[Federal Register: July 13, 2005 (Volume 70, Number 133)]
[Notices]
[Page 40409-40410]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr13jy05-140]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-51975; File No. SR-Amex-2005-065]
Self-Regulatory Organizations; American Stock Exchange LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change
and Amendment No. 1 Thereto Relating to Odd-Lots in Nasdaq Securities
July 6, 2005.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given
that on June 16, 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 and
II below, which Items have been prepared by Amex.\3\ On June 28, 2005,
Amex filed Amendment No. 1 to the proposed rule change.\4\ The Exchange
filed the proposed rule change pursuant to Section 19(b)(3)(A) of the
Act \5\ and Rule 19b-4(f)(6) thereunder,\6\ which renders the proposed
rule change effective upon filing with the Commission.\7\ 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\ The Commission has made minor technical changes to this
notice with Amex's consent. Telephone conversation between Jan Woo,
Attorney, Division of Market Regulation, Commission, and Laura
Clare, Assistant General Counsel, Amex, dated July 5, 2005.
\4\ Amendment No. 1 made technical and clarifying changes to the
proposed rule change.
\5\ 15 U.S.C. 78s(b)(3)(A).
\6\ 17 CFR 240.19b-4(f)(6).
\7\ The Exchange provided the Commission with written notice of
its intention to file the proposed rule change on June 14, 2005. The
Commission received the Exchange's submission, and asked the
Exchange to file the instant proposed rule change, pursuant to Rule
19b-4(f)(6) under the Act. 17 CFR 240.19-4(f)(6).
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
Amex proposes to extend for an additional six-month period ending
December 30, 2005, the Exchange's pilot program for odd-lot execution
procedures for Nasdaq securities traded on the Exchange pursuant to
unlisted trading privileges. There is no proposed rule text. Amex is
making no changes to the pilot program as it currently operates, other
than extending it through December 30, 2005.
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 Commission approved, and the Exchange implemented, a pilot
program for odd-lot order \8\ executions in Nasdaq securities
transacted on the Exchange pursuant to unlisted trading privileges.
Paragraph (j) of Amex Rule 118 (``Trading in Nasdaq National Market
Securities'') describes the Exchange's odd-lot execution procedures for
Nasdaq securities, and Commentary .05 of Amex Rule 205 (``Manner of
Executing Odd-Lot Orders'') references Amex Rule 118(j) odd-lot
procedures. The pilot program was originally approved on August 2, 2002
for a six-month period,\9\ and was extended four times, with the most
recent extension due to expire on June 30, 2005.\10\
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\8\ An odd-lot order is an order for less than 100 shares.
\9\ See Securities Exchange Act Release No. 46304 (August 2,
2002), 67 FR 51903 (August 9, 2002)(SR-Amex-2002-56).
\10\ See Securities Exchange Act Release Nos. 48174 (July 14,
2003), 68 FR 43409 (July 22, 2003)(SR-Amex-2003-56)(extending the
pilot until December 27, 2003); 48995 (December 24, 2003), 68 FR
75670 (December 31, 2003)(SR-Amex-2003-102) (extending the pilot
until June 27, 2004); 49855 (June 14, 2004), 69 FR 35399 (June 24,
2004)(SR-Amex-2004-30)(extending the pilot until December 27, 2004);
and 50934 (December 27, 2004), 70 FR 412 (January 4, 2005)(SR-Amex-
2004-108)(extending the pilot until June 30, 2005).
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Under the Exchange's current pilot program, after the opening of
trading in Nasdaq securities, odd-lot market orders and executable odd-
lot limit orders are executed at the qualified national best bid or
offer \11\ at the time the order is received at the trading post or
through Amex Order File. Odd-lot market orders and executable odd-lot
limit orders entered before the opening of trading in Nasdaq securities
are executed at the price of the first round-lot or part of round-lot
transaction on the Exchange. Non-executable limit orders, stop orders,
stop limit orders, orders filled after the close and non-regular way
trades are executed in accordance with Amex Rule 205 A(2), A(3), A(4),
C(1) and C(2), respectively. Orders to buy or sell ``at the close'' are
filled at the price of the closing round-lot sale on the Exchange. In a
locked market condition, odd-lot market orders and executable odd-lot
limit orders are executed at the locked market price. In a crossed
market condition, odd-lot market orders are
[[Page 40410]]
executed at the mean of the bid and offer prices when the displayed
national best bid is higher than the displayed national best offer by
$.05 or less. When the displayed national best bid is higher than the
displayed national best offer by more than $.05, odd-lot market orders
are executed when the crossed market condition no longer exists. In
addition, in a crossed market condition, executable odd-lot limit
orders are executed at the crossed market bid price (in the case of an
order to sell) or at the crossed market offer price (in the case of an
order to buy). For example, if the bid and offer are 20.10 and 20.00,
respectively, an executable odd-lot sell limit order priced at 20.10 or
less will be executed at 20.10 and an executable odd-lot buy limit
order priced at 20.00 or higher will be executed at 20.00.
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\11\ In Amex Rule 118(j), the qualified national best bid and
offer are defined as the highest bid and lowest offer, respectively,
disseminated (A) by the Exchange or (B) by another market center
participating in the Joint Self-Regulatory Organization Plan
Governing the Collection, Consolidation and Dissemination of
Quotation and Transaction Information for Nasdaq Listed Securities
Traded on Exchanges on an Unlisted Trading Privileges Basis
(``Plan''); provided, however, that the bid and offer in another
such market center will be considered in determining the qualified
national best bid or offer in a stock only if (i) the quotation
conforms to the requirements of Amex Rule 127 (``Minimum Price
Variations''), (ii) the quotation does not result in a locked or
crossed market, (iii) the market center is not experiencing
operational or system problems with respect to the dissemination of
quotation information, and (iv) the bid or offer is ``firm,'' that
is, members of the market center disseminating the bid or offer are
not relieved of their obligations with respect to such bid or offer
under paragraph (c)(2) of Rule 11Ac1-1 pursuant to the ``unusual
market'' exception of paragraph (b)(3) of Rule 11Ac1-1 under the
Act. 17 CFR 240.11Ac1-1.
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The Exchange believes that the existing odd-lot execution
procedures have operated efficiently. Furthermore, the Exchange has
received no complaints from members or the public regarding odd-lot
executions. Therefore, the Exchange seeks an extension to the pilot
program for an additional six-month period ending December 30, 2005,
providing the Exchange time to assess further enhancements to the odd-
lot execution procedures.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with Section 6(b) of the Act \12\ in general and furthers the
objectives of Section 6(b)(5) \13\ 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 facilitating transactions in
securities, to remove impediments to and perfect the mechanism of a
free and open market and a national market system, to protect investors
and the public interest and is not designed to permit unfair
discrimination between customers, issuers, brokers, or dealers.
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\12\ 15 U.S.C. 78f(b).
\13\ 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 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 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
Because the foregoing proposed rule change: (1) Does not
significantly affect the protection of investors or the public
interest; (2) does not impose any significant burden on competition;
and (3) by its terms does not become operative for 30 days after the
date of this filing, or such shorter time as the Commission may
designate if consistent with the protection of investors and the public
interest, the proposed rule change has become effective pursuant to
Section 19(b)(3)(A) \14\ of the Act and Rule 19b-4(f)(6)
thereunder.\15\
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\14\ 15 U.S.C. 78s(b)(3)(A).
\15\ 17 CFR 240.19b-4(f)(6).
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The Exchange requests that the Commission waive the 30-day
operative delay, as specified in Rule 19b-4(f)(6)(iii),\16\ and
designate the proposed rule change to become operative immediately. The
Commission believes that waiving the 30-day operative delay is
consistent with the protection of investors and the public interest
because such waiver would prevent the Amex's pilot program from
expiring.\17\
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\16\ 17 CFR 240.19b-4(f)(6)(iii).
\17\ 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).
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At any time within 60 days of the filing of the amended 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.\18\
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\18\ The effective date of the original proposed rule is June
16, 2005. The effective date of Amendment No. 1 is June 28, 2005.
For purposes of calculating the 60-day period within which the
Commission may summarily abrogate the proposed rule change under
Section 19(b)(3)(C) of the Act, the Commission considers the period
to commence on June 28, 2005, the date on which Amex submitted
Amendment No. 1. See 15 U.S.C. 78s(b)(3)(C).
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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 No. SR-Amex-2005-065 on the subject line.
Paper Comments
Send paper comments in triplicate to Jonathan G. Katz,
Secretary, Securities and Exchange Commission, Station Place, 100 F
Street, NE., Washington, DC 20549-9303.
All submissions should refer to File Number SR-Amex-2005-065. 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 Commissions 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 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-NASD-2005-065 and should be submitted by August 3, 2005.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\19\
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\19\ 17 CFR 200.30-3(a)(12).
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J. Lynn Taylor,
Assistant Secretary.
[FR Doc. E5-3712 Filed 7-12-05; 8:45 am]
BILLING CODE 8010-01-P