[Federal Register Volume 69, Number 249 (Wednesday, December 29, 2004)]
[Notices]
[Pages 78061-78063]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E4-3879]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-50902; File No. SR-Amex-2004-103]


Self-Regulatory Organizations; American Stock Exchange LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Revise Amex Rule 903C To Permit the Listing of Long-Term Index Options 
Series With a Duration of Up to Sixty Months Until Expiration

December 21, 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 December 14, 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 and 
II below, which Items have been prepared by the Amex. The Exchange 
filed the proposed rule change pursuant to Section 19(b)(3)(A) of the 
Act \3\ and Rule 19b-4(f)(6) thereunder,\4\ which renders it effective 
upon filing with the Commission.\5\ The Commission is publishing this 
notice to solicit comments on the proposed rule change from interested 
persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 15 U.S.C. 78s(b)(3)(A).
    \4\ 17 CFR 240.19b-4(f)(6).
    \5\ The Amex provided the Commission with written notice of its 
intent to file the proposed rule change on December 3, 2004. Amex 
asked the Commission to waive the 30-day operative delay. See 
Section 19(b)(3)(A) of the Act, and Rule 19b-4(f)(6)(iii) 
thereunder. 15 U.S.C. 78s(b)(1), 17 CFR 240.19b-4(f)(6)(iii).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    Amex seeks to revise Amex Rule 903C to permit the listing of long-
term index options series (``LEAPS'') with a duration of up to 60 
months (five years) until expiration. The text of the proposed rule 
change is available at the Amex and at the Commission.

[[Page 78062]]

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 Amex 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 purpose of the proposed rule change is to permit the Exchange 
to list index LEAPS with a duration of up to 60 months (five years) 
until expiration.\6\ Presently, the Exchange has authority pursuant to 
Amex Rule 903C to list index LEAPS that expire up to 36 months from the 
time they are listed. The Exchange represents that there has been 
increasing member firm and customer interest in longer term 
instruments. The Exchange, therefore, is proposing to amend Amex Rule 
903C to permit the listing of index options with up to 60 months until 
expiration.
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    \6\ The proposal would permit five-year LEAPS on both broad-
based and narrow-based indexes on which LEAPS have been approved for 
trading on the Amex.
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    Currently, institutional customers use index options to hedge the 
risks associated with holding diversified equity portfolios.\7\ 
Allowing investors to lock in their hedges with longer-term index LEAPS 
will permit institutions to protect better their portfolios from 
adverse market moves.\8\ The Amex believes that index LEAPS with up to 
five years until expiration will allow this protection at a known and 
limited cost.\9\ The proposal will provide institutions with an 
additional securities product with which to hedge their portfolios as 
an alternative to hedging with futures positions or off-exchange 
customized index options.\10\ The Amex notes that the Chicago Board 
Options Exchange, Inc. (``CBOE'') increased the possible duration of 
LEAPS to 60 months (five years) until expiration in 1995.\11\
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    \7\ See Securities Exchange Act Release No. 35617 (April 17, 
1995), 60 FR 20132 (April 24, 1995) (order approving SR-CBOE-95-02).
    \8\ See Securities Exchange Act Release No. 24853 (August 27, 
1987), 52 FR 33486 (September 3, 1987) (order approving SR-CBOE-87-
24).
    \9\ Id.
    \10\ Id.
    \11\ See CBOE Rule 24.9(b).
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2. Statutory Basis
    The Amex believes that the proposed rule change is consistent with 
Section 6 of the Act \12\ in general, and furthers the objectives of 
Section 6(b)(5) of the Act \13\ in particular, in that it is designed 
to perfect the mechanisms of a free and open market and the national 
market system, protect investors and the public interest, and promote 
just and equitable principles of trade.
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    \12\ 15 U.S.C. 78f(b).
    \13\ 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 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 either solicited or received by the 
Exchange on this proposal.

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

    Because the foregoing proposed rule change 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, it has 
become effective pursuant to Section 19(b)(3)(A) of the Act \14\ and 
Rule 19b-4(f)(6) thereunder.\15\ 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.
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    \14\ 15 U.S.C. 78s(b)(3)(A).
    \16\ 17 CFR 240.19b-4(f)(6).
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    The Amex has asked that the Commission waive the 30-day operative 
delay contained in Rule 19b-4(f)(6)(iii) under the Act.\16\ The 
Commission believes such waiver is consistent with the protection of 
investors and the public interest, for it will allow the Amex to 
compete without unnecessary delay with other market entities that offer 
LEAPS with a duration of up to 60 months until expiration. For these 
reasons, the Commission designates the proposal to be operative upon 
filing with the Commission.\17\
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    \16\ 17 CFR 240.19b-4(f)(6)(iii).
    \17\ For purposes only of waiving the 30-day pre-operative 
period, the Commission has considered the proposed rule's impact on 
efficiency, competition, and capital formation. 15 U.S.C. 78c(f).
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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 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-2004-103 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-2004-103. 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 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-

[[Page 78063]]

2004-103 and should be submitted on or before January 19, 2005.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\18\
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    \18\ 18 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
 [FR Doc. E4-3879 Filed 12-28-04; 8:45 am]
BILLING CODE 8010-01-P