Document ID: SEC-2006-0190-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: American Stock Exchange LLC
Posted Date: 2006-02-14T05:00Z

[Federal Register: February 14, 2006 (Volume 71, Number 30)]
[Notices]               
[Page 7817-7820]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr14fe06-107]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-53234; File No. SR-Amex-2006-009]

 
Self-Regulatory Organizations; American Stock Exchange LLC; 
Notice of Filing and Immediate Effectiveness of a Proposed Rule Change 
Relating to ``All or None'' Orders

February 6, 2006.
    Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934

[[Page 7818]]

(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on February 2, 2006, 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 the Amex. On February 3, 
2006, the Exchange submitted Amendment No. 1 to the proposed rule 
change.\3\ The Exchange filed the proposed rule change, as amended, as 
a ``non-controversial'' rule change under Rule 19b-4(f)(6) under the 
Act,\4\ which renders the proposal effective upon filing with the 
Commission. 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\ Partial Amendment No. 1 (``Amendment No. 1'') corrects an 
error in the heading of Exhibit 5 of Form 19b-4.
    \4\ 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

    The Amex proposes to eliminate the ``all or none'' (``AON'') order 
type.\5\ The text of the proposed rule change, as amended, is below. 
Proposed new language is in italics. Proposed deletions are in 
[brackets].
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    \5\ The Exchange is proposing to eliminate the AON order type 
for equities (including Exchange Traded funds, Trust Issued Receipts 
and other equity traded products), options, and bonds.
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Rule 118. Trading in Nasdaq National Market Securities

    (a)-(p) No change.
    (q) An institutional order is a limit order for a Nasdaq National 
Market Security of 10,000 shares or more transmitted to the order book 
electronically which is to be executed automatically in full at one 
price. If it is not executed automatically in full at one price, it is 
to be routed to the specialist for execution and may be partially 
executed. [Unlike an all or none order, a]An institutional order has 
standing on the limit order book. An institutional order may not be 
entered for the proprietary account of a broker-dealer.

Rule 122. Bids or Offers for More Than Unit of Trading

    Bids or offers for more than one unit of trading shall be deemed to 
be for the amount thereof or a smaller number of units[, except that 
bids or offers may be made and executed ``all or none'' if all of the 
following conditions are met:
    Bids or offers, ``all or none''
    (1) The securities bid for or offered are bonds;
    (2) The amount bid for or offered equals or exceeds $25,000 of par 
value;
    (3) The bid or offer is executed at a price higher than the best 
bid price and lower than the best offer price, ``regular way,'' at the 
time of execution].

Rule 124. Types of Bids and Offers

    (a)-(f) No change.

[``All or none''
    (g) ``All or none,'' i.e., that the bid or offer is for an amount 
of securities equal to the total amount of securities bid for or 
offered and no less; provided, however, that such condition may be 
specified only in accordance with the provisions of Rule 122.]

Rule 128A. Automatic Execution

    (a) No change.
    (b) Definitions:
    Amex Published Quote (``APQ'')--Specialist/Registered Trader 
Quantity--No change.
    Available Book Quantity: The Available Book Quantity is the number 
of shares on the order book at the APQ plus additional orders on the 
book that can be executed at or within the APQ minus shares on the book 
priced at or within the APQ that cannot be executed by their terms 
(e.g., [all or none orders and ]tick sensitive orders).
    Trade Threshold--Maximum Spread Value--No change.
    (c)-(i) No change.
    (j) Auto-Ex Unavailability. Auto-Ex will be unavailable in the 
following situations.
    (i)-(vii) No change.
    (viii) Auto-Ex will not occur with respect to an incoming Auto-Ex 
Eligible [All Or None or] Institutional Order in the event that there 
is insufficient size to execute the order in full at one price.
    (ix)-(xi) No change.
    (xii) [Auto-Ex will not occur if it would cause a trade to occur 
through the price of an all or none order on the book.
    (xiii)] Auto-Ex will not occur if there are orders on both sides of 
the market when the order book comes out of a Freeze condition to allow 
the specialist to pair-off the orders.
    (xiii) [(xiv)] Auto-Ex will not occur if the spread exceeds the 
Maximum Spread Value.
    Auto-Ex Eligible Orders that are not automatically executed will be 
routed to the specialist for handling.
* * * * *

Rule 131. Types of Orders

    (a)-(b) No change.

[All or none order
    (c) An all or none order is a market or limited price order which 
is to be executed in its entirety or not at all, but, unlike a fill or 
kill order, is not to be treated as cancelled if not executed as soon 
as it is represented in the Trading Crowd. The making of ``all or 
none'' bids or offers in stocks is prohibited, and the making of ``all 
or none'' bids or offers in bonds is subject to the restrictions of 
Rule 122.]
    (d)-(t) No change.
* * * * *

Rule 904. Position Limits

    (a)-(b) No change.

* * * Commentary

    .01-.09 No change.
    .10 No change.
    (a)-(b) No change.
    (c) The facilitation firm shall comply with the following 
provisions regarding the execution of its customer's order and its own 
facilitating order:
    (1) Neither the customer order nor the facilitation order may be 
contingent on [``all or none'' or] ``fill or kill'' instructions;
    (2) The orders may not be executed until Rule 950(d) procedures 
have been satisfied and all market participants have been given a 
reasonable time to participate in the order.
* * * * *
    .11 No change.

Rule 904C. Position Limits

    (a)-(d) No change.

* * * Commentary

    .01 No change.
    .02 No change.
    (a)-(b) No change.
    (c) The facilitation firm shall comply with the following 
provisions regarding the execution of its customer's order and its own 
facilitating order:
    (1) Neither the customer order nor the facilitation order may be 
contingent on [``all or none'' or] ``fill or kill'' instructions;
    (2) The orders may not be executed until Rule 950(d) procedures 
have been satisfied and all market participants have been given a 
reasonable time to participate in the order;
* * * * *

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, as 
amended, and discussed any comments it received on the proposed rule 
change, as amended. The text of these statements

[[Page 7819]]

may be examined at the places specified in Item IV below. The Amex 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, Proposed Rule Change

1. Purpose
    The Exchange proposes the elimination of the AON order type. The 
Amex states that, Exchange Rule 131(c) defines an AON order as a market 
or limited price order which is to be executed in its entirety or not 
at all, but, unlike a ``fill or kill'' \6\ order, is not to be treated 
as cancelled if not executed as soon as it is represented in the 
Trading Crowd.
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    \6\ The Exchange states that, Amex Rule 131(i) defines a ``fill 
or kill'' order as a market or limited price order which is to be 
executed in its entirety as soon as it is represented in the Trading 
Crowd, and such order, if not so executed, is to be treated as 
cancelled. The Amex states that, for purposes of this definition, a 
``stop'' is considered an execution. The Amex states, that a fill or 
kill order for securities other than options sent to the order book 
electronically and not executed by Auto-Ex would be cancelled 
immediately.
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    The Amex believes that, AON orders are unnecessary and should be 
eliminated because: (i) AON orders are infrequently used and represent 
a very small percentage of order flow; (ii) the resources and 
programming effort necessary to support AON orders cannot be justified; 
(iii) the availability of ``immediate or cancel'' \7\ and ``fill or 
kill'' orders provide a better substitute for customers seeking similar 
types of executions; and (iv) AON orders cannot be represented in the 
Amex's published best bid/offer due to the conditional nature of the 
order's execution.
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    \7\ The Exchange states that, Amex Rule 131(k) defines an 
``immediate or cancel'' order as a market or limited price order 
which is to be executed in whole or in part as soon as such order is 
represented in the Trading Crowd, and the portion not so executed is 
to be treated as cancelled. The Amex states that, for the purposes 
of this definition, a ``stop'' is considered an execution. The Amex 
states that, in the case of an immediate or cancel order for 
securities other than options sent to the order book electronically, 
any portion not executed by Auto-Ex would be cancelled 
automatically.
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    In support of the infrequent use of AON orders, Amex states that, 
an analysis of all AON equity orders on the Exchange for the months of 
November 2005 and December 2005 revealed that AON orders are 
infrequently used and represent a very small percentage of equity order 
flow. The Exchange notes that out of 7,854,438 and 8,736,624 orders 
entered on the Exchange during November 2005 and December 2005, 
respectively, only 53,405, or 0.68% and 54,607, or 0.63%, respectively, 
were AON orders. In addition, approximately 70.1% and 72.1% of these 
AON orders that were entered during the respective months of November 
and December were cancelled.
    The Amex states that, similarly, an analysis of all AON options 
orders on the Exchange for the months of November 2005 and December 
2005 also revealed that AON orders are infrequently used and represent 
a very small percentage of options order flow. The Exchange notes that 
out of 1,093,173 and 996,564 orders entered on the Exchange during 
November 2005 and December 2005, respectively, only 6,857, or 0.63% and 
4,278 or 0.43%, respectively, were AON orders. In addition, 
approximately 26.6% and 28.3% of these AON orders that were entered 
during the respective months of November and December were cancelled.
    Additionally, Amex notes that the New York Stock Exchange (the 
``NYSE'') filed a proposal with the Commission in July 2005 to 
eliminate the AON order type citing similar reasons.\8\ The Exchange 
believes that the AON order type should be eliminated, and accordingly, 
all references to AON orders should be eliminated from relevant Amex 
rules.
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    \8\ Securities Exchange Act Release No. 52154 (July 28, 2005), 
70 FR 44966 (August 4, 2005) (order approving file No. SR-NYSE-2005-
51).
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2. Statutory Basis
    The Exchange believes that its proposal, as amended, is consistent 
with section 6(b) of the Act \9\ in general, and furthers the 
objectives of section 6(b)(5) of the Act \10\ 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 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 national market 
system and, in general, to protect investors and the public interest; 
and is not designed to permit unfair discrimination between customers, 
issuers, brokers, or dealers, or to regulate by virtue of any authority 
conferred by the Act matters not related to the purpose of the Act or 
the administration of the Exchange.
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    \9\ 15 U.S.C. 78f(b).
    \10\ 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 inappropriate 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

    The Exchange states that, no written comments were solicited or 
received with respect to the proposed rule change, as amended.

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

    Because the proposed rule change, as amended, does not: (i) 
Significantly affect the protection of investors or the public 
interest; (ii) impose any significant burden on competition; and (iii) 
become operative for 30 days after the date of filing (or such shorter 
time as the Commission may designate if consistent with the protection 
of investors and the public interest), the proposed rule change, as 
amended, has become effective pursuant to section 19(b)(3)(A) of the 
Act \11\ and subparagraph (f)(6) of Rule 19b-4 thereunder.\12\
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    \11\ 15 U.S.C. 78s(b)(3)(A).
    \12\ 17 CFR 240.19b-4(f)(6).
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    A proposed rule change filed under 19b-4(f)(6) normally may not 
become operative prior to 30 days after the date of filing.\13\ 
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. The Exchange has satisfied the five-
day filing requirement. In addition, the Exchange has requested that 
the Commission waive the 30-day pre-operative delay and designate the 
proposed rule change, as amended, to become upon filing. The Commission 
believes that waiving the 30-day pre-operative delay is consistent with 
the protection of investors and the public interest because it would 
allow the Exchange to expeditiously eliminate an infrequently used 
order type, which may increase the efficiency of the Exchange. The 
Commission also notes that this proposed rule change, as amended, is 
similar to SR-NYSE-2005-51.\15\ For the reasons stated above, the 
Commission designates the proposal, as amended, to become effective and 
operative immediately.\16\
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    \13\ 17 CFR 240.19b-4(f)(6)(iii).
    \14\ Id.
    \15\ See supra, note 8.
    \16\ For purposes only of accelerating the operative date of 
this proposal, the Commission has considered the impact of the 
proposed rule on efficiency, competition, and capital formation. 15 
U.S.C. 78c(f).

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[[Page 7820]]

    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 the furtherance of the purposes of the Act.\17\
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    \17\ The effective date of the original proposed rule change is 
February 2, 2006, and the effective date of Amendment No. 1 is 
February 3, 2006. For purposes of calculating the 60-day period 
within which the Commission may summarily abrogate the proposed rule 
change, as amended, the Commission considers the period to commence 
on February 3, 2006, the date on which the Exchange 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, as amended, 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-2006-009 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-2006-009. 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 Section, 100 F Street, 
NE., Washington, DC 20549. 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-2006-009 and should be 
submitted on or before March 7, 2006.
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    \18\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\18\
Jill M. Peterson,
Assistant Secretary.
 [FR Doc. E6-2011 Filed 2-13-06; 8:45 am]

BILLING CODE 8010-01-P