Document ID: SEC-2006-0255-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: American Stock Exchange LLC
Posted Date: 2006-03-01T05:00Z

[Federal Register: March 1, 2006 (Volume 71, Number 40)]
[Notices]               
[Page 10571-10572]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr01mr06-121]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-53349; File No. SR-Amex-2006-07]

 
Self-Regulatory Organizations; American Stock Exchange LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change 
Relating to the Extension of a Pilot Program That Increases Position 
and Exercise Limits for Equity Options and Options on the Nasdaq-100 
Tracking Stock

February 22, 2006.
    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 January 31, 2006, 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 and 
II below, which Items have been prepared by the Amex. The Exchange has 
filed the proposal as a ``non-controversial'' rule change pursuant to 
Section 19(b)(3)(A) of the Act \3\ and Rule 19b-4(f)(6) thereunder,\4\ 
which renders it effective upon filing with the Commission. The 
Commission is publishing this notice to solicit comments on the 
proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 15 U.S.C. 78s(b)(3)(A).
    \4\ 17 CFR 240.19b-4(f)(6).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange seeks a six-month extension of its pilot program 
increasing the standard position and exercise limits for options on the 
QQQQ and equity option classes traded on the Exchange (``Pilot 
Program''). The text of the proposed rule change is available on the 
Amex's Web site (http://www.amex.com), at the Amex's principal office, 

and at the Commission's Public Reference Room.

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 Amex 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
    The Exchange is requesting to extend its current Pilot Program 
increasing the standard position and exercise limits for options on the 
QQQQ and equity option classes traded on the Exchange for a time period 
of slightly over six months from February 23, 2006, through and 
including September 1, 2006.
    The Exchange previously filed a proposed rule change, which was 
effective upon filing with the Commission, that increased standard 
position and exercise limits for options on the QQQQ and for equity 
option classes traded on the Exchange on a pilot basis for a six-month 
period.\5\ Under the Pilot Program, position and exercise limits for 
options on the QQQQ and equity options classes traded on the Exchange 
were increased to the following levels:
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    \5\ The Pilot Program, which commenced on March 3, 2005, is set 
to expire on February 23, 2006. See Securities Exchange Act Release 
No. 51316 (March 3, 2005), 70 FR 12251 (March 11, 2005) (notice of 
filing and immediate effectiveness of File No. SR-Amex-2005-029). 
See also Securities Exchange Act Release No. 52260 (August 15, 
2005), 70 FR 48991 (August 22, 2005) (notice of filing and immediate 
effectiveness of File No. SR-Amex-2005-082, which extended the Pilot 
Program).
    \6\ Except when the Pilot Program is in effect.

------------------------------------------------------------------------
   Current equity option contract        Pilot program equity option
             Limit \6\                          contract limit
------------------------------------------------------------------------
                         13,500                               25,000
                         22,500                               50,000
                         31,500                               75,000
                         60,000                              200,000
                         75,000                              250,000
------------------------------------------------------------------------
                               CurrenPilot Program QQQQ option contract
                                                               limit
------------------------------------------------------------------------
                        300,000                              900,000
------------------------------------------------------------------------

[[Page 10572]]

    The standard position limits were last increased on December 31, 
1998.\7\ Since that time there has been a steady increase in the number 
of accounts that: (a) Approach the position limit; (b) exceed the 
position limit; and (c) are granted an exemption to the standard limit. 
Several member firms have petitioned the options exchanges to either 
eliminate position limits, or in lieu of total elimination, increase 
the current levels and expand the available hedge exemptions. A review 
of available data indicates that the majority of accounts that maintain 
sizable positions are in those option classes subject to the 60,000 and 
75,000 tier limits. There also has been an increase in the number of 
accounts that maintain sizable positions in the lower three tiers. In 
addition, overall volume in the options market has continually 
increased over the past five years. The Exchange believes that the 
increase in options volume and lack of evidence of market manipulation 
occurrences over the past twenty years justifies the proposed increases 
in the position and exercise limits.
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    \7\ See Securities Exchange Act Release No. 40875 (December 31, 
1998), 64 FR 1842 (January 12, 1999) (SR-Amex-98-22) (approval of 
increase in position limits and exercise limits).
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    The Exchange has not encountered any problems or difficulties 
relating to the Pilot Program since its inception. The instant proposed 
rule change makes no substantive change to the Pilot Program other than 
to extend it for a time period slightly over six months through 
September 1, 2006.
2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act \8\ in general and furthers the objective of Section 
6(b)(5) of the Act \9\ 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, and to 
remove impediments to and perfect the mechanism of a free and open 
market and a national market system.
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    \8\ 15 U.S.C. 78f(b).
    \9\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange believes that the proposed rule change would 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

    Because the forgoing rule change does not: (1) Significantly affect 
the protection of investors or the public interest; (2) impose any 
significant burden on competition; and (3) become operative for 30 days 
after the date of this filing, or such shorter time as the Commission 
may designate, it has become effective pursuant to Section 19(b)(3)(A) 
of the Act \10\ and Rule 19b-4(f)(6) thereunder.\11\
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    \10\ 15 U.S.C. 78s(b)(3)(A).
    \11\ 17 CFR 240.19b-4(f)(6).
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    A proposed rule change filed under 19b-4(f)(6) normally may not 
become operative prior to 30 days after the date of filing.\12\ 
However, Rule 19b-4(f)(6)(iii) \13\ permits the Commission to designate 
a shorter time if such action is consistent with the protection of 
investors and the public interest. The Exchange provided the Commission 
with written notice of its intent to file this proposed rule change at 
least five business days prior to the date of filing the proposed rule 
change. In addition, the Exchange has requested that the Commission 
waive the 30-day pre-operative delay. The Commission believes that 
waiving the 30-day pre-operative delay is consistent with the 
protection of investors and in the public interest because it will 
allow the Pilot Program to continue uninterrupted.\14\
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    \12\ 17 CFR 240.19b-4(f)(6)(iii).
    \13\ Id.
    \14\ For the purposes only of waiving the pre-operative delay, 
the Commission has considered the proposed rule's impact on 
efficiency, competition, and capital formation. 15 U.S.C. 78c(f).
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    At any time 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 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. 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 rule-comments@sec.gov. Please include 

File No. SR-Amex-2006-07 on the subject line.

Paper Comments

     Send paper comments in triplicate to Nancy M. Morris, 
Secretary, Securities and Exchange Commission, Station Place, 100 F 
Street, NE., Washington, DC 20549-1090.
    All submissions should refer to File No. SR-Amex-2006-07. 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, 100 F Street, NE., 
Washington, DC 20549. Copies of such filing will also be available for 
inspection and copying at the principal office of the Amex. 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 No. SR-Amex-2006-07 and should be 
submitted on or before March 22, 2006.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\15\
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    \15\ 17 CFR 200.30-3(a)(12).
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Nancy M. Morris,
Secretary.
[FR Doc. E6-2814 Filed 2-28-06; 8:45 am]

BILLING CODE 8010-01-P