[Federal Register Volume 69, Number 199 (Friday, October 15, 2004)]
[Notices]
[Pages 61274-61275]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-23126]



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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-50498; File No. SR-Amex-2004-66]


Self-Regulatory Organizations; Notice of Filing of Proposed Rule 
Change and Amendment No. 1 Thereto by the American Stock Exchange LLC 
Relating to Allocation Procedures for Relisted Options

October 6, 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 August 10, 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 
September 24, 2004, Amex filed Amendment No. 1 to the proposed rule 
change. \3\ 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, Associate General 
Counsel, Amex, to Nancy J. Sanow, Assistant Director, Division of 
Market Regulation, Commission, dated September 23, 2004 (``Amendment 
No. 1''). Amendment No. 1 replaced the original proposed rule change 
in its entirety. Amendment No. 1 amended the proposal to limit the 
reallocation of a relisted option to the original specialist to a 
one year period.
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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 27. The text of the 
proposed rule change is set forth below. Proposed new language is 
italicized. Deleted language is in brackets.
* * * * *

Allocations Committee

    Rule 27 (a) through (i) No change.
    Commentary .01 through .03 No change.
    .04 Relisted Securities. A specialist shall be automatically 
allocated a security in which the specialist previously was registered 
only if all of the following conditions are met: (1) the company 
relists within one year of delisting, (2) the company is substantially 
the same entity as prior to delisting, (3) the company has no 
objection, and (4) the specialist is not subject to an allocation 
prohibition. A relisted option shall [will] be automatically allocated 
to the previously registered specialist unless (1) that specialist is 
subject to a prohibition on the allocation of options at the time that 
the option is relisted, (2) the Exchange relists the option more than 
one year after it was delisted, or (3) the specialist declines the 
allocation in writing [pursuant to the procedures described in 
paragraph (b) of this Rule]. If any of these conditions exist, the 
Allocations Committee will allocate the relisted option pursuant to the 
Exchange's regular options allocations procedures.
    (.05) 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
    A relisted security is a security that previously traded on the 
Exchange, was delisted, and is subsequently readmitted to dealings. In 
the case of options, the Exchange's rule on relisted securities 
currently provides that a relisted option will go to open allocation 
with no explicit preference given to the original specialist. Amex 
asserts that specialists, as a result, are reluctant to delist an 
inactive option because they are concerned that if they agree to delist 
the option, and it subsequently becomes active, they will have lost the 
opportunity to specialize in it.
    To encourage specialists to delist inactive options, the Exchange 
is proposing to amend the Exchange's allocations rules on relisted 
securities to provide that a relisted option will be automatically 
allocated to its original specialist unless: (1) The specialist is 
subject to a prohibition on options allocations at the time that the 
option is relisted; (2) the Exchange relists the option more than one 
year after it was delisted; or (3) the specialist declines in writing 
to accept the allocation. If any of these conditions exists, the 
Exchange's Allocations Committee will allocate the relisted option 
pursuant to its regular allocation procedures. The Exchange believes 
that this change in allocations policy will eliminate a disincentive to 
the delisting of inactive options. The Exchange further believes that 
this could benefit the options market and, consequently, investors in 
options by reducing quote traffic in options.
2. Statutory Basis
    The Exchange believes that the proposed rule change, as amended, is 
consistent with Section 6(b) of the Act, \4\ in general, and furthers 
the objectives of Section 6(b), \5\ in particular, in that it is 
designed to prevent fraudulent and manipulative acts and practices, to 
promote just and equitable principles of trade, 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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    \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 Exchange believes that the proposed rule change will impose no 
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

    Within 35 days of the date of publication of this notice in the 
Federal Register or within such longer period (i) as the Commission may 
designate up to 90 days of such date if it finds such longer period to 
be appropriate and publishes its reasons for so finding or (ii) as to 
which the self-regulatory organization consents, the Commission will:
    (A) By order approve such proposed rule change, or
    (B) Institute proceedings to determine whether the proposed rule 
change should be disapproved.

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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-2004-66 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-2004-66. 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-2004-66 and should be submitted on or before November 5, 2004.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority. \6\
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    \6\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 04-23126 Filed 10-14-04; 8:45 am]
BILLING CODE 8010-01-P