Document ID: SEC-2007-1228-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: American Stock Exchange LLC
Posted Date: 2007-08-31T04:00Z

[Federal Register: August 31, 2007 (Volume 72, Number 169)]
[Notice]               
[Page 50423-50425]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr31au07-150]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-56318; File No. SR-Amex-2007-48]

 
Self-Regulatory Organizations; American Stock Exchange, LLC; 
Notice of Filing of Proposed Rule Change Modifying the Options Listing 
Criteria for Underlying Securities

August 24, 2007.
    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 17, 2007, 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, II, 
and III below, which Items have been substantially prepared by the 
Exchange. On August 21, 2007, Amex amended the proposed rule change.\3\ 
The Commission is publishing this notice to solicit comments on the 
proposed rule change, as amended, from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ Amendment No. 1 replaced and superseded the original filing 
in its entirety.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend Commentary .01(4) to Amex Rule 915 
and add new Commentary .01(6) to Amex Rule 915 for the purpose of 
permitting the Exchange to list and trade individual equity options 
that are otherwise ineligible for listing and trading if such option is 
listed and traded on another national securities exchange.
    The text of the proposed rule change is available on the Amex's Web 
site at http://www.amex.com, at Amex's Office of the Secretary 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 Exchange 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 the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposal seeks to revise the options original listing 
guidelines so that, as long as the options maintenance listing 
standards set forth in Amex Rule 916 are met and the option is listed 
and traded on another national securities exchange, the Amex would be 
able to list and trade the option. Commentary .01 to Amex Rule 915 sets 
forth the guidelines that an underlying individual equity security must 
meet before the Exchange may initially list options on that security. 
The Amex states that these guidelines or requirements are uniform among 
the options exchanges.
    Commentary .01(4) to Amex Rule 915 relates to the minimum market 
price that an underlying security must trade at for an option to be 
listed on it. Paragraph (4) of this Commentary .01 permits the listing 
of individual equity options on both ``covered'' and ``uncovered'' 
underlying securities.\4\ In the case of an underlying security that is 
a ``covered security'' as defined under section 18(b)(1)(A) of the 1933 
Act, the closing market price of the underlying security must be at 
least $3 per share for the five (5) previous consecutive business days 
prior to the date on which the Amex submits an option class 
certification to The Options Clearing Corporation (``OCC'').\5\ In 
connection with underlying securities deemed to be ``uncovered,'' 
Exchange rules require that such underlying security be at least $7.50 
for the majority of business days during the three (3) calendar months 
preceding the date of selection for such listing. In addition, an 
alternative listing procedure for ``uncovered'' securities also permits 
the listing of such options so long as: (1) The underlying security 
meets the guidelines for continued approval contained in Amex Rule 916; 
(2) options on such underlying security are traded on at least one 
other registered national securities exchange; and (3) the average 
daily trading volume (``ADTV'') for such options over the last three 
calendar months preceding the date of selection has been at least 5,000 
contracts. Paragraphs (1) through (3) of Commentary .01 to Rule 915 
further set forth minimum requirements for an underlying security such 
as shares outstanding, number of holders and trading volume.
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    \4\ Section 18(b)(1)(A) of the Securities Act of 1933 (``1933 
Act'') provides that ``[a] security is a covered security if such 
security is listed, or authorized for listing, on the New York Stock 
Exchange or the American Stock Exchange, or listed or authorized for 
listing, on the National Market System of the Nasdaq Stock Market 
(or any successor to such entities) * * *.'' See 15 U.S.C. 
77r(b)(1)(A).
    \5\ For purposes of this proposal, the market price of an 
underlying security is measured by the closing price reported in the 
primary market in which the underlying security is traded. See 
proposed Commentary .01(4) to Amex Rule 915.
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    The existing alternative listing procedure was originally adopted 
by the Exchange in 2002. At that time, the Commission permitted the 
Amex to eliminate the $7.50 standard (currently $3 for covered 
securities) for an underlying security when such option is otherwise 
listed and traded on another options exchange and has an ADTV over the 
last three (3) calendar months of at least 5,000 contracts. The 
Exchange submits that the alternative listing procedure has limited 
usefulness. The options exchange (or exchanges) that may be fortunate 
enough to list an option that at first met the original

[[Page 50424]]

listing standards but subsequently fails to do so, is provided a 
trading monopoly inconsistent with the multiple trading of options, 
fostering competition and the maintenance of a national market system. 
Under the proposal, an option may be multiply-listed and traded as long 
as one other options exchange is trading the particular option and such 
underlying security of the option meets existing continued listing 
guidelines or requirements.
    The Amex notes that the requirements for listing additional series 
of an existing listed option (i.e., continued listing guidelines) are 
less stringent, largely because, in total, the Exchange's guidelines 
assure that options will be listed and traded on securities of 
companies that are financially sound and subject to adequate minimum 
standards.
    The Amex believes that although the continued listing requirements 
are uniform among the options exchanges, the application of both the 
original and continued listing standards in the current market 
environment have had an anti-competitive effect. Specifically, the 
Exchange notes that on several occasions it has been unable to list and 
trade options classes that trade elsewhere because the underlying 
security of such option did not at that time meet original listing 
standards. However, the other options exchange(s) may continue to trade 
such options (and list additional series) based on the lower 
maintenance listing standards, while the Amex may not list any options 
on such underlying security. This clearly is anti-competitive and 
inconsistent with the aims and goals of a national market system in 
options.
    To address this situation, the Exchange proposes to add new 
Commentary .01(6) to Amex Rule 915 and amend the alternative original 
listing requirement set forth in Commentary .01(4) to Amex Rule 915. 
Specifically, Commentary .01(6) would be added to provide that 
notwithstanding that a particular underlying security may not meet the 
requirements set forth in Paragraphs 1 through 4 of Commentary .01 to 
Amex Rule 915, the Exchange nonetheless could list and trade an option 
on such underlying security if: (i) The underlying security meets the 
guidelines for continued listing in Amex Rule 916; and (ii) options on 
such underlying security are listed and traded on at least one other 
registered national securities exchange. Commentary .01(4)(b) would be 
amended to delete reference to the alternative original listing 
guideline for ``uncovered'' securities. In connection with the proposed 
changes, the Exchange represents that the procedures currently employed 
to determine whether a particular underlying security meets the initial 
listing criteria will similarly be applied to the continued listing 
criteria.
    Amex believes that this proposal is narrowly tailored to address 
the circumstances where an options class is currently ineligible for 
listing on the Amex while at the same time, such option is trading on 
another options exchange(s). The Amex notes that when an underlying 
security meets the maintenance listing guidelines and at least one 
other exchange lists and trades options on the underlying security, the 
option is available to the investing public. Therefore, the Amex notes 
that the current proposal will not introduce any inappropriate 
additional listed options classes. The Exchange submits that the 
adoption of the proposal is essential for competitive purposes and to 
promote a free and open market for the benefit of investors.
2. Statutory Basis
    The proposed rule change is consistent with Section 6(b) \6\ of the 
Act, in general, and furthers the objectives of Section 6(b)(5),\7\ in 
particular, in that it is designed to prevent fraudulent and 
manipulative acts and practices, promote just and equitable principles 
of trade, 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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    \6\ 15 U.S.C. 78f(b).
    \7\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The proposed rule change will 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 with respect to the 
proposed rule change.

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

    Within 35 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 90 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-2007-48 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-2007-48. 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, on official business days between the hours of 10 
a.m. and 3 p.m. Copies of the filing also 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

[[Page 50425]]

submissions should refer to File Number SR-Amex-2007-48 and should be 
submitted on or before September 21, 2007.
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    \8\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\8\
Nancy M. Morris,
Secretary.
[FR Doc. E7-17354 Filed 8-30-07; 8:45 am]

BILLING CODE 8010-01-P