Self-Regulatory Organizations; Order Approving a Proposed Rule Change and Amendments No. 1, 2, 3, 4, 5, and 6 Thereto, and Notice of Filing and Order Granting Accelerated Approval to Amendments No. 7 and 8 Thereto by the American Stock Exchange LLC To Require the Immediate Display of Customer Options Limit Orders, 4163-4165 [E5-317]

Download as PDF Federal Register / Vol. 70, No. 18 / Friday, January 28, 2005 / Notices information collection requirements are necessary to assure that the substantive provisions of the Act may be enforced as a matter of contract right in the United States or Canada by the fund’s shareholders or by the Commission. Certain information collection requirements in rule 7d–1 are associated with complying with the Act’s provisions. These information collection requirements are reflected in the information collection requirements applicable to those provisions for all registered funds. The Commission believes that one fund is registered under rule 7d–1 and currently active. Apart from requirements under the Act applicable to all registered funds, rule 7d–1 imposes ongoing burdens to maintain records in the United States, and to update, as necessary, the foreign fund’s list of affiliated persons. The Commission staff estimates that the rule requires a total of three responses each year. The staff estimates that a respondent would make two responses each year under the rule, one response to maintain records in the United States and one response to update its list of affiliated persons. The Commission staff further estimates that a respondent’s investment adviser would make one response each year under the rule to maintain records in the United States. Commission staff estimates that each recordkeeping response would require 6.25 hours each of secretarial and compliance clerk time at a cost of $21.10 and $21.50 per hour, respectively, and the response to update the list of affiliated persons would require 0.25 hours of secretarial time, for a total annual burden of 25.25 hours at a cost of $537.78. The estimated number of 25.25 burden hours is identical to the current allocation. If a foreign fund were to file an application under the rule, the Commission estimates that the rule would impose initial information collection burdens (for filing an application, preparing the specified charter, bylaw, and contract provisions, designations of agents for service of process, and an initial list of affiliated persons, and establishing a means of keeping records in the United States) of approximately 90 hours for the fund and its associated persons. The Commission is not including these hours in its calculation of the annual burden because no fund has applied under rule 7d–1 to register under the Act in the last three years. After registration, a foreign fund may file a supplemental application seeking special relief designed for the fund’s particular circumstances. Because rule VerDate jul<14>2003 15:43 Jan 27, 2005 Jkt 205001 7d–1 does not mandate these applications and the fund determines whether to submit an application, the Commission has not allocated any burden hours for these applications. These estimates of average burden hours are made solely for the purposes of the Paperwork Reduction Act. The estimate is not derived from a comprehensive or even a representative survey or study of Commission rules. The Commission believes that the active registrant and its associated persons may spend (excluding the cost of burden hours) approximately $540 per year in maintaining records in the United States. These estimated costs include fees for a custodian or other agent to retain records, storage costs, and the costs of transmitting records. If a Canadian or other foreign fund in the future applied to register under the Act under rule 7d–1, the fund initially might have capital and start-up costs (not including hourly burdens) of an estimated $17,280 to comply with the rule’s initial information collection requirements. These costs include legal and processing-related fees for preparing the required documentation (such as the application, charter, bylaw, and contract provisions), designations for service of process, and the list of affiliated persons. Other related costs would include fees for establishing arrangements with a custodian or other agent for maintaining records in the United States, copying and transportation costs for records, and the costs of purchasing or leasing computer equipment, software, or other record storage equipment for records maintained in electronic or photographic form. The Commission expects that a foreign fund and its sponsors would incur these costs immediately, and that the annualized cost of the expenditures would be $17,280 in the first year. Some expenditures might involve capital improvements, such as computer equipment, having expected useful lives for which annualized figures beyond the first year would be meaningful. These annualized figures are not provided, however, because, in most cases, the expenses would be incurred immediately rather than on an annual basis. The Commission is not including these costs in its calculation of the annualized capital/start-up costs because no investment company has applied under rule 7d–1 to register under the Act pursuant to rule 7d–1 in the last three years. These estimates of average costs are made solely for the purposes of the Paperwork Reduction Act. The estimate is not derived from a comprehensive or PO 00000 Frm 00080 Fmt 4703 Sfmt 4703 4163 even a representative survey or study of the costs of Commission rules. An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a currently valid OMB control number. General comments regarding the above information should be directed to the following persons: (i) Desk Officer for the Securities and Exchange Commission, Office of Information and Regulatory Affairs, Office of Management and Budget, Room 10102, New Executive Office Building, Washington, DC 20503 or e-mail to: David_Rostker@omb.eop.gov; and (ii) R. Corey Booth, Director/Chief Information Officer, Office of Information Technology, Securities and Exchange Commission, 450 5th Street, NW., Washington, DC 20549. Comments must be submitted to OMB within 30 days of this notice. Dated: January 21, 2005. Margaret H. McFarland, Deputy Secretary. [FR Doc. E5–322 Filed 1–27–05; 8:45 am] BILLING CODE 8010–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–51062; File No. SR–Amex– 00–27] Self-Regulatory Organizations; Order Approving a Proposed Rule Change and Amendments No. 1, 2, 3, 4, 5, and 6 Thereto, and Notice of Filing and Order Granting Accelerated Approval to Amendments No. 7 and 8 Thereto by the American Stock Exchange LLC To Require the Immediate Display of Customer Options Limit Orders January 21, 2005. I. Introduction On May 10, 2000, the American Stock Exchange LLC (‘‘Amex’’ or ‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘Commission’’), pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’) 1 and Rule 19b–4 thereunder,2 a proposed rule change to amend Amex Rules 958A and 958A–ANTE to require the immediate display of customer options limit orders. Amex filed amendments to the proposed rule change on March 13, 1 15 22 E:\FR\FM\28JAN1.SGM U.S.C. 78s(b)(1). 17 CFR 240.19b–4 28JAN1 4164 Federal Register / Vol. 70, No. 18 / Friday, January 28, 2005 / Notices 2002,3 April 3, 2003,4 July 15, 2003,5 August 19, 2003,6 October 22, 2003,7 and August 12, 2004.8 The proposed rule change, as amended by Amendments No. 1 through 6, was published for comment in the Federal Register on August 19, 2004.9 No comments were received regarding the amended proposal. Amex filed amendments to the proposed rule change on December 16, 2004,10 and January 6, 2005.11 This order approves the proposed rule change and Amendments No. 1 through 6 and grants accelerated approval to and solicits comment on Amendments No. 7 and 8. II. Description of Proposed Rule Amex proposes to amend Amex Rules 958A and 958A–ANTE to require the immediate display of customer options limit orders12 that better the current market quotation (‘‘Display Obligation’’). Under the proposal, Amex specialists would be required to display immediately upon receipt the price and size of each customer options limit order held by the specialist that is at a price or size that would improve the displayed bid or offer in the option that is the subject of the limit order. Amex 3 On March 13, 2002, Amex filed a Form 19b–4, which replaced the original filing in its entirety (‘‘Amendment No. 1’’). 4 On April 3, 2003, Amex filed a Form 19b–4, which replaced the original filing and Amendment No. 1 in their entirety (‘‘Amendment No. 2’’). 5 On July 15, 2003, Amex filed a Form 19b–4, which replaced the original filing and all previous amendments in their entirety (‘‘Amendment No. 3’’). 6 On August 19, 2003, Amex filed a Form 19b– 4, which replaced the original filing and all previous amendments in their entirety (‘‘Amendment No. 4’’). 7 See letter from Claire P. McGrath, Senior Vice President and Deputy General Counsel, Amex, to Nancy Sanow, Assistant Director, Division of Market Regulation, Commission, dated October 21, 2003 (‘‘Amendment No. 5’’). 8 On August 12, 2004, Amex filed a Form 19b– 4, which replaced the original filing and all previous amendments in their entirety (‘‘Amendment No. 6’’). 9 See Securities Exchange Act Release No. 50188 (August 12, 2004), 69 FR 51495 (‘‘Notice of the Proposal’’). 10 See Amendment No. 7, dated December 16, 2004, submitted by Clare P. McGrath, Senior Vice President and Deputy General Counsel, Amex (‘‘Amendment No. 7’’). In Amendment No. 7, Amex proposes a minor modification to the exemptions to the Display Obligation. 11 See Amendment No. 8, dated January 6, 2005, submitted by Clare P. McGrath, Senior Vice President and Deputy General Counsel, Amex (‘‘Amendment No. 8’’). In Amendment No. 8, Amex proposes a minor modification to the exemptions to the Display Obligation. 12 Amex proposes to define the term ‘‘customer options limit order’’ as ‘‘an order to buy or sell an option at a specified price and size that is for the account of a customer as defined in paragraph (a)(26) of Rule 11Ac1–1 under the Securities Exchange Act of 1934.’’ Proposed Amex Rules 958A(e)(3) and 958A–ANTE(e)(3). VerDate jul<14>2003 15:43 Jan 27, 2005 Jkt 205001 proposes to define ‘‘immediately upon receipt’’ to mean, under normal market conditions, as soon as practicable but no later than 30 seconds after receipt by the specialist.13 Amex proposes to exempt, or partially exempt, certain orders from the Display Obligation. Specifically, Amex proposes to exempt orders executed upon receipt as well as any order where the customer who placed it requests that the order not be displayed if, upon receipt of the order, the specialist announces to the trading crowd the information about the order that would be displayed absent the customer’s request. Amex further proposes that orders the terms of which are delivered by the specialist to another exchange for execution be exempted from the Display Obligation. Exempt order types would also include all or none orders, at the close orders, fill or kill orders, immediate or cancel orders, stop orders, stop limit orders, and complex orders (i.e., spread, straddle, switch and combination orders), orders received prior to or during the opening trading rotation whether at the beginning of the trading day or after a trading halt (although once the trading rotation ends such orders would then be subject to the Display Obligation), and orders of more than 100 contracts, unless the customer placing such order requests that it be displayed.14 Amex also proposes to amend Amex Rule 590 to include violations of the Exchange’s limit order display rule in the Minor Rule Violation Fine System. III. Commission Findings and Order Granting Approval The Commission finds that the proposed rule change, as amended, is consistent with the requirements of the Act and the rules and regulations thereunder applicable to a national securities exchange 15 and, in particular, the requirements of section 6(b)(5) of the Act,16 which requires, among other things, that the rules of an exchange be designed to prevent fraudulent and manipulative acts and practices, to 13 In its filing, Amex states that ‘‘receipt’’ means the time the order enters the Amex Order File system (‘‘AOF’’), which is consistent with its surveillance standard for other rules, such as the firm quote rule, wherein the Exchange measures compliance with the rule using the time the order enters the AOF. This means that the time of receipt is when the order is received in the AOF, even if the specialist does not happen to see it for several seconds. 14 For a complete discussion of these exempt order types, see Notice of the Proposal, supra note 3. 15 In approving this proposal, the Commission has considered the proposed rule’s impact on efficiency, competition, and capital formation. 15 U.S.C. 78c(f). 16 15 U.S.C. 78f(b)(5). PO 00000 Frm 00081 Fmt 4703 Sfmt 4703 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, and, in general, to protect investors and the public interest. Specifically, the Commission believes that the display of customer options limit orders that improve the price or size of the best disseminated Amex quote should promote transparency and enhance the quality of executions of customer options limit orders on Amex. The proposed amendments to Amex Rules 958A and 958A–ANTE introduce requirements for customer limit order display that are comparable to the requirements of the Commission’s Display Rule, Rule 11Ac1–4 under the Act,17 which is applicable to customer limit orders received in the equity market. In addition, the Commission believes that the Exchange’s proposal to exempt all or none, fill or kill, immediate or cancel, and large sized orders from the Display Obligation is reasonable since these order types are either identical or substantially similar to order types exempt from the Commission’s Display Rule. The Commission also believes that it is consistent with the Act for Amex to exempt stop orders and stop limit orders from the Display Obligation under its rules. These orders are contingent orders that are subject to a particular triggering event and, thus, are not available for execution until the triggering event occurs. A stop order becomes a market order when triggered and thus is not subject to the Display Obligation because such an order would then be immediately executable. A stop limit order becomes a limit order when the triggering event occurs. This limit order would be subject to the Display Obligation. At the close orders may not be represented, displayed or booked until as near as possible to the close of trading, and, therefore, the Commission believes it is reasonable to exempt such orders from the Display Obligation. Spread, combination, straddle, stockoption, and one-cancels-the-other orders are complex orders with more than one component and, thus, the Commission believes, are not suitable for display. During a trading rotation, Amex systems attempt to set an opening price for the series. Until that opening price is established, there is no disseminated market. Therefore, the Commission believes it is reasonable to exempt 17 17 E:\FR\FM\28JAN1.SGM CFR 240.11Ac1–4. 28JAN1 Federal Register / Vol. 70, No. 18 / Friday, January 28, 2005 / Notices orders received during a trading rotation from the Display Obligation. The Commission notes, however, that once the trading rotation ends, any orders not executed would then be subject to the Display Obligation. Finally, customer orders the terms of which are delivered by the specialist to another exchange for execution are exempt from the Exchange’s Display Obligation. The Commission believes it is reasonable to exempt such orders since they are subject to execution upon receipt at the other options exchange. Moreover, the Exchange represents that if the order delivered to the other options exchange were canceled, in whole or in part, by the other exchange, then the original customer order would be subject to the Display Obligation immediately upon receipt of the cancellation notice by the Exchange. The Commission finds good cause for approving Amendments No. 7 and 8 to the proposed rule change prior to the thirtieth day after their publication in the Federal Register, pursuant to section 19(b)(2) of the Act.18 Amendments No. 7 and 8 made minor modifications to the exemption for customer orders the terms of which are immediately delivered to another exchange for execution. Acceleration of Amendments No. 7 and 8 will permit the Exchange to implement the proposal in an expeditious manner. The Commission, therefore, believes that good cause exists, consistent with section 6(b)(5) 19 and section 19(b) 20 of the Act, to accelerate approval of Amendments No. 7 and 8. IV. Solicitation of Comments Concerning Amendments No. 7 and 8 Interested persons are invited to submit written data, views, and arguments concerning Amendments No. 7 and 8, including whether they are consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission’s Internet comment form (https://www.sec.gov/ rules/sro.shtml); or • Send an e-mail to rulecomments@sec.gov. Please include File Number SR-Amex-00–27 on the subject line. 450 Fifth Street, NW., Washington, DC 20549–0609. All submissions should refer to File Number SR-Amex-00–27. 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 (https://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 the Exchange. 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-00–27 and should be submitted on or before February 18, 2005. V. Conclusion It is therefore ordered, pursuant to section 19(b)(2) of the Act,21 that the proposed rule change (File No. SRAmex-00–27), as amended, be approved, and that Amendments No. 7 and 8 thereto be approved on an accelerated basis. For the Commission, by the Division of Market Regulation, pursuant to delegated authority.22 Margaret H. McFarland, Deputy Secretary. [FR Doc. E5–317 Filed 1–27–05; 8:45 am] BILLING CODE 8010–01–P Paper Comments • Send paper comments in triplicate to Jonathan G. Katz, Secretary, Securities and Exchange Commission, 18 15 U.S.C. 78s(b)(2). U.S.C. 78f(b)(5). 20 15 U.S.C. 78s(b). 21 Id. 19 15 VerDate jul<14>2003 15:43 Jan 27, 2005 22 17 Jkt 205001 PO 00000 CFR 200.30–3(a)(12). Frm 00082 Fmt 4703 Sfmt 4703 4165 SECURITIES AND EXCHANGE COMMISSION [Release No. 34–51063; File No. SR–CBOE– 2004–35] Self-Regulatory Organizations; Order Approving a Proposed Rule Change and Notice of Filing and Order Granting Accelerated Approval to Amendment No. 2 Thereto by the Chicago Board Options Exchange, Inc. To Require the Immediate Display of Customer Limit Orders January 21, 2005. I. Introduction On June 17, 2004, the Chicago Board Options Exchange, Inc. (‘‘CBOE’’ or ‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘Commission’’), pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’) 1 and Rule 19b-4 thereunder,2 a proposed rule change to amend CBOE Rule 8.85 to require the immediate display of customer limit orders. The proposed rule change was published for comment in the Federal Register on July 2, 2004.3 No comments were received regarding the proposal. CBOE filed Amendments No. 1 and 2 with the Commission on August 31, 2004,4 and January 6, 2005,5 respectively. This order approves the proposed rule change, grants accelerated approval to Amendment No. 2, and solicits comment on Amendment No 2. II. Description of Proposed Rule CBOE proposes to amend CBOE Rule 8.85(b)(i) to codify an immediate display requirement with respect to eligible customer limit orders 6 (‘‘Display Obligation’’). Under the proposal, each DPM would be required 1 15 U.S.C. 78s(b)(1). CFR 240.19b–4. 3 See Securities Exchange Act Release No. 49916 (June 25, 2004), 69 FR 40422 (‘‘Notice of the Proposal’’). 4 See letter from Steve Youhn, Assistant Secretary, CBOE, to Nancy Sanow, Assistant Director, Commission, Division of Market Regulation, dated August 30, 2004 (‘‘Amendment No. 1’’). In Amendment No. 1, CBOE corrected a typographical error in the proposed rule text. Because Amendment No. 1 is a technical amendment, it is not subject to notice and comment. 5 See Amendment No. 2, dated January 6, 2005, submitted by Steve Youhn, Assistant Secretary, CBOE (‘‘Amendment No. 2’’). In Amendment No. 2, CBOE proposes a minor modification to the exemptions to the Display Obligation. 6 CBOE proposes to define the term ‘‘customer limit order’’ as ‘‘an order to buy or sell a listed option at a specified price that is not for the account of either a broker or dealer; provided, however, that the term customer limit order shall include an order transmitted by a broker or dealer on behalf of a customer.’’ Proposed CBOE Rule 8.85(b)(i). 2 17 E:\FR\FM\28JAN1.SGM 28JAN1

Agencies

SECURITIES AND EXCHANGE COMMISSION

[Federal Register Volume 70, Number 18 (Friday, January 28, 2005)]
[Notices]
[Pages 4163-4165]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E5-317]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-51062; File No. SR-Amex-00-27]


Self-Regulatory Organizations; Order Approving a Proposed Rule 
Change and Amendments No. 1, 2, 3, 4, 5, and 6 Thereto, and Notice of 
Filing and Order Granting Accelerated Approval to Amendments No. 7 and 
8 Thereto by the American Stock Exchange LLC To Require the Immediate 
Display of Customer Options Limit Orders

January 21, 2005.

I. Introduction

    On May 10, 2000, the American Stock Exchange LLC (``Amex'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission''), pursuant to section 19(b)(1) of the Securities 
Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder,\2\ a 
proposed rule change to amend Amex Rules 958A and 958A-ANTE to require 
the immediate display of customer options limit orders. Amex filed 
amendments to the proposed rule change on March 13,

[[Page 4164]]

2002,\3\ April 3, 2003,\4\ July 15, 2003,\5\ August 19, 2003,\6\ 
October 22, 2003,\7\ and August 12, 2004.\8\ The proposed rule change, 
as amended by Amendments No. 1 through 6, was published for comment in 
the Federal Register on August 19, 2004.\9\ No comments were received 
regarding the amended proposal. Amex filed amendments to the proposed 
rule change on December 16, 2004,\10\ and January 6, 2005.\11\ This 
order approves the proposed rule change and Amendments No. 1 through 6 
and grants accelerated approval to and solicits comment on Amendments 
No. 7 and 8.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 2 17 CFR 240.19b-4
    \3\ On March 13, 2002, Amex filed a Form 19b-4, which replaced 
the original filing in its entirety (``Amendment No. 1'').
    \4\ On April 3, 2003, Amex filed a Form 19b-4, which replaced 
the original filing and Amendment No. 1 in their entirety 
(``Amendment No. 2'').
    \5\ On July 15, 2003, Amex filed a Form 19b-4, which replaced 
the original filing and all previous amendments in their entirety 
(``Amendment No. 3'').
    \6\ On August 19, 2003, Amex filed a Form 19b-4, which replaced 
the original filing and all previous amendments in their entirety 
(``Amendment No. 4'').
    \7\ See letter from Claire P. McGrath, Senior Vice President and 
Deputy General Counsel, Amex, to Nancy Sanow, Assistant Director, 
Division of Market Regulation, Commission, dated October 21, 2003 
(``Amendment No. 5'').
    \8\ On August 12, 2004, Amex filed a Form 19b-4, which replaced 
the original filing and all previous amendments in their entirety 
(``Amendment No. 6'').
    \9\ See Securities Exchange Act Release No. 50188 (August 12, 
2004), 69 FR 51495 (``Notice of the Proposal'').
    \10\ See Amendment No. 7, dated December 16, 2004, submitted by 
Clare P. McGrath, Senior Vice President and Deputy General Counsel, 
Amex (``Amendment No. 7''). In Amendment No. 7, Amex proposes a 
minor modification to the exemptions to the Display Obligation.
    \11\ See Amendment No. 8, dated January 6, 2005, submitted by 
Clare P. McGrath, Senior Vice President and Deputy General Counsel, 
Amex (``Amendment No. 8''). In Amendment No. 8, Amex proposes a 
minor modification to the exemptions to the Display Obligation.
---------------------------------------------------------------------------

II. Description of Proposed Rule

    Amex proposes to amend Amex Rules 958A and 958A-ANTE to require the 
immediate display of customer options limit orders\12\ that better the 
current market quotation (``Display Obligation''). Under the proposal, 
Amex specialists would be required to display immediately upon receipt 
the price and size of each customer options limit order held by the 
specialist that is at a price or size that would improve the displayed 
bid or offer in the option that is the subject of the limit order. Amex 
proposes to define ``immediately upon receipt'' to mean, under normal 
market conditions, as soon as practicable but no later than 30 seconds 
after receipt by the specialist.\13\
---------------------------------------------------------------------------

    \12\ Amex proposes to define the term ``customer options limit 
order'' as ``an order to buy or sell an option at a specified price 
and size that is for the account of a customer as defined in 
paragraph (a)(26) of Rule 11Ac1-1 under the Securities Exchange Act 
of 1934.'' Proposed Amex Rules 958A(e)(3) and 958A-ANTE(e)(3).
    \13\ In its filing, Amex states that ``receipt'' means the time 
the order enters the Amex Order File system (``AOF''), which is 
consistent with its surveillance standard for other rules, such as 
the firm quote rule, wherein the Exchange measures compliance with 
the rule using the time the order enters the AOF. This means that 
the time of receipt is when the order is received in the AOF, even 
if the specialist does not happen to see it for several seconds.
---------------------------------------------------------------------------

    Amex proposes to exempt, or partially exempt, certain orders from 
the Display Obligation. Specifically, Amex proposes to exempt orders 
executed upon receipt as well as any order where the customer who 
placed it requests that the order not be displayed if, upon receipt of 
the order, the specialist announces to the trading crowd the 
information about the order that would be displayed absent the 
customer's request. Amex further proposes that orders the terms of 
which are delivered by the specialist to another exchange for execution 
be exempted from the Display Obligation. Exempt order types would also 
include all or none orders, at the close orders, fill or kill orders, 
immediate or cancel orders, stop orders, stop limit orders, and complex 
orders (i.e., spread, straddle, switch and combination orders), orders 
received prior to or during the opening trading rotation whether at the 
beginning of the trading day or after a trading halt (although once the 
trading rotation ends such orders would then be subject to the Display 
Obligation), and orders of more than 100 contracts, unless the customer 
placing such order requests that it be displayed.\14\ Amex also 
proposes to amend Amex Rule 590 to include violations of the Exchange's 
limit order display rule in the Minor Rule Violation Fine System.
---------------------------------------------------------------------------

    \14\ For a complete discussion of these exempt order types, see 
Notice of the Proposal, supra note 3.
---------------------------------------------------------------------------

III. Commission Findings and Order Granting Approval

    The Commission finds that the proposed rule change, as amended, is 
consistent with the requirements of the Act and the rules and 
regulations thereunder applicable to a national securities exchange 
\15\ and, in particular, the requirements of section 6(b)(5) of the 
Act,\16\ which requires, among other things, that the rules of an 
exchange 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 facilitating 
transactions in securities, 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.
---------------------------------------------------------------------------

    \15\ In approving this proposal, the Commission has considered 
the proposed rule's impact on efficiency, competition, and capital 
formation. 15 U.S.C. 78c(f).
    \16\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    Specifically, the Commission believes that the display of customer 
options limit orders that improve the price or size of the best 
disseminated Amex quote should promote transparency and enhance the 
quality of executions of customer options limit orders on Amex. The 
proposed amendments to Amex Rules 958A and 958A-ANTE introduce 
requirements for customer limit order display that are comparable to 
the requirements of the Commission's Display Rule, Rule 11Ac1-4 under 
the Act,\17\ which is applicable to customer limit orders received in 
the equity market. In addition, the Commission believes that the 
Exchange's proposal to exempt all or none, fill or kill, immediate or 
cancel, and large sized orders from the Display Obligation is 
reasonable since these order types are either identical or 
substantially similar to order types exempt from the Commission's 
Display Rule.
---------------------------------------------------------------------------

    \17\ 17 CFR 240.11Ac1-4.
---------------------------------------------------------------------------

    The Commission also believes that it is consistent with the Act for 
Amex to exempt stop orders and stop limit orders from the Display 
Obligation under its rules. These orders are contingent orders that are 
subject to a particular triggering event and, thus, are not available 
for execution until the triggering event occurs. A stop order becomes a 
market order when triggered and thus is not subject to the Display 
Obligation because such an order would then be immediately executable. 
A stop limit order becomes a limit order when the triggering event 
occurs. This limit order would be subject to the Display Obligation.
    At the close orders may not be represented, displayed or booked 
until as near as possible to the close of trading, and, therefore, the 
Commission believes it is reasonable to exempt such orders from the 
Display Obligation. Spread, combination, straddle, stock-option, and 
one-cancels-the-other orders are complex orders with more than one 
component and, thus, the Commission believes, are not suitable for 
display.
    During a trading rotation, Amex systems attempt to set an opening 
price for the series. Until that opening price is established, there is 
no disseminated market. Therefore, the Commission believes it is 
reasonable to exempt

[[Page 4165]]

orders received during a trading rotation from the Display Obligation. 
The Commission notes, however, that once the trading rotation ends, any 
orders not executed would then be subject to the Display Obligation.
    Finally, customer orders the terms of which are delivered by the 
specialist to another exchange for execution are exempt from the 
Exchange's Display Obligation. The Commission believes it is reasonable 
to exempt such orders since they are subject to execution upon receipt 
at the other options exchange. Moreover, the Exchange represents that 
if the order delivered to the other options exchange were canceled, in 
whole or in part, by the other exchange, then the original customer 
order would be subject to the Display Obligation immediately upon 
receipt of the cancellation notice by the Exchange.
    The Commission finds good cause for approving Amendments No. 7 and 
8 to the proposed rule change prior to the thirtieth day after their 
publication in the Federal Register, pursuant to section 19(b)(2) of 
the Act.\18\ Amendments No. 7 and 8 made minor modifications to the 
exemption for customer orders the terms of which are immediately 
delivered to another exchange for execution. Acceleration of Amendments 
No. 7 and 8 will permit the Exchange to implement the proposal in an 
expeditious manner. The Commission, therefore, believes that good cause 
exists, consistent with section 6(b)(5) \19\ and section 19(b) \20\ of 
the Act, to accelerate approval of Amendments No. 7 and 8.
---------------------------------------------------------------------------

    \18\ 15 U.S.C. 78s(b)(2).
    \19\ 15 U.S.C. 78f(b)(5).
    \20\ 15 U.S.C. 78s(b).
---------------------------------------------------------------------------

IV. Solicitation of Comments Concerning Amendments No. 7 and 8

    Interested persons are invited to submit written data, views, and 
arguments concerning Amendments No. 7 and 8, including whether they are 
consistent with the Act. Comments may be submitted by any of the 
following methods:

Electronic Comments

     Use the Commission's Internet comment form (https://
www.sec.gov/rules/sro.shtml); or
     Send an e-mail to rule-comments@sec.gov. Please include 
File Number SR-Amex-00-27 on the subject line.

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-00-27. 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 (https://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 the Exchange. 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-00-27 and should be submitted on or before February 
18, 2005.

V. Conclusion

    It is therefore ordered, pursuant to section 19(b)(2) of the 
Act,\21\ that the proposed rule change (File No. SR-Amex-00-27), as 
amended, be approved, and that Amendments No. 7 and 8 thereto be 
approved on an accelerated basis.
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    \21\ Id.
    \22\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\22\
Margaret H. McFarland,
Deputy Secretary.
 [FR Doc. E5-317 Filed 1-27-05; 8:45 am]
BILLING CODE 8010-01-P

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