Document ID: SEC-2008-0803-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: American Stock Exchange LLC
Posted Date: 2008-06-11T04:00Z

[Federal Register: June 11, 2008 (Volume 73, Number 113)]
[Notices]               
[Page 33126-33128]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr11jn08-105]                         

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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-57918; File No. SR-Amex-2008-42]

 
Self-Regulatory Organizations; American Stock Exchange LLC; 
Notice of Filing and Order Granting Accelerated Approval of Proposed 
Rule Change Relating to Equity Linked Term Notes

June 4, 2008.
    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 16, 2008, 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. 
This order provides notice of the proposed rule change and approves it 
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 revise Section 107B of the Amex Company 
Guide (``Company Guide'') to clarify that Rule 19b-4(e) under the Act 
\3\ applies to the listing of equity-linked term notes (``ELNs'') \4\ 
that meet the generic listing criteria of Section 107B. The text of the 
proposed rule change is available at Amex's principal office, the 
Commission's Public Reference Room, and http://www.amex.com.
---------------------------------------------------------------------------

    \3\ 17 CFR 240.19b-4(e).
    \4\ ELNs are the non-convertible debt of an issuer, whose value 
is based, at least in part, on the value of another issuer's common 
stock or non-convertible preferred stock.
---------------------------------------------------------------------------

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. The 
text of these statements may be examined at the places specified in 
Item III below. Amex has prepared summaries, set forth in Sections A, 
B, and C below, of the most significant aspects of such statements.

[[Page 33127]]

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

1. Purpose
    Section 107B of the Amex Company Guide details the Exchange's 
listing criteria for ELNs. The original listing criteria for Section 
107B were approved in 1990 and amended to reflect specific standards 
for ELNs \5\ prior to the adoption of Rule 19b-4(e) under the Act.\6\ 
The listing criteria allowed Amex to list ELNs that met the standards 
set forth in Section 107B of the Company Guide. In this manner, the 
Exchange was able to list ELNs linked to a basket of up to 30 
securities, as long as specified standards were met.\7\
---------------------------------------------------------------------------

    \5\ See Securities Exchange Act Release No. 27753 (March 1, 
1990), 55 FR 8626 (March 8, 1990) (SR-Amex-89-29) (approving listing 
standards to accommodate new securities not readily categorized 
under Amex's traditional listing guidelines for common and preferred 
stocks, bonds, debentures, and warrants); Securities Exchange Act 
Release No. 32343 (May 20, 1993), 58 FR 30833 (May 27, 1993) (SR-
Amex-92-42) (approving rules for the listing and trading of ELNs 
based on a single security).
    \6\ See Securities Exchange Act Release No. 40761 (December 8, 
1998), 63 FR 70952 (December 22, 1998) (New Products Release 
adopting Rule 19b-4(e)).
    \7\ See Securities Exchange Act Release No. 42582 (March 27, 
2000), 65 FR 17685 (April 4, 2000) (SR-Amex-99-42) (approving 
listing standards for ELNs based on a basket of up to 20 equity 
securities); Securities Exchange Act Release No. 47055 (December 19, 
2002), 67 FR 79669 (December 30, 2002) (SR-Amex-2002-110) (amending 
the standards to allow for the listing of ELNs based on a basket of 
up to 30 equity securities). Clarified in an e-mail from Jeffrey 
Burns, Vice President and Associate General Counsel, Amex, to Mitra 
Mehr, Special Counsel, Division of Trading and Markets, Commission, 
dated June 2, 2008.
---------------------------------------------------------------------------

    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, pursuant to paragraph (c)(1) of 
Rule 19b-4,\8\ if the Commission has approved, pursuant to Section 
19(b) of the Act,\9\ the self-regulatory organization's trading rules, 
procedures, and listing criteria for the product class that would 
include the new derivative securities product, and the self-regulatory 
organization has a surveillance program for the product class.
---------------------------------------------------------------------------

    \8\ 17 CFR 240.19b-4(c)(1).
    \9\ 15 U.S.C. 78s(b).
---------------------------------------------------------------------------

    The Exchange proposes to revise Section 107B of the Company Guide, 
which sets forth Amex's listing criteria for ELNs, to clarify that the 
listing and trading of ELNs on Amex is subject to Rule 19b-4(e) under 
the Act. Section 107B of the Company Guide would provide that income 
instruments which are linked, in whole or in part, to the market 
performance of up to 30 common stocks or non-convertible preferred 
stocks will be considered for listing, pursuant to Rule 19b-4(e) under 
the Act, as long as the applicable conditions set forth in Section 107B 
are met. Thus, within five business days after commencement of trading 
of an ELN in reliance on Section 107B, the Exchange would file a Form 
19b-4(e) with the Commission.
2. Statutory Basis
    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 
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.
---------------------------------------------------------------------------

    \10\ 15 U.S.C. 78f(b).
    \11\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    The Exchange submits that the proposal meets the forgoing 
objectives by clarifying the application of Rule 19b-4(e) under the Act 
to Section 107B of the Company Guide and providing notice to the 
Commission of new products listed under Section 107B.

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

    Amex does not believe that the proposed rule change will 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 (http://
www.sec.gov/rules/sro.shtml ); or
     Send an e-mail to rule-comments@sec.gov. Please include 
File Number SR-Amex-2008-42 on the subject line.

Paper Comments

     Send paper comments in triplicate to Secretary, Securities 
and Exchange Commission, 100 F Street, NE., Washington, DC 20549-1090.

All submissions should refer to File Number SR-Amex-2008-42. 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 the 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-2008-42 and should be submitted on 
or before July 2, 2008.

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

    After careful consideration, the Commission finds that the proposed 
rule change 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 finds that the proposed 
rule change is consistent with Section 6(b)(5) of the Act \13\--which 
requires that the rules of an exchange be designed, among other things, 
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

[[Page 33128]]

open market and a national market system, and, in general, to protect 
investors and the public interest--because it seeks to clarify that the 
Exchange's listing and trading of ELNs is subject to Rule 19b-4(e) 
under the Act.
---------------------------------------------------------------------------

    \12\ In approving this rule change, the Commission notes that it 
has considered the proposed rule's impact on efficiency, 
competition, and capital formation. See 15 U.S.C. 78c(f).
    \13\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    The Commission finds good cause for approving this proposal before 
the 30th day after the publication of notice thereof in the Federal 
Register. The Commission notes that it has recently approved similar 
proposals of other exchanges,\14\ and Amex's proposal does not raise 
any novel regulatory issues.
---------------------------------------------------------------------------

    \14\ See, e.g., Chicago Board Options Exchange Rule 31.5; 
Securities Exchange Act Release No. 57758 (May 1, 2008), 73 FR 25814 
(May 7, 2008) (SR-CBOE-2008-44).
---------------------------------------------------------------------------

IV. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\15\ that the proposed rule change (SR-Amex-2008-42) be, and it 
hereby is, approved on an accelerated basis.
---------------------------------------------------------------------------

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

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\16\
---------------------------------------------------------------------------

    \16\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Florence E. Harmon,
Acting Secretary.
 [FR Doc. E8-13039 Filed 6-10-08; 8:45 am]

BILLING CODE 8010-01-P