Document ID: SEC-2007-0035-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: American Stock Exchange LLC
Posted Date: 2007-01-09T05:00Z

[Federal Register: January 9, 2007 (Volume 72, Number 5)]
[Notices]               
[Page 1040-1041]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr09ja07-73]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-55018; File No. SR-Amex-2006-109]

 
Self-Regulatory Organizations; American Stock Exchange LLC; 
Notice of Filing and Order Granting Accelerated Approval of a Proposed 
Rule Change and Amendment No. 1 Thereto Relating to Listing Standards 
for Series of Portfolio Depositary Receipts and Index Fund Shares

December 28, 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 November 21, 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 substantially prepared by the Exchange. 
Amex filed Amendment No. 1 with the Commission on December 20, 2006. 
This order provides notice of the proposed rule change as modified by 
Amendment No. 1 and approves the proposed rule change on an accelerated 
basis.
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    \1\ 15 U.S.C. 78s(b)(l).
    \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 Exchange proposes to make clarifying changes to Amex Rules 
1000, 1002, 1000A and 1002A and minor, typographical changes to Amex 
Rules 1000, 1002 and 1002A, relating to listing standards for series of 
portfolio depositary receipts and index fund shares (collectively, 
``exchange-traded funds'' or ``ETFs''). The text of the proposed rule 
change is available at Amex, at http://www.amex.com, 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 III below. The Amex 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 the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to clarify the listing standards in Amex 
Rules 1000, 1002, 1000A and 1002A governing ETFs, amendments to which 
were approved by the Commission on November 9, 2006.\3\ In particular, 
the Commission approved changes to Rules 1000 and 1000A to include 
generic listing standards for series of ETFs that are based on 
international or global indexes. Additionally, the Commission approved 
revisions to Amex Rules 1000 and 1000A to include generic listing 
standards for ETFs that are based on indexes or portfolios previously 
approved by the Commission as an underlying benchmark for the trading 
of ETFs, options or other specified index-based securities. These 
changes enable the Exchange to list exchange-traded funds pursuant to 
Rule 19b-4(e) of the Act \4\ if each of the conditions set forth in 
Commentary .03 to Rule 1000 or Commentary .02 to Rule 1000A is 
satisfied.
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    \3\ See Securities Exchange Act Release No. 54739 (November 9, 
2006), 71 FR 66993 (November 17, 2006) (SR-Amex-2006-78).
    \4\ 17 CFR 240.19b-4(e).
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    Rule 19b-4(e) provides that the listing and trading of a new 
derivative securities product by a self-regulatory organization shall 
not be deemed a proposed rule change under Rule 19b-4(c)(1) of the Act 
\5\ if the Commission has approved, pursuant to Section 19(b) of the 
Act, the self-regulatory organization's trading rules, procedures and 
listing standards for the product class that would include the new 
derivatives securities product and the self-regulatory organization has 
a surveillance program for the product class.\6\
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    \5\ 17 CFR 240.19b-4(c)(1).
    \6\ When relying on Rule 19b-4(e), the SRO must submit Form 19b-
4(e) to the Commission within five business days after the exchange 
begins trading the new derivative securities products. See Exchange 
Act Release No. 40761 (December 8, 1998), 63 FR 70952 (December 22, 
1998).
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    The Commission also approved other minor clarifying changes to Amex 
Rules 1000, 1002, 1000A and 1002A.
    In connection with those approved changes, the Exchange now 
proposes to make additional clarifying changes to Rules 1000, 1002, 
1000A and 1002A. Specifically, the Exchange proposes to amend the 
definition of ``US Component Stock'' in Rules 1000(b)(3) and 
1000A(b)(3). The definition of U.S. Component Stock was designed to 
include any equity security that is registered under Sections 12(b) or 
12(g) of the Act, and therefore to comprise all securities that are 
subject to Commission oversight through registration. This definition 
was intended to include American Depositary Receipts (``ADRs''), the 
underlying security of which is registered under Section 12(b) or 12(g) 
of the Act. In the case of listed ADRs, it is the equity security 
underlying an ADR that is registered pursuant to Section 12 of the Act, 
not the ADRs.\7\ Under Amex's generic listing standards,\8\ the ADR 
would also be required to be listed on a national securities exchange 
and be an NMS Stock as defined in Rule 600 of Regulation NMS.\9\ 
Consequently, the Exchange proposes to revise the definition of U.S. 
Component Stock to clarify that, while the ADR would be considered the 
U.S. Component Stock and therefore the index component for purposes of 
satisfying the eligibility criteria, the ADR can only qualify as a ``US 
Component Stock'' if the equity security underlying that ADR is

[[Page 1041]]

registered under Section 12(b) or Section 12(d) of the Act.
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    \7\ See 17 CFR 240.12a-8.
    \8\ See Amex Rule 1000, Commentary .03(a)(A)(5), (a)(B)(5) and 
(a)(C), and Amex Rule 1000A, Commentary .02(a)(A)(5), (a)(B)(5) and 
(a)(C).
    \9\ 17 CFR 242.600.
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    The Exchange also proposes to modify Rule 1002(a)(ii) and Rule 
1002A(a)(ii) to specify that the ETF issuer must provide the Exchange 
with a representation that the net asset value per share will be 
calculated daily and made available to all market participants at the 
same time.
    Finally, the Exchange is proposing to make a number of minor, 
typographical changes to Rules 1000, 1002 and 1002A.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6 of the Act,\10\ in general, and furthers the objectives 
of Section 6(b)(5),\11\ 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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    \10\ 15 U.S.C. 78f(b).
    \11\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants or Others

    The Exchange did not receive any written comments on the proposed 
rule change.

III. Solicitation of Comments

    Interested persons are invited to submit written data, views and 
arguments concerning the foregoing, including whether the proposed rule 
change, as amended, is consistent with the Act. Comments may be 
submitted by any of the following methods:

Electronic Comments

     Use the Commission's Internet comment form at http://www.sec.gov/rules/sro.shtml
 or send an e-mail to rule-comments@sec.gov. 

Please include File No. SR-Amex-2006-109 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-2006-109. 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 at 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 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-2006-109 and should be 
submitted on or before January 30, 2007.

IV. Discussion and Commission's Findings

    The Commission finds that the proposed rule change, as amended, is 
consistent with the requirements of the Act and the rules and 
regulations thereunder applicable to a national securities 
exchange.\12\ In particular, the Commission believes that the proposal 
is consistent with Section 6(b)(5) of the Act,\13\ which requires that 
the rules of an exchange be 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, and in general protect investors 
and the public interest.
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    \12\ In approving this proposal, the Commission has considered 
its impact on efficiency, competition, and capital formation. See 15 
U.S.C. 78f(b).
    \13\ 15 U.S.C. 78f(b)(5).
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    The Commission believes that the proposal clarifies the Exchange's 
listing criteria applicable to ETFs. The definition of ``US Component 
Stock'' in Amex Rules 1000(b)(3) and 1000A(b)(3)1000 and 1000A will be 
amended to make clear that it is the equity security underlying an ADR 
that must be registered pursuant to Section 12 of the Act, not the ADR 
itself. The Commission believes that this change is consistent with the 
intent that the Exchange's definition of ``US Component Stock'' 
includes only securities that publicly disclose information under the 
federal securities laws.\14\ In addition, the Commission believes the 
Exchange's revisions to its Rules 1002(a)(ii) and 1002A(a)(ii) 
specifying that the ETF issuer must provide a representation that the 
net asset value per share will be calculated daily and disseminated to 
market participants at the same time is consistent with the Act. The 
Commission further believes that the additional proposed revisions to 
Amex Rules 1000, 1002 and 1002A are minor, and should serve to clarify 
the Exchange's listing standards.
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    \14\ The Commission notes that, pursuant to the Amex's listing 
rules, an ADR must also be listed on a national securities exchange 
and must be an NMS stock under Rule 600 of Regulation NMS. 17 CFR 
242.600.
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Accelerated Approval

    The Commission finds good cause, consistent with Section 19(b)(2) 
of the Act,\15\ for approving this proposed rule change, as amended, 
before the thirtieth day after the publication of notice thereof in the 
Federal Register. The Commission notes that accelerating approval will 
enable the proposed rule clarifications to be implemented immediately 
to the benefit of market participants.
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    \15\ 15 U.S.C. 78s(b)(2).
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V. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\16\ that the proposed rule change, as amended (SR-Amex-2006-109), 
is hereby approved on an accelerated basis.
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    \16\ 15 U.S.C. 78s(b)(2).
    \17\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\17\
Jill M. Peterson,
Assistant Secretary.
 [FR Doc. E7-62 Filed 1-8-07; 8:45 am]

BILLING CODE 8011-01-P