Federal Register / Vol. 70, No. 215 / Tuesday, November 8, 2005 / Notices 67765 

11SSF QP has the same policies and procedures, 

and will employ the same methodologies to 

compute its NAV, as SSF III. 

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

2 17 CFR 240.19b–4. 

3See Form 19b–4 dated September 21, 2005, 

which replaced the original filing in its entirety 

(‘‘Amendment No. 1’’). 

4Amendment No. 2 corrected technical errors in 

the proposed rule text. 

5Amendment No. 3 incorporated certain 

proposed revisions to Amex Rules 936 and 936—

ANTE contained in Amendment No. 1 to Amex 

Rules 936C and 936C—ANTE and corrected an 

error in the proposed rule text of Amex Rules 936C 

and 936C—ANTE. 

2. Section 17(b) of the Act authorizes 

the Commission to exempt a transaction 

from the provisions of section 17(a) if 

the terms of the transaction, including 

the consideration to be paid or received, 

are reasonable and fair and do not 

involve overreaching on the part of any 

person concerned and the proposed 

transaction is consistent with the 

policies of each registered investment 

company concerned and with the 

general purposes of the Act. Applicants 

submit that the Transaction has been 

approved by the Board, including a 

majority of the Independent General 

Partners, is reasonable and fair to SSF 

III and its Unit holders and meets the 

requirements of section 17(b) of the Act. 

Applicants state that the Transaction 

will not result in dilution to Unit 

holders of SSF III because (a) it will be 

effected at the NAV of SSF III’s Units, 

which NAV will be calculated in 

accordance with SSF III’s policies and 

procedures, as set forth in its 

registration statement, and computed 

using the same methodologies that SSF 

III has used to calculate its NAV in 

connection with each routine 

repurchase offer since its inception,11

and (b) it will involve a pro rata transfer 

of SSF III’s portfolio securities to SSF 

QP. Applicants further state that, prior 

to the Transaction, any Limited Partner 

not wishing to remain invested in SSF 

III or become invested in SSF QP will 

be able to have his or her Units 

repurchased for cash at the NAV of the 

Units, and all expenses of the 

Transaction will be paid by the Adviser 

or SSF QP, including the cost of 

separating SSF III’s portfolio between 

SSF III and SSF QP in the Transaction. 

Applicants’ Conditions 

Applicants agree that any order 

granting the requested relief will be 

subject to the following conditions: 

1. The Exchange Tender Offer will be 

effected at the NAV of SSF III’s Units 

determined in accordance with its 

registration statement under the Act. 

2. The sale of portfolio securities by 

SSF III to SSF QP in the Transaction 

will comply with the terms of rule 17a–

7(c), (d) and (f) under the Act. 

3. At its next regular meeting 

following the Transaction, the Board of 

SSF III, including a majority of the 

Independent General Partners, will 

determine whether the Units were 

valued in accordance with condition 1 

above. 

4. SSF III will maintain and preserve 

for a period of not less than six years 

from the end of the fiscal year in which 

the Transaction occurs, the first two 

years in an easily accessible place, a 

written record of the Transaction setting 

forth a description of each security 

transferred, the terms of the 

Transaction, and the information or 

materials upon which the determination 

required by condition 3 was made. 

5. In the Transaction, the portfolio 

securities will be distributed by SSF III 

to SSF QP on a pro rata basis, except 

that cash may be distributed in lieu of 

fractional shares. 

For the Commission, by the Division of 

Investment Management, under delegated 

authority. 

Jonathan G. Katz, 

Secretary. 

[FR Doc. 05–22163 Filed 11–7–05; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

Sunshine Act Meeting 

Notice is hereby given, pursuant to 

the provisions of the Government in the 

Sunshine Act, Pub. L. 94–409, that the 

Securities and Exchange Commission 

will hold the following meeting during 

the week of November 7, 2005: 

A Closed Meeting will be held on 

Thursday, November 10, 2005 at 10 a.m. 

Commissioners, Counsel to the 

Commissioners, the Secretary to the 

Commission, and recording secretaries 

will attend the Closed Meeting. Certain 

staff members who have an interest in 

the matters may also be present. 

The General Counsel of the 

Commission, or his designee, has 

certified that, in his opinion, one or 

more of the exemptions set forth in 5 

U.S.C. 552b(c)(5), (6), (7), (9)(B), and 

(10) and 17 CFR 200.402(a)(5), (6), (7), 

9(ii) and (10) permit consideration of 

the scheduled matters at the Closed 

Meeting. 

Commissioner Glassman, as duty 

officer, voted to consider the items 

listed for the closed meeting in closed 

session. 

The subject matter of the Closed 

Meeting scheduled for Thursday, 

November 10, 2005 will be: 

Formal orders of investigations; 

Institution and settlement of 

injunctive actions; 

Institution and settlement of 

administrative proceedings of an 

enforcement nature; 

Opinion; and a 

Regulatory matter bearing 

enforcement implications. 

At times, changes in Commission 

priorities require alterations in the 

scheduling of meeting items. 

For further information and to 

ascertain what, if any, matters have been 

added, deleted or postponed, please 

contact: The Office of the Secretary at 

(202) 551–5400. 

Dated: November 3, 2005. 

Jonathan G. Katz, 

Secretary. 

[FR Doc. 05–22292 Filed 11–3–05; 4:11 pm] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–52718; File No. SR–Amex–

2005–060] 

Self-Regulatory Organizations; 

American Stock Exchange LLC; Notice 

of Filing of Proposed Rule Change and 

Amendments Nos. 1, 2, and 3 Thereto 

Relating to Amendments to the 

Obvious Error Rules 

November 2, 2005. 

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 May 31, 

2005, 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. On 

September 21, 2005, the Amex 

submitted Amendment No. 1 to the 

proposed rule change.3 On October 4, 

2005, the Amex submitted Amendment 

No. 2 to the proposed rule change.4 On 

October 27, 2005, the Amex submitted 

Amendment No. 3 to the proposed rule 

change.5 The Commission is publishing 

this notice to solicit comments on the 

proposed rule change from interested 

persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Amex proposes to: (i) Amend the 

equity and index options obvious error 

rules to revise the manner in which an 

obvious price error is determined for 

both equity and index options; (ii) 

67766 Federal Register / Vol. 70, No. 215 / Tuesday, November 8, 2005 / Notices 

clarify the determination of ‘‘Fair 

Market Value’’ in connection with the 

index option obvious error rule; (iii) 

amend the equity and index options 

obvious error rules relating to an 

erroneous quote in the underlying 

security; (iv) amend the equity and 

index options obvious error rules to 

permit transactions executed outside of 

trading hours to be cancelled; (v) amend 

how obvious errors based on ‘‘verifiable 

disruptions or malfunctions of Exchange 

systems’’ as set forth in both the equity 

and index obvious error rules are 

adjusted or cancelled; and (vi) revise the 

equity and index options obvious error 

rules to amend the terms that relate to 

the cancellation of ‘‘no bid series.’’

Below is the text of the proposed rule 

change. Proposed new language is in 

italics; proposed deletions are in 

[brackets]. 

* * * * * 

Rule 936. Cancellation and Adjustment 

of Equity Options Transactions 

This Rule governs the cancellation 

and adjustment of transactions 

involving equity options. Rules 936C 

and 936C—ANTE govern the 

cancellation and adjustment of 

transactions involving options on 

indexes, exchange-traded funds 

(‘‘ETFs’’) and trust issued receipts 

(‘‘TIRs’’). Paragraphs (a)(1) and (2) of 

this Rule have no applicability to trades 

executed in open outcry. 

(a) Trades Subject to Review. A 

member or person associated with a 

member may have a trade cancelled or 

adjusted if, in addition to satisfying the 

procedural requirements of paragraph 

(b) below, one of the following 

conditions is satisfied: 

(1) Obvious Price Error. An obvious 

pricing error occurs when the execution 

price of an electronic transaction is 

above or below the Theoretical Price for 

the series by an amount equal to at least 

the amount shown below: 

Theoretical price Minimum 

amount 

Below $2 ....................................... $0.25 

$2 to $5 ........................................ 0.40 

Above $5 to $10 ........................... 0.50 

Above $10 to $20 ......................... 0.80 

Above $20 .................................... 1.00 

Definition of Theoretical Price. For 

purposes of this Rule only, the 

Theoretical Price of an option series is, 

for series traded on at least one other 

options exchange, the last bid price with 

respect to an erroneous sell transaction 

and the last offer price with respect to 

an erroneous buy transaction, just prior 

to the trade, disseminated by the 

competing options exchange that has 

the most liquidity in that option class in 

the previous two calendar months. The 

Theoretical Price will not include the 

last bid price (erroneous sell 

transaction) or last offer price 

(erroneous buy transaction) of the 

competing options exchange that has 

the most liquidity in that options class 

in the previous two calendar quarters if 

such competing options exchange 

widens its quote to incorporate the prior 

erroneous quote of the Exchange. In 

such a case, the Theoretical Price shall 

be the last bid price (erroneous sell 

transaction) and the last offer price 

(erroneous buy transaction) just prior to 

the trade, disseminated by the 

competing options exchange with the 

next best liquidity. If there are no 

competing options exchanges left 

without an erroneous quote, the 

Theoretical Price shall be the first quote 

of the competing options exchange, that 

has the most liquidity in that options 

class in the previous two calendar 

quarters, after the transaction(s) in 

question that does not reflect the 

erroneous quote. If there are no quotes 

for comparison, designated Trading 

Officials will determine the Theoretical 

Price. For transactions occurring as part 

of an opening, the Theoretical Price 

shall be the first quote after the 

transaction(s) in question that does not 

reflect the erroneous transaction(s). 

(i) Cancellation or Price Adjustment. 

Obvious Pricing Errors will be cancelled 

or adjusted as follows. 

• Transactions Between Amex 

specialists/registered options traders 

(ROTs): Where both parties to the 

transaction are Amex specialists/ROTs, 

the execution price of the transaction 

will be adjusted by Trading Officials to 

the prices provided in Paragraphs (A) 

and (B) below, minus (plus) an 

adjustment penalty (‘‘adjustment 

penalty’’), unless both parties agree to 

adjust the transaction to a different price 

or agree to cancel the trade within 

fifteen (15) minutes of being notified by 

Trading Officials of the Obvious Error. 

(A) Erroneous buy transactions will be 

adjusted to their Theoretical Price plus 

an adjustment penalty of either $.15 if 

the Theoretical Price is under $3 or $.30 

if the Theoretical Price is at or above $3. 

(B) Erroneous sell transactions will be 

adjusted to their Theoretical Price 

minus an adjustment penalty of either 

$.15 if the Theoretical Price is under $3 

or $.30 if the Theoretical Price is at or 

above $3. 

• Transactions Involving at least one 

non-Amex specialist/ROT: Where one of 

the parties to the transaction is not an 

Amex specialist/ROT, the transactions 

will be cancelled by Trading Officials 

unless both parties agree to an 

adjustment price for the transaction 

within thirty (30) minutes of being 

notified by Trading Officials of the 

Obvious Error. 

(2) No Bid Series. Electronic 

transactions in series quoted no bid [at 

a nickel (i.e., $0.05 offer)] will be 

cancelled provided at least one strike 

price below (for calls) or above (for puts) 

in the same options class was quoted no 

bid [at a nickel] at the time of execution. 

(3) Verifiable Disruptions or 

Malfunctions of Exchange Systems: 

Electronic or open outcry transactions 

arising out of a ‘‘verifiable disruption or 

malfunction’’ in the use or operation of 

any Exchange (a) automated quotation, 

dissemination, execution, or 

communication system that caused a 

quote/order to trade in excess of its 

disseminated size (e.g., a quote/order 

that is frozen because of an Exchange 

system error and is repeatedly traded) in 

which case trades in excess of the 

disseminated size may be nullified; or 

(b) automated quotation, dissemination 

or communication system that 

prevented a member from updating or 

canceling a quote/order for which the 

member is responsible, provided there 

is Exchange documentation reflecting 

that the member sought to update or 

cancel the quote/order. With respect to 

verifiable disruptions or malfunctions of 

the Exchange’s automated quotation 

system, documentation of the existence 

of the disruption or malfunction will be 

sufficient provided the automated 

quotation system was programmed to 

update or cancel a quote based upon 

specific changes in the underlying, 

those changes occurred and due to the 

disruption or malfunction the quote was 

not updated or cancelled. Unless the 

parties agree to a price adjustment, the 

transaction will be cancelled. 

[Transactions that qualify for price 

adjustment will be adjusted to the 

Theoretical Price, as defined in 

paragraph (a)(1) above.] 

(4) No Change 

(5) Erroneous Quote in Underlying. (i) 

Electronic trades (this provision does 

not apply to trades executed in open 

outcry) resulting from an erroneous 

quote in the underlying security may be 

adjusted or canceled as set forth in 

paragraph (a)(1) above. An erroneous 

quote occurs when the underlying 

security has a width of at least $1.00 

and has a width at least five times 

greater than the average quote width for 

such underlying security on the primary 

market (as defined in Rule 900 (b)(26)) 

during the time period encompassing 

two minutes before and after the 

dissemination of such quote. For 

purposes of this Rule, the average quote 

width shall be determined by adding the 

Federal Register / Vol. 70, No. 215 / Tuesday, November 8, 2005 / Notices 67767 

quote widths of each separate quote 

during the four minute time period 

referenced above (excluding the quote 

in question) and dividing the number of 

quotes during such time period 

(excluding the quote in question). 

(ii) Electronic trades resulting from an 

erroneous quote in the underlying 

security may also be adjusted or 

cancelled as set forth in paragraph 

(a)(1)(i) above when (i) a national 

securities exchange or the Nasdaq Stock 

Market, Inc.’s quotes are not firm based 

upon direct communication from that 

market or dissemination of a message 

indicating the quotes are not firm or (ii) 

a national securities exchange or the 

Nasdaq Stock Market, Inc. has directly 

communicated or otherwise confirmed 

that it is experiencing systems or other 

problems affecting the reliability of its 

disseminated quotes. 

(6) Transactions Executed Outside of 

Trading Hours. All equity options 

transactions that occur outside of the 

trading hours of the Exchange will be 

cancelled if it is determined by the 

Trading Officials that the transaction 

occurred outside of the Exchange’s 

trading hours, except as set forth in 

Commentary .02 to Amex Rule 1. 

(b) through (e). No Change 

Commentary 

.01 through .03 No Change 

* * * * * 

Rule 936C. Cancellation and 

Adjustment of Index Option 

Transactions 

This Rule only governs the 

cancellation and adjustment of 

transactions involving options on 

indexes, exchange-traded funds (ETFs) 

and trust issued receipts (TIRs). Rule 

936 governs the cancellation and 

adjustment of transactions involving 

equity options. Paragraphs (a)(1), (2), (6) 

and (7) of this Rule have no 

applicability to trades executed in open 

outcry. 

(a) Trades Subject to Review 

A member or person associated with 

a member may have a trade cancelled or 

adjusted if, in addition to satisfying the 

procedural requirements of paragraph 

(b) below, one of the following 

conditions is satisfied: 

(1) Obvious Price Error. An obvious 

pricing error will be deemed to have 

occurred when the execution price of a 

transaction is above or below the fair 

market value of the option by at least a 

prescribed amount. For series trading 

with normal bid-ask differentials as 

established in Rule 958(c), the 

prescribed amount shall be: (a) the 

greater of $0.10 or 10% for options 

trading under $2.50; (b) 10% for options 

trading at or above $2.50 and under $5; 

or (c) $0.50 for options trading at $5 or 

higher. For series trading with bid-ask 

differentials that are greater than the 

widths established in Rule 958(c), the 

prescribed error amount shall be: (a) the 

greater of $0.20 or 20% for options 

trading under $2.50; (b) 20% for options 

trading at or above $2.50 and under $5; 

or (c) $1.00 for options trading at $5 or 

higher. 

(i) Definition of Fair Market Value: 

For purposes of this Rule only, the 

[f]Fair [m]Market [v]Value of an option 

is the midpoint of the national best bid 

and national best offer for the series 

(across all exchanges trading the 

option). Fair Market Value will not 

include the national best bid price 

(erroneous sell transaction) or national 

best offer price (erroneous buy 

transaction) of competing options 

exchanges if such competing options 

exchange(s) widen their quote(s) to 

incorporate the prior erroneous quote of 

the Exchange. In such a case, the Fair 

Market Value shall be the midpoint of 

the first quote after the transaction(s) in 

question that does not reflect the 

erroneous quote. In multiply listed 

issues, if there are no quotes for 

comparison purposes, [f]Fair [m]Market 

[v]Value shall be determined by Trading 

Officials. For singly listed issues, [f]Fair 

[m]Market [v]Value shall be the 

midpoint of the first quote after the 

transaction(s) in question that does not 

reflect the erroneous quote [erroneous 

transaction(s)]. For transactions 

occurring as part of an opening, the Fair 

Market Value shall also be the midpoint 

of the first quote after the transaction(s) 

in question that does not reflect the 

erroneous quote [erroneous 

transaction(s)]. 

(2) No Change. 

(3) Verifiable Disruptions or 

Malfunctions of Exchange Systems. 

Trades arising out of a ‘‘verifiable 

disruption or malfunction’’ in the use or 

operation of any Exchange (a) 

automated quotation, dissemination, 

execution, or communication system 

that caused a quote/order to trade in 

excess of its disseminated size (e.g., a 

quote/order that is frozen because of an 

Exchange system error and is repeatedly 

traded) in which case trades in excess 

of the disseminated size may be 

nullified; or (b) automated quotation, 

dissemination or communication system 

that prevented a member from updating 

or canceling a quote/order for which the 

member is responsible, provided there 

is Exchange documentation reflecting 

that the member sought to update or 

cancel the quote/order. With respect to 

verifiable disruptions or malfunctions of 

the Exchange’s automated quotation 

system, documentation of the existence 

of the disruption or malfunction will be 

sufficient provided the automated 

quotation system was programmed to 

update or cancel a quote based upon 

specific changes in the underlying, 

those changes occurred and due to the 

disruption or malfunction the quote was 

not updated or cancelled. Unless the 

parties agree to a price adjustment, the 

transaction will be cancelled. 

[Transactions that qualify for price 

adjustment will be adjusted to the Fair 

Market Value, as defined in paragraph 

(a)(1)(i) above.] 

(4) No Change. 

(5) Erroneous Quote in Underlying. (i) 

A trade resulting from an erroneous 

quote in the underlying security may be 

cancelled or adjusted. An erroneous 

quote occurs when the underlying 

security has a width of at least $1.00 

and has a width at least five times 

greater than the average quote width for 

such underlying security on the primary 

market (as defined in Rule 900(b)(26)) 

during the time period encompassing 

two minutes before and after the 

dissemination of such quote. 

(ii) Electronic trades resulting from an 

erroneous quote in the underlying 

security may also be adjusted or 

cancelled as set forth in paragraph 

(a)(1)(i) above when (i) a national 

securities exchange or the Nasdaq Stock 

Market, Inc.’s quotes are not firm based 

upon direct communication from that 

market or dissemination of a message 

indicating the quotes are not firm or (ii) 

a national securities exchange or the 

Nasdaq Stock Market, Inc. has directly 

communicated or otherwise confirmed 

that it is experiencing systems or other 

problems affecting the reliability of its 

disseminated quotes. 

(6) No Change. 

(7) No Bid Series. Electronic 

transactions in series quoted no bid [at 

a nickel (i.e., $0.05 offer)] will be 

cancelled provided at least one strike 

price below (for calls) or above (for puts) 

in the same options class was quoted no 

bid [at a nickel] at the time of execution. 

(8) Transactions Executed Outside of 

Trading Hours. All index options 

transactions that occur outside of the 

trading hours of the Exchange will be 

cancelled if it is determined by the 

Trading Officials that the transaction 

occurred outside of the Exchange’s 

trading hours, except as set forth in 

Commentary .02 to Amex Rule 1. 

(b) through (e). No Change. 

Commentary 

.01 through .02. No Change. 

* * * * * 

67768 Federal Register / Vol. 70, No. 215 / Tuesday, November 8, 2005 / Notices 

Rule 936—ANTE. Cancellation and 

Adjustment of Equity Options 

Transactions 

This Rule governs the nullification 

and adjustment of transactions 

involving equity options. Rule 936C and 

936C—ANTE governs the nullification 

and adjustment of transactions 

involving options on indexes, exchangetraded funds (‘‘ETFs’’) and trust issued 

receipts (‘‘TIRs’’). Paragraphs (a)(1) and 

(2) of this Rule have no applicability to 

trades executed in open outcry. (a) 

Trades Subject to Review. A member or 

person associated with a member may 

have a trade cancelled or adjusted if, in 

addition to satisfying the procedural 

requirements of paragraph (b) below, 

one of the following conditions is 

satisfied: 

(1) Obvious Price Error. An obvious 

pricing error occurs when the execution 

price of an electronic transaction is 

above or below the Theoretical Price for 

the series by an amount equal to at least 

the amount shown below: 

Theoretical price Minimum 

amount 

Below $2 ....................................... $0.25 

$2 to $5 ........................................ 0.40 

Above $5 to $10 ........................... 0.50 

Above $10 to $20 ......................... 0.80 

Above $20 .................................... 1.00 

Definition of Theoretical Price. For 

purposes of this Rule only, the 

Theoretical Price of an option series is, 

for series traded on at least one other 

options exchange, the last bid price with 

respect to an erroneous sell transaction 

and the last offer price with respect to 

an erroneous buy transaction, just prior 

to the trade, disseminated by the 

competing options exchange that has 

the most liquidity in that option class in 

the previous two calendar months. The 

Theoretical Price will not include the 

last bid price (erroneous sell 

transaction) or last offer price 

(erroneous buy transaction) of the 

competing options exchange that has 

the most liquidity in that options class 

in the previous two calendar quarters if 

such competing options exchange 

widens its quote to incorporate the prior 

erroneous quote of the Exchange. In 

such a case, the Theoretical Price shall 

be the last bid price (erroneous sell 

transaction) and the last offer price 

(erroneous buy transaction) just prior to 

the trade, disseminated by the 

competing options exchange with the 

next best liquidity. If there are no 

competing options exchanges left 

without an erroneous quote, the 

Theoretical Price shall be the first quote 

of the competing options exchange, that 

has the most liquidity in that options 

class in the previous two calendar 

quarters, after the transaction(s) in 

question that does not reflect the 

erroneous quote. If there are no quotes 

for comparison, designated Trading 

Officials will determine the Theoretical 

Price. For transactions occurring as part 

of an opening, the Theoretical Price 

shall be the first quote after the 

transaction(s) in question that does not 

reflect the erroneous transaction(s). 

(i) Cancellation or Price Adjustment. 

Obvious Pricing Errors will be cancelled 

or adjusted as follows. 

• Transactions Between Amex 

specialists/registered options traders 

(ROTs): Where both parties to the 

transaction are Amex specialists/ROTs, 

the execution price of the transaction 

will be adjusted by Trading Officials to 

the prices provided in Paragraphs (A) 

and (B) below, minus (plus) an 

adjustment penalty (‘‘adjustment 

penalty’’), unless both parties agree to 

adjust the transaction to a different price 

or agree to cancel the trade within 

fifteen (15) minutes of being notified by 

Trading Officials of the Obvious Error. 

(A) Erroneous buy transactions will be 

adjusted to their Theoretical Price plus 

an adjustment penalty of either $.15 if 

the Theoretical Price is under $3 or $.30 

if the Theoretical Price is at or above $3. 

(B) Erroneous sell transactions will be 

adjusted to their Theoretical Price 

minus an adjustment penalty of either 

$.15 if the Theoretical Price is under $3 

or $.30 if the Theoretical Price is at or 

above $3. 

• Transactions Involving at least one 

non-Amex specialist/ROT: Where one of 

the parties to the transaction is not an 

Amex specialist/ROT, the transactions 

will be cancelled by Trading Officials 

unless both parties agree to an 

adjustment price for the transaction 

within thirty (30) minutes of being 

notified by Trading Officials of the 

Obvious Error. 

(2) No Bid Series. Electronic 

transactions in series quoted no bid [at 

a nickel (i.e., $0.05 offer)] will be 

cancelled provided at least one strike 

price below (for calls) or above (for puts) 

in the same options class was quoted no 

bid [at a nickel] at the time of execution. 

(3) Verifiable Disruptions or 

Malfunctions of Exchange Systems: 

Electronic or open outcry transactions 

arising out of a ‘‘verifiable disruption or 

malfunction’’ in the use or operation of 

any Exchange (a) automated quotation, 

dissemination, execution, or 

communication system that caused a 

quote/order to trade in excess of its 

disseminated size (e.g., a quote/order 

that is frozen because of an Exchange 

system error and is repeatedly traded) in 

which case trades in excess of the 

disseminated size may be nullified; or 

(b) automated quotation, dissemination 

or communication system that 

prevented a member from updating or 

canceling a quote/order for which the 

member is responsible, provided there 

is Exchange documentation reflecting 

that the member sought to update or 

cancel the quote/order. With respect to 

verifiable disruptions or malfunctions of 

the Exchange’s automated quotation 

system, documentation of the existence 

of the disruption or malfunction will be 

sufficient provided the automated 

quotation system was programmed to 

update or cancel a quote based upon 

specific changes in the underlying, 

those changes occurred and due to the 

disruption or malfunction the quote was 

not updated or cancelled. Unless the 

parties agree to a price adjustment, the 

transaction will be cancelled. 

[Transactions that qualify for price 

adjustment will be adjusted to the 

Theoretical Price, as defined in 

paragraph (a)(1) above.] 

(4) No Change. 

(5) Erroneous Quote in Underlying. (i) 

Electronic trades (this provision does 

not apply to trades executed in open 

outcry) resulting from an erroneous 

quote in the underlying security may be 

adjusted or canceled as set forth in 

paragraph (a)(1) above. An erroneous 

quote occurs when the underlying 

security has a width of at least $1.00 

and has a width at least five times 

greater than the average quote width for 

such underlying security on the primary 

market (as defined in Rule 900 (b)(26)) 

during the time period encompassing 

two minutes before and after the 

dissemination of such quote. For 

purposes of this Rule, the average quote 

width shall be determined by adding the 

quote widths of each separate quote 

during the four minute time period 

referenced above (excluding the quote 

in question) and dividing the number of 

quotes during such time period 

(excluding the quote in question). 

(ii) Electronic trades resulting from an 

erroneous quote in the underlying 

security may also be adjusted or 

canceled as set forth in paragraph 

(a)(1)(i) above when (i) a national 

securities exchange or the Nasdaq Stock 

Market, Inc.’s quotes are not firm based 

upon direct communication from that 

market or dissemination of a message 

indicating the quotes are not firm or (ii) 

a national securities exchange or the 

Nasdaq Stock Market, Inc. has directly 

communicated or otherwise confirmed 

that it is experiencing systems or other 

problems affecting the reliability of its 

disseminated quotes. 

Federal Register / Vol. 70, No. 215 / Tuesday, November 8, 2005 / Notices 67769 

(6) Transactions Executed Outside of 

Trading Hours. All equity options 

transactions that occur outside of the 

trading hours of the Exchange will be 

canceled if it is determined by the 

Trading Officials that the transaction 

occurred outside of the Exchange’s 

trading hours, except as set forth in 

Commentary .02 to Amex Rule 1. 

(b) through (e). No Change. 

Commentary 

.01 through .03. No Change. 

* * * * * 

Rule 936C—ANTE. Cancellation and 

Adjustment of Index Option 

Transactions 

This Rule only governs the 

cancellation and adjustment of 

transactions involving options on 

indexes, exchange-traded funds (ETFs) 

and trust issued receipts (TIRs). Rule 

936 and 936—ANTE governs the 

cancellation and adjustment of 

transactions involving equity options. 

Paragraphs (a)(1), (2), (6) and (7) of this 

Rule have no applicability to trades 

executed in open outcry. 

(a) Trades Subject to Review 

A member or person associated with 

a member may have a trade cancelled or 

adjusted if, in addition to satisfying the 

procedural requirements of paragraph 

(b) below, one of the following 

conditions is satisfied: 

(1) Obvious Price Error. An obvious 

pricing error will be deemed to have 

occurred when the execution price of a 

transaction is above or below the fair 

market value of the option by at least a 

prescribed amount. For series trading 

with normal bid-ask differentials as 

established in Rule 958(c), the 

prescribed amount shall be: (a) the 

greater of $0.10 or 10% for options 

trading under $2.50; (b) 10% for options 

trading at or above $2.50 and under $5; 

or (c) $0.50 for options trading at $5 or 

higher. For series trading with bid-ask 

differentials that are greater than the 

widths established in Rule 958(c), the 

prescribed error amount shall be: (a) the 

greater of $0.20 or 20% for options 

trading under $2.50; (b) 20% for options 

trading at or above $2.50 and under $5; 

or (c) $1.00 for options trading at $5 or 

higher. 

(i) Definition of Fair Market Value: 

For purposes of this Rule only, the 

[f]Fair [m]Market [v]Value of an option 

is the midpoint of the national best bid 

and national best offer for the series 

(across all exchanges trading the 

option). Fair Market Value will not 

include the national best bid price 

(erroneous sell transaction) or national 

best offer price (erroneous buy 

transaction) of competing options 

exchange(s) if such competing options 

exchanges widen their quote(s) to 

incorporate the prior erroneous quote of 

the Exchange. In such a case, the Fair 

Market Value shall be the midpoint of 

the first quote after the transaction(s) in 

question that does not reflect the 

erroneous quote. In multiple listed 

issues, if there are no quotes for 

comparison purposes, [f]Fair [m]Market 

[v]Value shall be determined by Trading 

Officials. For singly-listed issues, [f]Fair 

[m]Market [v]Value shall be the 

midpoint of the first quote after the 

transaction(s) in question that does not 

reflect the erroneous quote [erroneous 

transaction(s)]. For transactions 

occurring as part of an opening, the Fair 

Market Value shall also be the midpoint 

of the first quote after the transaction(s) 

in question that does not reflect the 

erroneous quote [erroneous 

transaction(s)]. 

(2) No Change. 

(3) Verifiable Disruptions or 

Malfunctions of Exchange Systems. 

Trades arising out of a ‘‘verifiable 

disruption or malfunction’’ in the use or 

operation of any Exchange (a) 

automated quotation, dissemination, 

execution, or communication system 

that caused a quote/order to trade in 

excess of its disseminated size (e.g., a 

quote/order that is frozen because of an 

Exchange system error and is repeatedly 

traded) in which case trades in excess 

of the disseminated size may be 

nullified; or (b) automated quotation, 

dissemination or communication system 

that prevented a member from updating 

or canceling a quote/order for which the 

member is responsible, provided there 

is Exchange documentation reflecting 

that the member sought to update or 

cancel the quote/order. With respect to 

verifiable disruptions or malfunctions of 

the Exchange’s automated quotation 

system, documentation of the existence 

of the disruption or malfunction will be 

sufficient provided the automated 

quotation system was programmed to 

update or cancel a quote based upon 

specific changes in the underlying, 

those changes occurred and due to the 

disruption or malfunction the quote was 

not updated or canceled. Unless the 

parties agree to a price adjustment, the 

transaction will be canceled. 

[Transactions that qualify for price 

adjustment will be adjusted to the Fair 

Market Value, as defined in paragraph 

(a)(1)(i) above.] 

(4) No Change. 

(5) Erroneous Quote in Underlying. (i) 

A trade resulting from an erroneous 

quote in the underlying security may be 

canceled or adjusted. An erroneous 

quote occurs when the underlying 

security has a width of at least $1.00 

and has a width at least five times 

greater than the average quote width for 

such underlying security on the primary 

market (as defined in Rule 900(b)(26)) 

during the time period encompassing 

two minutes before and after the 

dissemination of such quote. 

(ii) Electronic trades resulting from an 

erroneous quote in the underlying 

security may also be adjusted or 

canceled as set forth in paragraph 

(a)(1)(i) above when (i) a national 

securities exchange or the Nasdaq Stock 

Market, Inc.’s quotes are not firm based 

upon direct communication from that 

market or dissemination of a message 

indicating the quotes are not firm or (ii) 

a national securities exchange or the 

Nasdaq Stock Market, Inc. has directly 

communicated or otherwise confirmed 

that it is experiencing systems or other 

problems affecting the reliability of its 

disseminated quotes. 

(6) No Change. 

(7) No Bid Series. Electronic 

transactions in series quoted no bid [at 

a nickel (i.e., $0.05 offer)] will be 

cancelled provided at least one strike 

price below (for calls) or above (for puts) 

in the same options class was quoted no 

bid [at a nickel] at the time of execution. 

(8) Transactions Executed Outside of 

Trading Hours. All index options 

transactions that occur outside of the 

trading hours of the Exchange will be 

cancelled if it is determined by the 

Trading Officials that the transaction 

occurred outside of the Exchange’s 

trading hours, except as set forth in 

Commentary .02 to Amex Rule 1. 

(b) through (e). No Change 

Commentary 

.01 through .02. No Change. 

* * * * * 

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. 

67770 Federal Register / Vol. 70, No. 215 / Tuesday, November 8, 2005 / Notices 

6 ‘‘Theoretical Price’’ of an option series is, for 

series traded on at least one other options exchange, 

the last bid price with respect to an erroneous sell 

transaction and the last offer price with respect to 

an erroneous buy transaction, just prior to the trade, 

disseminated by the competing options exchange 

that has the most liquidity in that option class in 

the previous two calendar months. If there are no 

quotes for comparison, designated Trading Officials 

will determine the Theoretical Price. For 

transactions occurring as part of an opening, the 

Theoretical Price shall be the first quote after the 

transaction(s) in question that does not reflect the 

erroneous transaction(s). 

7 ‘‘Fair Market Value’’ of an option is the 

midpoint of the national best bid and national best 

offer for the series (across all exchanges trading the 

option). In multiply listed issues, if there are no 

quotes for comparison purposes, Fair Market Value 

shall be determined by Trading Officials. For 

singly-listed issues, Fair Market Value shall be the 

first quote after the transaction(s) in question that 

does not reflect the erroneous transaction(s). For 

transactions occurring as part of an opening, the 

Fair Market Value shall also be the first quote after 

the transaction(s) in question that does not reflect 

the erroneous transaction(s). 

8The requisite amount is: $0.25 for options below 

$2; $0.40 for options priced from $2 to $5; $0.50 

for options priced above $5 to $10; $0.80 for options 

priced above $10 to $20; and $1.00 for options 

priced above $20. 

9For index options series trading with normal 

bid-ask differentials as established in Rule 958(c), 

the prescribed amount shall be: (a) The greater of 

$0.10 or 10% for index options trading under $2.50; 

(b) 10% for index options trading at or above $2.50 

and under $5; or (c) $0.50 for index options trading 

at $5 or higher. For index options series trading 

with bid-ask differentials that are greater than the 

widths established in Rule 958(c), the prescribed 

error amount shall be: (a) The greater of $0.20 or 

20% for index options trading under $2.50; (b) 20% 

for index options trading at or above $2.50 and 

under $5; or (c) $1.00 for index options trading at 

$5 or higher. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The Exchange’s equity option obvious 

error rules, Amex Rules 936 and 936—

ANTE, and index option obvious error 

rules, Amex Rules 936C and 936C—

ANTE (the ‘‘Obvious Error Rules’’) 

establish guidelines for the adjustment 

and cancellation of transactions in 

equity and index options. The purpose 

of this proposed rule change is to (i) 

amend the definition of ‘‘Theoretical 

Price’’ 6 and ‘‘Fair Market Value’’ 7 in 

connection with determining whether 

an equity or index option obvious price 

error has occurred as established in 

Amex Rules 936(a)(1) and 936(a)(1)—

ANTE (equity), and Amex Rules 

936C(a)(1) and 936C(a)(1)—ANTE 

(index), respectively; (ii) amend Amex 

Rules 936C(a)(1)(i) and 936C(a)(1)(i)—

ANTE to clarify how Fair Market Value 

is determined in connection with singlelisted index options and opening 

transactions; (iii) amend the Obvious 

Error Rules relating to erroneous 

quote(s) in the underlying security to 

permit the cancellation/adjustment of 

an option transaction when an exchange 

declares its quotes non-firm or 

otherwise communicates to the Amex 

that its quotes are unreliable; (iv) add an 

additional type of qualifying transaction 

entitled ‘‘Transactions Executed Outside 

of Trading Hours’’; (v) amend how 

obvious price errors based on ‘‘verifiable 

disruptions or malfunctions of Exchange 

systems’’ are adjusted or cancelled; and 

(vi) revise the Obvious Error Rules to 

amend the terms of cancellations for 

‘‘no bid series.’’

Obvious Price Error 

Under the Obvious Error Rules, an 

obvious price error is one of several 

enumerated types of transactions that 

qualify as an obvious error and are 

accordingly subject to adjustment or 

cancellation. 

Equity Options 

Amex Rules 936(a)(1) and 936(a)(1)—

ANTE provide that an obvious pricing 

error will be deemed to have occurred 

when the execution price of an 

electronic transaction (not open outcry) 

varies from the Theoretical Price by a 

requisite amount.8 For multiply-traded 

options, the Theoretical Price is the last 

bid (offer) price with respect to an 

erroneous sell (buy) transaction just 

prior to the trade that is disseminated by 

the competing options exchange with 

the most liquidity in that class over the 

preceding two (2) calendar months. If 

there are no quotes for comparison 

purposes, then trading officials will 

determine the Theoretical Price. For 

transactions occurring as part of an 

opening, the Theoretical Price is the 

first quote after the transaction(s) in 

question that does not reflect the 

erroneous transaction(s). When an 

obvious price error occurs, the Amex 

either will adjust or cancel the 

transaction pursuant to Amex Rules 

936(a)(1)(i) and 936(a)(1)(i)—ANTE. 

Index Options 

Amex Rules 936C(a)(1) and 

936C(a)(1)—ANTE provide that an 

obvious pricing error will be deemed to 

have occurred when the execution price 

of an electronic transaction (not open 

outcry) varies from the Fair Market 

Value by a prescribed amount.9 For 

multiply-traded options, the Fair Market 

Value is the midpoint of the national 

best bid for erroneous sell transactions 

or national best offer for erroneous buy 

transactions. If there are no quotes for 

comparison purposes, then trading 

officials will determine the Fair Market 

Value. For both single-listed options 

and transactions occurring as part of an 

opening, Fair Market Value is the 

midpoint of the first quote after the 

transaction(s) in question that does not 

reflect the erroneous transaction(s). The 

Exchange proposes to revise the rule 

text accordingly to clarify that the Fair 

Market Value is the midpoint of the first 

non-erroneous quote. When an obvious 

price error occurs, the Amex either will 

adjust or cancel the transaction 

pursuant to Amex Rules 936C(c) and 

936C(c)—ANTE. 

Since the implementation of the 

Obvious Error Rules, there have 

occasionally been options transactions 

effected on the Exchange that were 

executed at prices that appeared to be 

‘‘obvious price errors’’ but could not be 

cancelled or adjusted under existing 

rules. For example, in connection with 

an equity option, following 

dissemination of an erroneous quotation 

by the Amex, the competing options 

exchange with the most liquidity in the 

option class in question during the 

previous two (2) calendar months 

widened its quote to incorporate the 

Amex quote. As a result, although the 

price of the Amex transaction was 

‘‘erroneous’’ (i.e. based on an erroneous 

quote), it was not ‘‘erroneous’’ pursuant 

to Amex Rules 936 and 936—ANTE in 

that the Theoretical Price was based on 

the ‘‘widened quotes’’ disseminated by 

the competing options exchanges. As a 

result, the Exchange believes that an 

amendment to the definition of 

Theoretical Price (and Fair Market 

Value for index options) is appropriate 

so that the bids and offers of an options 

exchange experiencing obvious price 

errors or erroneous quotes are not 

indirectly used as the basis for the 

Theoretical Price (and Fair Market 

Value). The Exchange believes that the 

use of quotes that are deemed to be 

‘‘erroneous’’ as a basis for the 

Theoretical Price (equity) and Fair 

Market Value (indexes) is not proper 

and is inconsistent with the role and 

purpose of the Obvious Error Rules. 

Widened Quotes 

The proposal is intended to correct 

circumstances in the Obvious Error 

Rules where the Amex posts an 

erroneous quote and subsequently a 

competing options exchange, in direct 

response to the erroneous quote, widens 

its quote to incorporate the prior 

erroneous quote of the Amex. For 

example, the current market for an 

option is established by the Chicago 

Board Options Exchange, Inc. (‘‘CBOE’’) 

to be 1.65 bid/1.90 offer. The Amex then 

quotes 0 bid/.25 offer for the option. The 

CBOE immediately posts a market to 

incorporate the Amex quote such as .20 

Federal Register / Vol. 70, No. 215 / Tuesday, November 8, 2005 / Notices 67771 

10The Obvious Error Rules define an erroneous 

quote as a quote that occurs when the underlying 

security has a width of at least $1.00 and a width 

at least five times greater than the average quote 

width for such underlying security on the primary 

market (as defined in Amex Rule 900(b)(26) and 

Rule 900(b)(26)—ANTE) during the time period 

encompassing two minutes before and after the 

dissemination of such quote. The average quote 

width is determined by adding the quote widths of 

each separate quote during the four minute time 

period referenced above (excluding the quote in 

question) and dividing the number of quotes during 

such time period (excluding the quote in question). 

bid/1.90 offer. An order to buy is then 

executed on the Amex at the offer price 

of $0.25. The Amex then corrects the 

quote to 1.65 bid/1.90 offer with the 

CBOE following suit at 1.65 bid/1.90 

offer. The Exchange believes for 

purposes of determining Theoretical 

Price in connection with the equity 

options (Amex Rules 936(a)(1) and 

936(a)(1)—ANTE) and Fair Market 

Value in connection with index options 

(Amex Rules 936C(a)(1) and 

936C(a)(1)—ANTE) that erroneous 

quotes of a competing options exchange 

that incorporated an erroneous Amex 

quote (in this example, .20 bid/1.90 

offer) should not be used. 

The Exchange proposes a revision to 

its equity option obvious price error 

rules, Amex Rules 936(a)(1) and 

936(a)(1)—ANTE, providing that in 

determining the Theoretical Price of an 

option the last bid (erroneous sell 

transaction) or last offer (erroneous buy 

transaction) of the competing options 

exchange with the most liquidity in that 

option class over the previous two 

calendar quarters will be excluded if 

such competing options exchange 

widens its quote to incorporate the prior 

erroneous quote of the Amex. As a 

result, the Exchange proposes that the 

Theoretical Price, under these 

circumstances, would be the last bid 

price (erroneous sell transaction) and 

the last offer price (erroneous buy 

transaction) just prior to the trade, 

disseminated by the competing options 

exchange with the next best liquidity. If 

there are no competing options 

exchanges left without an erroneous 

quote, the Theoretical Price would be 

the first quote of the competing options 

exchange that has the most liquidity in 

such option class over the previous two 

(2) calendar quarters after the 

transaction(s) in question that does not 

reflect the erroneous quote. 

In connection with the index option 

obvious price error rules, the Exchange 

proposes that Fair Market Value will not 

include the national best bid price 

(erroneous sell transaction) or national 

best offer price (erroneous buy 

transaction) of a competing options 

exchange if such exchange widens its 

quotes to incorporate the prior 

erroneous quote of the Exchange. 

Accordingly, the Fair Market Value will 

be the midpoint of the first quote after 

the transaction(s) in question that does 

not reflect the erroneous quote. 

Erroneous Quote in Underlying 

Security 

As set forth in the Obvious Error 

Rules, a trade resulting from an 

erroneous quote in the underlying 

security may be adjusted or cancelled. 

However, pursuant to these Rules, a 

quote from an exchange in an 

underlying security that is declared 

‘‘erroneous’’ by that exchange may not 

qualify for cancellation or adjustment.10

Therefore, the Exchange proposes to 

amend Amex Rules 936(a)(5), 

936(a)(5)—ANTE, 936C(a)(5) and 

936C(a)(5)—ANTE so that when an 

exchange for an underlying security or 

Nasdaq if the underlying security trades 

on Nasdaq declares its quote(s) ‘‘nonfirm’’ or when an exchange or Nasdaq 

communicates to the Amex that it is 

experiencing systems or other problems 

affecting the reliability of its 

disseminated quotes, a trade resulting 

from such ‘‘erroneous’’ underlying 

quote could be cancelled or adjusted. In 

order for a trade to be cancelled or 

adjusted, the Exchange would have to 

have proper documentation of that 

market’s non-firm declaration or 

notification of unreliable quotes, as 

applicable. 

Transactions Executed Outside of 

Trading Hours 

The Exchange further proposes that 

any equity options or index options 

transaction that occurs outside normal 

trading hours (currently, 9:30 a.m. until 

4:02 p.m. Eastern time (‘‘ET’’) for equity 

options and 9:30 a.m. until 4:15 p.m. ET 

for broad-based index options and 

options on select Exchange-Traded 

Fund Shares) would be cancelled if the 

Trading Officials determine that the 

transaction took place outside of Amex 

trading hours, except as set forth in 

Commentary .02 to Amex Rule 1. 

Amex Rule 1 sets forth the hours of 

business at the Exchange. Commentary 

.02 to Rule 1 provides that no option 

series may freely trade after 4:02 p.m. 

ET except that broad stock index group 

options and options on select ExchangeTraded Fund Shares shall freely trade 

until 4:15 p.m. ET each business day. 

Three (3) exceptions to the general rule 

are provided in Commentary .02 so that 

a trading rotation in any class of options 

may be effected even though the 

transaction will occur after 4:02 p.m. as 

follows: (i) Trading in the underlying 

security opens or re-opens after 3:30 

p.m. ET; (ii) such rotation was initiated 

due to unusual market conditions 

pursuant to Rule 918 and notice of such 

rotation is publicly disseminated no 

later than the commencement of the 

rotation or 4:00 p.m. whichever is 

earlier or notice of such rotation is 

publicly disseminated after 4:00 p.m. 

and the rotation does not commence 

until five (5) minutes after news of such 

rotation is publicly disseminated; or (iii) 

for option classes trading on ANTE, an 

automated trading rotation is held at the 

close of trading as soon as practicable 

after 4:02 p.m. ET. Accordingly, equity 

options and index options transactions 

would be cancelled if the Trading 

Officials determine that the transaction 

occurred outside of the Amex trading 

hours. 

Verifiable Disruptions or Malfunctions 

of Exchange Systems 

In connection with transactions 

arising out of ‘‘verifiable disruptions or 

malfunctions of Exchange systems,’’ the 

Obvious Error Rules provide that those 

transactions that qualify for price 

adjustment will be adjusted to the 

Theoretical Price for equity options or 

Fair Market Value for index options. 

The Exchange submits that unintended 

results may occur due to the manner in 

which price adjustments are handled 

during these circumstances. 

Accordingly, the Exchange proposes 

that unless the parties agree to a price 

adjustment, the transaction would be 

cancelled. This new standard would 

replace the current price adjustment to 

the Theoretical Price for equity options 

or Fair Market Value for index options 

and clarify that the transaction will be 

cancelled if a price adjustment is not 

agreed to. 

An example of such unintended 

consequences is set forth below. The 

current market for a particular equity 

call option is established by the Amex 

at 1.15 bid/1.30 offer. The underlying 

security subsequently increases in price. 

The other options exchanges (excluding 

the Amex) change their quote so that the 

market is now 1.20 bid/1.35 offer. The 

Amex due to a systems problem does 

not change its quote and remains at 1.15 

bid/1.30 offer. The underlying security 

continues to increase in price. The other 

options exchanges now post a market of 

1.25 bid/1.40 offer. The Amex remains 

at 1.15 bid/1.30 offer. An order to buy 

is executed on the Amex at 1.30. As 

defined by the current Rule, the 

Theoretical Price for this option is 1.25 

so that in adjusting the price the 

specialist would be disadvantaged by 

the adjustment to 1.25 compared to the 

selling price of 1.30 (when the market 

was actually 1.40). Under the proposal, 

67772 Federal Register / Vol. 70, No. 215 / Tuesday, November 8, 2005 / Notices 

11When the bid price is $0.00, the offer price is 

typically $0.05. In this instance, the option 

typically is referred to as ‘‘no bid at a nickel.’’

12 15 U.S.C. 78f(b). 

13 15 U.S.C. 78f(b)(5). 14 17 CFR 200.30–3(a)(12). 

unless the parties agreed to an 

adjustment, the transaction would be 

cancelled. 

No Bid Series 

Under the current Obvious Error 

Rules ‘‘no bid provisions,’’ electronic 

transactions in option series quoted no 

bid at a nickel (i.e. $0.05 offer) will be 

cancelled provided at least one strike 

price below (for calls) or above (for puts) 

in the same options class was quoted no 

bid at a nickel at the time of execution. 

A ‘‘no bid’’ option refers to an option 

where the bid price is $0.00.11 Series of 

options quoted no bid are typically deep 

out-of-the-money series that are 

perceived as having little if any chance 

of expiring in-the-money. For this 

reason, relatively few transactions occur 

in these series and those that do are 

usually the result of a momentary 

pricing error. In some cases, the pricing 

error is substantial enough such that the 

other provisions in the equity and index 

options obvious error rules become 

applicable. However, in many cases, the 

no bid provisions are the only 

provisions that would apply to the 

pricing error. 

The proposal seeks to revise the no 

bid provision in the Obvious Error Rules 

that provide that the option series must 

be quoted no bid at a nickel and instead 

only require that the option series be 

quoted no bid. The reason for this 

change is that options that are priced at 

no bid, regardless of the offer, are 

typically deep out-of-the-money series 

that are perceived as having little if any 

chance of expiring in-the-money. This is 

especially the case when the series 

below (for calls) or above (for puts) in 

the same option class similar is quoted 

no bid. In this regard, the offer price is 

irrelevant. Therefore, transactions in 

series that are quoted no bid at a dime, 

for example, are just as likely to be the 

result of an obvious error as are 

transactions in series that are quoted no 

bid at a nickel when the series below 

(for calls) or above (for puts) in the same 

option class similarly is quoted no bid. 

2. Statutory Basis 

The Amex represents that the filing 

provides objective guidelines for the 

nullification or adjustment of 

transactions executed at clearly 

erroneous prices. Moreover, the 

proposed rule provides uniformity 

regarding obvious pricing errors, which 

will serve to benefit customers. For 

these reasons, the Exchange believes the 

proposal is consistent with Section 6(b) 

of the Act 12, in general, and furthers the 

objectives of Section 6(b)(5) of the Act,13

in particular, in that it is designed to 

prevent fraudulent and manipulative 

acts and practices, to promote just and 

equitable principles of trade, and, in 

general, to protect investors and the 

public interest. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The Exchange believes the proposed 

rule change will impose no burden on 

competition that is not necessary or 

appropriate in furtherance of the 

purposes of the Act. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants or Others 

No written comments were solicited 

or received by the Exchange on this 

proposal. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

Within 35 days of the date of 

publication of this notice in the Federal 

Register or within such longer period (i) 

as the Commission may designate up to 

90 days of such date if it finds such 

longer period to be appropriate and 

publishes its reasons for so finding, or 

(ii) as to which the Exchange consents, 

the Commission will: 

(A) By order approve the proposed 

rule change or 

(B) Institute proceedings to determine 

whether the proposed rule change 

should be disapproved. 

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. 

Comments may be submitted by any of 

the following methods: 

Electronic Comments 

• Use the Commission’s Internet 

comment form (http://www.sec.gov/ 

rules/sro.shtml); or 

• Send an e-mail to rulecomments@sec.gov. Please include File 

Number SR–Amex–2005–060 on the 

subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Jonathan G. Katz, Secretary, 

Securities and Exchange Commission, 

100 F Street, NE., Washington, DC 

20549–9303. 

All submissions should refer to File 

Number SR–Amex–2005–060. This file 

number should be included on the 

subject line if e-mail is used. To help the 

Commission process and review your 

comments more efficiently, please use 

only one method. The Commission will 

post all comments on the Commission’s 

Internet Web site (http://www.sec.gov/ 

rules/sro.shtml). 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 the filing also will be 

available for inspection and copying at 

the principal office of the Exchange. All 

comments received will be posted 

without change; the Commission does 

not edit personal identifying 

information from submissions. You 

should submit only information that 

you wish to make available publicly. All 

submissions should refer to File 

Number SR–Amex–2005–060 and 

should be submitted on or before 

November 29, 2005. 

For the Commission, by the Division of 

Market Regulation, pursuant to delegated 

authority.14

Jonathan G. Katz, 

Secretary. 

[FR Doc. 05–22164 Filed 11–7–05; 8:45 am] 

BILLING CODE 8010–01–P 

SMALL BUSINESS ADMINISTRATION 

Reporting and Recordkeeping 

Requirements Under OMB Review 

AGENCY: Small Business Administration. 

ACTION: Notice of Reporting 

Requirements Submitted for OMB 

Review. 

SUMMARY: Under the provisions of the 

Paperwork Reduction Act (44 U.S.C. 

Chapter 35), agencies are required to 

submit proposed reporting and 

recordkeeping requirements to OMB for 

review and approval, and to publish a 

notice in the Federal Register notifying 

the public that the agency has made 

such a submission. 

DATES: Submit comments on or before 

December 8, 2005. If you intend to 

comment but cannot prepare comments