Document ID: SEC-2006-0401-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: American Stock Exchange LLC
Posted Date: 2006-03-27T05:00Z

[Federal Register: March 27, 2006 (Volume 71, Number 58)]
[Notices]               
[Page 15229-15231]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr27mr06-97]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-53519; File No. SR-Amex-2006-26]

 
Self-Regulatory Organizations; American Stock Exchange LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change 
Relating to the Extension of Time for Exercising Expiring Options and 
Submitting Contrary Exercise Advices

March 20, 2006.
    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 March 14, 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 Exchange. The Amex 
filed the proposal as a ``non-controversial'' proposed rule change 
pursuant to Section 19(b)(3)(A) of the Act \3\ and Rule 19b-4(f)(6) 
thereunder,\4\ which renders it effective upon filing with the 
Commission. The Commission is publishing this notice to solicit 
comments on the proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 15 U.S.C. 78s(b)(3)(A).
    \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, pursuant to section 19(b)(1) of the Act \5\ and Rule 19b-
4 thereunder,\6\ proposes to amend Amex Rule 980 ``Exercise of Options 
Contracts'' to add two additional minutes to the time frame within 
which one may make a final decision to exercise or not exercise an 
option, or to deliver a contrary exercise advice (``CEA'') \7\ to the 
Exchange. The proposal

[[Page 15230]]

is intended to conform Amex Rule 980 to the recent industry-wide change 
in the close of trading for equity options and narrow-based index 
options from 4:02 p.m. to 4 p.m. (EST).\8\ The Exchange further 
proposes to amend the text of Amex Rule 980 to correspond to the more 
appropriate classification of Eastern Time (``ET'') rather than New 
York Time (``NY Time''). The text of the proposed rule change is 
available on the Amex's Web site at (http://www.amex.com), at the 

Amex's principal office, and at the Commission's Public Reference Room.
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    \5\ 15 U.S.C. 78s(b)(1).
    \6\ 17 CFR 240.19b-4.
    \7\ Amex Rule 980(b)(ii) defines a CEA as a communication 
either: (A) To not exercise an option that would be automatically 
exercised under the Options Clearing Corporation's (``OCC'') Ex-by-
Ex procedure, or (B) to exercise an option that would not be 
automatically exercised under the OCC's Ex-by-Ex procedure.
    \8\ See Securities Exchange Act Release No. 53244 (February 7, 
2006), 71 FR 8008 (February 15, 2006) (approving SR-Amex-2006-003, 
which amended Amex Rules 1,918--ANTE, 936C--ANTE and 903C to adjust 
the close of normal trading hours in equity options and narrow-based 
index options from 4:02 p.m. to 4:02 p.m. (ET)).
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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 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 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, the Proposed Rule Change

1. Purpose
    The purpose of the proposed rule change is to amend Amex Rule 980 
to add two additional minutes to the time frame within which one may 
make a final decision to exercise or not exercise an option, or to 
deliver a CEA to the Exchange. This proposal is intended to conform 
Amex Rule 980 to the recent industry-wide change to the close of 
trading for equity and narrow-based index options from 4:02 p.m. to 4 
p.m. (ET). The Exchange further proposes to amend the text of Amex Rule 
980 to correspond to the more appropriate classification of ET rather 
than NY Time.
    Currently, Amex Rule 980(c) establishes that on the business day 
immediately prior to an expiration date, option holders may make final 
decisions to exercise or not exercise options, and members and member 
organizations may accept exercise instructions and submit a CEA to the 
Exchange as late as 5:30 p.m. or 6:30 p.m. NY Time, pursuant to the 
circumstances set forth in Rule 980(c). Amex Rule 980(g) establishes 
that where, on the last business day before the day of expiration, the 
Exchange provides advance notice of a modified time for the close of 
trading in equity options, the deadline to make a final decision to 
exercise or not exercise an expiring option and to deliver a CEA to the 
Exchange will be 1 hour 28 minutes or 2 hours 28 minutes after the 
announced modified closing time, instead of the 5:30 p.m. or 6:30 p.m. 
(ET). The Exchange proposes to add two minutes to each of these 
timeframes to correspond to the two-minute difference in trading time 
created by the change in the close of trading time from 4:02 p.m. to 4 
p.m. (ET).
    This proposal seeks only to change the exercise timeframes for 
equity options, not index options, because Amex Rule 980C governing 
index options does not have pre-set times.\9\ According to the 
Exchange, the proposed rule change is based on similar rule changes 
submitted by the Pacific Exchange, Inc., the Philadelphia Stock 
Exchange, Inc., the International Securities Exchange, Inc., and the 
Chicago Board Options Exchange, Incorporated.\10\
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    \9\ Amex Rule 980C provides that a memorandum to exercise any 
American-style index option must be received or prepared by the 
member organization no later than five (5) minutes after the close 
of trading on that day and must be time stamped at the time it is 
received or prepared.
    \10\ See Securities Exchange Act Release Nos. 53249 (February 7, 
2006), 71 FR 8035 (February 15, 2006) (SR-PCX-2005-138); 53407 
(March 3, 2006), 71 FR 12764 (March 13, 2006) (SR-Phlx-2006-12); 
53439 (March 7, 2006), 71 FR 13643 (March 16, 2006) (SR-ISE-2006-
11); 53438 (March 7, 2006), 71 FR 13641 (March 16, 2006) (SR-CBOE-
2006-19).
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2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with section 6(b) of the Act \11\ in general, and furthers the 
objectives of section 6(b)(5) of the Act \12\ in particular, because 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 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.
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    \11\ 15 U.S.C. 78f(b).
    \12\ 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 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

    The Amex has neither solicited nor received comments on the 
proposed rule change.

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

    Because the foregoing proposed rule change: (1) Does not 
significantly affect the protection of investors or the public 
interest; (2) does not impose any significant burden on competition; 
and (3) by its terms does not become operative for 30-days after the 
date on which it was filed, or such shorter time as the Commission may 
designate if consistent with the protection of investors and the public 
interest, the proposed rule change has become effective pursuant to 
section 19(b)(3)(A) of the Act \13\ and Rule 19b-4(f)(6) 
thereunder.\14\
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    \13\ 15 U.S.C. 78s(b)(3)(A).
    \14\ 17 CFR 240.19b-4(f)(6).
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    A proposed rule change filed under Rule 19b-4(f)(6) \15\ normally 
does not become operative prior to 30-days after the date of filing. 
However, Rule 19b-4(f)(6)(iii) permits the Commission to designate a 
shorter time if such action is consistent with the protection of 
investors and the public interest. The Amex has asked the Commission to 
waive the 30-day operative delay and the 5-day pre-filing requirement. 
The Commission believes that waiving the 30-day operative delay and the 
5-day pre-filing requirement is consistent with the protection of 
investors and the public interest because such waiver will allow the 
Amex to immediately clarify its rule and conform it to the industry-
wide close of trading times now in effect. Accelerating the operative 
date will allow for a more efficient and effective market operation by 
offering clarity and internal consistency with existing Amex rules. For 
these reasons, the Commission designates the proposed rule change as 
effective and operative immediately upon filing with the 
Commission.\16\
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    \15\ Id.
    \16\ For the purposes only of waiving the 30-day 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).
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    At any time within 60-days after the filing of the proposed rule 
change, the Commission may summarily abrogate

[[Page 15231]]

the 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.

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-2006-26 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-2006-26. 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 Room. 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-2006-26 and should be submitted on or before April 
17, 2006.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\17\
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    \17\ 17 CFR 200.30-3(a)(12).
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Nancy M. Morris,
Secretary.
 [FR Doc. E6-4343 Filed 3-24-06; 8:45 am]

BILLING CODE 8010-01-P