[Federal Register Volume 70, Number 113 (Tuesday, June 14, 2005)]
[Notices]
[Pages 34509-34510]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E5-3060]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-51796; File No. SR-Amex-2005-037]


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

June 7, 2005.
    On April 4, 2005, 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 amending its Rule 154, Commentary .08 to require 
Amex 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, and making a 
conforming amendment to its Rule 119, governing indications, openings, 
and reopenings. On April 20, 2005, Amex submitted Amendment No. 1 to 
the proposal.\3\ The Commission published the proposed rule change, as 
amended, for comment in the Federal Register on May 3, 2005.\4\ The 
Commission did not receive any comments on the proposed rule change.
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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.
    \4\ Securities Exchange Act Release No. 51621 (April 27, 2005), 
70 FR 22930.
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    After careful consideration, the Commission finds that the proposed 
rule change, as amended, is consistent with the requirements of the Act 
and the rules and regulations thereunder that are 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, among other things, that the 
rules of the Amex be 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. The 
Commission believes that the proposal will help enhance the efficient 
processing of orders on the Exchange floor by reducing the need for 
floor official involvement in the normal course of trading of higher 
priced securities. The impact of the proposed rule change is that, for 
very high-priced stocks that trade at more than $200 per share,\7\ the 
next trade may be up to 1% away from the previous sale, without 
requiring floor official approval.\8\ The Commission 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 relative to 
other price moves allowed under Rule 154, Commentary .08 and

[[Page 34510]]

appropriate in maintaining adequate trade-to-trade price continuity.
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    \5\ In approving the proposed rule change, the Commission notes 
that it 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).
    \7\ In its proposal, the Exchange stated that 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 
$1,124.00
    \8\ 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. Specialists who 
wish to effect trades outside the foregoing limit have been required 
to obtain the prior approval of an Amex floor official. Rule 154, 
Commentary .08 currently provides that, for stocks trading at $10 or 
more (but less than $20) per share, the next trade may 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). For stocks trading at less than $10 
per share, the next trade 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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    The Commission likewise finds that the proposed conforming change 
to Amex Rule 119, which governs indications, openings, and reopenings, 
is consistent with the Act. As amended, Amex Rule 119(3)(a)(iii) will 
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, thus limiting the frequency of trading halts and improving the 
efficient handling of orders in very high-priced stocks on the Exchange 
floor.
    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\9\ that the proposed rule change (SR-Amex-2005-037) and Amendment 
No. 1 thereto be, and hereby is, approved.
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    \9\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\10\
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    \10\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. E5-3060 Filed 6-13-05; 8:45 am]
BILLING CODE 8010-01-P