Document ID: SEC-2005-0061-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: American Stock Exchange LLC
Posted Date: 2005-10-03T04:00Z

[Federal Register: October 3, 2005 (Volume 70, Number 190)]
[Notices]               
[Page 57632-57634]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr03oc05-150]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-52504; File No. SR-Amex-2005-086]

 
Self-Regulatory Organizations; American Stock Exchange LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change 
and Amendment No. 1 Revising the Implementation Date for the ANTE 
System

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 September 1, 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 and 
II below, which items have been prepared by Amex. On September 20, 
2005, the Exchange filed Amendment No. 1 to the proposed rule 
change.\3\ Amex filed the proposal, as amended, as a ``non-
controversial'' proposed rule change pursuant to Section 
19(b)(3)(A)(iii) of the Act \4\ and Rule 19b-4(f)(6) thereunder.\5\ 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\ Amendment No. 1 clarified that the proposed rule change was 
being submitted under Section 19(b)(3)(A)(iii) of the Act and Rule 
19b-4(f)(6) thereunder.
    \4\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \5\ 17 CFR 240.19b-4(f)(6).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    Amex proposes to amend (1) Amex Rule 900-ANTE to provide a revised 
date for the completion of the implementation of the ANTE System (as 
defined herein) to all option classes; and (2) Amex Rule 935-ANTE, 
Commentary .01 to establish a revised date for increased floor broker 
functionality in the ANTE System. The text of the proposed rule change 
is available on Amex's Web site (http://www.amex.com), at 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, Amex 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

Revised Implementation Date--Amex Rule 900-ANTE

    On May 20, 2004, the Commission approved Amex's proposal to 
implement a new options trading platform known as the Amex New Trading 
Environment (``ANTE'') System.\6\ On May 25, 2004, Amex began rolling 
out the ANTE System on its trading floor on a specialist's post-by-
specialist's post basis. At that time, it was anticipated the roll-out 
would be completed by the end of the second quarter of 2005. The 
implementation date for the full roll-out of the ANTE System was 
subsequently extended to August 31, 2005.\7\ Amex has now rolled out 
the ANTE System to all its option classes except two--the Nasdaq 100 
Index (``NDX'') and the Mini Nasdaq Index (``MNX''). Amex represents 
that there are specific reasons why these products have not been rolled 
out on the ANTE System. The specialist in these products is concerned 
that the theoretical price calculator provided by the ANTE System may 
not accurately price the options on these indexes. The specialist is 
currently waiting for his own theoretical index price calculator, which 
has been installed, to successfully calculate prices for these indexes 
and the options. Amex expects that the MNX/NDX specialist will have its 
proprietary calculator in place by October 31, 2005.
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    \6\ See Securities Exchange Act Release No. 49747 (May 20, 2004) 
69 FR 30344 (May 27, 2004) (``Initial Approval of ANTE System'').
    \7\ See Securities Exchange Act Release No. 51965 (July 1, 2005) 
70 FR 40082 (July 12, 2005).
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    Amex is now proposing to further revise its implementation schedule 
to provide that the remaining two option classes will be on the ANTE 
System by October 31, 2005. Maintaining two systems for the trading of 
options--the legacy system (XTOPS, AODB and Auto-Ex) and ANTE--is 
costly. As a result, the Exchange is working diligently to have all 
option classes on the ANTE System by October 31, 2005, so that it can 
retire its legacy systems.

Increased Floor Broker Functionality--Rule 935-ANTE

    Amex Rule 935-ANTE(b) provides for the post trade allocation of 
contracts executed as the result of the submission of orders to trade 
with orders in the ANTE Central Book. Under this rule, if more than one 
ANTE Participant \8\ and/or floor broker representing a customer order 
submits an order to trade with an order in the ANTE Central book within 
a period not to exceed five seconds after the initial ANTE Participant 
has submitted its order, all those ANTE Participants and/or floor 
brokers' customers will be entitled to participate in the allocation of 
any executed contracts. Amex represents that the ANTE System is 
currently unable to provide the functionality necessary for floor 
brokers representing customer orders in the trading crowd the ability 
to directly participate in the post trade allocation of orders taken 
off the Central Book. Commentary .01 to Amex Rule 935-ANTE provides a 
temporary methodology for the specialist to disengage the post trade 
allocation system in a specific series, which allows the floor broker 
to alert the specialist within the five second timeframe whenever his 
customer wants to participate in post trade allocation, and allows the 
specialist to provide for the customer's participation in post trade 
allocation when appropriate. The Commission approved the procedures

[[Page 57633]]

set forth in Commentary .01 as a ``reasonable, temporary solution.'' 
\9\ Commentary .01 to Amex Rule 935-ANTE also originally provided that 
the ANTE System will give floor brokers greater functionality accessing 
the Central Book on March 31, 2005 or such other date as established by 
the Exchange and submitted to the Commission pursuant to Section 19(b) 
of the Act. The Exchange subsequently established August 31, 2005, as 
the date the increased functionality will be available in the ANTE 
System. Due to a delay in the roll out of the increased floor broker 
functionality, the Exchange now proposes to establish October 31, 2005 
as the date set forth in Commentary .01 to Amex Rule 935-ANTE for such 
increased functionality.
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    \8\ Amex Rule 900-ANTE(b)(45) defines ``ANTE Participant'' as 
either the specialist and/or registered options trader(s) assigned 
to trade a specific options class on the ANTE System.
    \9\ See Initial Approval of ANTE System.
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2. Statutory Basis
    The Exchange believes that 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 
and to promote just and equitable principles of trade, to foster 
cooperation and coordination with persons engaged in regulating, 
clearing, settling, processing information with respect to and 
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; 
and is designed to prohibit unfair discrimination between customers, 
issuers, brokers and dealers.
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    \10\ 15 U.S.C. 78f(b).
    \11\ 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 the proposed rule change, as 
amended, will 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 Exchange has designated the proposed rule change, as amended, 
as a ``non-controversial'' rule change pursuant to Section 
19(b)(3)(A)(iii) of the Act \12\ and subparagraph (f)(6) of Rule 19b-4 
thereunder.\13\ Amex represents that the foregoing rule change does 
not: (i) Significantly affect the protection of investors or the public 
interest; (ii) impose any significant burden on competition; and (iii) 
by its terms, does not 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. 
The Exchange has requested that the Commission waive the five-day pre-
filing requirement and the 30-day operative delay period for ``non-
controversial'' proposals and make the proposed rule change, as 
amended, effective and operative upon filing.
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    \12\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \13\ 7 CFR 240.19b-4(f)(6).
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    The Commission has determined to waive the five-day pre-filing 
requirement and the 30-day operative delay period.\14\ The Commission 
notes that Amex has represented that the theoretical price calculators 
for the final two options classes are not installed and/or functioning 
properly and that it has not yet implemented the functionality for 
floor brokers representing customer orders. The Commission believes 
that extending the deadline for implementing Amex Rules 900- and 935-
ANTE by two months should afford Amex the time needed to install and/or 
fix the theoretical price calculators and to implement the floor broker 
customer order functionality. Furthermore, the Commission believes that 
it is in the interest of investors and the public to delay 
implementation of the ANTE system until all of the components are in 
place and functioning properly. Therefore, the foregoing rule change 
has become immediately effective and operative upon filing pursuant to 
Section 19(b)(3)(A)(iii) of the Act \15\ and Rule 19b-4(f)(6) 
thereunder.\16\
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    \14\ For purposes only of accelerating the operative date of 
this proposal, the Commission has considered the proposed rule's 
impact on efficiency, competition, and capital formation. 15 U.S.C. 
78c(f).
    \15\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \16\ 17 CFR 240.19b-4(f)(6).
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    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.\17\
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    \17\ For purposes of calculating the 60-day period within which 
the Commission may summarily abrogate the proposed rule change, as 
amended, under Section 19(b)(3)(C) of the Act, the Commission 
considers the period to commence on September 20, 2005, the date on 
which Amex submitted Amendment No. 1. See 15 U.S.C. 78s(b)(3)(C).
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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-2005-086 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-2005-086. 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 Website (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 Amex's 
Office of the Secretary. 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-2005-086 and should be submitted on or before October 24, 2005.

[[Page 57634]]

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\18\
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    \18\ 17 CFR 200.30-3(a)(12).
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Jonathan G. Katz,
Secretary.
 [FR Doc. E5-5345 Filed 9-30-05; 8:45 am]

BILLING CODE 8010-01-P