Document ID: SEC-2005-0059-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: American Stock Exchange LLC
Posted Date: 2005-09-30T04:00Z

[Federal Register: September 30, 2005 (Volume 70, Number 189)]
[Notices]               
[Page 57336-57338]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr30se05-157]                         

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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-52505; File No. SR-Amex-2005-056]

 
Self-Regulatory Organizations; American Stock Exchange LLC; 
Notice of Filing of Proposed Rule Change and Amendment No. 1 Thereto 
Relating to the Requirement that Registered Options Traders May Only 
Sign on to Auto-Ex for ETFs Traded by the Same or Adjoining Specialists 
and Shall Sign on to Auto-Ex for a Maximum of Fifteen ETFs

September 23, 2005.
    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 May 23, 2005, 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 the Exchange. On 
September 13, 2005, the Amex submitted Amendment No. 1 to the proposed 
rule change.\3\ 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\ See Form 19b-4 dated September 13, 2005, which replaced the 
original filing in its entirety (``Amendment No. 1'').
---------------------------------------------------------------------------

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

    The Amex proposes amendments to Amex Rule 958, Commentary .10 and 
Amex Rule 958-ANTE, Commentary .09, to establish that Registered 
Options Traders (``ROTs'') may only sign on to Auto-Ex for Portfolio 
Depository Receipts, Index Fund Shares, and Trust Issued Receipts 
(collectively ``Exchange-Traded Funds'' or ``ETFs'') traded by the same 
or adjoining specialists, for a maximum of three (3) contiguous panels, 
and shall also not sign on to Auto-Ex for more than a maximum of 
fifteen (15) ETFs.
    Below is the text of the proposed rule change. Proposed new 
language is in italics; proposed deletions are in [brackets].
* * * * *

Rule 958. Options Transactions of Registered Traders

(a)-(h)--No change.

Commentary * * *

    .01-.09--No change.
    .10 (a) Transactions on the Floor in index warrants, currency 
warrants, securities listed pursuant to Section 107 of the Company 
Guide (``Other Securities''), and Trust Issued Receipts listed pursuant 
to Amex Rules 1200 et seq. which are otherwise traded under the 
Exchange's equity trading rules, shall be effected in accordance with 
the provisions of this rule, and shall only be effected by Registered 
Traders who are regular members. Transactions by Registered Traders on 
the Floor in derivative products (as defined in Article I, Section 3(d) 
of the Exchange Constitution) which are otherwise traded under the 
Exchange's equity trading rules, shall be effected in accordance with 
the provisions of this rule. In addition, Amex Rule 111, Commentary .01 
shall not apply to such transactions. (See Amex Rule 111, Commentary 
.12, and Amex Rule 114, Commentary .14.)
    (b) A Registered Trader who is logged onto Auto-Ex shall only sign 
on to Auto-Ex for Portfolio Depository Receipts, Index Fund Shares and 
Trust Issued Receipts (collectively ``Exchange Traded Funds'' or 
``ETFs'') traded on the same or contiguous panels, i.e. ETFs traded by 
two adjoining Specialists, or ETFs traded by the same Specialist for a 
maximum of three (3) panels. A Registered Trader also shall not sign on 
to Auto-Ex for more than fifteen (15) ETFs. A Senior Floor Official may 
modify the foregoing restrictions if he determines that a Registered 
Trader is able to appropriately fulfill his obligations to the market 
due to the level of activity in the ETFs and their proximity.
* * * * *

Rule 958. ANTE Options Transactions of Registered Options Traders

    (a)-(i)--No change.

Commentary * * *

    .01-.08--No change.
    .09 (a) Transactions on the Floor and through the facilities of the 
Exchange in index warrants, currency warrants, securities listed 
pursuant to Section 107 of the Company Guide (``Other Securities''), 
and Trust Issued Receipts listed pursuant to Amex Rules 1200 et seq. 
which are otherwise traded under the Exchange's equity trading rules, 
shall be effected in accordance with the provisions of this rule, and 
shall only be effected by registered options traders who are regular 
members. Transactions by registered options traders on the Floor in 
derivative products (as defined in Article I, Section 3(d) of the 
Exchange Constitution) which are otherwise traded under the Exchange's 
equity

[[Page 57337]]

trading rules, shall be effected in accordance with the provisions of 
this rule. In addition, Amex Rule 111, Commentary .01 shall not apply 
to such transactions. (See Amex Rule 111, Commentary .12, and Amex Rule 
114, Commentary .14.)
    (b) A Registered Trader who is logged onto Auto-Ex shall only sign 
on to Auto-Ex for Portfolio Depository Receipts, Index Fund Shares and 
Trust Issued Receipts (collectively ``Exchange Traded Funds'' or 
``ETFs'') traded on the same or contiguous panels, i.e. ETFs traded by 
two adjoining Specialists, or ETFs traded by the same Specialist for a 
maximum of three (3) panels. A Registered Trader also shall not sign on 
to Auto-Ex for more than fifteen (15) ETFs. A Senior Floor Official may 
modify the foregoing restrictions if he determines that a Registered 
Trader is able to appropriately fulfill his obligations to the market 
due to the level of activity in the ETFs and their proximity.
* * * * *

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 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. 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
    Amex Rule 958(c) and Amex Rule 958(c)-ANTE currently provide that 
an ROT is required to make competitive bids and offers necessary to 
contribute to the maintenance of a fair and orderly market. ROTs must 
reasonably engage in dealings for their own accounts when there exists 
a lack of price continuity and a temporary disparity between the supply 
and demand of ETFs. As part of their market making activities in ETFs, 
ROTs may sign on to Auto-Ex, the Exchange's automatic execution system.
    The Exchange proposes to amend Amex Rule 958, Commentary .10 and 
Amex Rule 958-ANTE, Commentary .09 to state that if an ROT logs onto 
Auto-Ex for ETFs, the ROT would only be allowed only to log onto 
contiguous panels, or on panels traded on by the same or adjoining 
specialists (i.e., electronic order book work stations).\4\ ROTs would 
be permitted to log onto a maximum of three (3) contiguous panels. The 
amendments to Amex Rule 958, Commentary .10 and Amex Rule 958-ANTE, 
Commentary .09 would also limit an ROT to trading in a maximum of 
fifteen (15) ETFs while signed onto Auto-Ex.\5\ A Senior Floor Official 
would be permitted to modify these restrictions if he determines that 
an ROT is able to appropriately fulfill his obligations to the market 
due to the level of activity in the ETFs and their proximity.
---------------------------------------------------------------------------

    \4\ Each panel has one specialist assigned to it. Numerous ETFs 
may be traded on one panel.
    \5\ Although ETFs are traded on NETS (New Equity Trading System) 
and not ANTE (Amex New Trading Environment), Amex Rule 958-ANTE 
applies to ETFs.
---------------------------------------------------------------------------

    The Exchange believes the foregoing amendments are necessary to 
ensure that ROTs fulfill their market-making obligations to make 
competitive bids and offers as reasonably necessary to contribute to 
the maintenance of a fair and orderly market in ETFs, by encouraging 
ROTs logged onto Auto-Ex to remain in the crowd. In order to make 
competitive bids, ROTs must remain in the crowd near the specialist 
panels. If ROTs were allowed to log onto Auto-Ex panels throughout the 
trading floor, it would be difficult for them to remain in the crowd. 
The Exchange notes that ROTs logged onto Auto-Ex may not be actively 
quoting because they do not post their own quotes on Auto-Ex; instead 
they receive executions, which are allocated to ROTs and specialists on 
the wheel, at the specialist quote. However, the Exchange's proposal, 
which only would permit a ROT to log onto three contiguous panels, 
would confine the ROT to one section of the trading floor with the 
intent of encouraging the ROT to remain in that area as part of the 
crowd in order to make competitive bids and offers in ETFs.
2. Statutory Basis
    The Exchange believes the proposal is consistent with Section 6(b) 
of the Act \6\, in general, and furthers the objectives of Section 
6(b)(5) of the Act,\7\ in particular, in that 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.
---------------------------------------------------------------------------

    \6\ 15 U.S.C. 78f(b).
    \7\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

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

    The Exchange believes the proposed rule change will 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

    No written comments were solicited or received by the Exchange on 
this proposal.

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 the 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 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-2005-056 on the subject line.

Paper Comments

     Send paper comments in triplicate to Jonathan G. Katz, 
Secretary, Securities and Exchange Commission, 100 F Street, NE., 
Washington, DC 20549-9303.
    All submissions should refer to File Number SR-Amex-2005-056. 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

[[Page 57338]]

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 the filing also will be available for 
inspection and copying at the principal office 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 Number SR-Amex-2005-056 and should be 
submitted on or before October 21, 2005.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\8\
---------------------------------------------------------------------------

    \8\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Jonathan G. Katz,
Secretary.
 [FR Doc. E5-5325 Filed 9-29-05; 8:45 am]

BILLING CODE 8010-01-P