Document ID: SEC-2006-1307-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: American Stock Exchange LLC
Posted Date: 2006-10-06T04:00Z

[Federal Register: October 6, 2006 (Volume 71, Number 194)]
[Notices]               
[Page 59157-59159]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr06oc06-101]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-54543; File No. SR-Amex-2006-92]

 
Self-Regulatory Organizations; American Stock Exchange LLC; 
Notice of Filing and Immediate Effectiveness of a Proposed Rule Change 
Relating to the Exercise Deadline for Quarterly Options Series

September 29, 2006.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ and Rule 19(b)(4) thereunder,\2\ notice is hereby given 
that on September 25, 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 substantially been prepared by the Exchange. 
The Commission has designated this proposed rule change as non-
controversial under Section 19(b)(3)(A)(iii) of the Act \3\ and Rule 
19b-4(f)(6) thereunder,\4\ which renders the proposed rule change 
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)(iii).
    \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 Exchange proposes to amend Amex Rule 980(c) to provide that 
options holders of quarterly options have until the expiration date to 
make a decision to exercise or not exercise an expiring option. The 
text of the proposed rule change is set forth below. Proposed new 
language is italicized.
* * * * *

American Stock Exchange LLC

* * * * *

Rule 980. Exercise of Option Contracts

    (a)-(b) No change.
    (c) Exercise cut-off time. Option holders have until 5:30 p.m. 
Eastern time (``ET'') on the business day immediately prior to the 
expiration date or, in the case of a Quarterly Options Series, on the 
expiration date, to make a final decision to exercise or not exercise 
an expiring option. For customer accounts, members and member 
organizations may not accept exercise instructions after 5:30 p.m. ET 
but have until 6:30 p.m. ET to submit a Contrary Exercise Advice. For 
non-customer accounts, members and member organizations may not accept 
exercise instructions after 5:30 p.m. ET but have until 6:30 p.m. ET to 
submit a Contrary Exercise Advice if such member or member organization 
employs an electronic submission procedure with time stamp for the 
submission of exercise instructions by option holders. Consistent with 
Commentary .04, members and member organizations are required to submit 
a Contrary Exercise Advice by 5:30 p.m.

[[Page 59158]]

ET for non-customer accounts if such Members and/or member organization 
do not employ an electronic submission procedure with time stamp for 
the submission of exercise instructions by option holders.
    (d)-(h) No change
* * * * *

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 proposed rule change. The 
text of these statements may be examined at the places specified in 
Item IV below. The Exchange 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 the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Amex proposes to amend Amex Rule 980(c) to provide that holders 
of a Quarterly Options Series \5\ have until 5:30 p.m. Eastern Time 
(``ET'') on the expiration date to make a final decision to exercise or 
not exercise an expiring option.
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    \5\ See Amex Rule 900(b)(45) which defines Quarterly Options 
Series to mean a series in an options class that is approved for 
listing and trading on the Exchange in which the series is opened 
for trading on any business day and that expires at the close of 
business on the last business day of a calendar quarter.
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    Amex Rule 980(c) states that option holders have until 5:30 p.m. ET 
on the business day immediately prior to the expiration date to make a 
final decision to exercise or not exercise any expiring option. Because 
Quarterly Options Series continue to trade on the expiration date, the 
rule in its current form would require the holder of a Quarterly Option 
to decide whether to exercise or not exercise and expiring option 
without the knowledge of what the closing price of the underlying 
security would be on expiration. Thus, the Exchange proposes to amend 
Rule 980(c) to permit holders of Quarterly Options Series to make their 
final decision regarding exercise of such options at any time before 
5:30 p.m. ET on the expiration date.
    The Exchange believes that changing the exercise cut-off time for 
Quarterly Options Series is beneficial to the Exchange and the 
marketplace because doing so will allow holders of contracts in 
Quarterly Options Series to take into account trading activity on the 
expiration day when making a final decision whether to exercise the 
options.
    The Exchange believes that it is appropriate for the Exchange to 
adopt the proposed rule change, as proposed, in order to permit 
exercise of a quarterly options series at any time until the close of 
business on its expiration date.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act \6\ in general, and Section 6(b)(5) of the 
Act \7\ specifically, in that it is designed to promote just and 
equitable principles of trade, to prevent fraudulent and manipulative 
acts and practices, and, in general, to protect investors and the 
public interest.
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    \6\ 15 U.S.C. 78f(b).
    \7\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange believes that the proposed rule change will not 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

    No written comments were solicited or received with respect to the 
proposed rule change.

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

    The Exchange has filed the proposed rule change pursuant to Section 
19(b)(3)(A) \8\ of the Act and subparagraph (f)(6) of Rule 19b-4 
thereunder.\9\ Because the foregoing proposed rule change (i) does not 
significantly affect the protection of investors or the public 
interest; (ii) does not impose any significant burden on competition; 
and (iii) does not become operative for 30 days from the date of the 
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 has become effective pursuant to Section 
19(b)(3)(A) of the Act and Rule 19b-4(f)(6)(iii) thereunder.\10\
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    \8\ 15 U.S.C. Section 78s(b)(3)(A).
    \9\ 17 CFR 240.19b-4(f)(6).
    \10\ Rule 19b-4(f)(6)(iii) requires the Exchange to give written 
notice to the Commission of its intent to file the proposed rule 
change five business days prior to filing. The Commission has 
determined to waive the five-day pre-filing requirement for this 
proposal.
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    A proposed rule change filed under Rule 19b-4(f)(6) normally does 
not become operative for 30 days after the date of filing. However, 
Rule 19b-4(f)(6)(iii) permits the Commission to waive the operative 
delay if such action is consistent with the protection of investors and 
the public interest. The Exchange has asked the Commission to waive the 
operative delay to permit the proposed rule change to become effective 
prior to the 30th day after filing.
    The Commission believes that waiving the 30-day operative delay is 
consistent with the protection of investors and the public interest. 
Waiving the operative delay will allow the Exchange to permit exercise 
of a Quarterly Options Series at any time until the close of business 
on its expiration date starting with the third quarter 2006 expirations 
on Friday, September 29, 2006, and consequently will benefit investors. 
Therefore the Commission has determined to waive the 30-day delay and 
allow the proposed rule change to become operative immediately.\11\
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    \11\ For purposes only of waiving the operative delay of this 
proposal, the Commission notes that it 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 sixty (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 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-2006-92 on the subject line.

Paper Comments

     Send paper comments in triplicate to Nancy M. Morris, 
Secretary, Securities and Exchange Commission,

[[Page 59159]]

100 F Street, NE., Washington, DC 20549-1090.

All submissions should refer to File Number SR-Amex-2006-92. 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. 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-2006-92 and should be submitted on or before 
October 27, 2006.
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    \12\ 17 CFR 200.30-3(a)(12).

    For the Commission by the Division of Market Regulation, 
pursuant to delegated authority.\12\
Nancy M. Morris,
Secretary.
[FR Doc. E6-16547 Filed 10-5-06; 8:45 am]

BILLING CODE 8011-01-P