[Federal Register Volume 70, Number 181 (Tuesday, September 20, 2005)]
[Notices]
[Pages 55186-55188]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 05-18671]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-52428; File No. SR-Amex-2005-047]


Self-Regulatory Organizations; American Stock Exchange LLC; 
Notice of Filing of Proposed Rule Change and Amendment No. 1 Thereto 
Relating to the Definition of Firm Customer Quote Size and the Removal 
of Certain Restrictions on Sending Principal Acting as Agent (P/A) 
Orders Through the Linkage

September 14, 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 28, 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 Amex. On September 
12, 2005, the Exchange submitted Amendment No. 1 to the proposed rule 
change.\3\ 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\ In Amendment No. 1, the Exchange made clarifying changes to 
the proposed rule text relating to the availability of Participant 
exchanges' automatic execution system.
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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 its rules governing the operation of 
the intermarket option linkage to conform with a proposed amendment \4\ 
to the Plan for the Purpose of Creating and Operating an Intermarket 
Linkage (``Linkage Plan'').\5\ Accordingly, the Exchange is proposing 
to amend Amex Rules 940 and 941 to modify the

[[Page 55187]]

definition of ``Firm Customer Quote Size'' (``FCQS'') \6\ to provide 
automatic executions of the Principal Acting as Agent Orders (``P/A 
Orders'') \7\ up to the full size of the Exchange's disseminated 
quotation and to eliminate the 15-second waiting period between the 
sending of P/A Orders.
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    \4\ See Securities Exchange Act Release No. 34-52401 (September 
9, 2005) (File No. 4-429) (``Amendment No. 16'').
    \5\ On July 28, 2000, the Commission approved a national market 
system plan for the purpose of creating and operating an intermarket 
option market linkage proposed by the Amex, Chicago Board Options 
Exchange, Incorporated, and International Securities Exchange, Inc. 
See Securities Exchange Act Release No. 43086 (July 28, 2000), 65 FR 
48023 (August 4, 2000). Subsequently, upon separate requests by the 
Philadelphia Stock Exchange, Inc., Pacific Exchange, Inc. and Boston 
Stock Exchange, Inc. the Commission issued orders to permit these 
exchanges to participate in the Linkage Plan. See Securities 
Exchange Act Release Nos. 43573 (November 16, 2000), 65 FR 70850 
(November 28, 2000), 43574 (November 16, 2000), 65 FR 70851 
(November 28, 2000) and 49198 (February 5, 2004), 69 FR 7029 
(February 12, 2004).
    \6\ See Exchange Rule 940(b)(7).
    \7\ See Section 2(16)(a) of the Linkage Plan and Exchange Rule 
940(b)(10)(i).
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    The text of the proposed rule change is available on the Amex's Web 
site at http://www.amex.com, the Office of the Secretary, the Amex 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 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 this proposed rule change is to conform Amex's rules 
to proposed Amendment No. 16. Amendment No. 16, together with this 
proposed rule change, would change the definition of FCQS and eliminate 
the 15-second limitation in connection with the sending of P/A Orders. 
The change to the definition of FCQS is intended to reflect current 
practices of the Linkage Plan participants (``Participants'') relating 
to disseminated size not in existence at the time the Plan was 
originally adopted. At the time of the Linkage Plan's adoption, options 
quote sizes were generally not disseminated through the Options Price 
Reporting Authority, and most Participants employed automatic execution 
systems that guaranteed automatic executions on orders under a certain 
contract size. Accordingly, the FCQS was calculated based on the number 
of contracts the sending and receiving exchange guaranteed they would 
automatically execute. Now that all the Participants disseminate 
dynamic quotes with size, the Exchange believes it is appropriate to 
calculate the FCQS based on the size of the disseminated quotation of 
the Participant receiving the P/A Order. Therefore, the Exchange 
proposes to amend Amex Rule 940(b)(7) to define FCQS as the size of the 
disseminated quotation of the Participant receiving the P/A Order.
    This proposal also seeks to eliminate the 15-second wait period for 
sending a second P/A Order. Specifically, Amex Rule 941(b)(2), which 
governs the manner in which a P/A Order larger than the FCQS can be 
broken into smaller P/A Orders. Currently, Amex Rule 941(b)(2) provides 
that an initial P/A Order may be sent to a Participant for execution at 
the FCQS and, if the same Participant continues to disseminate the same 
price 15 seconds after the execution of the initial P/A Order, the 
specialist may send a second P/A Order, subject to certain 
restrictions. The Exchange proposes to eliminate the 15-second wait 
period because the Participants now employ dynamic quotes with size, 
obviating the need for a manual quote refresh period for P/A Orders. 
The Exchange also proposes to amend Amex Rule 941 to clarify that an 
automatic execution of a P/A Order is not required if the P/A Order is 
larger than the FCQS.
2. Statutory Basis
    The Exchange believes that the proposed rule change, as amended, is 
consistent with Section 6(b) of the Act \8\ in general, and furthers 
the objectives of Section 6(b)(5) of the Act \9\ 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.
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    \8\ 15 U.S.C. 78f(b).
    \9\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Amex does not believe that the proposed rule change, as 
amended, would impose any 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

    Written comments were neither solicited nor received.

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 Amex consents, the Commission will:
    A. By order approve such proposed rule change, as amended; or
    B. Institute proceedings to determine whether the proposed rule 
change, as amended, 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 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-2005-47 on the subject line.

Paper Comments

     Send paper comments in triplicate to Jonathan G. Katz, 
Secretary, Securities and Exchange Commission, Station Place, 100 F 
Street, NE., Washington, DC 20549-9303.
    All submissions should refer to File Number SR-Amex-2005-047. 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 Room. Copies of such 
filing also will be available for inspection and copying at the 
principal office of the Exchange. All comments received will be posted

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without change; the Commission does not edit personal identifying 
information from submissions. You should submit only information that 
you wish to make publicly available. All submissions should refer to 
File Number SR-Amex-2005-047 and should be submitted on or before 
October 11, 2005. 
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    \10\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\10\
Jonathan G. Katz,
Secretary.
[FR Doc. 05-18671 Filed 9-19-05; 8:45 am]
BILLING CODE 8010-01-P