Self-Regulatory Organizations; American Stock Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change and Amendment No. 1 Thereto Relating to a Revision and Extension of the Limitation on Trade Through Liability at the End of the Trading Day Pilot Program, 6473-6475 [E5-468]

Download as PDF Federal Register / Vol. 70, No. 24 / Monday, February 7, 2005 / Notices gather sufficient information to justify the need for the pilot program or determine that the exemption from Trade-Through liability is no longer necessary. The Commission believes that raising the limitation on liability to 50 contracts per Satisfaction Order will increase the average size of Satisfaction Order fills during the end of the options trading day, thereby enhancing customer order protection. In addition, the Commission finds, as described further below, that it is appropriate to put into effect summarily Joint Amendment No. 14 upon publication of this notice, on a temporary basis for 120 days. The Commission believes that such action is appropriate in the public interest, for the protection of investors and the maintenance of fair and orderly markets because it will allow the pilot to continue without interruption during the comment period.17 Therefore, the Commission is extending the effectiveness of Section 8(c)(ii)(B)(2)(b) of the Linkage Plan on a temporary basis for 120 days, with the increase in the limitation in liability to 50 contracts per Satisfaction Order, for an additional year, until January 31, 2006. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether proposed Joint Amendment No. 14 is 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 4–429 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 4–429. 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 proposed Joint Amendment No. 14 that are filed 17 17 with the Commission, and all written communications relating to proposed Joint Amendment No. 14 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 filings also will be available for inspection and copying at the principal offices of the Amex, BSE, CBOE, ISE, PCX and Phlx. 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 publicly available. All submissions should refer to File Number 4–429 and should be submitted on or before February 28, 2005. V. Conclusion It is therefore ordered, pursuant to Section 11A of the Act 18 and Rule 11Aa3–2(c)(4) thereunder,19 that Joint Amendment No. 14 is summarily put into effect until May 31, 2005. For the Commission, by the Division of Market Regulation, pursuant to delegated authority.20 Margaret H. McFarland, Deputy Secretary. [FR Doc. E5–477 Filed 2–4–05; 8:45 am] BILLING CODE 8010–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–51109; File No. SR–Amex– 2005–012] Self-Regulatory Organizations; American Stock Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change and Amendment No. 1 Thereto Relating to a Revision and Extension of the Limitation on Trade Through Liability at the End of the Trading Day Pilot Program January 31, 2005. 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 January 26, 2005, the American Stock Exchange LLC (‘‘Amex’’ or ‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘Commission’’) the proposed rule change as described in CFR 240.11Aa3–2(c)(4). VerDate jul<14>2003 21:04 Feb 04, 2005 Jkt 205001 PO 00000 18 15 U.S.C. 78k–1. supra note 17. 20 17 CFR 200.30–3(a)(29). 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 19 See Frm 00067 Fmt 4703 Sfmt 4703 6473 Items I and II below, which Items have been prepared by the Amex. On January 28, 2005, the Amex filed Amendment No. 1 to the proposed rule change.3 The Exchange has filed the proposal as a ‘‘non-controversial’’ rule change pursuant to Section 19(b)(3)(A) of the Act,4 and Rule 19b–4(f)(6) thereunder,5 which renders the proposal effective upon filing with the Commission.6 The Commission is publishing this notice to solicit comments on the proposed rule change, as amended, from interested persons. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to extend through January 31, 2006 the current pilot program that limits an exchange member’s trade-through liability to twenty-five (25) contracts per Satisfaction Order 7 for the period between five minutes prior to the close of trading in the underlying security and the close of trading in the options class (the ‘‘Pilot Program’’). In connection with the extension of the Pilot Program, the Exchange also proposes to increase the limit on trade-through liability at the end of the day from twenty-five (25) to fifty (50) contracts. The text of the proposed rule change is available on the Amex’s Web site at https://www.amex.com, at the Exchange’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, 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. The Exchange has prepared summaries, set forth in Sections A, B, and C below, of the most significant aspects of such statements. 3 In Amendment No. 1 the Exchange made certain technical corrections to Exhibit 5 to the filing. 4 15 U.S.C. 78s(b)(3)(A). 5 17 CFR 240.19b–4(f)(6). 6 The Annex asked the Commission to waive the 30-day operative delay. See Rule 19b–4(f)(6)(iii). 17 CFR 240.19b–4(f)(6)(iii). 7 A ‘‘Satisfaction Order’’ is an order sent through the Linkage to notify a Participant Exchange of a Trade-Through and to seek satisfaction of the liability arising from that Trade-Through. See Section 2(16)(c) of the Linkage Plan. E:\FR\FM\07FEN1.SGM 07FEN1 6474 Federal Register / Vol. 70, No. 24 / Monday, February 7, 2005 / Notices A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The purpose of this proposed rule change is to extend the Pilot Program that limits trade-through liability at the end of the options trading day. Under the current Pilot Program, an Exchange member’s trade-through liability is limited to twenty-five (25) contracts per Satisfaction Order received during the period between five (5) minutes prior to the close of trading in the underlying security and the close of trading in the options class. The Commission approved the Pilot Program on January 31, 2003.8 The Commission has granted two (2) extensions of the Pilot Program, most recently through January 31, 2005.9 The proposed rule change, amending Amex Rule 942(a)(2)(ii)(B), will implement the substance of proposed Joint Amendment No. 14 to the Plan for the Purpose of Creating and Operating an Intermarket Option Linkage (the ‘‘Linkage Plan’’).10 Joint Amendment No. 14 will amend Section 8(c)(ii)(B)(2)(b) of the Linkage Plan on a temporary basis so that the Linkage Pilot Program extends through January 31, 2006. In addition, Joint Amendment No. 14 also increases the limit on tradethrough liability at the end of the day from 25 contracts to 50 contracts. Accordingly, this proposed rule change will implement the changes proposed in Joint Amendment No. 14. The option exchanges that are participants in the Linkage Plan (‘‘Participants’’) are currently considering amendments to the Linkage Plan that may make the need for this limitation of liability unnecessary. In particular, the amendments would increase the ability for members of the Participants to receive automatic execution of P/A Orders 11 and would provide tools to avoid trade-through liability generally, including at the end 8 See Securities Exchange Act Release No. 47297 (January 31, 2003), 68 FR 6526 (February 7, 2003) (SR–Amex–2002–84). 9 See Securities Exchange Act Release No. 49868 (June 15, 2004), 69 FR 35401 (June 24, 2004) (SR– Amex–2004–36). 10 See Amendment No. 14 to the Linkage Plan filed by the Exchange on January 28, 2005 in a letter from Jeffrey P. Burns, Associate General Counsel, Amex, to Jonathan G, Katz, Secretary, Commission, dated January 27, 2005. 11 A Principal Acting as Agent (‘‘P/A’’) Order is an order for the principal account of a Market Maker that is authorized to represent Customer orders, reflecting the terms of a related unexecuted Customer order for which the Market Maker is acting as agent. See Section 2(16)(a) of the Linkage Plan. VerDate jul<14>2003 21:04 Feb 04, 2005 Jkt 205001 of the trading day. The Exchange anticipates that the amendments will be filed with the Commission in the near future. In the interim, the Amex believes that an extension of the Pilot Program is necessary until the new amendments have been filed, approved and implemented. This extension will allow the limitation to continue in effect, as amended, while the Commission staff and the Participants work on amendments to the Linkage Plan that would make this limitation of liability unnecessary. 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, 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. The Exchange believes that the proposed rule change will enhance the national market system for options by extending and revising the Pilot Program, which limits the Exchange member’s tradethrough liability at the end of the trading day. B. Self-Regulatory Organization’s Statement on Burden on Competition The Exchange does not believe that the proposed rule change, as amended, will impose any burden on competition 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 The Exchange has neither solicited nor received comments on the proposed rule change. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Because the foregoing 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) does not become operative for 30 days from the date on which it was filed, or such shorter time as the Commission may designate if consistent with the protection of investors and the PO 00000 12 15 13 15 U.S.C. 78f(b). U.S.C. 78f(b)(5). Frm 00068 Fmt 4703 Sfmt 4703 public interest, the proposed rule change has become effective pursuant to Section 19(b)(3)(A) of the Act 14 and Rule 19b–4(f)(6) thereunder.15 A proposed rule change filed under Rule 19b-4(f)(6) 16 normally does not become operative prior to 30 days after the date of filing. However, Rule 19b4(f)(6)(iii) permits the Commission to designate a shorter time if such action is consistent with the protection of investors and the public interest. The Exchange has requested that the Commission waive the five-day prefiling requirement and the 30-day operative delay, as specified in Rule 19b-4(f)(6)(iii), and designate the proposed rule change immediately operative. The Commission believes that waiving the five-day pre-filing provision and the 30-day operative delay is consistent with the protection of investors and the public interest.17 By waiving the pre-filing requirement and accelerating the operative date, the Pilot Program can continue without interruption. The Commission believes that allowing the pilot to continue will allow Participants to either gather sufficient information to justify the need for the pilot program or determine that the exemption from trade-through liability is no longer necessary. Increasing the maximum number of contracts to be satisfied with respect to Satisfaction Orders in the last seven minutes of trading in options to 50 contracts will enhance customer order protection. At any time within 60 days of the filing of such 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. 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: 14 15 U.S.C. 78s(b)(3)(A) 17 CFR 240.19b–4(f)(6). 16 17 CFR 240.19b–4(f)(6). 17 For purposes of accelerating the operative date of this proposal, the Commission has considered the proposed rule’s impact on efficiency, competition, and capital formation. 15 U.S.C. 78c(f). 15 15 E:\FR\FM\07FEN1.SGM 07FEN1 Federal Register / Vol. 70, No. 24 / Monday, February 7, 2005 / Notices 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–2005–012 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-2005– 012 . 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 the filing also will be available for inspection and copying at the principal offices 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 submissions should refer to File Number SR–Amex–2005–012 and should be submitted on or before February 28, 2005. For the Commission, by the Division of Market Regulation, pursuant to delegated authority.18 Margaret H. McFarland, Deputy Secretary. [FR Doc. E5–468 Filed 2–4–05; 8:45 am] BILLING CODE 8010–01–P 18 17 CFR 200.30–3(a)(12). VerDate jul<14>2003 21:04 Feb 04, 2005 Jkt 205001 SECURITIES AND EXCHANGE COMMISSION [Release No. 34–51110; File No. SR–BSE– 2005–08] Self-Regulatory Organizations; Boston Stock Exchange, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change and Amendment No. 1 Thereto Relating to Limitations on End-of-Day TradeThrough Liability on the Boston Options Exchange January 31, 2005. 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. The Exchange 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 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 January 28, 2005, the Boston Stock Exchange, Inc. (‘‘BSE’’ 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 the BSE. On January 31, 2005, the Exchange filed Amendment No. 1 to the proposed rule change.3 The Exchange has filed the proposal as a ‘‘non-controversial’’ rule change pursuant to Section 19(b)(3)(A) of the Act,4 and Rule 19b–4(f)(6) thereunder,5 which renders the proposal effective upon filing with the Commission.6 The Commission is publishing this notice to solicit comments on the proposed rule change, as amended, from interested persons. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to extend a pilot program relating to certain limitations on trade-through liability. The text of the proposed rule change is available on the Exchange’s Web site (https://www.bostonstock.com), at the Exchange’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 BSE included statements concerning the The purpose of the filing is to conform Boston Options Exchange (‘‘BOX’’) rules to Joint Amendment No. 14 to the Plan for the Purpose of Creating and Operating an Intermarket Option Linkage (‘‘Linkage Plan’’) to extend the linkage pilot program limiting trade-through liability at the end of the options trading day. Pursuant to the pilot as currently in effect, a BOX Options Participant’s 7 trade-through liability is limited to 25 contracts per Satisfaction Order 8 for the period between five minutes prior to the close of trading in the underlying security and the close of trading in the options class. The Linkage Plan participants proposed this limitation on liability as a one-year pilot in Joint Amendment No. 4 to the Linkage Plan. The Commission temporarily approved the pilot on January 31, 2003,9 followed by approval on June 18, 2003.10 The Commission then granted two extensions of the pilot, first until June 30, 2004 11 and then until January 31, 2005.12 The Exchange is proposing to extend the pilot in BOX’s Rules for an additional year, until January 31, 2006. In addition, the Exchange proposes to increase the limit on trade-through liability at the end of the day from 25 contracts to 50 contracts per Satisfaction Order. This increase in the limit on liability would be effective on February 1, 2005, when the current pilot expires. The period during which this limit will apply will remain the same, from five minutes prior to the close of trading in the underlying security until the close of trading in the options class. 7 See 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 3 See Partial Amendment dated January 31, 2005 (‘‘Amendment No. 1’’). In Amendment No. 1, the Exchange corrected an error in Item 8 of Form 19b– 4. 4 15 U.S.C. 78s(b)(3)(A). 5 17 CFR 240.19b–4(f)(6). 6 The BSE asked the Commission to waive the 30day operative delay. See Rule 19b–4(f)(6)(iii). 17 CFR 240.19b–4(f)(6)(iii). PO 00000 Frm 00069 Fmt 4703 6475 Sfmt 4703 Section 1(40) of Chapter I of the BOX Rules. Section 2(16)(c) of the Linkage Plan. 9 See Securities Exchange Act Release No. 47298 (January 31, 2003), 68 FR 6524 (February 7, 2003). 10 See Securities Exchange Act Release No. 48055 (June 18, 2003), 68 FR 37869 (June 25, 2003), 11 See Securities Exchange Act Release No. 49146 (January 29, 2004), 69 FR 5618 (February 5, 2004). 12 See Securities Exchange Act Release No. 49863 (June 15, 2004), 69 FR 35081 (June 23, 2004). This extension increased the maximum liability from 10 to 25 contracts. 8 See E:\FR\FM\07FEN1.SGM 07FEN1

Agencies

SECURITIES AND EXCHANGE COMMISSION

[Federal Register Volume 70, Number 24 (Monday, February 7, 2005)]
[Notices]
[Pages 6473-6475]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E5-468]


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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-51109; File No. SR-Amex-2005-012]


Self-Regulatory Organizations; American Stock Exchange LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change 
and Amendment No. 1 Thereto Relating to a Revision and Extension of the 
Limitation on Trade Through Liability at the End of the Trading Day 
Pilot Program

January 31, 2005.
    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 January 26, 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 the Amex. On January 28, 
2005, the Amex filed Amendment No. 1 to the proposed rule change.\3\ 
The Exchange has filed the proposal as a ``non-controversial'' rule 
change pursuant to Section 19(b)(3)(A) of the Act,\4\ and Rule 19b-
4(f)(6) thereunder,\5\ which renders the proposal effective upon filing 
with the Commission.\6\ The Commission is publishing this notice to 
solicit comments on the proposed rule change, as amended, from 
interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ In Amendment No. 1 the Exchange made certain technical 
corrections to Exhibit 5 to the filing.
    \4\ 15 U.S.C. 78s(b)(3)(A).
    \5\ 17 CFR 240.19b-4(f)(6).
    \6\ The Annex asked the Commission to waive the 30-day operative 
delay. See Rule 19b-4(f)(6)(iii). 17 CFR 240.19b-4(f)(6)(iii).
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to extend through January 31, 2006 the 
current pilot program that limits an exchange member's trade-through 
liability to twenty-five (25) contracts per Satisfaction Order \7\ for 
the period between five minutes prior to the close of trading in the 
underlying security and the close of trading in the options class (the 
``Pilot Program''). In connection with the extension of the Pilot 
Program, the Exchange also proposes to increase the limit on trade-
through liability at the end of the day from twenty-five (25) to fifty 
(50) contracts.
---------------------------------------------------------------------------

    \7\ A ``Satisfaction Order'' is an order sent through the 
Linkage to notify a Participant Exchange of a Trade-Through and to 
seek satisfaction of the liability arising from that Trade-Through. 
See Section 2(16)(c) of the Linkage Plan.
---------------------------------------------------------------------------

    The text of the proposed rule change is available on the Amex's Web 
site at https://www.amex.com, at the Exchange'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, 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. The Exchange has prepared summaries, set forth in 
Sections A, B, and C below, of the most significant aspects of such 
statements.

[[Page 6474]]

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

 1. Purpose
    The purpose of this proposed rule change is to extend the Pilot 
Program that limits trade-through liability at the end of the options 
trading day. Under the current Pilot Program, an Exchange member's 
trade-through liability is limited to twenty-five (25) contracts per 
Satisfaction Order received during the period between five (5) minutes 
prior to the close of trading in the underlying security and the close 
of trading in the options class. The Commission approved the Pilot 
Program on January 31, 2003.\8\ The Commission has granted two (2) 
extensions of the Pilot Program, most recently through January 31, 
2005.\9\
---------------------------------------------------------------------------

    \8\ See Securities Exchange Act Release No. 47297 (January 31, 
2003), 68 FR 6526 (February 7, 2003) (SR-Amex-2002-84).
    \9\ See Securities Exchange Act Release No. 49868 (June 15, 
2004), 69 FR 35401 (June 24, 2004) (SR-Amex-2004-36).
---------------------------------------------------------------------------

    The proposed rule change, amending Amex Rule 942(a)(2)(ii)(B), will 
implement the substance of proposed Joint Amendment No. 14 to the Plan 
for the Purpose of Creating and Operating an Intermarket Option Linkage 
(the ``Linkage Plan'').\10\ Joint Amendment No. 14 will amend Section 
8(c)(ii)(B)(2)(b) of the Linkage Plan on a temporary basis so that the 
Linkage Pilot Program extends through January 31, 2006. In addition, 
Joint Amendment No. 14 also increases the limit on trade-through 
liability at the end of the day from 25 contracts to 50 contracts. 
Accordingly, this proposed rule change will implement the changes 
proposed in Joint Amendment No. 14.
---------------------------------------------------------------------------

    \10\ See Amendment No. 14 to the Linkage Plan filed by the 
Exchange on January 28, 2005 in a letter from Jeffrey P. Burns, 
Associate General Counsel, Amex, to Jonathan G, Katz, Secretary, 
Commission, dated January 27, 2005.
---------------------------------------------------------------------------

    The option exchanges that are participants in the Linkage Plan 
(``Participants'') are currently considering amendments to the Linkage 
Plan that may make the need for this limitation of liability 
unnecessary. In particular, the amendments would increase the ability 
for members of the Participants to receive automatic execution of P/A 
Orders \11\ and would provide tools to avoid trade-through liability 
generally, including at the end of the trading day. The Exchange 
anticipates that the amendments will be filed with the Commission in 
the near future. In the interim, the Amex believes that an extension of 
the Pilot Program is necessary until the new amendments have been 
filed, approved and implemented. This extension will allow the 
limitation to continue in effect, as amended, while the Commission 
staff and the Participants work on amendments to the Linkage Plan that 
would make this limitation of liability unnecessary.
---------------------------------------------------------------------------

    \11\ A Principal Acting as Agent (``P/A'') Order is an order for 
the principal account of a Market Maker that is authorized to 
represent Customer orders, reflecting the terms of a related 
unexecuted Customer order for which the Market Maker is acting as 
agent. See Section 2(16)(a) of the Linkage Plan.
---------------------------------------------------------------------------

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, 
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. The Exchange believes that the proposed rule change will 
enhance the national market system for options by extending and 
revising the Pilot Program, which limits the Exchange member's trade-
through liability at the end of the trading day.
---------------------------------------------------------------------------

    \12\ 15 U.S.C. 78f(b).
    \13\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change, as 
amended, will impose any burden on competition 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

    The Exchange has neither solicited nor received comments on the 
proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Because the foregoing 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) does not become 
operative for 30 days from the date on which it was filed, 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) of the Act 
\14\ and Rule 19b-4(f)(6) thereunder.\15\
---------------------------------------------------------------------------

    \14\ 15 U.S.C. 78s(b)(3)(A)
    \15\ 15 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------

    A proposed rule change filed under Rule 19b-4(f)(6) \16\ normally 
does not become operative prior to 30 days after the date of filing. 
However, Rule 19b-4(f)(6)(iii) permits the Commission to designate a 
shorter time if such action is consistent with the protection of 
investors and the public interest. The Exchange has requested that the 
Commission waive the five-day pre-filing requirement and the 30-day 
operative delay, as specified in Rule 19b-4(f)(6)(iii), and designate 
the proposed rule change immediately operative.
---------------------------------------------------------------------------

    \16\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------

    The Commission believes that waiving the five-day pre-filing 
provision and the 30-day operative delay is consistent with the 
protection of investors and the public interest.\17\ By waiving the 
pre-filing requirement and accelerating the operative date, the Pilot 
Program can continue without interruption. The Commission believes that 
allowing the pilot to continue will allow Participants to either gather 
sufficient information to justify the need for the pilot program or 
determine that the exemption from trade-through liability is no longer 
necessary. Increasing the maximum number of contracts to be satisfied 
with respect to Satisfaction Orders in the last seven minutes of 
trading in options to 50 contracts will enhance customer order 
protection.
---------------------------------------------------------------------------

    \17\ For purposes of accelerating the operative date of this 
proposal, the Commission has considered the proposed rule's impact 
on efficiency, competition, and capital formation. 15 U.S.C. 78c(f).
---------------------------------------------------------------------------

    At any time within 60 days of the filing of such 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.

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:

[[Page 6475]]

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-2005-012 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-2005-012 . 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 the filing also will be available for 
inspection and copying at the principal offices 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 
submissions should refer to File Number SR-Amex-2005-012 and should be 
submitted on or before February 28, 2005.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\18\
---------------------------------------------------------------------------

    \18\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Margaret H. McFarland,
Deputy Secretary.
 [FR Doc. E5-468 Filed 2-4-05; 8:45 am]
BILLING CODE 8010-01-P

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.