Document ID: SEC-2006-1286-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: American Stock Exchange LLC
Posted Date: 2006-10-03T04:00Z

[Federal Register: October 3, 2006 (Volume 71, Number 191)]
[Notices]               
[Page 58455-58456]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr03oc06-119]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-54509; File No. SR-Amex-2006-70]

 
Self-Regulatory Organizations; American Stock Exchange LLC; Order 
Approving Proposed Rule Change and Amendment No. 1 Thereto To Apply 
Certain Provisions of Its Minor Rule Violation Plan to Registered 
Options Traders, Supplemental Registered Options Traders, and Remote 
Registered Options Traders

September 26, 2006.
    On July 31, 2006, 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 amend Amex Rule 590, which applies certain 
provisions the Exchange's Minor Rule Violation Plan to Registered 
Options Traders (``ROTs''), Supplemental Registered Options Traders 
(``SROTs''), and Remote Registered Options Traders (``RROTs'').\3\ 
These provisions relate to quoting obligations and restrictions on 
quoting outside of assigned classes. On August 14, 2006, the Exchange 
filed Amendment No. 1 to the proposed rule change. The proposed rule 
change, as amended, was published for comment in the Federal Register 
on August 21, 2006.\4\ The Commission received no comments regarding 
the proposal.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ Amex recently created these new classes of market 
participants. See Securities Exchange Act Release Nos. 53635 (April 
12, 2006), 71 FR 20144 (April 19, 2006) (creating the SROT class) 
and 53652 (April 13, 2006), 71 FR 20422 (April 20, 2006) (creating 
the RROT class).
    \4\ See Securities Exchange Act Release No. 54317 (August 15, 
2006), 71 FR 48566.
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    The Commission finds that the proposed rule change, as amended, is 
consistent with the requirements of the Act and the rules and 
regulations thereunder applicable to a national securities exchange.\5\ 
In particular, the Commission believes that the proposal is consistent 
with section 6(b)(5) of the Act \6\ because a proposed rule change that 
is reasonably designed to promote compliance by ROTs, SROTs, and RROTs 
with applicable quoting obligations and restrictions should help 
protect investors and the public interest.
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    \5\ In approving this proposed rule change, the Commission notes 
that it has considered the proposed rule's impact on efficiency, 
competition, and capital formation. See 15 U.S.C. 78c(f).
    \6\ 15 U.S.C. 78f(b)(5).
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    The Commission further believes that handling violations of these 
quoting rules pursuant to Amex's Minor Rule Violation Plan is 
consistent with sections 6(b)(1) and 6(b)(6) of the Act,\7\ which 
require that the rules of an exchange enforce compliance with, and 
provide appropriate discipline for, violations of Commission and 
Exchange rules. In addition, because existing Amex Rule 590 provides 
procedural rights to a person fined for any violation of an Exchange 
rule that is determined to be minor in nature to contest the fine and 
permits disciplinary proceedings on the matter, the Commission believes 
Amex Rule 590, as amended by this proposal, provides a fair procedure 
for the disciplining of members and persons associated with members, 
consistent with sections 6(b)(7) and 6(d)(1) of the Act.\8\
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    \7\ 15 U.S.C. 78f(b)(1) and 78f(b)(6).
    \8\ 15 U.S.C. 78f(b)(7) and 78f(d)(1).
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    Finally, the Commission finds that the proposal is consistent with 
the public interest, the protection of investors, or otherwise in 
furtherance of the purposes of the Act, as required by Rule 19d-1(c)(2) 
under the Act \9\ which governs minor rule violation plans. The 
Commission believes that the proposed change to Amex Rule 590 will 
strengthen the Exchange's ability to carry out its oversight and 
enforcement responsibilities as a self-regulatory organization in cases 
where full disciplinary proceedings are unsuitable in view of the minor 
nature of the particular violation.
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    \9\ 17 CFR 240.19d-1(c)(2).
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    In approving this proposed rule change, the Commission in no way 
minimizes the importance of compliance with Amex rules and all other 
rules subject to the imposition of fines under the minor rule violation 
plan of the Exchange. The Commission believes that the violation of any 
self-regulatory organization's rules, as well as Commission rules, is a 
serious matter. However, the Exchange's minor rule violation plan under 
Amex Rule 590 provides a reasonable means of addressing rule violations 
that do not rise to the level of requiring formal disciplinary 
proceedings, while providing greater flexibility in handling certain 
violations. The Commission expects that Amex will continue to conduct 
surveillance with due diligence and make a determination based on its 
findings, on a case-by-case basis, whether a fine of more or less than 
the recommended amount is appropriate for a violation under the minor 
rule violation plan or whether a violation requires formal disciplinary 
action

[[Page 58456]]

under Amex's Rules of Procedure in Disciplinary Matters.
    It is therefore ordered, pursuant to section 19(b)(2) of the Act 
\10\ and Rule 19d-1(c)(2) under the Act,\11\ that the proposed rule 
change (SR-Amex-2006-70), as amended, be, and hereby is, approved and 
declared effective.
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    \10\ 15 U.S.C. 78s(b)(2).
    \11\ 17 CFR 240.19d-1(c)(2).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\12\
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    \12\ 17 CFR 200.30-3(a)(12); 17 CFR 200.30-3(a)(44).
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Nancy M. Morris,
Secretary.
 [FR Doc. E6-16250 Filed 10-2-06; 8:45 am]

BILLING CODE 8010-01-P