Document ID: SEC-2006-1218-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: American Stock Exchange LLC
Posted Date: 2006-09-21T04:00Z

[Federal Register: September 21, 2006 (Volume 71, Number 183)]
[Notices]               
[Page 55229-55230]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr21se06-84]                         

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SECURITIES AND EXCHANGE COMMISSION

Release No. 34-54442; File No. SR-Amex-2006-80]

 
Self-Regulatory Organizations; American Stock Exchange LLC; 
Notice of Filing of Proposed Rule Change To Amend Rule 777 Regarding 
Depository Eligibility

September 14, 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 August 21, 2006, the American Stock Exchange LLC (``Amex'') filed 
with the Securities and Exchange Commission (``Commission'') the 
proposed rule change described in Items I, II, and III below, which 
items have been prepared primarily by Amex. The Commission is 
publishing this notice to solicit comments on the proposed rule change 
from interested parties.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The proposed rule change seeks to amend Amex Rule 777 by deleting 
the references to ``domestic'' and ``foreign'' in paragraph (a) as well 
as additional requirements imposed by paragraph (b) of the rule in 
order for a security to be depository eligible. The proposed rule also 
seeks to add new sections 136 and 137 to the Amex Company Guide to 
cross-reference Rules 776 and 777.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, 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. Amex has prepared summaries, set forth in sections (A), 
(B), and (C) below, of the most significant aspects of these 
statements.\3\
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    \3\ The Commission has modified the text of the summaries 
prepared by Amex.
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(A) Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    On June 1, 1995, Amex adopted Rule 777 for the purpose of 
facilitating implementation of Rule 15c6-1 of the Act that established 
a three-day settlement period for most securities transactions.\4\ Rule 
777 requires domestic issuers' securities be depository eligible prior 
to listing and sets forth specific requirements for issuers' depository 
eligibility.
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    \4\ Securities Exchange Act Release No. 35798 (June 1, 1995) 60 
FR 30909 (June 12, 1995) [File No. SR-Amex-95-17].
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    Currently, before an issue of securities can be listed, Rule 777(a) 
requires a domestic issuer to represent to Amex that a CUSIP number 
identifying the securities had been included in the file of eligible 
issues maintained by a securities depository registered with the 
Commission as a clearing agency under section 17A of the Act.\5\ Amex 
proposes to delete the exception for foreign issuers in Rule 777(a). 
Exclusion of foreign issuers is no longer necessary because they have 
the capacity to comply with Rule 777 and have been doing so voluntarily 
for years. The proposed rule change is consistent with clarifying 
changes adopted by NYSE.\6\
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    \5\ 15 U.S.C. 78q-1.
    \6\ Securities Exchange Act Release No. 45987 (May 28, 2002), 67 
FR 38538 (June 4, 2002) (SR-NYSE-2001-30).
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    Amex also proposes to delete the exception in Rule 777(a) for 
securities whose terms cannot be reasonably modified to meet the 
criteria for depository eligibility at all securities depositories. The 
exception was originally included in Rule 777(a) because various States 
and countries precluded the book-entry issuance of securities. 
Following implementation of Rule 777(a), however, States have amended 
their corporate statutes to allow for book-entry issuance and, as 
mentioned above, foreign issuers have voluntarily complied with book-
entry issuance requirements. As a result, the expectation is no longer 
needed to accommodate such issuers. Further, in light of the direct 
registration eligibility requirements recently approved by the 
Commission \7\ that require new and current listings on the Amex to be 
eligible for a direct registration system operated by a securities 
depository, Amex is concerned that the exception will confuse issuers.
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    \7\ Securities Exchange Act Release No. 54290 (August 8, 2006), 
71 FR 47262 (August 16, 2006) (SR-Amex-2006-40).
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    Rule 777(b) currently sets forth additional requirements that must 
be met before a security will be deemed ``depository eligible'' within 
the meaning of Rule 776.\8\ The applicability of the requirement set 
forth in Rule 777(b) to an issuer depended upon whether a new issue is 
distributed by an underwriting syndicate before or after the date an 
electronic securities depository system is available for monitoring 
repurchases of the distributed shares by syndicate members. Prior to 
the availability of such a system, a managing underwriter may delay the 
date a security is deemed depository eligible for up to three months 
after commencement of trading on Amex.
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    \8\ Rule 776 requires Amex members to use the facilities of a 
security depository for the book-entry settlement of all 
transactions in depository-eligible securities with another 
financial intermediary or institutional customer. Securities 
Exchange Act Release No. 32455 (June 11, 1993), 58 FR 33679 (June 
18, 1993) [File Nos. SR-Amex-93-07; SR-BSE-93-08; SR-MSE-93-03; SR-
NASD-93-11; SR-NYSE-93-13; SR-PSE-93-04; and SR-PHLX-93-09].
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    On May 13, 1996, approximately one year after the approval of Rule 
777, the Commission approved a rule change filed by The Depository 
Trust Company

[[Page 55230]]

(``DTC'')\9\ allowing DTC to implement its Initial Public Offering 
(``IPO'') Tracking System.\10\ The IPO Tracking System enables lead 
managers and syndicate members of equity underwritings to monitor 
repurchases of distributed shares in an automated book-entry 
environment.
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    \9\ DTC is a securities depository registered with the 
Commission under section 17A and 19 of the Act as a clearing agency.
    \10\ Securities Exchange Act Release No. 37208 (May 13, 1996), 
61 FR 25253 (May 20, 1996) [File No. SR-DTC-95-27].
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    Amex proposes deleting Rule 777(b) in its entirety as it is no 
longer relevant since DTC has implemented its IPO Tracking System, 
which is monitoring repurchases of distributed shares. The proposed 
rule change is consistent with clarifying changes adopted by NYSE.\11\
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    \11\ Supra, note 5.
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    Finally, Amex proposes cross-referencing rules 776 and 777 in Part 
1 of the Amex Company Guide to clarify that Rules 776 and 777 are 
initial and continued listing standards applicable to companies listed 
on Amex.
    Amex believes the proposed rule change is consistent with the 
requirements of Sections 6(b)(5) and 17A of the Act \12\ and the rules 
and regulations thereunder requiring the rules of Amex be designed to 
remove impediments to and perfect the mechanism of a free and open 
market and to perfect a national market system which provides, among 
other things, for the prompt and accurate clearance and settlement of 
securities transactions.
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    \12\ 15 U.S.C. 78f(b)(5) and 78q-1.
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(B) Self-Regulatory Organization's Statement on Burden on Competition

    Amex does not believe that the proposed rule change will impose any 
burden on competition that is not necessary or appropriate in 
furtherance of the purposes of the Act.

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 with respect to the 
proposed rule change.

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

    Within thirty-five 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 ninety 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 self-regulatory organization consents, 
the Commission will:
    (A) By order approve such 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 rule-comments@sec.gov. Please include 

File Number SR-Amex-2006-80 on the subject line.

Paper Comments

     Send paper comments in triplicate to Nancy M. Morris, 
Secretary, Securities and Exchange Commission, 100 F Street, NE., 
Washington, DC 20549-1090.
    All submissions should refer to File Number SR-Amex-2006-80. 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 Section, 100 F Street, 
NE., Washington, DC 20549. Copies of such filings also will be 
available for inspection and copying at the principal office of Amex 
and on Amex's Web site at http://www.amex.com. 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-2006-80 and should be submitted on 
or before October 12, 2006.
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    \13\ 17 CFR 200.30-3(a)(12).

    For the Commission by the Division of Market Regulation, 
pursuant to delegated authority.\13\
Jill M. Peterson,
Assistant Secretary.
[FR Doc. 06-7840 Filed 9-20-06; 8:45 am]

BILLING CODE 8010-01-P