Document ID: SEC-2006-1074-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: American Stock Exchange LLC
Posted Date: 2006-08-21T04:00Z

[Federal Register: August 21, 2006 (Volume 71, Number 161)]
[Notices]               
[Page 48566-48567]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr21au06-82]                         

[[Page 48566]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-54317; File No. SR-Amex-2006-70]

 
Self-Regulatory Organizations; American Stock Exchange LLC; 
Notice of Filing of a Proposed Rule Change and Amendment No. 1 Thereto 
Relating to the Application of Certain Violations of the Minor Rule 
Violation Fine Plan to Registered Options Traders, Supplemental 
Registered Options Traders, and Remote Registered Options Traders

August 15, 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 July 31, 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 August 14, 
2006, the Exchange filed Amendment No. 1 to the proposed rule 
change.\3\ The Commission is publishing this notice to solicit comments 
on the proposed rule change, as amended, from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ In Amendment No. 1, Amex provided a specific paragraph 
citation for the violation of Rule 958--ANTE (relating to the 
restriction on ROTs quoting outside their assigned option class), 
modified the description of this particular violation and similar 
violations under the SROT and RROT rules, and corrected an omission 
in the original proposed rule text.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend Amex Rule 590, which codifies the 
Exchange's Minor Rule Violation Fine Plan, to include additional 
violations of certain rules applicable to Registered Options Traders 
(``ROTs''), Supplemental Registered Options Traders (``SROTs''), and 
Remote Registered Options Traders (``RROTs'').
    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, the Exchange included statements 
concerning the purpose of, and basis for, the proposed rule change, as 
amended, and discussed any comments it received on the proposal. The 
text of these statements may be examined at the places specified in 
Item IV 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 Exchange proposes to amend Amex Rule 590, the Minor Rule 
Violation Fine Plan, to include the violations of certain rules 
applicable to ROTs, SROTs, and RROTs.
    The Exchange's Minor Rule Violation Fine Plan provides a simplified 
procedure for the resolution of minor rule violations. Codified in Amex 
Rule 590, the Minor Rule Violation Fine Plan has three distinct 
sections: Part 1 (``General Rule Violations''), which covers more 
substantive matters that, nonetheless, are deemed ``minor'' by the 
Commission and Amex; Part 2 (``Floor Decorum''), which covers Floor 
Decorum and operational matters; and Part 3 (``Reporting Violations''), 
which covers the late submission of routine reports.
    Part I of Rule 590 paragraph (g) applies to members, member 
organizations, approved persons, or employees of members or member 
organizations. In this regard, the Exchange proposes to amend Part 1 of 
Rule 590 to include additional violations of certain rules applicable 
to ROTs, SROTs, and RROTs. The proposal includes the addition of the 
failure to comply with ROT, SROT, and RROT quoting requirements, 
pursuant to Rules 958-ANTE (h)(iii), 993-ANTE (c)(ii), and 994-ANTE 
(c)(iv).\4\
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    \4\ The Exchange's SROT and RROT programs were recently approved 
by the Commission on April 12, 2006 and April 13, 2006, 
respectively. See Securities Exchange Act Release No. 53635 (April 
12, 2006), 71 FR 20144 (April 19, 2006) (order approving the SROT 
program); Securities Exchange Act Release No. 53652 (April 13, 
2006), 71 FR 20422 (April 20, 2006) (order approving the RROT 
program).
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    Rule 958-ANTE (h)(iii) provides that if a ROT transacted 20% or 
more of his or her contract volume electronically, and not through open 
outcry, during any calendar quarter, then for the next quarter he or 
she would have an electronic quoting obligation. This analysis is 
performed separately for each ROT's assigned option classes. The 
required percentage varies from 20% to 60% depending on the contract 
volume executed electronically on the Amex, in that option class, by 
all Amex market participants. Rules 993-ANTE (c)(ii) and 994-ANTE 
(c)(iv) require SROTs and RROTs to provide continuous two-sided 
quotations in accordance with Rule 958-ANTE (c), in at least 60% of the 
series of their assigned classes.
    Furthermore, the Exchange proposes to include as a violation, the 
restriction on quoting outside assigned classes, as set forth in Rule 
958-ANTE (a), Commentary .03 to Rule 993-ANTE, and 994-ANTE (c)(iii). 
Commentary .03 to Rule 993-ANTE provides that a SROT may act in a 
market-making capacity only in the option classes to which it is 
assigned, while Rule 994-ANTE (c)(iii) states that a RROT may not enter 
quotations electronically from outside the trading crowd in options 
classes in which it is not assigned as an RROT.
2. Statutory Basis
    The Exchange believes that the proposed rule change, as amended, is 
consistent with Section 6 of the Act \5\ in general and furthers the 
objectives of Section 6(b)(5) \6\ in particular in that it is designed 
to prevent fraudulent and manipulative acts and practices, to promote 
just and equitable principles of trade, to foster cooperation and 
coordination with persons engaged in facilitating transactions in 
securities, and to remove impediments to and perfect the mechanism of a 
free and open market and a national market system.
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    \5\ 15 U.S.C. 78f(b).
    \6\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that proposed rule change would 
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

[[Page 48567]]

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 proposed rule 
change, as amended, 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-2006-70 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-2006-70. 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 submissions should refer to File Number 
SR-Amex-2006-70 and should be submitted on or before September 11, 
2006.
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    \7\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\7\
Nancy M. Morris,
Secretary.
[FR Doc. E6-13728 Filed 8-18-06; 8:45 am]

BILLING CODE 8010-01-P