Document ID: SEC-2006-1067-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: American Stock Exchange LLC
Posted Date: 2006-08-18T04:00Z

[Federal Register: August 18, 2006 (Volume 71, Number 160)]
[Notices]               
[Page 47833-47834]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr18au06-132]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-54310; File No. SR-Amex-2006-71]

 
Self-Regulatory Organizations; American Stock Exchange LLC; 
Notice of Filing and Order Granting Accelerated Approval of Proposed 
Rule Change Relating to Floor Broker HandHeld Terminals

August 11, 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 August 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 substantially prepared by the Exchange. 
The Commission is publishing this notice to solicit comments on the 
proposed rule change from interested persons and is approving the 
proposal 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 adopt Commentary .02 to Amex Rule 935--
ANTE to clarify that floor brokers, when interacting with orders and 
quotes in the ANTE System, are required to use their handheld 
terminals.
    The text of the proposed rule change is available on the Exchange's 
Web site at (http://www.amex.com), at the principal office of the 

Exchange, and at the Commission's Public Reference Room. The text of 
the proposed rule change is set forth below. Proposed new language is 
italicized.
Rule 935--ANTE. Allocation of Executed Contracts
    (a)-(b) No Change.
Commentary
    .01 No Change
    .02 Floor brokers when interacting with orders and quotes in the 
ANTE system are required to use their handheld terminals.
* * * * *

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. 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 the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to add new Commentary .02 to Amex Rule 935--
ANTE to clarify that Exchange floor brokers are required to use their 
handheld terminals when interacting with orders and quotes in accessing 
the Exchange's electronic options marketplace or ``ANTE.'' The market 
depth at the Exchange in ANTE and the trading crowd may differ, due to 
the differences inherent in an automatic execution system and an 
auction market. With the recent approval and near-term implementation 
of a remote market maker program (i.e., Remote Registered Options 
Traders (``RROTs'') and Supplemental Registered Options Traders 
(``SROTs'')),\3\ as well as the ``hybrid'' market structure for options 
at the Exchange, a floor broker may receive different execution sizes 
based on whether the order is routed electronically or walked into the 
trading crowd. As a result, the Exchange believes that in order to 
maintain a fair and orderly market, a floor broker who desires to 
access the ANTE system should be required to use his or her handheld 
terminal.
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    \3\ See Securities Exchange Act Release Nos. 53652 (April 13, 
2006), 71 FR 20422 (April 20, 2006) and 53635 (April 12, 2006), 71 
FR 20144 (April 19, 2006).
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    In today's options marketplace, orders are increasingly routed to 
and executed on the Amex and the other options exchanges 
electronically. At the Exchange, the ANTE system provides for the 
automatic matching and execution of market and marketable limit orders 
within eligible size limit parameters (i.e., the ``auto-match size''). 
The auto-match size is the maximum order size that can be automatically 
matched with orders on the book or the disseminated quote. Orders for 
less than the auto-match size are automatically matched at the 
disseminated price up to the disseminated size. The ANTE system then 
allocates the executed contracts among the participants to the trade, 
pursuant to the algorithm set forth in Amex Rule 935--ANTE.
    Floor brokers, in order to receive an ANTE allocation for 
transactions in ANTE, are required to use their handheld terminals so 
that the order trades against the ANTE Central Book. Floor brokers that 
execute orders in the trading crowd are accordingly outside the ANTE 
system. Therefore, the ANTE or electronic marketplace and the trading 
crowd may have different depth of market at any particular point in 
time. The Exchange believes that this is the nature of the ``hybrid'' 
market model that currently exists. As a result, a floor broker who 
desires to access the depth of market available in ANTE by interacting 
with orders and quotes, must submit his or her order through the 
handheld terminal. Working an order in the trading crowd does not 
access the depth of market that may exist in the ANTE system. In 
addition, the introduction of RROTs and SROTs further necessitates 
direct floor broker access to the ANTE market, since the specialist is 
unable to match a trade in the trading crowd with an RROT or SROT 
quote. Therefore, the Exchange proposes to adopt Commentary .02 to Amex 
Rule 935--ANTE to clarify that a floor broker accessing the electronic 
marketplace available through ANTE by interacting with orders and 
quotes must submit such order(s) via his or her handheld terminal.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\4\ in general, and furthers the 
objectives of Section 6(b)(5) of the Act,\5\ in particular, in that it 
is designed to prevent fraudulent and manipulative acts and practices, 
to

[[Page 47834]]

promote just and equitable principles of trade, to remove impediments 
to and perfect the mechanisms 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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    \4\ 15 U.S.C. 78f(b).
    \5\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchanges believes that the proposed rule change does 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. 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-2006-71 on the subject line.

Paper Comments

     Send paper comments in triplicate to Nancy M. Morris, 
Secretary, Securities and Exchange Commission, Station Place, 100 F 
Street, NE., Washington, DC 20549-1090.
    All submissions should refer to File Number SR-Amex-2006-71. 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-2006-71 and should be submitted on or before 
September 8, 2006.

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

    The Commission finds that the proposed rule change is consistent 
with the requirements of the Act and the rules and regulations 
thereunder applicable to a national securities exchange.\6\ In 
particular, the Commission finds that the proposed rule change is 
consistent with Section 6(b)(5) of the Act,\7\ which requires that an 
exchange have rules designed, among other things, to promote just and 
equitable principles of trade, to remove impediments to and perfect the 
mechanisms 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 proposal should help to promote just and 
equitable principles of trade and remove impediments to and perfect the 
mechanisms of a free and open market by clarifying current requirements 
for floor broker access to the liquidity on ANTE, the Exchange's 
electronic options marketplace.
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    \6\ In approving this 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).
    \7\ 15 U.S.C. 78f(b)(5).
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    The Commission finds good cause for approving this proposed rule 
change before the thirtieth day after the publication of notice thereof 
in the Federal Register pursuant to Section 19(b)(2) of the Act.\8\ The 
proposal does not raise any new or novel regulatory issues and merely 
codifies a current requirement for floor broker access to ANTE.
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    \8\ 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,\9\ that the proposed rule change (SR-Amex-2006-71) is hereby 
approved on an accelerated basis.
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    \9\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\10\
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    \10\ 17 CFR 200.30-3(a)(12).
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Nancy M. Morris,
Secretary.
 [FR Doc. E6-13637 Filed 8-17-06; 8:45 am]

BILLING CODE 8010-01-P