Document ID: SEC-2006-0707-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: American Stock Exchange LLC
Posted Date: 2006-06-01T04:00Z

[Federal Register: June 1, 2006 (Volume 71, Number 105)]
[Notices]               
[Page 31234-31236]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr01jn06-115]                         

-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-53867; File No. SR-Amex-2006-50]

 
Self-Regulatory Organizations; American Stock Exchange LLC; 
Notice of Filing and Order Granting Accelerated Approval of Proposed 
Rule Change Regarding Options Quote Size Mitigation

May 25, 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 18, 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 Amex. The 
Commission is publishing this notice to solicit comments on the 
proposed rule change from interested persons and to approve the 
proposal on an accelerated basis.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to extend the operation of the options market 
data size mitigation pilot program (``Options Size Mitigation'' or 
``Pilot Program'') from March 5, 2006 through March 5, 2007.
    The text of the proposed rule change is available on the Amex's Web 
site (http://www.amex.com), at the Office of the Secretary, the Amex, 

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 Exchange has prepared summaries, set forth in 
sections A, B, and C below, of the most significant aspects of such 
statements.

[[Page 31235]]

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

1. Purpose
    The Amex is proposing to extend the operation of Options Size 
Mitigation from March 5, 2006 through March 5, 2007. The Commission 
approved Options Size Mitigation on a four (4) month pilot basis on 
November 4, 2005.\3\ The Pilot Program terminated on March 5, 2006 
without extension.
---------------------------------------------------------------------------

    \3\See Securities Exchange Act Release No. 52741 (November 4, 
2005), 70 FR 69369 (November 15, 2005).
---------------------------------------------------------------------------

    The purpose of the proposal is to continue the effectiveness of the 
Pilot Program until March 5, 2007. According to the Exchange, 
continuation of the Pilot Program will benefit the Exchange and the 
marketplace by helping to enhance the Exchange's ability to process an 
ever increasing volume of incoming options quotes. The Exchange 
believes that the continuation of Options Size Mitigation will help to 
prevent potential data delays and enhance the Exchange's ability to 
manage market data traffic.
    Under Options Size Mitigation, incoming market data is filtered 
prior to being forwarded to Exchange floor trading systems. When in 
effect, Options Size Mitigation filters market data by not processing 
incoming quotes (i.e., away market quotes) with size changes below a 
variable percent. However, Amex systems always maintain and display 
Amex quotations with accurate size regardless of whether Options Size 
Mitigation is in effect.
    The Exchange submits that the initial Options Size Mitigation 
filtering level was set at 10% and has remained the same since the 
introduction of the Pilot Program. As set forth in the Approval Order, 
the Exchange has the ability to increase the filtering level in 10% 
level increments as warranted. The appropriate filtering level is 
determined by the head of the Exchange's Floor Operations (or his 
designee), in conjunction with two (2) Senior Floor Officials.
    As was the case in the original Pilot Program, the Exchange 
believes that Options Size Mitigation offers greater ability and 
flexibility to manage inbound quote traffic. Given the exponential 
increase in options quote traffic rates in recent years, the Exchange 
believes that the continuation of Options Size Mitigation is a 
necessary tool in connection with the processing of quote traffic.
    Based on the Exchange's experience to date, the Amex believes that 
continuation of the Pilot Program from March 5, 2006 through March 5, 
2007 is appropriate.
2. Statutory Basis
    The Exchange believes the proposed rule change is consistent with 
section 6(b) of the Act\4\ in general and furthers the objectives of 
section 6(b)(5)\5\ in particular in that it is designed to prevent 
fraudulent and manipulative acts and practices, to promote just and 
equitable principles of trade, to remove impediments to and perfect the 
mechanism of a free and open market and a national market system, and, 
in general, to protect investors and the public interest.
---------------------------------------------------------------------------

    \4\ 15 U.S.C. 78f(b).
    \5\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

B. Self-Regulatory Organization's Statement on Burden on Competition

    The proposed rule change does not impose any 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 with respect to 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 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-2006-50 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 No. SR-Amex2006-50. 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 No. SR-Amex-2006-50 and should be 
submitted on or before June 22, 2006.

IV. Commission's Findings and Order Granting Accelerated Approval of 
Proposed Rule Change.

    After careful consideration, the Commission finds that the proposed 
rule change is consistent with the requirements of the section 6 of the 
Act \6\ and the rules and regulations thereunder applicable to a 
national securities exchange.\7\ In particular, the Commission believes 
that the proposed rule change is consistent with section 6(b)(5) of the 
Act, which requires, among other things, that the rules of a national 
securities 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 
regulating, clearing, settling, processing information with respect to, 
and facilitating transactions in securities, to remove impediments to 
and perfect the mechanism of a free and open market and a national 
market system, and, in general, to protect investors and the public 
interest.\8\
---------------------------------------------------------------------------

    \6\ 15 U.S.C. 78f.
    \7\ In approving this proposed rule change, the Commission has 
considered its impact on efficiency, competition, and capital 
formation. See 15 U.S.C. 78c(f).
    \8\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    The Commission believes that the Options Size Mitigation should 
continue to enhance the Amex's ability to process an increasing volume 
of

[[Page 31236]]

incoming options quotes during high option quote volume periods and 
peaks. The Commission notes that Options Size Mitigation operated on a 
pilot basis for four months and the Amex believes it is functioning as 
intended.
    The Amex has requested that the Commission find good cause for 
approving the proposed rule change prior to the thirtieth day after 
publication of the notice thereof in the Federal Register. The 
Commission believes that granting accelerated approval of the proposal 
will allow the Amex to continue to operate the Options Size Mitigation 
program without interruption and thus, should facilitate the processing 
of incoming options quotes. The Commission notes that no comments were 
received in connection with the approval of the temporary Pilot Program 
and no comments have been received during the operation of the 
temporary Pilot Program. Accordingly, the Commission finds good cause, 
pursuant to section 19(b)(2) of the Act,\9\ for approving the proposed 
rule change prior to the thirtieth day after publication of the notice 
thereof in the Federal Register.
---------------------------------------------------------------------------

    \9\ 15 U.S.C. 78s(b)(2).
---------------------------------------------------------------------------

V. Conclusion

    It is therefore ordered, pursuant to section 19(b)(2) of the 
Act,\10\ that the proposed rule change, as amended (SR-Amex-2006-50), 
is hereby approved on an accelerated basis for a period to expire on 
March 5, 2007.
---------------------------------------------------------------------------

    \10\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\11\
---------------------------------------------------------------------------

    \11\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Nancy M. Morris,
Secretary.
 [FR Doc. E6-8477 Filed 5-31-06; 8:45 am]

BILLING CODE 8010-01-P