Document ID: SEC-2006-0892-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: American Stock Exchange LLC
Posted Date: 2006-07-13T04:00Z

[Federal Register: July 13, 2006 (Volume 71, Number 134)]
[Notices]               
[Page 39692-39694]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr13jy06-93]                         

=======================================================================
-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-54109; File No. SR-Amex-2006-27]

 
Self-Regulatory Organizations; American Stock Exchange LLC; 
Notice of Filing of Proposed Rule Change and Amendments No. 1 and 2 
Thereto Relating to Interim Members

July 6, 2006.
    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 March 23, 2006, 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 prepared by Amex. On June 15, 
2006, Amex filed Amendment No. 1 to the proposed rule change.\3\ On 
June 27, 2006, Amex filed Amendment No. 2 to the proposed rule 
change.\4\ The Commission is publishing this notice to solicit comments 
on the proposed rule change, as amended, from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ Amendment No. 1 replaced the original filing in its 
entirety.
    \4\ Amendment No. 2 clarifies that an interim member may be 
designated or redesignated by a member or member organization as an 
interim member after it has exhausted the fifteen day allocation 
even if this occurs prior to the end of the one-year period. 
Amendment No. 2 also makes technical corrections to the purpose 
section and the rule text in Exhibit 5.
---------------------------------------------------------------------------

 I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    Amex proposes to amend Amex Rule 353 to limit members and member 
organizations from allocating their seats to interim members on the 
Floor of the Exchange for a maximum of fifteen aggregate days that may 
be used consecutively or non-consecutively for a one-year period 
beginning on the date of approval as an interim member (``approval 
date''). In addition, the Exchange is proposing revisions to the Amex 
Constitution and the Amex Fee Schedule to correspond with the changes 
to Amex Rule 353.
    The text of the proposed rule change is available on Amex's Web 
site at 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, the Proposed Rule Change

 1. Purpose
    An interim member is an individual, pre-qualified by the Exchange, 
who is designated by a member or member organization to temporarily use 
the membership for a specified period of time when the member is absent 
from the Trading Floor.\5\ Currently, Amex Rule 353 permits unfettered 
temporary allocation of a membership to an interim member so long as 
the duration is no less than one day and no more than one year. The 
proposed amendment to Amex Rule 353 significantly reduces the maximum 
number of days an interim member can receive such designation. The new 
maximum would be reduced to fifteen days that may be used by each 
interim member consecutively or non-consecutively for a one-year period 
beginning on the approval date.
---------------------------------------------------------------------------

    \5\ Article IV, Section 3(e) of the Amex Constitution explicitly 
states that the designation of an interim member is ``subject to and 
in accordance with such rules as may be adopted from time to time by 
the Board of Governors.'' Amex Rule 353 more specifically sets forth 
the requirements, rights and limitations of interim members.
---------------------------------------------------------------------------

    If an interim member has exhausted the fifteen day period, even if 
this occurs prior to end of the one-year period, the member or member 
organization may regain interim membership status by designating 
another interim member, or redesignating the same interim member to the 
seat by filing documents required by the Membership Services Department 
and paying the maintenance fee in accordance with Article VII, Section 
1(g) of the Amex Constitution. The Exchange believes that allowing 
unlimited allocation to interim members lessens the value of 
memberships by increasing the number of unleased seats. By permitting 
the designation of interim members, the Exchange is essentially 
permitting individuals who do not own or lease seats to operate as 
members. This circumvention of seat leasing and ownership may 
artificially lessen the value of a membership by decreasing its demand. 
However, the Exchange also believes that the Interim Member program has 
served a useful function on the Floor. Specifically, it provides 
members with protection should illnesses or emergencies arise and also 
provides coverage when vacation is taken. The Exchange believes that 
the proposed amendment to Amex Rule 353 effectively balances concerns 
over having adequate emergency coverage on

[[Page 39693]]

the Floor versus concerns over the devaluation of memberships.
    Article IV, Section 3(e) and Article VII, Section 1(g) of the Amex 
Constitution specify the fees associated with the Interim Member 
program. The proposed amendments would eliminate the $250 allocation 
fee and all references thereto.
    Article IV, Section 1(f) and Article VII, Section 1(c) of the Amex 
Constitution reference the initiation fee associated with the transfer 
of a membership pursuant to a special transfer agreement.\6\ The 
proposed amendment would permit this fee to be waived by rule, which 
will permit Amex to offer financial incentives to those interim members 
who wish to subsequently lease a seat.
---------------------------------------------------------------------------

    \6\ A special transfer agreement is an agreement between the 
owner of a regular or options principal membership and an individual 
who is authorized to use the membership for a specified period of 
time or until the occurrence of a specified event.
---------------------------------------------------------------------------

    The Member Fee Schedule sets forth the fees that Amex charges its 
members. The changes thereto will correspond with the amendments 
proposed to the Interim Member program.
    The Exchange believes that if the proposed rule change was 
implemented at the start of 2005, approximately half of the 21 interim 
members would have exhausted their fifteen aggregate days by the 
beginning of November. Upon approval of these amendments by the 
Commission, the fifteen days will begin to deplete for all interim 
members currently on seats for the duration of the year for which they 
are qualified for interim membership, as well as each time an interim 
member is approved to the program.
    The Exchange acknowledges that some members will incur additional 
expense as a result of the proposed restrictions to the Interim Member 
program. The proposed amendments to the Amex Constitution and Rules and 
the Member Fee Schedule are meant to provide economic relief to these 
members. Currently, the $250 allocation fee is a flat fee that the 
Exchange charges each time an interim member is designated to a seat. 
The elimination of the $250 allocation fee will permit members to 
effectively use the fifteen days for emergencies, illness, and 
vacations. Specifically, the elimination of the allocation fee will 
facilitate members who designate interim members on a non-consecutive 
basis. The $1,500 initiation fee is charged whenever a member enters 
into a special transfer agreement. The waiving of this initiation fee 
for those who wish to lease a seat immediately following their allotted 
time as an interim member will provide relief to members who encounter 
serious emergencies, as well as offer a financial incentive for interim 
members to enter into special transfer agreements. No change is 
proposed for the $1,500 maintenance fee that members pay when an 
interim member is pre-qualified by the Exchange.
    Finally, the Exchange proposes to clarify in Amex Rule 353 and 
Article IV, Section 3(e) of the Amex Constitution that an interim 
member will become effective upon submission of the appropriate form to 
and approval by the Membership Services Department.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\7\ in general, and furthers the 
objectives of Section 6(b)(5) of the Act,\8\ in particular, in that it 
is designed to promote just and equitable principles of trade, to 
foster cooperation and coordination with persons engaged in regulating, 
clearing, settling, processing information with respect to, and 
facilitating transactions in securities, 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. 
In addition, the Exchange further believes that the proposed rule 
change is consistent with Section 6(b) of the Act,\9\ in general, and 
furthers the objectives of Section 6(b)(4) of the Act,\10\ in 
particular, in that it is designed to provide for the equitable 
allocation of reasonable dues, fees, and other charges among its 
members, issuers and other persons using its facilities.
---------------------------------------------------------------------------

    \7\ 15 U.S.C. 78f(b).
    \8\ 15 U.S.C. 78f(b)(5).
    \9\ 15 U.S.C. 78f(b).
    \10\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------

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

    The Exchange 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. 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 Exchange 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 amended 
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 No. SR-Amex-2006-27 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-Amex-2006-27. 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. 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

[[Page 39694]]

submissions should refer to File Number SR-Amex-2006-27 and should be 
submitted on or before August 3, 2006.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\11\
---------------------------------------------------------------------------

    \11\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Jill M. Peterson,
Assistant Secretary.
 [FR Doc. E6-11031 Filed 7-12-06; 8:45 am]

BILLING CODE 8010-01-P