Document ID: SEC-2006-0760-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: American Stock Exchange LLC
Posted Date: 2006-06-15T04:00Z

[Federal Register: June 15, 2006 (Volume 71, Number 115)]
[Notices]               
[Page 34646-34648]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr15jn06-63]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-53956; File No. SR-Amex-2006-55]

 
Self-Regulatory Organizations; American Stock Exchange LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change 
Relating to Odd-Lots in Nasdaq Securities

June 7, 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 May 25, 2006, the American Stock Exchange LLC (``Amex'' or 
``Exchange'') submitted to the Securities and Exchange Commission 
(``Commission'') the proposed rule change as described in Items I and 
II below, which Items have been prepared by Amex. Amex filed the 
proposed rule change 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

    Amex proposes to extend for an additional twelve-month period 
ending June 30, 2007, the Exchange's pilot program for odd-lot 
execution procedures for Nasdaq securities traded on the Exchange 
pursuant to unlisted trading privileges. There is no proposed new rule 
text. Amex is making no changes to the pilot program as it currently 
operates, other than extending it through June 30, 2007.\5\
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    \5\ Telephone conversation between Sudhir Bhattacharyya, 
Assistant General Counsel, and Mia Zur, Special Counsel, Division of 
Market Regulation, Commission, on June 7, 2006.
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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 such statements.

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

1. Purpose
    The Commission approved, and the Exchange implemented, a pilot 
program for odd-lot order \6\ executions in Nasdaq securities 
transacted on the Exchange pursuant to unlisted trading privileges.\7\

[[Page 34647]]

The pilot program was originally approved on August 2, 2002, for a six-
month period, was most recently extended on December 30, 2005, and is 
due to expire on June 30, 2006.\8\ Accordingly, as a result of the 
numerous prior extensions and the Exchange's intention to continue the 
pilot program, the Exchange currently proposes a twelve-month 
extension.
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    \6\ An odd-lot order is an order for less than 100 shares.
    \7\ See Commentary .05 of Amex Rule 205, which describes the 
manner of executing odd-lot orders in general, and which for Nasdaq 
securities, references Amex Rule 118(j), specifically describing the 
Exchange's odd-lot execution procedures for Nasdaq securities.
    \8\ The pilot program originally approved on August 2, 2002, was 
subsequently extended on July 14 and December 24, 2003; June 14 and 
December 27, 2004; July 6 and January 13, 2006. See Securities 
Exchange Act Release Nos. 46304 (August 2, 2002), 67 FR 51903 
(August 9, 2002); 48174 (July 14, 2003), 68 FR 43409 (July 22, 
2003); 48995 (December 24, 2003); 68 FR 75670 (December 31, 2003); 
49855 (June 14, 2004), 69 FR 35399 (June 24, 2004); 50934 (December 
27, 2004), 70 FR 412 (January 4, 2005); 51975 (July 6, 2005), 70 FR 
40409 (July 13, 2005); and 53116 (January 13, 2006), 71 FR (January 
23, 2006).
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    Under the Exchange's current pilot program, after the opening of 
trading in Nasdaq securities, odd-lot market orders and executable odd-
lot limit orders are executed at the qualified national best bid or 
offer \9\ at the time the order is received at the trading post or 
through Amex Order File. Odd-lot market orders and executable odd-lot 
limit orders entered before the opening of trading in Nasdaq securities 
are executed at the price of the first round-lot or part of round-lot 
transaction on the Exchange. Non-executable limit orders, stop orders, 
stop limit orders, orders filled after the close, and non-regular way 
traders are executed in accordance with Amex Rules 205 A(2), A(3), 
A(4), C(1), and C(2), respectively. Orders to buy or sell ``at the 
close'' are filled at the price of the closing round-lot sale on the 
Exchange. In a locked market condition, odd-lot market orders and 
executable odd-lot limit orders are executed at the locked market 
price. In a crossed market condition, odd-lot market orders are 
executed at the mean of the bid and offer prices when the displayed 
national best bid is higher than the displayed national best offer by 
$.05 or less. When the displayed national best bid is higher than the 
displayed national best offer by more than $.05, odd-odd market orders 
are executed when the crossed market condition no longer exits. In 
addition, in a crossed market conditio, executable odd-lot limit orders 
are executed at the crossed market bid price (in the case of an order 
to sell) or at the crossed market offer price (in the case of an order 
to buy). For example, if the bid and offer are 20.10 and 20.00, 
respectively, an executable odd-lot sell limit order priced at 20.10 or 
less will be executed at 20.10 and an executable odd-lot buy limit 
order priced at 20.00 or higher will be executed at 20.00.
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    \9\ In Amex Rule 118(j), the qualified national best bid and 
offer for a Nasdaq security means the highest bid and lowest offer, 
respectively, disseminated (A) by the Exchange or (B) by another 
market center participating in the Plan; provided, however, that the 
bid and offer in another such market center will be considered in 
determining the qualified national best bid or offer in a stock only 
if (i) the quotation conforms to the requirements of Amex Rule 127, 
(ii) the quotation does not result in a locked or crossed market, 
(iii) the market center is not experiencing operational or system 
problems with respect to the dissemination of quotation information, 
and (iv) the bid or offer is ``firm,'' that is, members o the market 
center dissemination the bid of offer are not relieved of their 
obligations with respect to such bid of offer under paragraph (c)(2) 
of Rule 602 of Regulation NMS pursuant to the ``unusual market'' 
exception of paragraph (a)(3) of Rule 602 of Regulation NMS.
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    The Exchange believes that the existing odd-lot execution 
procedures have operated efficiently. Furthermore, the Exchange has 
received no complaints from members or the public regarding odd-lot 
executions. Therefore, the Exchange seeks an extension to the pilot 
program for an additional twelve-month period ending June 30, 2007, 
which will provide the Exchange time to assess further enhancements to 
the odd-lot execution procedures.
2. Statutory Basis
    Amex believes that the proposed rule change is consistent with 
Section 6(b) of the Act,\10\ in general, and furthers the objectives of 
Section 6(b)(5) of the Act,\11\ in particular, in that it is designed 
to prevent fraudulent and manipulative acts and practices, to promote 
just and equitable principle of trade, to foster cooperation and 
coordination with persons engaged in facilitating transactions in 
securities, to remove impediments to and perfect the mechanism of a 
free and open market and a national market system, to protect investors 
and the public interest, and is not designed to permit unfair 
discrimination between customers, issuers, brokers, or dealers.
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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

    Amex does not believes 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

    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

    Because the foregoing proposed rule change: (1) Does not 
significantly affect the protection of investors or the public 
interest; (2) does not impose any significant burden on competition; 
and (3) does not become operative for 30 days from the date of filing, 
or such shorter time as the Commission may designate if consistent with 
the protection of investors and the public interest, the proposed rule 
change has become effective pursuant to Section 19(b)(3)(A) of the Act 
\12\ and Rule 19b-4(f)(6) thereunder.\13\ As required by Rule 19b-
4(f)(6)(iii), Amex provided the Commission with written notice of its 
intent to file the proposed rule change at least five business days 
prior to filing the proposal with the Commission or such shorter period 
as designated by the Commission.
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    \12\ 15 U.S.C. 78s(b)(3)(A).
    \13\ 17 CFR 240.19b-4(f)(6).
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    At any time within 60 days of the filing of such proposal 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 purposes 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 from (http://www.sec.gov/rules/sro.shtml.
); or     Send an e-mail to rule-comment@sec.gov. Please include 

File Number SR-Amex-2006-55 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-2006-55. 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

[[Page 34648]]

Internet Web site (http://www.sec.gov/rules/sro.html). 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 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 such 
filing will 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 Number 
SR-Amex-2006-55 and should be submitted on or before July 6, 2006.
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    \14\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Market Regulations, 
pursuant to delegated authority.\14\
J. Lynn Taylor,
Assistant Secretary.
[FR Doc. 06-5418 Filed 6-14-06; 8:45 am]

BILLING CODE 8010-01-M