Document ID: SEC-2007-1360-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: American Stock Exchange LLC
Posted Date: 2007-10-02T04:00Z

[Federal Register: October 2, 2007 (Volume 72, Number 190)]
[Notices]               
[Page 56112-56114]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr02oc07-86]                         

[[Page 56112]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-56530; File No. SR-Amex-2007-102]

 
Self-Regulatory Organizations; American Stock Exchange LLC; 
Notice of Filing and Order Granting Accelerated Approval of Proposed 
Rule Change To Amend the Requirements for Listing Commodity-Linked 
Securities and Currency-Linked Securities

 September 25, 2007.
    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 August 29, 2007, 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 substantially prepared by the Exchange. 
This order provides notice of the proposed rule change and approves the 
proposed rule change on an accelerated basis.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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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 Sections 107E and 107F of the Amex 
Company Guide (the ``Company Guide'') relating to the listing 
requirements for commodity-linked securities (``Commodity-Linked 
Securities'') and currency-linked securities (``Currency-Linked 
Securities''). The text of the proposed rule change is available at 
Amex, the Commission's Public Reference Room, and http://www.amex.com.

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 III 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 
Statutory Basis for, the Proposed Rule Change

 1. Purpose
    The Exchange proposes to amend sections 107E and 107F of the 
Company Guide to permit the listing of Commodity-Linked Securities and 
Currency-Linked Securities, respectively, where the pricing information 
for up to 10% of the dollar weight of the Commodity Reference Asset,\3\ 
in the case of Commodity-Linked Securities, or the Currency Reference 
Asset,\4\ in the case of Currency-Linked Securities, is derived from 
markets that do meet the general requirements as set forth in sections 
107E(g)(1)(ii) and 107F(g)(1)(ii), respectively.\5\ The Exchange 
further proposes that no single component subject to the foregoing 
proposed exception may exceed 7% of the dollar weight of the Commodity 
or Currency Reference Asset, as the case may be.
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    \3\ Commodity Reference Asset is defined as one or more 
commodities, commodity futures, options or other commodity 
derivatives or Commodity-Based Trust Shares (as defined in Rule 
1200A of the Company Guide) or a basket or index of any of the 
foregoing. See Section 107E of the Company Guide.
    \4\ Currency Reference Asset if defined as one or more 
currencies, or options or currency futures or other currency 
derivatives or Currency Trust Shares (as defined in Rule 1200B of 
the Company Guide) or a basket or index of any of the foregoing. See 
Section 107F of the Company Guide.
    \5\ E-mail from Candice Fordin, Assistant General Counsel, Amex, 
to Edward Cho, Special Counsel, Division of Market Regulation, 
Commission, dated September 20, 2007 (clarifying the proposed 
amendments to the generic listing standards for Commodity-Linked and 
Currency-Linked Securities).
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    Commodity-Linked Securities are securities that provide for the 
payment at maturity of a cash amount based on the performance of the 
Commodity Reference Asset. Such securities may or may not provide for 
the repayment of the original principal investment amount. Under 
section 107E of the Company Guide, an issuance of Commodity-Linked 
Securities cannot be listed unless either:
     The Commodity Reference Asset to which the security is 
linked shall have been reviewed and approved for the trading of 
Commodity Trust Shares or options or other derivatives by the 
Commission under section 19(b)(2) of the Act \6\ and rules thereunder 
and the conditions set forth in the Commission's approval order, 
including with respect to comprehensive surveillance sharing 
agreements, continue to be satisfied; or
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    \6\ 15 U.S.C. 78s(b)(2).
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     The pricing information for each component of a Commodity 
Reference Asset must be derived from a market which is a self-
regulatory organization (``SRO'') member or affiliate member of the 
Intermarket Surveillance Group (``ISG'') or with which the Exchange has 
a comprehensive surveillance sharing agreement (``CSSA''); 
notwithstanding the foregoing, the pricing information for gold and 
silver bullion may be derived from the London Bullion Market 
Association.
    The Exchange proposes to amend the listing requirements relating to 
the source of pricing information for components of Commodity-Linked 
Securities. Specifically, the proposal seeks to permit the listing of 
such securities where a maximum of 10% of the dollar weight of the 
Commodity Reference Asset is comprised of components from markets that 
are not SRO members or affiliate members of ISG or with which the 
Exchange does not have a CSSA. In addition, no component subject to 
this exception may exceed 7% of the dollar weight of the Commodity 
Reference Asset.\7\
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    \7\ See supra note 5.
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    Currency-Linked Securities are securities that provide for the 
payment at maturity of a cash amount based on the performance of the 
Currency Reference Asset. Such securities may or may not provide for 
the repayment of the original principal investment amount. Under 
Section 107F of the Company Guide, an issuance of Currency-Linked 
Securities cannot be listed unless either:
     The Currency Reference Asset to which the security is 
linked shall have previously reviewed and approved for the trading of 
Currency Trust Shares or options or other derivatives by the Commission 
under section 19(b)(2) of the Act and rules thereunder and the 
conditions set forth in the Commission's approval order, including with 
respect to comprehensive surveillance sharing agreements, continue to 
be satisfied; or
     The pricing information for each component of a Currency 
Reference Asset must be: (1) The generally accepted spot price for the 
currency exchange rate in question or (2) derived from a market (a) 
which is either an ISG SRO member or affiliate member or with which the 
Exchange has a CSSA and (b) is the pricing source for components of a 
Currency Reference Asset that has previously been approved by the 
Commission.
    The Exchange proposes to amend the listing requirements relating to 
the source of pricing information for components of Currency-Linked 
Securities. Specifically, the proposal seeks to permit the listing of 
such

[[Page 56113]]

securities where a maximum of 10% of the dollar weight of the Currency 
Reference Asset is comprised of components (1) For which there is no 
generally accepted spot price, (2) the pricing of which is derived from 
markets that are not SRO members or affiliate members of ISG or for 
which the Exchange does not have a CSSA, and (3) the pricing source of 
which has not previously been approved by the Commission.\8\ In 
addition, no component subject to this exception may exceed 7% of the 
dollar weight of the Currency Reference Asset.
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    \8\ See id.
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    The Exchange states that many commodity and currency markets and 
exchanges are not SRO members or affiliates of ISG. In addition, the 
Exchange frequently experiences difficulty entering into CSSAs with 
such commodity and currency markets outside the United States. The 
Exchange believes, consistent with this proposal, that its surveillance 
procedures would not be materially hampered as long as it has access to 
trading information with respect to at least 90% of the dollar weight 
of the components comprising the Commodity Reference Asset or Currency 
Reference Asset, as the case may be. With respect to Commodity-Linked 
Securities, the pricing information for at least 90% of the dollar 
weight of the Commodity Reference Asset must be derived from ISG member 
markets or markets with which the Exchange has a CSSA. With respect to 
Currency-Linked Securities, the Exchange believes that the fact that up 
to 10% of the dollar weight of the Currency Reference Asset may be 
comprised of components (1) The pricing information for which is not 
the generally accepted spot price, (2) the pricing information for 
which is not derived from a SRO ISG member or affiliate or a market 
that is a party to a CSSA with the Exchange, or (3) the pricing source 
of which has not been previously approved by the Commission, should not 
constitute a material risk to investors.
    The Exchange notes that the Commission has previously approved 
similar approaches to this proposal.\9\ The Exchange states that the 
proposed amendment would provide Amex with greater flexibility to list 
Commodity-Linked and Currency-Linked Securities under Sections 107E and 
107F of the Company Guide, respectively, and provide issuers with a 
faster and less cumbersome means of listing such securities, to the 
benefit of the investing public.
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    \9\ See Section 107D(g)(vi) of the Company Guide (permitting the 
inclusion of foreign country securities or American Depositary 
Receipts or ``ADRs,'' provided that such foreign country securities 
or foreign country securities underlying ADRs having their primary 
trading market outside the United States on foreign trading markets 
that are not members of ISG or are not parties to CSSAs with the 
Exchange will not, in the aggregate, represent more than 20% of the 
dollar weight of the underlying index. See also Commentary .06(b) to 
Amex Rule 915 (providing for exceptions to certain eligibility 
requirements for options trading where the underlying component 
securities of an index or portfolio are traded on foreign markets); 
Commentary .02(a)(10) to Amex Rule 901C (allowing the Exchange to 
trade options on a broad stock index group comprised of non-U.S. 
component securities as long as the non-U.S. component securities 
that are not subject to comprehensive surveillance agreements do 
not, in the aggregate, represent more than 20% of the weight of the 
index); and Commentary .03(a)(5) to Amex Rule 901C (permitting the 
listing of options on stock industry index groups comprised of 
foreign country securities or ADRs thereon, so long as such foreign 
country securities of ADRs that are not subject to comprehensive 
surveillance agreements do not, in the aggregate, represent more 
than 20% of the weight of the index).
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2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with section 6(b) of the Act,\10\ in general, and section 6(b)(5) of 
the Act,\11\ in particular, in that it is designed 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, and to remove impediments to and perfect the mechanism of a 
free and open market and a national market system in a manner 
consistent with the protection of investors and the public interest.
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    \10\ 15 U.S.C. 78f(b).
    \11\ 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 
result in any burden on competition that is not necessary or 
appropriate in furtherance of the purpose of the Act.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants or Others

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

III. 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-2007-102 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-2007-102. 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, 100 F Street, 
NE., Washington, DC 20549, on official business days between the hours 
of 10 a.m. and 3 p.m. Copies of such filing also will be available for 
inspection and copying at the principal offices of the Exchange. 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-2007-102 and should be 
submitted on or before October 23, 2007.

IV. Commission's Findings and Order Granting Accelerated Approval of 
the Proposed Rule Change

    After careful consideration, the Commission finds that the proposed 
rule change is consistent with the requirements of the Act and the 
rules and regulations thereunder applicable to

[[Page 56114]]

a national securities exchange.\12\ In particular, the Commission finds 
that the proposed rule change is consistent with the requirements of 
section 6(b)(5) of the Act,\13\ which requires, among other things, 
that the Exchange's rules be designed 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 a national market system and, in general, to 
protect investors and the public interest. The Commission believes that 
the Exchange's surveillance procedures would not be materially hampered 
as long as the Exchange has access to trading and pricing information 
of the underlying components that constitute at least 90% of the dollar 
weight of the Commodity Reference Asset or Currency Reference Asset, as 
the case may be. In addition, the Commission believes that so long as 
the pricing information for at least 90% of the dollar weight of the 
Commodity Reference Asset or Currency Reference Asset, as the case may 
be, is based on the general pricing information requirements, the 
proposed amendment to the Exchange's generic listing standards should 
not constitute a material risk to investors, while potentially 
benefiting investors by providing the Exchange flexibility to list a 
broader array of products.
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    \12\ 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).
    \13\ 15 U.S.C. 78f(b)(5).
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    The Commission finds good cause for approving the proposed rule 
change before the 30th day after the date of publication of notice of 
filing thereof in the Federal Register. The Commission notes that it 
has previously approved similar approaches to the instant proposal, 
where an underlying equity index may include foreign country securities 
or foreign country securities underlying American Depositary Receipts 
having their primary trading market outside the United States on 
foreign trading markets that are not members or affiliates of ISG or 
parties to CSSAs with the Exchange, as long as such securities do not, 
in the aggregate, represent more than 20% of the dollar weight of such 
underlying index.\14\ The Commission further notes that it has approved 
a substantively identical proposed rule change for another national 
securities exchange.\15\ The Commission believes that accelerated 
approval of the proposed rule change should expedite the listing and 
trading of additional Commodity-Linked Securities and Currency-Linked 
Securities, subject to the standards discussed herein, to the benefit 
of the investing public. Therefore, the Commission finds good cause, 
consistent with section 19(b)(2) of the Act,\16\ to approve the 
proposed rule change on an accelerated basis.
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    \14\ See supra note 8.
    \15\ See Securities Exchange Act Release No. 56525 (September 
25, 2007) (SR-NYSE-2007-76) (approving the same amendments to the 
New York Stock Exchange LLC's generic listing standards for 
Commodity-Linked and Currency-Linked Securities).
    \16\ 15 U.S.C. 78s(b)(2).
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V. Conclusion

    It is therefore ordered, pursuant to section 19(b)(2) of the 
Act,\17\ that the proposed rule change (SR-Amex-2007-102) be, and it 
hereby is, approved on an accelerated  basis.
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    \17\ 15 U.S.C. 78s(b)(2).
    \18\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Market Regulation, 
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pursuant to delegated authority.\18\

Nancy M. Morris,
Secretary.
 [FR Doc. E7-19361 Filed 10-1-07; 8:45 am]

BILLING CODE 8011-01-P