[Federal Register: August 31, 2007 (Volume 72, Number 169)]
[Notice]
[Page 50423-50425]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr31au07-150]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-56318; File No. SR-Amex-2007-48]
Self-Regulatory Organizations; American Stock Exchange, LLC;
Notice of Filing of Proposed Rule Change Modifying the Options Listing
Criteria for Underlying Securities
August 24, 2007.
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 17, 2007, 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 substantially prepared by the
Exchange. On August 21, 2007, Amex amended the proposed rule change.\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\3\ Amendment No. 1 replaced and superseded the original filing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 amend Commentary .01(4) to Amex Rule 915
and add new Commentary .01(6) to Amex Rule 915 for the purpose of
permitting the Exchange to list and trade individual equity options
that are otherwise ineligible for listing and trading if such option is
listed and traded on another national securities exchange.
The text of the proposed rule change is available on the Amex's Web
site at http://www.amex.com, at 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 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
The Exchange proposal seeks to revise the options original listing
guidelines so that, as long as the options maintenance listing
standards set forth in Amex Rule 916 are met and the option is listed
and traded on another national securities exchange, the Amex would be
able to list and trade the option. Commentary .01 to Amex Rule 915 sets
forth the guidelines that an underlying individual equity security must
meet before the Exchange may initially list options on that security.
The Amex states that these guidelines or requirements are uniform among
the options exchanges.
Commentary .01(4) to Amex Rule 915 relates to the minimum market
price that an underlying security must trade at for an option to be
listed on it. Paragraph (4) of this Commentary .01 permits the listing
of individual equity options on both ``covered'' and ``uncovered''
underlying securities.\4\ In the case of an underlying security that is
a ``covered security'' as defined under section 18(b)(1)(A) of the 1933
Act, the closing market price of the underlying security must be at
least $3 per share for the five (5) previous consecutive business days
prior to the date on which the Amex submits an option class
certification to The Options Clearing Corporation (``OCC'').\5\ In
connection with underlying securities deemed to be ``uncovered,''
Exchange rules require that such underlying security be at least $7.50
for the majority of business days during the three (3) calendar months
preceding the date of selection for such listing. In addition, an
alternative listing procedure for ``uncovered'' securities also permits
the listing of such options so long as: (1) The underlying security
meets the guidelines for continued approval contained in Amex Rule 916;
(2) options on such underlying security are traded on at least one
other registered national securities exchange; and (3) the average
daily trading volume (``ADTV'') for such options over the last three
calendar months preceding the date of selection has been at least 5,000
contracts. Paragraphs (1) through (3) of Commentary .01 to Rule 915
further set forth minimum requirements for an underlying security such
as shares outstanding, number of holders and trading volume.
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\4\ Section 18(b)(1)(A) of the Securities Act of 1933 (``1933
Act'') provides that ``[a] security is a covered security if such
security is listed, or authorized for listing, on the New York Stock
Exchange or the American Stock Exchange, or listed or authorized for
listing, on the National Market System of the Nasdaq Stock Market
(or any successor to such entities) * * *.'' See 15 U.S.C.
77r(b)(1)(A).
\5\ For purposes of this proposal, the market price of an
underlying security is measured by the closing price reported in the
primary market in which the underlying security is traded. See
proposed Commentary .01(4) to Amex Rule 915.
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The existing alternative listing procedure was originally adopted
by the Exchange in 2002. At that time, the Commission permitted the
Amex to eliminate the $7.50 standard (currently $3 for covered
securities) for an underlying security when such option is otherwise
listed and traded on another options exchange and has an ADTV over the
last three (3) calendar months of at least 5,000 contracts. The
Exchange submits that the alternative listing procedure has limited
usefulness. The options exchange (or exchanges) that may be fortunate
enough to list an option that at first met the original
[[Page 50424]]
listing standards but subsequently fails to do so, is provided a
trading monopoly inconsistent with the multiple trading of options,
fostering competition and the maintenance of a national market system.
Under the proposal, an option may be multiply-listed and traded as long
as one other options exchange is trading the particular option and such
underlying security of the option meets existing continued listing
guidelines or requirements.
The Amex notes that the requirements for listing additional series
of an existing listed option (i.e., continued listing guidelines) are
less stringent, largely because, in total, the Exchange's guidelines
assure that options will be listed and traded on securities of
companies that are financially sound and subject to adequate minimum
standards.
The Amex believes that although the continued listing requirements
are uniform among the options exchanges, the application of both the
original and continued listing standards in the current market
environment have had an anti-competitive effect. Specifically, the
Exchange notes that on several occasions it has been unable to list and
trade options classes that trade elsewhere because the underlying
security of such option did not at that time meet original listing
standards. However, the other options exchange(s) may continue to trade
such options (and list additional series) based on the lower
maintenance listing standards, while the Amex may not list any options
on such underlying security. This clearly is anti-competitive and
inconsistent with the aims and goals of a national market system in
options.
To address this situation, the Exchange proposes to add new
Commentary .01(6) to Amex Rule 915 and amend the alternative original
listing requirement set forth in Commentary .01(4) to Amex Rule 915.
Specifically, Commentary .01(6) would be added to provide that
notwithstanding that a particular underlying security may not meet the
requirements set forth in Paragraphs 1 through 4 of Commentary .01 to
Amex Rule 915, the Exchange nonetheless could list and trade an option
on such underlying security if: (i) The underlying security meets the
guidelines for continued listing in Amex Rule 916; and (ii) options on
such underlying security are listed and traded on at least one other
registered national securities exchange. Commentary .01(4)(b) would be
amended to delete reference to the alternative original listing
guideline for ``uncovered'' securities. In connection with the proposed
changes, the Exchange represents that the procedures currently employed
to determine whether a particular underlying security meets the initial
listing criteria will similarly be applied to the continued listing
criteria.
Amex believes that this proposal is narrowly tailored to address
the circumstances where an options class is currently ineligible for
listing on the Amex while at the same time, such option is trading on
another options exchange(s). The Amex notes that when an underlying
security meets the maintenance listing guidelines and at least one
other exchange lists and trades options on the underlying security, the
option is available to the investing public. Therefore, the Amex notes
that the current proposal will not introduce any inappropriate
additional listed options classes. The Exchange submits that the
adoption of the proposal is essential for competitive purposes and to
promote a free and open market for the benefit of investors.
2. Statutory Basis
The proposed rule change is consistent with Section 6(b) \6\ of the
Act, 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, promote just and equitable principles
of trade, remove impediments to and perfect the mechanism of a free and
open market and a national market system, and, in general, 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 will 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 with respect to the
proposed rule change.
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 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-2007-48 on the subject line.
Paper Comments
Send paper comments in triplicate to Nancy M. Morris,
Secretary, Securities and Exchange Commission, 100 F Street, NE.,
Washington, DC 20549-1090.
All submissions should refer to File Number SR-Amex-2007-48. 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 at (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, 100 F Street, NE.,
Washington, DC 20549, on official business days between the hours of 10
a.m. and 3 p.m. Copies of the 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
[[Page 50425]]
submissions should refer to File Number SR-Amex-2007-48 and should be
submitted on or before September 21, 2007.
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\8\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\8\
Nancy M. Morris,
Secretary.
[FR Doc. E7-17354 Filed 8-30-07; 8:45 am]
BILLING CODE 8010-01-P