[Federal Register: May 3, 2005 (Volume 70, Number 84)]
[Notices]
[Page 22930-22932]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr03my05-109]
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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 rule-comments@sec.gov. 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