[Federal Register Volume 69, Number 228 (Monday, November 29, 2004)]
[Notices]
[Page 69433]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E4-3347]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-50698; File No. SR-Amex-2004-66]


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

November 18, 2004.
    On August 10, 2004, the American Stock Exchange LLC (``Amex'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission''), pursuant to Section 19(b)(1) of the Securities 
Exchange Act of 1934 (``Act''),\1\ and Rule 19b-4 thereunder,\2\ a 
proposed rule change to amend Amex Rule 27, which would allow automatic 
allocation of relisted options to their previously assigned specialists 
upon satisfaction of certain conditions. On September 24, 2004, Amex 
filed Amendment No. 1 to the proposed rule change.\3\ The proposed rule 
change, as amended, was published for comment in the Federal Register 
on October 15, 2004.\4\ The Commission received no comments regarding 
the proposal.
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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'').
    \4\ See Securities Exchange Act Release No. 50498 (October 6, 
2004), 69 FR 61274.
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    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.\5\ 
In particular, the Commission finds that the proposed rule change, as 
amended, is consistent with Section 6(b)(5) of the Act,\6\ which 
requires that the rules of the 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 a national securities 
system, and, in general, to protect investors and the public interest.
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    \5\ In approving this proposed rule change, the Commission has 
considered the proposed rule's impact on efficiency, competition, 
and capital formation. See 15 U.S.C. 78c(f).
    \6\ 15 U.S.C. 78f(b)(5).
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    The Commission believes that automatic allocation of relisted 
options to their previously assigned specialists may provide 
specialists with an incentive to delist inactive options. As a result, 
the Commission further believes that this proposed rule change, as 
amended, could reduce quote traffic in options market. The Commission 
has previously noted that proposals that may mitigate quote traffic 
should benefit investors and other participants in the options 
markets.\7\ The Commission also notes that the proposed rule change, as 
amended, would not permit automatic allocation in all instances. 
Specifically, automatic allocation would not occur when a specialist is 
subject to an allocation prohibition, the Exchange relists an option 
more than one year after delisting, or a specialist declines the 
allocation. In any of these cases, the option would be allocated 
pursuant to the Exchange's regular options allocation procedure.
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    \7\ See Securities Exchange Act Release No. 42764 (May 8, 2000), 
65 FR 31037 (May 15, 2000) (approving File No. SR-Phlx-2000-06).
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    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\8\ that the proposed rule change (SR-Amex-2004-66), as amended, 
be, and it hereby is, approved.
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    \8\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\9\
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    \9\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. E4-3347 Filed 11-26-04; 8:45 am]
BILLING CODE 8010-01-P