Document ID: SEC-2007-0352-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: American Stock Exchange LLC
Posted Date: 2007-03-09T05:00Z

[Federal Register: March 9, 2007 (Volume 72, Number 46)]
[Notices]               
[Page 10793-10795]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr09mr07-133]                         

[[Page 10793]]

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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-55378; File No. SR-Amex-2007-17]

 
Self-Regulatory Organizations; American Stock Exchange LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change 
and Amendment No. 1 Thereto Revising the AEMI and AEMI-One Rules 
Relating to Portfolio Depositary Receipts and Index Fund Shares

March 1, 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 February 5, 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 the Amex. The 
Exchange 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. On February 22, 2007, the Exchange filed Amendment No. 
1 to the proposed rule change. 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\ 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

    The Exchange proposes to revise two of its AEMI rules and two of 
its AEMI-One rules, relating in each case to portfolio depositary 
receipts (``PDRs'') and index fund shares (``IFSs'') that trade on the 
Amex, in order to conform these rules to changes previously approved by 
the Commission to the corresponding legacy rules for these securities. 
Among other things, these proposed changes include generic listing 
standards for series of PDRs and IFSs that are based on international 
or global indexes or on indexes previously approved by the Commission 
for the trading of PDRs, IFSs, options or other specified index-based 
securities. The proposed conforming rule changes would not make any 
changes to the manner in which PDRs and IFSs trade on the AEMI 
platform, but are concerned primarily with eligibility criteria for 
index components, index methodology and calculation, and intraday 
dissemination of information on estimated share value. The text of the 
proposed rule change is available at Amex, the Commission's Public 
Reference Room, and http://www.amex.com.

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
    The Exchange has recently adopted two sets of rules in connection 
with the operation of its new hybrid market trading platform for equity 
products and exchange traded funds, designated as AEMI \SM\ (the 
``Auction and Electronic Market Integration'' platform). The initial 
version of AEMI is referred to as ``AEMI-One'' and is currently 
operational on a pilot basis \5\ through the day prior to the final 
date set by the Commission for full operation of all automated trading 
centers that intend to qualify their quotations for trade-through 
protection under Rule 611 of Regulation NMS \6\ (the latter date being 
referred to as the ``Trading Phase Date'').\7\ On the Trading Phase 
Date, the regular AEMI rules will become effective \8\ and the AEMI-One 
rules will cease to be operative. As each security is migrated from the 
legacy platform to the AEMI platform during the AEMI-One pilot, any 
legacy rule for which there is a corresponding AEMI-One rule will cease 
to be applicable and the AEMI-One rule will then become the applicable 
rule for that security (e.g., Rule 1000 will cease to apply and Rule 
1000-AEMI-One will become applicable). Other legacy rules with respect 
to PDRs and IFSs without corresponding AEMI-One or AEMI counterpart 
rules (e.g., Rule 1001 or Rule 1001A) will continue to be applicable to 
AEMI and the AEMI-One pilot.
---------------------------------------------------------------------------

    \5\ See Securities Exchange Act Release No. 54709 (Nov. 3, 
2006), 71 FR 65847 (Nov. 9, 2006) (SR-Amex-2006-72) (Order Approving 
a Proposed Rule Change and Amendment No 1 Thereto, and Notice of 
Filing and Order Granting Accelerated Approval to Amendment No. 3, 
To Adopt New Rules To Implement on a Pilot Basis an Initial Version 
of AEMI, Its Proposed New Hybrid Market Trading Platform For Equity 
Products and Exchange Traded Funds).
    \6\ 17 CFR 242.611. The Order Protection Rule requires trading 
centers to establish, maintain and enforce written policies and 
procedures reasonably designed to prevent the execution of trades at 
prices inferior to protected quotations displayed by other trading 
centers, subject to certain exceptions.
    \7\ The Trading Phase Date is currently established as March 5, 
2007.
    \8\ See Securities Exchange Act Release No. 54552 (Sept. 29, 
2006), 71 FR 59546 (Oct. 10, 2006) (SR-Amex-2005-104) (Order 
Approving a Proposed Rule Change and Amendments No. 1, 2, 3, 4, and 
5 Thereto, and Notice of Filing and Order Granting Accelerated 
Approval to Amendment No. 6, To Establish a New Hybrid Trading 
System Known as AEMI).
---------------------------------------------------------------------------

    The Exchange proposes to revise Rules 1000-AEMI-One and 1000-AEMI 
(relating to PDRs) and Rules 1000A-AEMI-One 1000A-AEMI (relating to 
IFSs) in order to conform these rules to changes previously approved by 
the Commission to the corresponding legacy rules for these securities. 
In particular, the Exchange is proposing to make the same changes to 
these AEMI-One and AEMI rules that were approved by the Commission for 
legacy Rules 1000 and 1000A in Securities Exchange Act Release Nos. 
54739 and 55018.\9\ Among other things, these proposed changes include 
generic listing standards for series of PDRs and IFSs that are based on 
international or global indexes or on indexes previously approved by 
the Commission for the trading of PDRs, IFSs, options or other 
specified index-based securities. The proposed conforming rule changes 
would not make any changes to the manner in which PDRs and IFSs trade 
on the AEMI platform, but are concerned primarily with eligibility 
criteria for index components, index methodology and calculation, and 
intraday dissemination of information on estimated share value. The 
Exchange states that the proposed rule text is substantially identical 
to the

[[Page 10794]]

text of the existing legacy rules mentioned above.
---------------------------------------------------------------------------

    \9\ See Securities Exchange Act Release No. 54739 (Nov. 9, 
2006), 71 FR 66993 (Nov. 17, 2006) (SR-Amex-2006-78) (Order Granting 
Accelerated Approval to Proposed Rule Change and Amendment No. 1 
Thereto and Notice of Filing and Order Granting Accelerated Approval 
to Amendment No. 2 Thereto Relating to Generic Listing Standards for 
Series of Portfolio Depositary Receipts and Index Fund Shares Based 
on International or Global Indexes); see also Securities Exchange 
Act Release No. 55018 (Dec. 28, 2006), 72 FR 1040 (Jan. 9, 2007) 
(SR-Amex-2006-109) (Notice of Filing and Order Granting Accelerated 
Approval of a Proposed Rule Change and Amendment No. 1 Thereto 
Relating to Listing Standards for Series of Portfolio Depositary 
Receipts and Index Fund Shares).
---------------------------------------------------------------------------

2. Statutory Basis
    The proposed rule change is consistent with Section 6(b) of the 
Act,\10\ in general, and furthers the objectives of Section 6(b)(5) of 
the Act,\11\ in particular, in that it is 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.
---------------------------------------------------------------------------

    \10\ 15 U.S.C. 78f(b).
    \11\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

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

    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 with respect to the 
proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Because the forgoing rule change does not: (1) Significantly affect 
the protection of investors or the public interest; (2) impose any 
significant burden on competition; and (3) become operative for 30 days 
after the date of this filing (or such shorter time as the Commission 
may designate if consistent with the protection of investors and the 
public interest), it has become effective pursuant to Section 
19(b)(3)(A) of the Act \12\ and Rule 19b-4(f)(6) thereunder.\13\
---------------------------------------------------------------------------

    \12\ 15 U.S.C. 78s(b)(3)(A).
    \13\ 17 CFR 240.19b-4(f)(6)(iii).
---------------------------------------------------------------------------

    Normally, a proposed rule change filed under 19b-4(f)(6) may not 
become operative prior to 30 days after the date of filing. However, 
Rule 19b-4(f)(6)(iii) \14\ permits the Commission to designate a 
shorter time if such action is consistent with the protection of 
investors and the public interest. In addition, Rule 19b-4(f)(6)(iii) 
requires that a self-regulatory organization submit to the Commission 
written 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. The 
Exchange has requested that the Commission waive the five-day pre-
filing requirement and the 30-day operative delay because all of the 
securities trading on the Exchange are trading on the AEMI platform 
under the AEMI-One pilot and subject to the AEMI-One rules (rather than 
the legacy rules), which will be replaced by the AEMI rules on the 
Trading Phase Date.\15\ In addition, recently, the Exchange submitted 
another proposed rule change that would revise legacy Rules 1000 and 
1000A.\16\ The Exchange states that, upon approval, those rules will 
require another rule filing to provide for changes to the corresponding 
AEMI-One and AEMI rules, and believes that there is likely to be less 
confusion regarding the latter filing if the changes proposed in the 
instant rule filing are approved and become operative first.
---------------------------------------------------------------------------

    \14\ Id.
    \15\ The Exchange notes that, in contrast to the Exchange's 
AEMI-One rules, its AEMI rules (and any changes thereto) will not 
actually become effective and operative (as provided in Rule 1A-
AEMI) until the Trading Phase Date, currently scheduled for March 5, 
2007. That date is within the 30-day delay period, so a waiver is 
needed.
    \16\ See Securities Exchange Act Release No. 55240 (Feb. 5, 
2007), 72 FR 6624 (SR-Amex-2007-07) (Notice of Filing of Proposed 
Rule Change and Amendment No. 1 Thereto Amending Existing Rules for 
Portfolio Depositary Receipts and Index Fund Shares).
---------------------------------------------------------------------------

    The Commission has determined to waive the five-day pre-filing 
notice requirement. In addition, the Commission believes that waiving 
the 30-day operative delay is consistent with the protection of 
investors and the public interest because such waiver would permit a 
smoother transition to the AEMI-One and AEMI rules. The Commission 
notes that the proposed rule text is substantially identical to the 
text of CBOE's existing legacy rules.\17\ For this reason, the 
Commission designates the proposed rule change to be effective and 
operative upon filing with the Commission.\18\
---------------------------------------------------------------------------

    \17\ See Securities Exchange Act Release Nos. 54739 and 55018, 
supra note 9. The same standards previously approved by the 
Commission (eligibility criteria for index components, index 
methodology and calculation, and intraday dissemination of 
information on estimated share values) that are already in place 
with respect to securities trading on the legacy platform will, as a 
result of this proposed rule change, merely continue to apply to 
those same securities once they are migrated to the AEMI platform.
    \18\ For the purposes only of waiving the 30-day operative 
delay, 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 such 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.\19\
---------------------------------------------------------------------------

    \19\ For purposes of calculating the 60-day period within which 
the Commission may summarily abrogate the proposed rule change, the 
Commission considers the period to commence on February 22, 2007, 
the date on which the Exchange filed Amendment No. 1.
---------------------------------------------------------------------------

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-2007-17 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-2007-17. 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 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

[[Page 10795]]

Number SR-Amex-2007-17 and should be submitted on or before March 30, 
2007.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\20\
---------------------------------------------------------------------------

    \20\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Florence E. Harmon,
Deputy Secretary.
 [FR Doc. E7-4190 Filed 3-8-07; 8:45 am]

BILLING CODE 8010-01-P