[Federal Register: August 22, 2007 (Volume 72, Number 162)]
[Notices]
[Page 47091-47092]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr22au07-157]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-56273; File No. SR-Amex-2007-91]
Self-Regulatory Organizations; American Stock Exchange LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change to
Add an Additional Exemption to Rule 24-AEMI Relating to Intermarket
Sweep Orders
August 16, 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 August 16, 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 and
II below, which Items have been substantially prepared by Amex. Amex
filed the proposal as a ``non-controversial'' rule change pursuant to
Section 19(b)(3)(A) of the Act \3\ and Rule 19b-4(f)(6) thereunder,\4\
which renders the proposal effective upon filing with the Commission.
The Commission is publishing this notice to solicit comments on the
proposed rule change from interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ 15 U.S.C. 78s(b)(3)(A).
\4\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
Amex proposes to amend Rule 24-AEMI to add an additional exemption
to its general rule against a member executing a proprietary order
while in possession of a customer order which could trade at the same
price. The exemption would permit a member organization to send an
intermarket sweep order (``ISOs'') as principal under Regulation NMS,
provided that the member organization yields its principal execution to
any open customer order that is required to be protected by Rule 24-
AEMI and is capable of being filled. In addition, if the member
organization executed the ISO to facilitate a customer order at a price
inferior to one or more protected quotations, that customer must
consent to not receiving the better prices obtained by the ISO or the
firm must yield its principal execution to that customer. The Exchange
proposes this change to better harmonize Rule 24-AEMI with recent
changes to the corresponding Rule 92 of the New York Stock Exchange
(``NYSE'').
The text of the proposed rule change is available on Exchange's Web
site (http://www.amex.com), at 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, 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. 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 to amend Rule 24-AEMI to add an exemption so
that a member organization can comply with its Regulation NMS
obligation without also violating Rule 24-AEMI when facilitating a
customer order that would otherwise require the firm to either violate
Rule 24-AEMI or trade through protected quotations. Under the current
rule, if a member organization is required to route an ISO as principal
to execute against the full displayed size of any protected quotation
in a security, for example, when facilitating a customer order at a
price inferior to the national best bid or offer or other protected
quotations and in compliance with Rules 600(b)(30)(ii) and 611(b)(6) of
Regulation NMS,\5\ the ISO could violate Rule 24-AEMI by trading ahead
of or along with an open customer order.
---------------------------------------------------------------------------
\5\ 17 CFR 242.600(b)(30)(ii) and 17 CFR 242.611(b)(6).
---------------------------------------------------------------------------
The proposed exemption provides that, when routing an ISO, the
member organization must yield its principal execution to any open
customer order that is required to be protected by Rule 24-AEMI and is
capable of accepting the fill. As defined in Rule 24-AEMI(a), a
customer order that is required to be protected is an open customer
order that is known to the member organization before entry of the ISO.
In addition, the proposed exemption would require that, if a firm
executes an ISO to facilitate a customer order at a price inferior to
one or more protected quotations, that customer must consent to not
receiving the better price obtained by the ISO or
[[Page 47092]]
the firm must yield its principal execution to that customer. For
purposes of this amendment, the Exchange further proposes adopting the
definitions of Regulation NMS in connection with the terms ``protected
quotation'' and ``intermarket sweep order.'' \6\
---------------------------------------------------------------------------
\6\ See 17 CFR 242.600(b)(30) and (58).
---------------------------------------------------------------------------
2. Statutory Basis
The proposed rule change is designed to be consistent with
Regulation NMS and with Section 6(b) of the Act \7\ in general, and
furthers the objectives of Section 6(b)(5) of the Act \8\ in particular
in that the Exchange's proposed rules are 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.
---------------------------------------------------------------------------
\7\ 15 U.S.C. 78f(b).
\8\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
B. Self-Regulatory Organization's Statement on Burden on Competition
The proposed rule change does not 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
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
The foregoing proposed rule change is subject to Section
19(b)(3)(A)(iii) of the Act \9\ and Rule 19b-4(f)(6) thereunder \10\
because the proposal: (i) Does not significantly affect the protection
of investors or the public interest; (ii) does not impose any
significant burden on competition; and (iii) does not become operative
prior to 30 days after the date of filing or such shorter time as the
Commission may designate if consistent with the protection of investors
and the public interest; provided that the self-regulatory organization
has given the Commission notice of its intent to file the proposed rule
change, along with a brief description and text of the proposed rule
change, at least five business days prior to the date of filing of the
proposed rule change, or such shorter time as designated by the
Commission.
---------------------------------------------------------------------------
\9\ 15 U.S.C. 78s(b)(3)(A)(iii).
\10\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------
Amex has requested that the Commission waive the five-day pre-
filing requirement and the 30-day operative delay in order to enable
the Exchange to implement this rule change on an expeditious basis,
noting, in particular, the commencement of full industry compliance
with Rules 610 and 611 of Regulation NMS during the ``All Stocks
Phase'' that begins on August 20, 2007. The Commission believes that
waiving the 30-day operative delay is consistent with the protection of
investors and the public interest because the proposed rule change adds
an exemption to Rule 24-AEMI that is identical to that approved as part
of recent amendments to corresponding Rule 92 of the NYSE and does not
raise any new issues of regulatory concern.\11\ For these reasons, the
Commission waives the 30-day operative delay.\12\ The Commission also
waives the five-day pre-filing requirement.
---------------------------------------------------------------------------
\11\ See Securities Exchange Act Release No. 56017 (July 5,
2007), 72 FR 38110 (July 12, 2007).
\12\ For purposes only of waiving the operative delay for this
proposal, the Commission has considered the proposed rule's impact
on efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
---------------------------------------------------------------------------
At any time within 60 days of the filing of the proposed rule
change, the Commission may summarily abrogate such rule change if it
appears to the Commission that such action is necessary or appropriate
in the public interest, for the protection of investors, or otherwise
in furtherance of the purposes of the Act.\13\
---------------------------------------------------------------------------
\13\ See Section 19(b)(3)(C) of the Act, 15 U.S.C. 78s(b)(3)(C).
---------------------------------------------------------------------------
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-2007-91 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-2007-91. 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, 100 F Street, NE.,
Washington, DC 20549, on official business days between the hours of 10
a.m. and 3 p.m. Copies of such filing also will be available for
inspection and copying at the principal office of 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-2007-91 and should be
submitted on or before September 12, 2007.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\14\
---------------------------------------------------------------------------
\14\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7-16556 Filed 8-21-07; 8:45 am]
BILLING CODE 8010-01-P