Document ID: SEC-2008-0833-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: American Stock Exchange LLC
Posted Date: 2008-06-18T04:00Z

[Federal Register: June 18, 2008 (Volume 73, Number 118)]
[Notices]               
[Page 34809-34811]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr18jn08-131]                         

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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-57952; File No. SR-Amex-2008-44]

 
 Self-Regulatory Organizations; American Stock Exchange LLC; 
Notice of Filing of Proposed Rule Change Modifying the Provisions 
Governing Contacts Between Specialists and Issuers

June 11, 2008.
    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 20, 2008, 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 substantially prepared by the 
Exchange. 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.
---------------------------------------------------------------------------

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

    The Exchange proposes to amend Amex Rule 27 to (i) modify the 
provisions governing contacts between specialists and issuers or, in 
the case of exchange traded funds (``ETFs'') and structured products, 
sponsors, and (ii) clarify other procedures applicable to the 
allocation of securities to specialists.
    The text of the proposed rule change is available on the Amex's Web 
site at http://www.amex.com, the Amex's Office of the Secretary, 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 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 parts of such 
statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The purpose of the proposed rule change is to revise Amex Rule 27 
in order to better reflect the different treatment that is afforded 
ETFs and structured products in connection with the allocation of 
securities to specialists. This is reflected in the fact that ETFs and 
structured products are typically allocated to a specialist within a 
few days after approval of the issuer's application for listing on the 
Exchange. However, in the case of other equity securities, the 
allocation process may take a longer period of time so that allocation 
to a specialist may not occur within a few days of approval of the 
issuer's listing application.
    Amex Rule 27 sets forth the procedures and policies pursuant to 
which the Allocations Committee allocates securities listing on the 
Exchange to specialists. In particular, paragraph (e) describes the 
Exchange's ``issuer choice'' program under which issuers or, in the 
case of an ETF or structured product, sponsors, select their 
specialists from a list of the most qualified specialists prepared by 
the Allocations Committee and is designed to be read in conjunction 
with Commentaries .02 and .03 thereto.
    Commentaries .02 and .03 contain guidelines for communications 
between specialists and issuers or, in the case of ETFs and structured 
products, sponsors that have not yet listed a security on the Exchange, 
have applied to list a security on the Exchange and/or have a security 
that has been approved for listing on the Exchange.\3\
---------------------------------------------------------------------------

    \3\ See Securities Exchange Act Release Nos. 44972 (October 23, 
2001), 66 FR 55031 (October 31, 2001) (SR-Amex-2001-19); and 45260 
(January 9, 2002), 67 FR 2255 (January 16, 2002) (SR-Amex-2001-19).
---------------------------------------------------------------------------

(i) Commentary .02
    Commentary .02 prohibits equity specialists and other members from 
making direct or indirect contact with an issuer that has requested a 
listing qualification review \4\ for the purpose of influencing the 
issuer's choice of a specialist. In addition, any communication between 
equity specialists and issuers is prohibited once an issuer has been 
approved for listing and the Allocations Committee has prepared the 
list of qualified specialists. The exception to such prohibition is 
Exchange-arranged interviews between an issuer approved for listing and 
any specialist(s) the issuer requests to interview.
---------------------------------------------------------------------------

    \4\ The listing qualification review is the process whereby an 
issuer undergoes review by the Exchange's Listing Qualifications 
Department. The listing qualification review will commence once the 
listing application is submitted to the Exchange.
---------------------------------------------------------------------------

    The interviews are closely monitored by the Exchange and the 
Exchange will take appropriate action in the event an inappropriate 
communication is deemed by the Exchange to have occurred during the 
interview. The Exchange proposes to clarify that such appropriate 
action may include the disqualification of a specialist for the 
allocation. The proposed rule change will also make Commentary .02 more 
consistent with Commentary .03, which currently permits the Exchange to 
disqualify ETF and structured product specialists deemed to have made 
inappropriate representations.
    The Exchange also proposes adding a provision to Commentary .02 
addressing post-interview communications between specialists and 
issuers approved for listing on the Exchange. The proposed rule change 
would prohibit post-interview contacts between specialists and issuers 
and provide a means for issuers to obtain further information from the 
specialists

[[Page 34810]]

through the Exchange's Equity Sales Group.
    Finally, the Exchange proposes to simplify the description of the 
procedures set forth in Commentary .02 by adding defined terms and 
moving the provision concerning an issuer's ability to request 
specialists to be placed on the list of qualified specialists to 
paragraph (e)(i) of Rule 27. The Exchange believes that such changes 
will simplify Commentary .02 and avoid potential confusion for 
specialists and/or issuers engaged in the Amex listing process.
(ii) Commentary .03
    Current Commentary .03, unlike Commentary .02, applies to ETFs and 
structured products and contains provisions governing contacts between 
specialists and other members and sponsors and issuers prior to such 
sponsor or issuer deciding to list a security on the Exchange. Pursuant 
to the current Commentary .03, specialists and other members must 
notify the Exchange in writing before any planned contact with a 
potential sponsor or issuer for the purpose of listing the ETFs or 
structured products of such sponsor or issuer on the Exchange, or 
within five (5) business days of unanticipated contact where 
discussions regarding the listing occur. Exchange approval of planned 
contact is required and the Exchange will grant such approval where it 
appears that the contact will assist rather than impede the Exchange's 
effort to list the new ETF or structured product.\5\
---------------------------------------------------------------------------

    \5\ See supra note 3.
---------------------------------------------------------------------------

    The Exchange does not believe that the communication restrictions 
set forth in Commentary .03 are necessary, in that it is unlikely that 
such contact would impede the Exchange's effort to list an issuer. As a 
result, the Exchange proposes to delete such restrictions. The 
Commission previously approved a rule change to Commentary .02 removing 
similar restrictions on equity specialists.\6\
---------------------------------------------------------------------------

    \6\ See Securities Exchange Act Release Nos. 47914 (May 23, 
2003), 68 FR 32782 (June 2, 2003) (SR-Amex-2002-112); and 48132 
(July 7, 2003), 68 FR 41665 (July 14, 2003) (SR-Amex-2002-112).
---------------------------------------------------------------------------

    ETF and structured product specialists are also currently required 
to promptly report to the Exchange any representations or commitments 
that they, or an individual acting on their behalf, have made to an 
employee of, or any individual acting on behalf of, an issuer or 
sponsor. The Exchange proposes to amend Commentary .03 to require 
specialists to only disclose in their applications to be allocated an 
ETF or structured product representations or commitments that relate to 
the prospective listing of the ETF or structured product and that are 
made within the six (6) months preceding the date allocation 
applications are solicited with respect to that ETF or structured 
product. The Exchange further proposes, in the event an ETF or 
structured product is not allocated within five (5) days of the 
allocation application, to require specialists and other members to 
update their applications accordingly to report all representations or 
commitments since last reported to the Exchange.
    While the disclosure requirement is intended to ensure the 
integrity of the allocation process, the Exchange believes that if it 
is interpreted too broadly, it could impair such process by requiring 
specialists to disclose every representation or commitment that they, 
or an individual acting on their behalf, have ever made to an employee 
of, or any individual acting on behalf of, an issuer or sponsor. By 
narrowing the time frame of the disclosure requirement to six (6) 
months prior to listing, the Exchange believes that specialists will be 
able to provide more detailed disclosures of any representations and/or 
commitments they have made with regard to a particular listing, thereby 
enabling the Exchange to better monitor the appropriateness of such 
representations and/or commitments.
    Commentary .03 also includes procedures related to the interview 
process. The Exchange proposes to clarify that such procedures apply to 
issuers and sponsors whose securities have been approved for listing on 
the Exchange in accordance with Rule 27(e)(i).
(iii) Other Changes
    Finally, the Exchange proposes to make technical revisions to 
paragraphs (c) and (e)(i) of Rule 27 in order to consistently use the 
term ``issuer'' as opposed to ``company'', clarify the applicability of 
the provisions to equity, ETF and structured product listings \7\ and, 
in general, to simplify the reading of the text.
---------------------------------------------------------------------------

    \7\ See supra note 3.
---------------------------------------------------------------------------

    The Exchange believes that the proposed rule change will enhance 
the clarity of and provide additional transparency to the Amex's 
allocation policy and procedures. Such additional clarity and 
transparency to the provisions governing specialist-issuer 
communications will facilitate uniform application and ease 
administration of Rule 27.
2. Statutory Basis
    The proposed rule change is consistent with Section 6(b) of the 
Act,\8\ in general, and furthers the objectives of Section 6(b)(5) of 
the Act,\9\ 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, 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.
---------------------------------------------------------------------------

    \8\ 15 U.S.C. 78f(b).
    \9\ 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

    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 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

[[Page 34811]]

Number SR-Amex-2008-44 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-Amex-2008-44. 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, 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 
the 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-2008-44 and should be submitted on or before July 9, 2008.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\10\
---------------------------------------------------------------------------

    \10\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Florence E. Harmon,
Acting Secretary.
 [FR Doc. E8-13708 Filed 6-17-08; 8:45 am]

BILLING CODE 8010-01-P