section 1003(g) of the Amex Company 

Guide currently provides that the 

Exchange will ‘‘normally consider’’ 

suspending or delisting units if any of 

their component parts do not meet the 

applicable continued listing standards. 

However, if one or more of the 

components is otherwise qualified for 

listing, such component may remain 

listed. For example, a unit comprised of 

both a common stock component and a 

debt component would face suspension 

or delisting procedures if either the 

common stock or the debt component 

no longer met its applicable continued 

listing standards. As a result, if the debt 

component failed to meet the continued 

listing standards for bonds, both the 

unit and such debt component would be 

subject to suspension or delisting 

procedures, but the common stock 

component could independently remain 

listed and continue to trade on the 

Exchange, provided such common stock 

component met the continued listing 

standards for equity securities. 

The Exchange proposes to amend 

Section 1003(g) of the Amex Company 

Guide so that, in the event a component 

of a unit does not meet its continued 

listing standards, the Exchange would 

no longer ‘‘consider’’ suspending or 

delisting the unit, but would commence 

a formal continued listing evaluation of 

such component and unit in accordance 

with Section 1009 of the Amex 

Company Guide.4

The Exchange also proposes to add 

language to Section 1003(g) on the 

applicability of certain continued listing 

standards relating to components of 

units that have separated. Under the 

proposal, when units in good standing 

begin to separate into their component 

securities, the remaining units that are 

still intact and the components of those 

units which have separated may all be 

separately listed and continue to trade, 

provided that they meet the applicable 

continued listing standards. The 

proposal specifies that, in determining 

whether an individual component meets 

the continued listing distribution 

standards (i.e., number of shares 

publicly held, number of public 

shareholders, and aggregate market 

value of shares publicly held) set forth 

in Section 1003(b) of the Company 

Guide,5 the units that are intact and 

freely separable into their component 

parts will be aggregated with the 

separately-traded components. For 

example, Amex stated that if 120,000 

shares of common stock are publicly 

held after their separation from their 

units, and 210,000 intact and freely 

separable units are publicly held, the 

common stock would be credited with 

having 330,000 shares publicly held, 

enabling it to satisfy one of the 

distribution standards for common 

stock, which requires at least 200,000 

shares of common stock to be publicly 

held.6 If the units are no longer freely 

separable and/or listed on the Exchange, 

the separately-traded components 

would still be required to meet their 

applicable continued listing standards, 

but the distribution values would not be 

aggregated.7

Despite the fact that the aggregated 

distribution values satisfy the continued 

listing distribution standards, under the 

proposal, the Exchange would also 

consider suspending trading in, or 

removing from listing, an individual 

component or unit when the public 

distribution or aggregate market value of 

such component or unit becomes so 

reduced as to make continued listing 

inadvisable. In its review of the 

advisability of the continued listing of 

an individual component or unit under 

such circumstances, the Exchange 

proposes to take into account the 

trading characteristics of the component 

or unit and whether it would be in the 

public interest for trading in such 

component or unit to continue. 

The Exchange also proposes to make 

technical revisions to Sections 1003(a), 

(c), (d) and (f) to consistently use the 

term ‘‘issuer’’ as opposed to ‘‘company.’’ 

III. Discussion and Commission’s 

Findings 

After careful consideration, 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.8 In 

particular, the Commission finds that 

the proposed rule change, as amended, 

is consistent with the requirements of 

Section 6(b)(5) of the Act,9 which 

requires, among other things, that the 

Exchange’s rules be designed to promote 

just and equitable principles of trade, 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 

proposal strengthens the procedures 

applicable to units when their 

components fall below continued listing 

standards, by providing that, in such 

instances, the Exchange would 

commence a formal evaluation of the 

components and unit pursuant to 

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Federal Register / Vol. 72, No. 85 / Thursday, May 3, 2007 / Notices 24639 

10 See supra note 5 and accompanying text. 

11 The Commission notes that minimum 

distribution requirements are extremely important 

to ensure, among other things, the liquidity of a 

security and an active public market. The changes 

being approved for meeting the distribution 

standards applicable to units and their components 

recognize the unique trading characteristics and 

challenges that can occur in meeting the minimum 

standards during the separation period of the units, 

while containing certain protections to ensure 

certain minimum standards will be met. 

12 17 CFR 200.30–3(a)(12). 

1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

3 Amendment No. 2 replaced and superseded 

Amendment No. 1 and the original filing in their 

entireties. 

Section 1009 of the Amex Company 

Guide. 

In addition, the proposal sets forth the 

application of continued listing 

standards to individual components 

comprising units once some, but not all, 

of the units have separated into their 

component parts, by specifying that the 

units that are intact and freely separable 

into their component parts will be 

counted toward the total distribution 

numbers 10 required for continued 

listing of the component. The rule 

change recognizes the practical situation 

that as investors decide whether to 

separate their unit, there may be a 

period of time at the outset of the 

separation period when there may be 

less components outstanding than 

necessary to meet the distribution 

requirements. However, to immediately 

delist these components during the 

separation period may be unfair to those 

investors who still have an opportunity 

to separate their components and want 

to trade them in a public market. The 

rule ensures that to be able to count the 

units for purposes of the distribution 

requirements for the component parts, 

the units must be freely separable into 

the components, so there is a reasonable 

basis for assuming that as more units are 

separated, which adds liquidity to the 

components, the distribution 

requirements for the components can, in 

fact, be separately met. 

Under the rule however, if it appears 

that not enough units will be separated 

to allow the components to meet the 

public distribution and aggregate market 

value requirements independently or 

there are other concerns, the rule makes 

clear that Amex should consider 

delisting the components or unit. This 

recognizes the fact that although the 

rule allows the aggregation of units and 

components for purposes of distribution 

standards, Amex will need to ensure 

that there is some minimal level of 

liquidity in each component and unit 

and should consider delisting if the 

public distribution or the aggregate 

market value of the components or unit 

has become so reduced as to make 

continued listing on the Exchange 

inadvisable. In this regard, the Exchange 

will take into account the individual 

distribution values and the trading 

characteristics of the component or unit 

and whether it would be in the public 

interest for continued trading of such 

component or unit.11

As Amex noted in its filing, the 

proposal should help to promote 

transparency of the Exchange rules 

relating to the continued listing of units 

and their components and provide 

clearer guidance for members and 

investors trading in such units and/or 

components. Finally, the technical 

changes to Section 1003 of the Company 

Guide ensure that the rule’s language 

will be consistent throughout. Based on 

the above, the Commission believes the 

proposal promotes just and equitable 

principles of trade in such securities 

and is designed to protect investors and 

the public interest, consistent with 

Section 6(b)(5) of the Act. 

IV. Conclusion 

It is therefore ordered, pursuant to 

Section 19(b)(2) of the Act, that the 

proposed rule change (SR–Amex–2006– 

114), as modified by Amendment No. 1, 

be, and it hereby is, approved. 

For the Commission, by the Division of 

Market Regulation, pursuant to delegated 

authority.12

J. Lynn Taylor, 

Deputy Secretary. 

[FR Doc. E7–8397 Filed 5–2–07; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[(Release No. 34–55674; File No. SR–CBOE– 

2006–101] 

Self-Regulatory Organizations; 

Chicago Board Options Exchange, 

Incorporated; Notice of Filing of 

Proposed Rule Change as Modified by 

Amendment Nos. 1 and 2 Thereto To 

Amend CBOE’s Rules To Reflect the 

Migration of Its TPF Technology 

Platform Over to the Existing 

CBOEdirect Technology Platform. 

April 26, 2007. 

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 November 

30, 2006, the Chicago Board Options 

Exchange, Incorporated (‘‘CBOE’’ 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 

substantially prepared by the Exchange. 

The Exchange submitted Amendment 

No. 1 to the proposed rule change on 

February 15, 2007. The Exchange 

submitted Amendment No. 2 to the 

proposed rule change on April 13, 

2007.3 The Commission is publishing 

this notice and order to solicit 

comments on the proposal, 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 amend 

CBOE’s rules to reflect the migration of 

its TPF technology platform over to the 

existing CBOEdirect technology 

platform. The text of the proposed rule 

change, incorporating Amendment Nos. 

1 and 2, is set forth below. Proposed 

new language is in italics; proposed 

deletions are in brackets. 

Chicago Board Options Exchange, 

Incorporated 

Rules 

* * * * * 

CHAPTER I Definitions 

Rule 1.1. Definitions 

When used in these Rules, unless the 

context otherwise requires: 

(a) Any term defined in Article I of 

the Constitution and not otherwise 

defined in this Chapter shall have the 

meaning assigned to such term in such 

Article I. 

Hybrid Trading System 

(aaa) ‘‘Hybrid Trading System’’ refers 

to the Exchange’s trading platform that 

allows individual Market-Makers to 

submit electronic quotes in their 

appointed classes. ‘‘ Hybrid 2.0 

Platform’’ is an enhanced trading 

platform that allows remote quoting by 

authorized categories of members. 

‘‘Hybrid 3.0 Platform’’ is an electronic 

trading platform on the Hybrid Trading 

System that allows a single quoter to 

submit an electronic quote which 

represents the aggregate Market-Maker 

quoting interest in a series for the 

trading crowd. Classes authorized by the 

Exchange for trading on the Hybrid 

Trading System shall be referred to as 

Hybrid Classes. Classes authorized by 

the Exchange for trading on the Hybrid 

2.0 Platform shall be referred to as 

Hybrid 2.0 Classes. Classes authorized 

by the Exchange for trading on the 

Hybrid 3.0 Platform shall be referred to 

as Hybrid 3.0 Classes. References to 

‘‘Hybrid,’’ ‘‘Hybrid System,’’ or ‘‘Hybrid 

Trading System’’ in the Exchange’s 

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