Document ID: SEC-2007-1632-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: American Stock Exchange, LLC
Posted Date: 2007-12-04T05:00Z

[Federal Register: December 4, 2007 (Volume 72, Number 232)]
[Notices]               
[Page 68225-68226]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr04de07-115]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-56850; File No. SR-Amex-2007-123]

 
Self-Regulatory Organizations; American Stock Exchange LLC; 
Notice of Filing and Order Granting Accelerated Approval of a Proposed 
Rule Change, as Modified by Amendment No.1 Thereto, To Send P/A Orders 
Through Linkage Prior to the Opening of Trading

November 27, 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 November 16, 2007, the American Stock Exchange LLC (``Exchange'' or 
``Amex'') 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. On 
November 26, 2008, the Exchange filed Amendment No. 1 to the proposed 
rule change. The Commission is publishing this notice to solicit 
comments on the proposed rule change, as amended, from interested 
persons and is approving the proposed rule change on an accelerated 
basis.
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    \1\ 15 U.S.C. 78s(b)(l).
    \2\ 17 CFR 240. 19b-4.
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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 Commentary .06 to Amex Rule 918 to 
permit the sending of Principal Acting as Agent Orders (``P/A Orders'') 
\3\ through the Intermarket Options Linkage (``Linkage'') prior to the 
opening of trading. This proposal would conform Amex Rule 918 to Joint 
Amendment No. 23 \4\ (``Amendment No. 23'') to the Plan for the Purpose 
of Creating and Operating an Intermarket Options Linkage (the ``Linkage 
Plan'').\5\ The text of the proposed rule change is available at the 
Amex, at the Commission's Public Reference Room, and at http://www.amex.com
.

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    \3\ See Section 2(16)(a) of the Plan for the Purpose of Creating 
and Operating an Intermarket Option Linkage (``Linkage Plan'') .
    \4\ See Securities Exchange Act Release No. 56780 (November 13, 
2007), 72 FR 65113 (November 19, 2007) (File No. 4-429).
    \5\ On July 28, 2000, the Commission approved a national market 
system plan for the purpose of creating and operating an intermarket 
options market linkage proposed by the Amex, CBOE, and ISE. See 
Securities Exchange Act Release No. 43086 (July 28, 2000), 65 FR 
48023 (August 4, 2000). Subsequently, Phlx, Pacific Exchange, Inc. 
(n/k/a NYSE Arca, Inc.), and BSE joined the Linkage Plan. See 
Securities Exchange Act Release Nos. 43573 (November 16, 2000), 65 
FR 70851 (November 28, 2000); 43574 (November 16, 2000), 65 FR 70850 
(November 28, 2000); and 49198 (February 5, 2004), 69 FR 7029 
(February 12, 2004).
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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, the Exchange included statements 
concerning the purpose of, and basis for, its 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.

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

1. Purpose
    The Amex proposes to adopt Commentary .06 to Amex Rule 918 to amend 
its rule to conform to Amendment No. 23 to the Linkage Plan. The 
proposal will permit the use of the Linkage prior to the opening of 
trading. Prior to the adoption of Amendment No. 23, the Linkage Plan 
did not comtemplate the use of the Linkage before a Linkage Plan 
participant (a ``Participant'') opened for trading and disseminated a 
quotation in an options series. In addition, there was no trade-through 
protection for opening trades. As a result, if there was a better 
market away at the time a Plan Participant opens its market, the Amex 
specialist, responsible both for the opening and for protecting 
customer orders, could not access that market for a customer. The 
customer accordingly could receive a price inferior to the national 
best bid and offer (``NBBO''). This proposal, along with Amendment No. 
23 to the Linkage Plan, will permit the sending of P/A Orders prior to 
the opening, allowing the Amex specialist to access better markets on 
behalf of customers prior to the Exchange's opening.
    In implementing this proposed rule change, the Exchange represented 
that it will ensure that customers receive the best price for their 
orders. Under the Linkage Plan, a Participant receiving market has five 
(5) seconds to respond to a P/A Order, and the Participant receiving 
market can then reject a response it receives more than five (5) 
seconds after sending the order. In the unlikely event that the Amex 
opens its market during this five (5) second period, it is possible 
that the opening price could differ from the price of an executed P/A 
Order. In that case, the Amex represented that it will ensure that the 
specialist provides the customer with the most advantageous price. 
Therefore, the proposal will only benefit customers by providing them 
with potential price improvement at the opening.
2. Statutory Basis
    The Exchange believes the proposed rule change is consistent with 
the Act and the rules and regulations under the Act applicable to 
national securities exchanges and, in particular, the

[[Page 68226]]

requirements of Section 6(b) of the Act.\6\ Specifically, the Exchanges 
believe the proposed rule change is consistent with the requirements of 
Section 6(b)(5) of the Act\7\ that the rules of an exchange be designed 
to prevent fraudulent and manipulative acts, 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.
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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 Exchange believes that the proposed rule change would 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

    The Exchange has neither solicited nor received comments on this 
proposal.

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-2007-123 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-2007-123. 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 submissions, 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 filings also will be available for inspection and 
copying at the principal offices 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-2007-123 and should be submitted on or 
before December 26, 2007.

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

    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 national securities 
exchanges.\8\ In particular, the Commission finds that the proposal is 
consistent with the provisions of Section 6(b)(5) of the Act\9\ 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. The Commission believes that allowing the Exchange to 
send P/A Orders to the Linkage prior to the opening should facilitate 
investors' intermarket access to superior prices.
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    \8\ In approving this proposal, the Commission has considered 
its impact on efficiency, competition, and capital formation. See 
U.S.C. 78c(f).
    \9\ 15 U.S.C. 78f(b)(5).
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    The Commission finds good cause for approving the proposed rule 
change before the 30th day after the date of publication of notice of 
filing thereof in the Federal Register. Granting accelerated approval 
would facilitate the implementation of the proposed rule change in 
conjunction with Amendment No. 23 to the Linkage Plan.\10\ In addition, 
the Commission notes that the Exchange has committed to ensuring that, 
for Linkage P/A Orders sent prior to the opening, Amex specialists will 
provide customers with the most advantageous price in the event that 
the Amex opens its market while the Exchange is awaiting a response to 
such a P/A Order. Therefore, the Commission finds good cause, 
consistent with Section 19(b)(2) of the Act,\11\ to approve the 
proposed rule change on an accelerated basis.
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    \10\ See supra note 4.
    \11\ 15 U.S.C. 78s(b)(2).
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V. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\12\ that the proposed rule change (SR-Amex-2007-123) be, and it 
hereby is, approved on an accelerated basis.
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    \12\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\13\
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    \13\ 15 U.S.C. 78s(b)(2).
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Nancy M. Morris,
Secretary.
 [FR Doc. E7-23396 Filed 12-3-07; 8:45 am]

BILLING CODE 8011-01-P