[Federal Register Volume 69, Number 123 (Monday, June 28, 2004)]
[Notices]
[Pages 36139-36141]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-14585]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-49889; File No. SR-Amex-2004-34]


Self-Regulatory Organizations; Notice of Filing and Order 
Granting Accelerated Approval of Proposed Rule Change by American Stock 
Exchange LLC Relating to the Handling of Principal Acting as Agent 
Orders

June 17, 2004.
    Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act'') \1\, and Rule 19b-4 \2\ thereunder, notice is hereby given 
that on May 13, 2004, the American Stock Exchange LLC (``Amex'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``SEC'' or ``Commission'') the proposed rule change as described in 
Items I and II, below, which Items have been prepared by the Amex. The 
Commission is publishing this notice to solicit comments on the 
proposed rule change from interested persons and to grant accelerated 
approval to the proposed rule change.
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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 the requirements regarding the 
handling of Principal Acting as Agent Order (``P/A Orders'') pursuant 
to the options intermarket linkage (the ``Linkage''). The text of the 
proposed rule change is

[[Page 36140]]

available at the Office of the Secretary, the Amex and at the 
Commission.

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 the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The purpose of this proposed rule change is to implement proposed 
Joint Amendment No. 10 to the Plan for the Purpose of Creating and 
Operating an Intermarket Options Linkage (the ``Linkage Plan'').\3\ 
Joint Amendment No. 10 to the Linkage Plan, together with this proposed 
rule change, proposes to clarify the manner in which an Amex member may 
send P/A Orders that are larger than the Firm Customer Quote Size 
(``FCQS''). A P/A Order is an order for the account of an Amex 
specialist (or specialist equivalent on another options exchange) 
reflecting the terms of an unexecuted customer order for which the Amex 
specialist is acting as agent. The FCQS is the minimum size for which 
an exchange must provide an execution in its automatic execution system 
for a P/A Order, if the exchange's automatic execution system is 
available.
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    \3\ See Securities Exchange Act Release No. 49689 (May 12, 
2004), 69 FR 28953 (May 19, 2004) (File No. 4-429) (Notice of Filing 
of Joint Amendment No. 10 to the Linkage Plan).
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    Currently, Linkage Plan section 7(a)(ii)(B) and Amex Rule 941 (the 
``Rule'') provide an Amex specialist with two ways to handle P/A Orders 
that are larger than the FCQS. The specialist may send a P/A Order 
(representing the entire public customer order) larger than the FCQS 
for manual processing at the receiving exchange. Alternatively, the 
specialist may send an initial P/A Order for up to the FCQS to be 
executed in the automatic execution system of the receiving exchange, 
if available. If the specialist then seeks to send another P/A Order, 
it must send an order for the lesser of the entire remaining size of 
the underlying customer order or 100 contracts.
    The proposed rule change addresses the handling of orders if the 
specialist chooses the second alternative, the sending of multiple P/A 
Orders. As currently drafted, the Linkage Plan and Rule do not 
recognize the possibility that an exchange's disseminated quotation may 
be for less than either the remaining size of the customer order or 100 
contracts. Thus, the proposed rule change specifies that a specialist 
sending a second P/A Order may limit such order to the lesser of: (1) 
The remaining size of the customer order; (2) 100 contracts; or (3) the 
size of the receiving exchange's disseminated quotation.
    In addition, there is a practical issue if multiple exchanges are 
displaying the same bid or offer. In that case, the Linkage Plan is 
unclear as to whether a specialist must send the entire order to one 
exchange or can send orders to multiple exchanges, as long as they are 
for the size of the entire order or 100 contracts, in the aggregate. 
This proposed rule change clarifies Amex Rule 941 to specify that a 
specialist may send P/A Orders to multiple exchanges, as long as all 
such orders, in the aggregate, are for the lesser of the entire 
remaining size or 100 contracts. However, as is the case when only one 
exchange is at the NBBO, a specialist may limit the size of any single 
additional order to the size of the receiving exchange's disseminated 
quotation.
2. Statutory Basis
    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) \5\ in 
particular in that it is designed to prevent fraudulent and 
manipulative acts and practices, promote just and equitable principles 
of trade, remove impediments to and perfect the mechanisms of a free 
and open market and a national market system, and, in general, 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 proposed rule change will impose no burden on competition.

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 [email protected]. Please include 
File Number SR-Amex-2004-34 on the subject line.

Paper Comments

     Send paper comments in triplicate to Jonathan G. Katz, 
Secretary, Securities and Exchange Commission, 450 Fifth Street, NW., 
Washington, DC 20549-0609.

    All submissions should refer to File Number SR-Amex-2004-34. 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, 450 Fifth 
Street, NW., Washington, DC 20549. Copies of such filing also will be 
available for inspection and copying at the principal offices 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-

[[Page 36141]]

2004-34 and should be submitted on or before July 19, 2004.

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

    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.\6\ 
In particular, the Commission finds that the proposed rule change is 
consistent with the requirements of section 6(b)(5) of the Act \7\ 
which requires, among other things, that the rules of an exchange be 
designed to promote just and equitable principles of trade, to remove 
impediments to and perfect the mechanism of a free and open market, and 
to protect investors and the public interest. The Commission believes 
that the proposed rule change should clarify the specialist's 
obligations in handling P/A Orders, which should facilitate the 
efficient handling of P/A Orders through the Linkage.
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    \6\ In approving this proposed rule change, the Commission has 
considered the proposed rule's impact on efficiency, competition, 
and capital formation. 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 the proposed rule 
change prior to the thirtieth day after the date of publication of the 
notice thereof in the Federal Register. As noted above, the proposed 
rule change incorporates changes into the Amex Rules that correspond to 
changes made to the Linkage Plan through Joint Amendment No. 10, which 
was published for comment on May 19, 2004.\8\ The Commission received 
no comments on the substance of that Amendment. The Commission believes 
that no new issues of regulatory concerns are being raised by Amex's 
proposed rule change. The Commission believes, therefore, that granting 
accelerated approval of the proposed rule change is appropriate and 
consistent with sections 6 and 19(b) of the Act.\9\
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    \8\ See Securities Exchange Act Release No. 49689 (May 12, 
2004), 69 FR 28953.
    \9\ 15 U.S.C. 78f and 78s(b).
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V. Conclusion

    It is therefore ordered, pursuant to section 19(b)(2) of the 
Act,\10\ that the proposed rule change (SR-Amex-2004-34) is approved on 
an accelerated basis.
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    \10\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Market Regulation, 
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pursuant to delegated authority.\11\

    \11\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 04-14585 Filed 6-25-04; 8:45 am]
BILLING CODE 8010-01-P