Document ID: SEC-2007-1167-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: American Stock Exchange LLC
Posted Date: 2007-08-22T04:00Z

[Federal Register: August 22, 2007 (Volume 72, Number 162)]
[Notices]               
[Page 47091-47092]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr22au07-157]                         

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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-56273; File No. SR-Amex-2007-91]

 
Self-Regulatory Organizations; American Stock Exchange LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change to 
Add an Additional Exemption to Rule 24-AEMI Relating to Intermarket 
Sweep Orders

August 16, 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 August 16, 2007, 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 Amex. Amex 
filed the proposal as a ``non-controversial'' rule change pursuant to 
Section 19(b)(3)(A) of the Act \3\ and Rule 19b-4(f)(6) thereunder,\4\ 
which renders the proposal effective upon filing with the Commission. 
The Commission is publishing this notice to solicit comments on the 
proposed rule change from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 15 U.S.C. 78s(b)(3)(A).
    \4\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------

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

    Amex proposes to amend Rule 24-AEMI to add an additional exemption 
to its general rule against a member executing a proprietary order 
while in possession of a customer order which could trade at the same 
price. The exemption would permit a member organization to send an 
intermarket sweep order (``ISOs'') as principal under Regulation NMS, 
provided that the member organization yields its principal execution to 
any open customer order that is required to be protected by Rule 24-
AEMI and is capable of being filled. In addition, if the member 
organization executed the ISO to facilitate a customer order at a price 
inferior to one or more protected quotations, that customer must 
consent to not receiving the better prices obtained by the ISO or the 
firm must yield its principal execution to that customer. The Exchange 
proposes this change to better harmonize Rule 24-AEMI with recent 
changes to the corresponding Rule 92 of the New York Stock Exchange 
(``NYSE'').
    The text of the proposed rule change is available on Exchange's Web 
site (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
    The Exchange proposes to amend Rule 24-AEMI to add an exemption so 
that a member organization can comply with its Regulation NMS 
obligation without also violating Rule 24-AEMI when facilitating a 
customer order that would otherwise require the firm to either violate 
Rule 24-AEMI or trade through protected quotations. Under the current 
rule, if a member organization is required to route an ISO as principal 
to execute against the full displayed size of any protected quotation 
in a security, for example, when facilitating a customer order at a 
price inferior to the national best bid or offer or other protected 
quotations and in compliance with Rules 600(b)(30)(ii) and 611(b)(6) of 
Regulation NMS,\5\ the ISO could violate Rule 24-AEMI by trading ahead 
of or along with an open customer order.
---------------------------------------------------------------------------

    \5\ 17 CFR 242.600(b)(30)(ii) and 17 CFR 242.611(b)(6).
---------------------------------------------------------------------------

    The proposed exemption provides that, when routing an ISO, the 
member organization must yield its principal execution to any open 
customer order that is required to be protected by Rule 24-AEMI and is 
capable of accepting the fill. As defined in Rule 24-AEMI(a), a 
customer order that is required to be protected is an open customer 
order that is known to the member organization before entry of the ISO. 
In addition, the proposed exemption would require that, if a firm 
executes an ISO to facilitate a customer order at a price inferior to 
one or more protected quotations, that customer must consent to not 
receiving the better price obtained by the ISO or

[[Page 47092]]

the firm must yield its principal execution to that customer. For 
purposes of this amendment, the Exchange further proposes adopting the 
definitions of Regulation NMS in connection with the terms ``protected 
quotation'' and ``intermarket sweep order.'' \6\
---------------------------------------------------------------------------

    \6\ See 17 CFR 242.600(b)(30) and (58).
---------------------------------------------------------------------------

2. Statutory Basis
    The proposed rule change is designed to be consistent with 
Regulation NMS and 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 the Exchange's proposed rules are 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.
---------------------------------------------------------------------------

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

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

    The proposed rule change does not 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

    The foregoing proposed rule change is subject to Section 
19(b)(3)(A)(iii) of the Act \9\ and Rule 19b-4(f)(6) thereunder \10\ 
because the proposal: (i) Does not significantly affect the protection 
of investors or the public interest; (ii) does not impose any 
significant burden on competition; and (iii) does not become operative 
prior to 30 days after the date of filing or such shorter time as the 
Commission may designate if consistent with the protection of investors 
and the public interest; provided that the self-regulatory organization 
has given the Commission notice of its intent to file the proposed rule 
change, along with a brief description and text of the proposed rule 
change, at least five business days prior to the date of filing of the 
proposed rule change, or such shorter time as designated by the 
Commission.
---------------------------------------------------------------------------

    \9\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \10\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------

    Amex has requested that the Commission waive the five-day pre-
filing requirement and the 30-day operative delay in order to enable 
the Exchange to implement this rule change on an expeditious basis, 
noting, in particular, the commencement of full industry compliance 
with Rules 610 and 611 of Regulation NMS during the ``All Stocks 
Phase'' that begins on August 20, 2007. The Commission believes that 
waiving the 30-day operative delay is consistent with the protection of 
investors and the public interest because the proposed rule change adds 
an exemption to Rule 24-AEMI that is identical to that approved as part 
of recent amendments to corresponding Rule 92 of the NYSE and does not 
raise any new issues of regulatory concern.\11\ For these reasons, the 
Commission waives the 30-day operative delay.\12\ The Commission also 
waives the five-day pre-filing requirement.
---------------------------------------------------------------------------

    \11\ See Securities Exchange Act Release No. 56017 (July 5, 
2007), 72 FR 38110 (July 12, 2007).
    \12\ For purposes only of waiving the operative delay for this 
proposal, the Commission has considered the proposed rule's impact 
on efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
---------------------------------------------------------------------------

    At any time within 60 days of the filing of the proposed rule 
change, the Commission may summarily abrogate such rule change if it 
appears to the Commission that such action is necessary or appropriate 
in the public interest, for the protection of investors, or otherwise 
in furtherance of the purposes of the Act.\13\
---------------------------------------------------------------------------

    \13\ See Section 19(b)(3)(C) of the Act, 15 U.S.C. 78s(b)(3)(C).
---------------------------------------------------------------------------

IV. 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-2007-91 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-2007-91. 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 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-2007-91 and should be 
submitted on or before September 12, 2007.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\14\
---------------------------------------------------------------------------

    \14\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7-16556 Filed 8-21-07; 8:45 am]

BILLING CODE 8010-01-P