Document ID: SEC-2007-0888-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: American Stock Exchange LLC
Posted Date: 2007-07-02T04:00Z

[Federal Register: July 2, 2007 (Volume 72, Number 126)]
[Notices]               
[Page 36078-36079]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr02jy07-98]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-55949; File No. SR-Amex-2007-61]

 
Self-Regulatory Organizations; American Stock Exchange LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Clarify the Method by Which Specialists Execute Odd-Lot Market Orders 
in Rule 205--AEMI

June 25, 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 June 21, 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 Amex. 
Amex has filed this proposal pursuant to Section 19(b)(3)(A) of the Act 
\3\ and Rule 19b-4(f)(5) 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)(5).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to adopt clarifying changes to Rule 205--AEMI 
to specify that a specialist on the Exchange executes unelected odd-lot 
market orders, along with all other outstanding unexecuted odd-lot 
market orders on the AEMI book, at the price of the specialist's quote 
30 seconds after the later of (i) the entry of such order into AEMI or 
(ii) the last round-lot election of a previously entered odd-lot market 
order.
    The text of the proposed rule change is available on Exchange's Web 
site (http://www.amex.com), at Amex's principal office, 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, 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, Proposed Rule Change

1. Purpose
    Pursuant to its most recent amendment, Rule 205--AEMI(b) currently 
specifies that, to the extent an odd-lot market order is not elected by 
a round-lot transaction within 30 seconds of entry into AEMI, such 
order will be executed against the specialist's quote 30 seconds after 
entry of the order into AEMI.\5\
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    \5\ See Securities Exchange Act Release No. 55762 (May 15, 
2007), 72 FR 28529 (May 21, 2007).
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    The Exchange is now submitting the instant rule change to clarify, 
more consistently with the way the AEMI system has been configured, 
that such unelected unexecuted odd-lot market orders are executed, 
along with all other outstanding unexecuted odd-lot market orders on 
the AEMI book, at the price of the specialist's quote 30 seconds after 
the later of (i) the entry of such order into AEMI or (ii) the last 
round-lot election of a previously entered odd-lot market order.
    While the current version of Rule 205--AEMI(b) implies that every 
odd-lot market order has a unique 30-second timer for execution (if not 
elected by virtue of an earlier round-lot transaction), the instant 
rule change is necessary to clarify that, in certain limited scenarios, 
an unelected odd-lot market order can receive executions in under 30 
seconds (where tied to executions of earlier-entered odd-lot market 
orders) \6\ and, in rare circumstances, more than 30 seconds.\7\
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    \6\ The Exchange estimates that executed odd-lot volume that may 
fall into this category is less than 15,000 shares per day, or less 
than 1.5% of all odd-lot executed volume and less than 0.03% of Amex 
executed volume.
    \7 \ The Exchange estimates that this occurs only several times 
per day when, within a 30-second window, multiple odd-lot market 
orders are entered followed by round-lot transactions insufficient 
in size to elect all of them. In such circumstances, remaining 
unelected odd-lot market order(s) may take more than 30 seconds 
after their entry to execute, depending on the timing of subsequent 
round-lot transactions. For example, if three 50-share market buy 
orders are entered at :01, :02, and :03 seconds, followed at :29 
seconds by execution of a new 100 share order at $10, the first two 
market buy orders are both executed against the specialist at $10 at 
:29 seconds. Then, the timer in AEMI resets back to zero, and the 
remaining 50-share market buy order is executed against the 
specialist upon the earlier of (i) the next round-lot transaction 
(at the price of said transaction) or (ii) the expiration of 30 
seconds (at the price of the specialist's then best offer), 
resulting in execution anywhere from 26 to 56 seconds after original 
entry into AEMI.
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 2. Statutory Basis
    The proposed rule change is designed to be consistent with Section 
6(b) of the Act,\8\ in general, and furthers the objectives of Section 
6(b)(5) of the Act,\9\ 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 national market system and, in

[[Page 36079]]

general, to protect investors and the public interest.
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    \8\ 15 U.S.C. 78f(b).
    \9\ 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

    Because the proposed rule change does not: (1) Significantly affect 
the protection of investors or the public interest; (2) impose any 
significant burden on competition; and (3) have the effect of limiting 
the access to or availability of an existing order entry or trading 
system of the Exchange, the foregoing rule change has become effective 
immediately pursuant to Section 19(b)(3)(A)(iii) of the Act \10\ and 
Rule 19b-4(f)(5) thereunder.\11\ At any time within 60 days of the 
filing of such proposed 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 the furtherance of the 
purposes of the Act.
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    \10\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \11\ 17 CFR 240.19b-4(f)(5).
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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-2007-61 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-2007-61. 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 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 such filing also will be available for 
inspection and copying at the principal office of 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-2007-61 and should be 
submitted on or before July 23, 2007.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\12\
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    \12\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
 [FR Doc. E7-12681 Filed 6-29-07; 8:45 am]

BILLING CODE 8010-01-P