Document ID: SEC-2005-0118-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: American Stock Exchange LLC
Posted Date: 2005-10-18T04:00Z

[Federal Register: October 18, 2005 (Volume 70, Number 200)]
[Notices]               
[Page 60583]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr18oc05-129]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-52592; File No. SR-Amex-2004-76]

 
Self-Regulatory Organizations; American Stock Exchange LLC; Order 
Approving Proposed Rule Change and Amendment Nos. 1 and 2 Relating to 
Contingency Trading Procedures

October 12, 2005.

I. Introduction

    On September 10, 2004, the American Stock Exchange LLC (``Amex'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission'') pursuant to Section 19(b)(1) of the Securities 
Exchange Act of 1934 (``Act''),\1\ and Rule 19b-4 thereunder,\2\ a 
proposed rule change to adopt Amex Rule 119A regarding contingency 
trading procedures. On August 26, 2005, the Exchange submitted 
Amendment No. 1 to the proposal.\3\ On August 29, 2005, the Exchange 
submitted Amendment No. 2 to the proposal.\4\ The proposed rule change, 
as amended, was published for notice and comment in the Federal 
Register on September 7, 2005.\5\ The Commission received no comment 
letters regarding the proposed rule change. This order approves the 
proposed rule change, as amended.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ In Amendment No. 1, the Exchange substantially revised the 
proposed rule text and corresponding description of the proposal in 
its Form 19b-4. Amendment No. 1 replaced Amex's original filing in 
its entirety.
    \4\ In Amendment No. 2, the Exchange made minor corrections to 
the rule text.
    \5\ See Securities Exchange Act Release No. 52360 (August 30, 
2005), 70 FR 53260 (``Notice'').
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II. Description of Proposal

    As set forth in the Notice, the Amex proposes to adopt a new Rule 
119A, setting forth the Exchange's contingency trading with respect to 
the use of the Exchange's ``Alternative Trading Facility'' (``ATF''), 
which is a remote facility established by the Exchange for trading 
securities admitted to dealings in the event that the Exchange's 
primary trading facility at 86 Trinity Place is wholly or partially 
unusable.
    Under proposed Amex Rule 119A(b) the provisions of the Constitution 
and Rules of the Exchange are applicable to trading conducted on the 
ATF, except to the extent that the provisions of Amex Rule 119A govern, 
or unless the context otherwise requires. Paragraph (c) of proposed 
Amex Rule 119A provides that the Exchange's Executive Vice President 
for Market Operations and Trading Floor Systems or his or her 
designee(s) shall have authority to designate the individuals who will 
be allowed to conduct a securities business on the ATF from among those 
members, member organizations, and persons associated with those 
members and member organizations who are entitled to trade and support 
trading at the Exchange's facility at 86 Trinity Place. Not all persons 
who generally conduct business at the Exchange's regular facility will 
be able to use the ATF due to occupancy restrictions at the facility. 
One or more individuals from each broker and specialist unit will be 
allowed to conduct business on the ATF. Registered Option Traders 
(``ROTs'') will be allowed to conduct business on the ATF to the extent 
that there is space in the ATF to accommodate them based upon their 
volume of trading. Paragraph (d) to proposed Amex Rule 119A provides 
that if a ROT is not allowed to trade on the ATF, the ROT may initiate 
opening trades for his or her market maker account from off the ATF 
without reference to in-person requirements or the requirement that 
off-floor orders be effected only for hedging, reducing risk, 
rebalancing or liquidating positions.
    The Exchange states that, although it has installed tethered 
telephones at the ATF, it has not replicated its wireless telephone 
system at this facility. As a result, the Amex is proposing to allow 
members to use personal cellular telephones to conduct business on the 
ATF subject to the same conditions that were applicable to the use of 
personal cellular telephones on the Amex following September 11, 2001. 
The conditions applicable to the use of personal cellular telephones on 
the ATF are set forth in paragraph (e) to the proposed rule. Paragraph 
(f) provides that Exchange Officials may substitute for Senior Floor 
Officials without reference to their seniority in the event that a 
Floor Official's ruling is appealed to a three Senior Floor Official 
panel and there is an insufficient number of available Senior Floor 
Officials to consider the appeal.\6\
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    \6\ The Exchange recently amended Amex Rule 22 to establish a 
three-level review process in which Floor Official decisions, as 
needed, may be appealed to a three Senior Floor Official Panel. See 
Securities Exchange Act Release No. 52527 (September 29, 2005), 70 
FR 58246 (October 5, 2005) (SR-Amex-2005-052).
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III. Discussion

    After careful consideration, the Commission finds that the Amex's 
proposed rule change, as amended, is consistent with Section 6(b) of 
the Act \7\ in general and furthers the objectives of Section 6(b)(5) 
\8\ in particular in that it is designed to foster cooperation and 
coordination with persons engaged in regulating, clearing, settling and 
processing information with respect to, and facilitating transactions 
in securities.\9\
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    \7\ 15 U.S.C. 78f(b).
    \8\ 15 U.S.C. 78f(b)(5).
    \9\ In approving this proposal, the Commission has considered 
its impact on efficiency, competition, and capital formation. 15 
U.S.C. 78c(f).
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    The Commission believes that the Amex's proposed rule change, as 
amended, is an important element of ongoing contingency planning and 
reasonably designed to permit trading in the event that the Exchange's 
primary facilities are not available. As proposed, the Commission 
believes that the ATF is reasonably designed to provide a venue 
sufficient to accommodate a minimum threshold of Amex members and 
personnel to support continued operations of the Exchange on a 
contingency basis. The Commission further believes that the provisions 
of proposed Amex Rule 119A are reasonably designed to permit the fair 
and orderly trading of Amex-listed securities on the ATF.

IV. Conclusion

    It is therefore ordered, pursuant to section 19(b)(2) of the 
Act,\10\ that the proposed rule change (SR-Amex-2004-76), as amended, 
is approved.
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    \10\ 10 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\11\
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    \11\ 17 CFR 200.30-3(a)(12).
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Jill M. Peterson,
Assistant Secretary.
 [FR Doc. E5-5719 Filed 10-17-05; 8:45 am]

BILLING CODE 8010-01-P