[Federal Register Volume 71, Number 104 (Wednesday, May 31, 2006)]
[Notices]
[Pages 30971-30973]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E6-8321]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-53853; File No. SR-Amex-2006-46]


Self-Regulatory Organizations; American Stock Exchange LLC; 
Notice of Filing and Order Granting Accelerated Approval to a Proposed 
Rule Change and Amendment No. 1 Thereto Relating to the Elimination of 
the Prohibition on Computer Generated Orders

May 23, 2006.
    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 May 9, 2006, 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 Amex. On May 11, 2006, Amex 
filed Amendment No. 1 to the proposed rule change.\3\ The Commission is 
publishing this notice to solicit comments on the proposed rule change, 
as amended, from interested persons, and is approving the proposal on 
an accelerated basis.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ Amendment No. 1 supersedes and replaces the original rule 
filing in its entirety.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to eliminate Amex Rules 934(b) and 934-
ANTE(b) relating to the prohibition of computer generated orders.
    The text of the proposed rule change is available on the Amex's Web 
site (http://www.amex.com), at the Amex's Office of the Secretary, 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, as 
amended, and discussed any comments it received on the proposed rule 
change, as amended. The text of these statements may be examined at the 
places specified in Item III below. The 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 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes that the amendment to the Amex Rules pursuant 
to this proposal be effective on May 8, 2006.
    The Exchange proposes to eliminate the prohibition on computer 
generated orders set forth in Amex Rules 934(b) and 934-ANTE(b). 
Originally, Amex Rules 934(b) and 934-ANTE(b) were adopted to protect 
registered options traders (``ROTs'') because, at the time, allowing 
electronic entry directly into the Exchange's order routing system 
could give customers and broker-dealers with order-generating systems a 
significant advantage over Amex ROTs. Since the adoption of Amex Rules 
934(b) and 934-ANTE(b), the Exchange

[[Page 30972]]

has implemented ANTE as well as other electronic trading enhancements 
minimizing the concerns raised by the rules. For example, ANTE permits 
specialists and ROTs to submit proprietary quotes electronically,\4\ 
which reduces the risk of multiple executions of orders delivered in 
rapid succession before the specialist or ROT is able to revise its 
quotation. In addition, the Exchange recently received Commission 
approval for an ANTE enhancement known as the ``Quote Risk Manager.'' 
The Quote Risk Manager is a risk management tool allowing specialists 
and ROTs to automatically adjust their quotes if a certain number of 
trades are executed within a certain period of time.\5\ Therefore, 
specialists and ROTs now have the ability to manage their exposure more 
quickly and efficiently, thereby obviating the need for both Amex Rules 
934(b) and 934-ANTE(b). The Exchange also believes that the removal of 
the prohibition on computer generated orders should enhance access to 
the Exchange and therefore provide additional liquidity.
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    \4\ See Securities Exchange Act Release No. 49747 (May 20, 
2004), 69 FR 30344 (May 27, 2004) (SR-Amex-2003-89).
    \5\ See Securities Exchange Act Release No. 53148 (January 19, 
2006), 71 FR 4386 (January 26, 2006) (SR-Amex-2005-131).
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2. Statutory Basis
    The Exchange believes that the proposed rule change, as amended, is 
consistent with the provisions of section 6(b) of the Act,\6\ in 
general, and with section 6(b)(5) of the Act,\7\ in particular, in that 
it is designed to prevent fraudulent and manipulative acts and 
practices, to promote just and equitable principles of trade, to foster 
cooperation and coordination with persons engaged in regulating, 
clearing, settling, processing information with respect to, and 
facilitating transactions in securities, 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; 
and is not designed to permit unfair discrimination between customers, 
issuers, brokers, or dealers, or to regulate by virtue of any authority 
conferred by the Act matters not related to the purpose of the Act or 
the administration of the Exchange.
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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 Exchange does not believe that the proposed rule change, as 
amended, will impose any burden on competition.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants or Others

    No written comment were solicited or received with respect to the 
proposed rule change.

III. 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-2006-46 on the subject line.

Paper Comments

     Send paper comments in triplicate to Nancy M. Morris, 
Secretary, Securities and Exchange Commission, Station Place, 100 F 
Street, NE., Washington, DC 20549-1090.

All submissions should refer to File Number SR-Amex-2006-46. 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 
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-2006-46 and should be submitted on or before June 
21, 2006.

IV. Commission's Findings and Order Granting Accelerated Approval of a 
Proposed Rule Change

    After careful consideration, the Commission finds that the proposed 
rule change, as amended, is consistent with the Act and the rules and 
regulations thereunder applicable to a national securities exchange.\8\ 
In particular, the Commission believes that the proposal is consistent 
with section 6(b)(5) of the Act,\9\ which requires that the rules of an 
exchange be designed to prevent fraudulent and manipulative acts and 
practices, to promote just and equitable principles of trade, to foster 
cooperation and coordination with persons engaged in regulating, 
clearing, settling, processing information with respect to, and 
facilitating transactions in securities, 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; 
and are not designed to permit unfair discrimination between customers, 
issuers brokers, or dealers, or to regulate by virtue of any authority 
conferred by the Act matters not related to the purposes of the Act or 
the administration of the Exchange. Specifically, the Commission 
believes that the proposal is designed to permit increased access to 
the Exchange, and therefore should help provide additional liquidity 
for orders executed on the Exchange.
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    \8\ In approving this proposal, the Commission has considered 
its impact on efficiency, competition, and capital formation. See 15 
U.S.C. 78c(f).
    \9\ 15 U.S.C. 78f(b)(5).
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    Under section 19(b)(2) of the Act,\10\ the Commission may not 
approve any proposed rule change prior to the thirtieth day after the 
date of publication of the notice of filing thereof, unless the 
Commission finds good cause for so doing. The Commission hereby finds 
good cause for approving the proposed rule change, as amended, prior to 
the thirtieth day after publishing notice of filing thereof in the 
Federal Register. The Commission does not believe that the proposal 
would significantly affect the protection of investors or the public 
interest, and would not impose any significant burden on competition.
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    \10\ 15 U.S.C. 78s(b)(2).
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    The Commission notes that it has recently approved the deletion of 
the

[[Page 30973]]

Chicago Board Options Exchange (``CBOE'') Rule 6.8A\11\ and the 
Philadelphia Stock Exchange (``Phlx'') Rule 1080(i).\12\ Both of these 
rules had prohibited the entry of electronically generated orders. The 
Commission believes that the proposed rule change, as amended, raises 
no new regulatory issues and that a full notice and comment period is 
not necessary.
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    \11\ See Securities Exchange Act Release No. 51030 (January 12, 
2005), 70 FR 3404 (January 24, 2005) (SR-CBOE-2004-91).
    \12\ See Securities Exchange Act Release No. 48648 (October 16, 
2003), 68 FR 60762 (October 23, 2003) (SR-Phlx-2003-37).
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    For the reasons set forth above, the Commission finds good cause to 
accelerate approval of the proposed rule change, as amended, pursuant 
to section 19(b)(2) of the Act.

V. Conclusion

    It is therefore ordered, pursuant to section 19(b)(2) of the Act, 
that the proposed rule change (SR-Amex-2006-46), as amended, is hereby 
approved on an accelerated basis.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\13\
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    \13\ 17 CFR 200.30-3(a)(12).
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Nancy M. Morris,
Secretary.
[FR Doc. E6-8321 Filed 5-30-06; 8:45 am]
BILLING CODE 8010-01-P