Document ID: SEC-2006-1615-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: American Stock Exchange LLC
Posted Date: 2006-12-13T05:00Z

[Federal Register: December 13, 2006 (Volume 71, Number 239)]
[Notices]               
[Page 74964-74965]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr13de06-75]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-54882; File No. SR-Amex-2006-80]

 
Self-Regulatory Organizations; American Stock Exchange LLC; Order 
Approving Proposed Rule Change To Amend Rule 777 Regarding Depository 
Eligibility

December 6, 2006.

I. Introduction

    On August 21, 2006, the American Stock Exchange LLC (``Amex'') 
filed with the Securities and Exchange Commission (``Commission'') 
proposed rule change SR-Amex-2006-80 pursuant to Section 19(b)(1) of 
the Securities Exchange Act of 1934 (``Act'').\1\ Notice of the 
proposal was published in the Federal Register on September 21, 
2006.\2\ No comment letters were received. For the reasons discussed 
below, the Commission is approving the proposed rule change as amended.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ Securities Exchange Act Release No. 54442 (September 14, 
2006), 71 FR 55229.
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II. Description

    In general, Amex is amending its depository eligibility 
requirement. The rule change: (i) Deletes a reference to a distinction 
between domestic and foreign issuers; (ii) deletes an exception for 
securities whose terms cannot be reasonably modified to meet the 
criteria for depository eligibility at all securities depositories; and 
(iii) deletes additional requirements imposed by the rule that are no 
longer necessary.
    Previously, before an issue of securities could be listed, Rule 
777(a) required only a domestic issuer to represent to Amex that a 
CUSIP number identifying the securities had been included in the file 
of eligible issues maintained by a securities depository registered 
with the Commission as a clearing agency under section 17A of the 
Act.\3\ The same requirement did not apply to foreign issuers. However, 
exclusion of foreign issuers is no longer necessary because they have 
the capacity to comply with Rule 777 and have been doing so voluntarily 
for years.
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    \3\ 15 U.S.C. 78q-1.
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    Amex's rule change also deletes the exception in Rule 777(a) for 
securities whose terms cannot be reasonably modified to meet the 
criteria for depository eligibility at all securities depositories. The 
exception was originally included in Rule 777(a) because, among other 
things, various states and countries precluded the book-entry issuance 
of securities. Following implementation of Rule 777(a), however, most, 
if not all, states have amended their corporate statutes to allow for 
book-entry issuance, and as a result the exception is no longer needed 
to accommodate such issuers.
    Furthermore, Amex's rule change deletes a provision that prevented 
new issues distributed by an underwriting syndicate prior to the date a 
securities depository system for monitoring repurchases of distributed 
shares by the underwriting syndicate from becoming depository eligible 
because such a system has become available. Prior to the availability 
of such a system, a managing underwriter could delay the date a 
security was deemed depository eligible for up to three months after 
commencement of trading on Amex. Since the approval of Rule 777, The 
Depository Trust Company (``DTC'') \4\ implemented its Initial Public 
Offering Tracking System \5\ that enables lead managers and syndicate 
members of equity underwritings to monitor repurchases of distributed 
shares in an automated book-entry environment. Since DTC has the 
capability to monitor repurchases of distributed shares, the 
requirements listed in Rule 777(b) are no longer necessary, and Amex 
has deleted Rule 777(b) in its entirety.
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    \4\ DTC is a securities depository registered with the 
Commission under sections 17A and 19 of the Act as a clearing 
agency.
    \5\ Securities Exchange Act Release No. 37208 (May 13, 1996), 61 
FR 25253 (May 20, 1996) [File No. SR-DTC-95-27].
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    Finally, Amex has cross-referenced rules 776 and 777 in Part 1 of 
the Amex Company Guide to clarify that Rules 776 and 777 are initial 
and continued listing standards applicable to companies listed on Amex.

III. Discussion

    Section 19(b) of the Act directs the Commission to approve a 
proposed rule change of a self-regulatory organization if it finds that 
such proposed rule change is consistent with the requirements of the 
Act and the rules and regulations thereunder applicable to

[[Page 74965]]

such organization.\6\ Section 6(b)(5) of the Act requires, among other 
things, that the rules of an exchange be designed to foster cooperation 
and coordination with persons engaged in regulating, clearing, 
settling, processing information with respect to, and facilitating 
transactions in securities and to remove impediments to and perfect the 
mechanism of a free and open market and a national market system.\7\ 
The Commission finds that Amex's rule change is consistent with these 
requirements. By revising its rule regarding depository eligibility, 
Amex's proposed rule change fosters cooperation and coordination with 
persons engaged in clearing and settling transactions in securities and 
perfects the mechanism of a free and open market and a national market 
system.\8\
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    \6\ 15 U.S.C. 78s(b).
    \7\ 15 U.S.C. 78f(b)(5).
    \8\ In approving the proposed rule change, the Commission 
considered the proposal's impact on efficiency, competition, and 
capital formation. 15 U.S.C. 78c(f).
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IV. Conclusion

    On the basis of the foregoing, the Commission finds that the 
proposed rule change is consistent with the requirements of the Act and 
the rules and regulations thereunder applicable to a national 
securities exchange and in particular Section 6(b)(5) of the Act and 
the rules and regulations thereunder.
    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\9\ that the proposed rule change (File No. SR-Amex-2006-80) be and 
hereby is approved.
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    \9\ 15 U.S.C. 78s(b)(2).
    \10\ 17 CFR 200.30-3(a)(12).

    For the Commission by the Division of Market Regulation, 
pursuant to delegated authority.\10\
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E6-21169 Filed 12-12-06; 8:45 am]

BILLING CODE 8011-01-P