[Federal Register Volume 70, Number 84 (Tuesday, May 3, 2005)]
[Notices]
[Pages 22930-22932]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E5-2125]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-51621; File No. SR-Amex-2005-037]


Self-Regulatory Organizations; Notice of Filing of Proposed Rule 
Change and Amendment No. 1 Thereto By the American Stock Exchange LLC 
Relating to When Floor Official Approval for a Transaction in a High-
Priced Security Is Necessary

April 27, 2005.
    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 April 4, 2005, 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 April 
20, 2005, Amex submitted Amendment No.

[[Page 22931]]

1 to the proposal.\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\ In Amendment No. 1, Amex made minor, non-substantive changes 
to the text of the proposal and a conforming amendment to Amex Rule 
119.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    Amex seeks to amend its Rule 154, Commentary .08 to require Floor 
Official approval for a transaction in a stock at a price of $20 or 
more a share only when the trade is to be made at the greater of 1% or 
two dollars away from the last previous sale. The Exchange also 
proposes a conforming amendment to its Rule 119, governing indications, 
openings, and reopenings.
    The text of the proposed rule change is available on Amex's Web 
site (http://www.amex.com), at the Amex's principal office, and at the 
Commission's Public Reference Room.

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. Amex 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
    Amex Rule 154, Commentary .08 places limitations on the amount a 
stock may trade away from its previous sale. Depending upon the price 
of the stock, Commentary .08 allows a stock to trade up to 50 cents, 
one dollar, or two dollars away from its previous sale. For high-priced 
stocks trading at more than $20 per share, Commentary .08 currently 
limits members from effecting trades at more than two dollars away from 
the previous sale.\4\ Specialists who wish to effect trades outside the 
foregoing limit must obtain the prior approval of a Floor Official.
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    \4\ Rule 154, Commentary .08 currently allows for stocks trading 
at $10 or more (but less than $20) per share to execute at no more 
than one dollar away from the last previous sale (which allows for a 
minimum of just over 5% and a maximum of just under 10% away from 
the last previous sale). Stocks trading at less than $10 per share 
may execute at no more than 50 cents away from the last previous 
sale (which allows for a minimum just over 5% and, theoretically, a 
maximum of just under 5000% away from the last previous sale).
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    High-priced stocks \5\ frequently may trade more than two dollars 
away from the last sale in the ordinary course, and Floor Officials 
will approve these trades since they do not involve a significant price 
change in percentage terms. The need to obtain prior Floor Official 
approval for a proposed transaction, however, delays order processing 
in circumstances where an independent review of the transaction is not 
otherwise necessary. Therefore, the Exchange proposes to amend its Rule 
154, Commentary .08 to provide that, for stocks that trade at more than 
$20 per share, the next trade may be up to the greater of two dollars 
or 1% away from the previous sale, thus eliminating the need for Floor 
Official approval in those situations. The Exchange believes that 
permitting trades to be effected at the greater of 1% or two dollars 
away from the last previous sale is a moderate adjustment, conservative 
in percentage terms relative to other price moves allowed under Rule 
154, Commentary .08 and appropriate in maintaining adequate trade-to-
trade price continuity.
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    \5\ Examples of such high priced securities include NVR, Inc. 
(ticker symbol: NVR), whose last sale on March 22, 2005 was $795.50 
and Seaboard Corporation (ticker symbol: SEB), whose last sale on 
March 22, 2005 was $1,124.
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    The Exchange further believes that allowing such flexibility in 
price movement would improve efficiency of order processing on the 
floor by exempting those who trade in high-priced stocks from obtaining 
approval in every instance they trade through the two-dollar limit in 
the normal course of business.
    Corresponding to the proposed amendment of Amex Rule 154, the 
Exchange proposes a conforming change to its Rule 119, which governs 
indications, openings, and reopenings. That rule defines a 
``significant order imbalance'' as one which would result in a 
reopening at a price change constituting two or more dollars away from 
the last sale in a stock selling at $20 or more per share, one point or 
more away from the last sale in a stock selling at $10 or more (but 
less than $20) per share, and one-half point or more away from the last 
sale in a stock selling at less than $10. Amex proposes to amend Rule 
119(3)(a)(iii) to provide that a significant order imbalance is one 
which results in a reopening at a price change constituting the greater 
of 1% or two dollars from the last previous sale for stocks that trade 
at $20 or more. Accordingly, the proposed amendment to Rule 119 would 
limit the frequency of significant order imbalances.
2. Statutory Basis
    Amex believes that the proposed rule change is consistent with 
Section 6(b) of the Act,\6\ in general, and furthers the objectives of 
Section 6(b)(5),\7\ in particular, in that it is designed to prevent 
fraudulent and manipulative acts and practices, to promote just and 
equitable principles of trade, and, in general, to protect investors 
and the public interest.
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    \6\ 15 U.S.C. 78f(b).
    \7\ 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 would 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 by the Exchange on 
this proposal.

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.

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-2005-037 on the subject line.

[[Page 22932]]

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-2005-037. 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-2005-037 and should be submitted on or before May 24, 2005.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\8\
 Margaret H. McFarland,
Deputy Secretary.
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    \8\ 17 CFR 200.30-3(a)(12).
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[FR Doc. E5-2125 Filed 5-2-05; 8:45 am]
BILLING CODE 8010-01-P