[Federal Register: February 20, 2007 (Volume 72, Number 33)]
[Notices]
[Page 7779-7780]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr20fe07-27]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-55272; File No. SR-Amex-2006-77]
Self-Regulatory Organizations; American Stock Exchange LLC; Order
Granting Approval to Proposed Rule Change and Amendment No. 1 Thereto
To Amend Rules 918 and 918-Ante Regarding Trading Rotations, Halts and
Suspensions
February 12, 2007.
I. Introduction
On August 16, 2006, the American Stock Exchange LLC (``Amex'' or
``Exchange'') filed with the Securities and Exchange Commission
(``Commission'') the proposed rule change to amend Amex Rules 918 and
918-ANTE relating to trading rotations and trading halts. On December
5, 2006, Amex filed Amendment No. 1 to the proposed rule change. The
proposed rule change, as modified by Amendment No. 1, was published for
comment in the Federal Register on December 29, 2006.\1\ The Commission
received no comments regarding the proposal. This order approves the
proposed rule change as modified by Amendment No. 1.
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\1\ See Securities Exchange Act Release No. 54995 (December 21,
2006), 71 FR 78474.
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II. Discussion and Commission Findings
The Exchange proposes to amend Amex Rules 918 and 918-ANTE relating
to trading rotations and trading halts. Specifically, Amex Rules 918(a)
and 918-ANTE(a) currently provide that a trading rotation shall be
employed at the opening of each business day following the opening of
the underlying security in the primary market. Amex Rules 918(b) and
918-ANTE(b) provide that trading on any Exchange option contract may be
halted or suspended whenever the Exchange deems such action
appropriate. Included in these rules is a list of factors that the
Exchange may use to determine if a trading halt or suspension is
warranted. Pursuant to Amex Rules 918(b)(1) and 918-ANTE(b)(1), the
Exchange may halt or suspend trading in an option contract if the
underlying security has been halted or suspended in the primary market.
Similarly, the Exchange may also consider, pursuant to Amex Rules
918(b)(2) and 918-ANTE(b)(2), halting or suspending trading in an
option contract if the opening of such underlying stock in the primary
market has been delayed due to unusual circumstances.
``Primary market'' is defined in Amex Rules 900(b)(26) and 900-
ANTE(b)(26) as (i) With respect to an underlying equity security which
is principally traded on a national securities exchange, the principal
exchange market in which the underlying security is traded, (ii) with
respect to an underlying equity security which is principally traded in
the over-the-counter market, the market reflected by Nasdaq,\2\ and
(iii) with respect to any other type of security, the market reflected
by any widely recognized quotation dissemination system.
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\2\ The Commission notes that Nasdaq currently operates as a
national securities exchange with respect to Nasdaq-listed
securities and as a facility of the NASD with respect to non-Nasdaq
exchange listed securities.
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The Exchange proposes to amend Amex Rules 918(a)(1) and Amex Rule
918-Ante(a)(1) to permit the opening rotation to begin once the
underlying security has opened for trading in any market. In addition,
Amex proposes to amend Amex Rule 918-Ante Commentary .01(d) to provide
that the automated opening rotation shall begin once the opening trade
or quote is disseminated by any market. Amex proposes to amend Amex
Rules 918(b)(1) and 918-ANTE(b)(1) to implement trading halts and
suspensions in any options contract if the underlying security is
subject to a trading halt or suspension across several markets or in
the primary listed market. Amex also proposes to amend Amex Rules
918(b)(2) and 918-ANTE(b)(2) to institute trading halts and suspensions
in any options contract if there is a delay in the opening of the
underlying security across several markets or in the primary listed
market because of unusual circumstances. Additionally, the Exchange
proposes to amend Amex Rules 918 Commentary .01(c) and 918-ANTE
Commentary .01(g) to permit the closing rotation to begin once the
final price for the underlying security is established in the trading
markets and/or the primary listed market. Finally, the Exchange
proposes to make clarifying changes to Amex Rules 918 and 918-ANTE to
clarify that trading rotations, halts and suspensions apply to any
options on a stock, exchange traded fund and trust issued receipt.
The Commission finds that the proposed rule change is consistent
with the requirements of the Act and the rules and regulations
thereunder applicable to a national securities exchange and, in
particular, the requirements of Section 6(b)(5) of the Act,\3\ which
requires, among other things, Amex's rules 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.\4\
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\3\ 15 U.S.C. 78f(b)(5).
\4\ In approving this proposed rule change the Commission notes
that it has considered the proposed rule's impact on efficiency,
competition, and capital formation. See 15 U.S.C. 78c(f).
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Amex represented that the analysis of which market is the ``primary
market'' for purposes of trading rotations and halts has become
burdensome and uncertain due to trading of underlying securities in
multiple markets. The Commission believes that the proposed rule change
will provide Amex with flexibility to determine when to permit opening
and closing rotations to begin by removing the requirement that it
analyze which market is the primary market. As proposed, Amex may
[[Page 7780]]
institute opening and closing rotations based on any market trading the
underlying security. With regard to trading halts, however, Amex
proposes to halt trading if multiple underlying markets have halted
trading or if the primary listed market halted trading. The Commission
believes that this standard is sufficient to establish when Amex should
halt trading in its option contracts.
III. Conclusion
It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\5\ that the proposed rule change (SR-Amex-2006-77), as modified by
Amendment No. 1, be and hereby is, approved.
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\5\ 15 U.S.C. 78s(b)(2).
\6\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\6\
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7-2837 Filed 2-16-07; 8:45 am]
BILLING CODE 8010-01-P