Document ID: SEC-2005-0076-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: American Stock Exchange LLC
Posted Date: 2005-10-05T04:00Z

[Federal Register: October 5, 2005 (Volume 70, Number 192)]
[Notices]               
[Page 58246-58247]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr05oc05-110]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-52527; File No. SR-Amex-2005-052]

 
Self-Regulatory Organizations; American Stock Exchange LLC; Order 
Granting Approval to Proposed Rule Change and Amendment No. 1 Thereto 
Relating to the Integration of Regulatory Staff into Floor Official 
Rulings and the Review of Floor Official Rulings and Expediting the 
Process for Appealing Floor Official Rulings

September 29, 2005.

I. Introduction

    On May 11, 2005, the American Stock Exchange LLC (``Amex'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission''), pursuant to Section 19(b)(1) of the Securities 
Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder,\2\ a 
proposed rule change to: (1) Amend Amex Rules 22(c),

[[Page 58247]]

115, 958A(d), 958A-ANTE(d), 118(n), 135A and Amex Rule 155, Commentary 
.05 to integrate regulatory staff into Floor Official rulings and the 
review of Floor Official rulings; and (2) amend Amex Rule 22(d) to 
expedite the process for appealing a Floor Official's ruling. On August 
12, 2005, the Amex filed Amendment No. 1 to the proposed rule 
change.\3\ The proposed rule change, as amended, was published for 
comment in the Federal Register on August 30, 2005.\4\ The Commission 
received no comments on the proposal, as amended. This order approves 
the proposed rule change, as amended.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ In Amendment No. 1 Amex made minor revisions to the proposed 
rule text and clarified certain details of its proposal. Amendment 
No. 1 replaced and superseded Amex's original filing in its 
entirety.
    \4\ See Securities Exchange Act Release No. 52325 (August 23, 
2005), 70 FR 51392.
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II. Description of the Proposal

    The Exchange proposes to amend Amex Rule 22(c) to require that a 
member of the regulatory staff participate in an advisory capacity in 
the following categories of Floor Official rulings: \5\ (i) Unusual 
market exception to the Commission's Firm Quote Rule; (ii) Intermarket 
Trading System disputes; (iii) member disputes; and (iv) cancellations 
or revisions to trades. In particular, the Exchange's proposal would 
require a member of the regulatory staff to be present during a Floor 
Official's ruling on an advisory basis. This member of the regulatory 
staff would give his or her opinion on the matter and, although the 
Floor Official would be required to take this opinion into 
consideration, the Floor Official would not be required to rule 
according to the regulatory staff member's opinion. Once a Floor 
Official's decision is documented by the Floor Official, the 
participating regulatory staff person will also sign the form, 
indicating whether he or she disagrees with the ruling.\6\ To conform 
the remainder of the Exchange's rules with this proposed modification 
to Amex Rule 22(c), the proposed rule change also makes corresponding 
amendments to Amex Rules 115, 958A(d), 958A-ANTE(d), 118(n), 135A and 
155, Commentary .05, which are the existing rules governing the 
application of the unusual market exception to the Commission's Firm 
Quote Rule and the Amex rules governing cancellation or revisions to 
trades.\7\ Amex has indicated that at the present time, regulatory 
staff would not be required to participate in Floor Official rulings 
relating to trading halts, indications and reopenings, non-regular way 
trades, turning Auto-Ex off, voluntary publication of imbalances, and 
enforcing standards of floor decorum.
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    \5\ Floor Officials are officers of the Exchange, who are 
authorized to (1) make rulings on behalf of the Exchange with 
respect to certain matters that require a decision by the Exchange, 
and (2) resolve trading disputes submitted to them by members. Floor 
Official decisions are currently subject to same day, on-floor 
appeal at the request of an aggrieved member, first by an Exchange 
Official, then by a Governor and finally by a panel of three 
Governors.
    \6\ The regulatory staff person will be responsible for 
maintaining the documentation related to Floor Official rulings and 
reviews that require the participation of a regulatory staff person.
    \7\ Amex Rules 936, 936C, 936-ANTE, 936C-ANTE, governing the 
cancellation and adjustment to equity and index option transactions, 
are not being amended because regulatory staff is already required 
to participate in such rulings.
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    The Amex also is proposing to amend Amex Rule 22(d) in two 
respects.\8\ First, the Exchange is proposing to amend Amex Rule 22(d) 
to clarify that Senior Floor Officials have the same authority as 
Governors with respect to matters arising on the Floor that require 
review or action by Governors.\9\ The amendment will replace each 
reference to ``Governor'' with ``Senior Floor Official.'' The Exchange 
also proposes to make conforming changes to Amex Rule 118(n)(iii) \10\ 
and Amex 135A(c) \11\ to replace ``governor'' and ``Floor Governor,'' 
as applicable, with ``Senior Floor Official.'' \12\
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    \8\ Amex Rule 22(d) relates to the procedures for reviewing a 
Floor Official's initial ruling.
    \9\ These changes are based on a recent amendment to Amex Rule 
21 approved by the Commission. See Securities Exchange Act Release 
No. 51503 (April 7, 2005), 70 FR 19534 (April 13, 2005).
    \10\ Amex Rule 118 relates to trading in Nasdaq National Market 
securities.
    \11\ Amex 135A relates to cancellations of, and revisions in, 
transactions where both the buying and selling members do not agree 
to the cancellation or revision.
    \12\ Amex Rules 118(n)(iii) and 135A(c) address the process for 
review of transactions, and the ability of a Floor Governor to 
declare a transaction null or void, in the event of an operational 
malfunction or ``extraordinary market conditions.''
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    Second, the Exchange proposes to amend Amex Rule 22(d) to eliminate 
the second tier in the current review process of Floor Official 
decisions. Amex Rule 22(d) currently provides for three tiers of review 
in the appeal of a Floor Official's initial ruling.\13\ The proposed 
rule will provide two levels of review to a Floor Official's initial 
decision, first by an Exchange Official, and then by a panel of three 
Senior Floor Officials. In addition, under the proposal, regulatory 
staff would advise and participate in each level of review of a Floor 
Official decision or ruling that required the advice and participation 
of a member of the regulatory staff in the initial Floor Official 
ruling.
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    \13\ See supra note 5.
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III. Discussion

    The Commission has carefully reviewed the proposed rule change, as 
amended, and finds that it is consistent with the requirements of the 
Act and the rules and regulations thereunder applicable to a national 
securities exchange \14\ and, in particular, the requirements of 
Section 6 of the Act \15\ and the rules and regulations thereunder. 
Specifically, the Commission finds that the proposal is consistent with 
Section 6(b)(5) of the Act \16\ because it is designed to prevent 
fraudulent and manipulative acts and practices, to promote just and 
equitable principles of trade, and, in general, to protect investors 
and the public interest. In particular, the Commission believes that 
the proposal is reasonably designed to (1) ensure a more consistent 
application of Amex's rules in Floor Official rulings and that such 
rulings are in accordance with applicable rules, and (2) increase the 
efficiency in reviewing such rulings, while continuing to provide for 
two levels of on-floor review.
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    \14\ In approving this proposed rule change, as amended, the 
Commission has considered the proposed rule's impact on efficiency, 
competition, and capital formation. 15 U.S.C. 78c(f).
    \15\ 15 U.S.C. 78f.
    \16\ 15 U.S.C. 78f(b)(5).
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IV. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\17\ that the proposed rule change (SR-Amex-2005-052), as amended, 
be, and it hereby is, approved.
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    \17\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\18\
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    \18\ 17 CFR 200.30-3(a)(12).
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Jonathan G. Katz,
Secretary.
 [FR Doc. E5-5449 Filed 10-4-05; 8:45 am]

BILLING CODE 8010-01-P