[Federal Register Volume 69, Number 134 (Wednesday, July 14, 2004)]
[Notices]
[Pages 42229-42230]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-15926]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-49983; File No. SR-Amex-2004-40]


Self-Regulatory Organizations; American Stock Exchange LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change 
and Amendment No. 1 thereto Relating to an Amendment to Amex Rule 131

July 8, 2004.
    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 May 27, 2004, 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, II, 
and III below, which Items have been prepared by the Exchange. On June 
10, 2004, the Amex amended the proposed rule change.\3\ The Exchange 
filed the proposal pursuant to Section 19(b)(3)(A) of the Act,\4\ and 
Rule 19b-4(f)(6) thereunder,\5\ which renders the proposal effective 
upon filing with the Commission. The Commission is publishing this 
notice to solicit comments on the proposed rule change, as amended, 
from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See letter from William Floyd-Jones, Assistant General 
Counsel, Amex, to Nancy Sanow, Assistant Director, Division of 
Market Regulation, Commission, dated June 9, 2004 (``Amendment No. 
1''). In Amendment No. 1, the Amex replaced the proposed rule change 
in its entirety.
    \4\ 15 U.S.C. 78s(b)(3)(A).
    \5\ 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 131. The text of the 
proposed rule change is set forth below. Proposed new language is in 
italics.
* * * * *

Rule 131. Types of Orders

    (a) through (h) No change.
    (i) A fill or kill order is a market or limited price order which 
is to be executed in its entirety as soon as it is represented in the 
Trading Crowd, and such order, if not so executed, is to be treated as 
cancelled. For purposes of this definition, a ``stop'' is considered an 
execution. A fill or kill order for securities other than options sent 
to the order book electronically and not executed by Auto-Ex will be 
cancelled automatically.
    (j) No change.
    (k) An immediate or cancel order is a market or limited price order 
which is to be executed in whole or in part as soon as such order is 
represented in the Trading Crowd, and the portion not so executed is to 
be treated as cancelled. For the purposes of this definition, a 
``stop'' is considered an execution. In the case of an immediate or 
cancel order for securities other than options sent to the order book 
electronically, any portion not executed by Auto-Ex will be cancelled 
automatically.
    Except as otherwise provided in the Plan, a ``commitment to trade'' 
received on the Floor through ITS shall be treated in the same manner, 
and entitled to the same privileges, as would an immediate or cancel 
order that reaches the Floor at the same time (i.e., the commitment 
shall be executed in whole or in part as soon as it reaches the Trading 
Crowd and any portion not so executed shall be cancelled); provided 
however, that such a commitment may not be ``stopped'' and the 
commitment shall remain irrevocable for the time period chosen by the 
sender of the commitment.
    (l) through (t) 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 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange is proposing to modify the definitions of ``fill or 
kill'' (``FOK'') and ``immediate or cancel'' (``IOC'') orders for 
equity securities to provide that if these orders were to be sent to 
the book electronically, and were to not be executed by Auto-Ex, the 
orders would be cancelled automatically. Under the proposed rule 
change, a person sending an FOK or IOC order to the Exchange would 
receive an immediate electronic report of an execution, partial 
execution, or a nothing done. Orders sent to the book electronically 
with the FOK and IOC qualifiers, accordingly, would be processed 
automatically without any human intervention.
    The Exchange believes that modifying the processing of FOK and IOC 
orders sent to the book electronically so that they are automatically 
cancelled if not executed automatically would conform Amex practice 
with respect to the handling of these orders to customer expectations. 
Currently, the Exchange frequently receives marketable orders for 
securities traded in an Auto-Ex environment immediately followed by a 
message to cancel the orders. The Exchange believes that the persons 
sending these related messages are seeking an immediate automatic 
execution to all or part of their orders and wish to cancel whatever 
quantity is not executed automatically. The Exchange thus believes that 
these persons would use the proposed FOK and IOC orders if they were 
available since these orders would provide for an immediate automatic 
execution or cancellation and an immediate

[[Page 42230]]

electronic report. The Exchange also anticipates that the proposed 
change to the processing of FOK and IOC orders would reduce message 
traffic by eliminating the need for persons seeking an immediate 
automatic execution or cancellation to send a separate cancellation 
message following the entry of the order.
    The proposed rule change would not affect the processing of market 
and marketable limit orders that are sent to the order book 
electronically that are not subject to the FOK and IOC qualifications. 
Likewise, there would be no change to the processing of FOK and IOC 
orders sent to a floor broker for execution. The Exchange intends to 
implement the proposed revisions to IOC and FOK order processing when 
it implements its proposed enhanced Auto-Ex functionality.\6\
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    \6\ See, Securities Exchange Act Release Nos. 49921 (June 25, 
2004), 69 FR 40690 (July 6, 2004) (approval order); and 49449 (March 
19, 2004), 69 FR 15411 (March 25, 2004) (notice) (SR-Amex-2004-04).
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2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act \7\ in general, and furthers the 
objectives of Section 6(b)(5) \8\ in particular, in that 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, and is not designed to 
permit unfair discrimination between customers, issuers, brokers, or 
dealers.
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    \7\ 15 U.S.C. 78f(b).
    \8\ 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, as amended, 
will impose no burden on competition 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, as amended.

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

    Because the foregoing proposed rule change, as amended, does not:
    (i) Significantly affect the protection of investors or the public 
interest;
    (ii) Impose any significant burden on competition; and
    (iii) Become operative for 30 days from 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, it 
has become effective pursuant to Section 19(b)(3)(A) of the Act,\9\ and 
Rule 19b-4(f)(6) thereunder.\10\ At any time within 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.\11\
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    \9\ 15 U.S.C. 78s(b)(3)(A).
    \10\ 17 CFR 240.19b-4(f)(6). The Commission notes that the 
Exchange provided written notice of its intent to file the proposed 
rule change, along with a brief description and text of the proposed 
rule change at least five business days prior to the date of filing 
of the proposed rule change.
    \11\ For purposes of calculating the 60-day period within which 
the Commission may summarily abrogate the proposed rule change, as 
amended, under Section 19(b)(3)(C) of the Act, the Commission 
considers the period to commence on June 10, 2004, the date on which 
the Amex filed Amendment No. 1. See 15 U.S.C. 78s(b)(3)(C).
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IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change, as amended, 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-2004-40 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-2004-40. 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 the 
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-2004-40 and should be submitted on or before August 
4, 2004.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\12\
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    \12\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 04-15926 Filed 7-13-04; 8:45 am]
BILLING CODE 8010-01-P