Self-Regulatory Organizations; American Stock Exchange LLC; Notice of Filing of Proposed Rule Change Relating to the Elimination of Position and Exercise Limits on NDX Options, 50431-50433 [E5-4658]

Download as PDF Federal Register / Vol. 70, No. 165 / Friday, August 26, 2005 / Notices nonutility companies by, among other things, facilitating the making of proposals in respect of investments in nonutility companies, and helping to reduce the cost of necessary bonds, sureties, and other credit support. The terms and conditions of Guarantees would continue to be established at arm’s length, based upon market conditions. Any Guarantees provided by Entergy to Exempt Projects would be subject to the limitation on aggregate investment in EWGs and FUCOs set forth in Rule 53(a), as modified by the Commission’s authorization in File No. 70–9049. Specifically, in the absence of further authorization, Entergy would only issue Guarantees to Exempt Projects to the extent that the amount of any the Guarantee, when added to Entergy’s aggregate investment in Exempt Projects, would not exceed 100% of Entergy’s consolidated retained earnings. Any Guarantees provided to Energy-related Companies would be subject to the limitation on ‘‘aggregate investment’’ in energy-related companies set forth in Rule 58. Entergy and any Nonutility Company issuing Guarantees pursuant to the authorization requested in this filing may elect to charge each Nonutility Company a fee for any Guarantee provided on its behalf, provided that the fee does not exceed the cost of obtaining the liquidity necessary to perform the Guarantee (for example, bank line commitment fees or letter of credit fees) for the period of time the Guarantee remains outstanding. Guarantees may, in some cases, be provided to support obligations of Nonutility Companies that are not capable of exact quantification or are subject to varying quantification. In that event, Entergy or the Nonutility Company issuing the Guarantee would determine the exposure under the Guarantee for purposes of measuring compliance with the Aggregate Authorization limit by appropriate means, including estimation of exposure based on loss experience or projected potential payment amounts. Any estimates would be made in accordance with generally accepted accounting principles, and would be reevaluated periodically. Other Authorization Parameters 1. Common Equity Ratio Entergy represents that it will at all times during the Authorization Period maintain common equity (as reflected in the most recent Quarterly Report on Form 10–Q or Annual Report on Form 10–K filed with the Commission adjusted to reflect changes in VerDate jul<14>2003 16:18 Aug 25, 2005 Jkt 205001 capitalization since the applicable balance sheet date) of at least 30% of its consolidated capitalization. The term ‘‘consolidated capitalization’’ is defined to include, where applicable, all common stock equity (comprised of common stock, additional paid in capital, retained earnings, accumulated other comprehensive income or loss, and/or treasury stock), minority interests, preferred stock, preferred securities, equity linked securities, longterm debt, short-term debt and current maturities. 2. Investment Grade Rating With respect to the securities issuance authority proposed in this Declaration: (a) Within four business days after the occurrence of a Ratings Event,5 Entergy would notify the Commission of its occurrence (by means of a letter, via fax, e-mail or overnight mail to the Office of Public Utility Regulation); and (b) within 30 days after the occurrence of a Ratings Event, Entergy would submit a post-effective amendment to this Declaration explaining the material facts and circumstances relating to that Ratings Event (including the basis on which, taking into account the interests of investors, consumers and the public as well as other applicable criteria under the Act, it remains appropriate for Entergy and/or the other Applicants to issue such securities, so long as Applicants continues to comply with the other applicable terms and conditions specified in the Commission’s order authorizing the transactions requested in this Declaration). Furthermore, no securities authorized as a result of this Declaration will be issued any Applicant following the 60th day after a Ratings Event if the downgraded rating(s) has or have not been upgraded to investment grade. Applicants request that the Commission reserve jurisdiction through the remainder of the Authorization Period over the issuance of any such security that Applicants are prohibited from issuing as a result of the occurrence of a Ratings Event if no revised rating reflecting an investment grade rating has been issued. 5 A ‘‘Ratings Event’’ will occur if, during the Authorization Period, (i) an security issued by Entergy upon original issuance, if rated, is rated below investment grade; or (ii) any outstanding security of Entergy, that is rated is downgraded below investment grade. For purposes of this provision, a security will be deemed to be rated ‘‘investment grade’’ if it is rated investment grade by at least one nationally recognized statistical rating organization, as that term is used in paragraphs (c)(2)(vi)(E), (F) and (H) of rule 15c3–1 under the Securities Exchange Act of 1934. PO 00000 Frm 00141 Fmt 4703 Sfmt 4703 50431 For the Commission, by the Division of Investment Management, pursuant to delegated authority. Margaret H. McFarland, Deputy Secretary. [FR Doc. E5–4687 Filed 8–25–05; 8:45 am] BILLING CODE 8010–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–52312; File No. SR–Amex– 2005–063] Self-Regulatory Organizations; American Stock Exchange LLC; Notice of Filing of Proposed Rule Change Relating to the Elimination of Position and Exercise Limits on NDX Options August 22, 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 June 9, 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, II, and III below, which Items have been prepared by the Amex. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to eliminate position and exercise limits for options on the Nasdaq-100 Index (‘‘NDX’’). The text of the proposed rule change is available on the Amex’s Web site (https://www.amex.com), at the Amex’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 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 Amex has prepared summaries, set forth in Sections A, B, and C below, of the most significant aspects of such statements. 1 15 2 17 E:\FR\FM\26AUN1.SGM U.S.C. 78s(b)(1). CFR 240.19b–4. 26AUN1 50432 Federal Register / Vol. 70, No. 165 / Friday, August 26, 2005 / Notices A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The Exchange proposes to eliminate position and exercise limits for options on the NDX, a broad-based securities index.3 In August 2002, the Commission granted permanent approval to an Amex pilot program that eliminated position and exercise limits for options on the Major Market Index (the ‘‘XMI’’) and the Institutional Index (the ‘‘XII’’).4 For similar reasons, the Exchange believes that position and exercise limits for NDX options should equally be eliminated. In the XMI/XII Permanent Approval Order, the Commission cited several reasons for allowing the Exchange to eliminate position and exercise limits for XMI and XII options. First, the Commission expressed its belief that the enormous capitalization of these indexes and the deep liquid markets for the securities underlying each of these indexes significantly reduced concerns of market manipulation or disruption in the underlying markets. The Amex believes that the NDX is similarly capitalized. As of June 1, 2005, the market capitalization of XMI and XII was $2.20 trillion and $6.65 trillion, respectively, while NDX had a market capitalization of $1.86 trillion. In addition, the average daily trading volume (‘‘ADTV’’), in aggregate, for the component securities of the XMI, XII, and NDX from January 1, 2005 through May 31, 2005 was 113.9, 524.8, and 425.8 million shares, respectively. During the same time period, the ADTV for an average single component security of the XMI, XII, and NDX was 5.87, 7.014, and 4.25 million shares, respectively. The ADTV for options on 3 As described by Amex, the Nasdaq-100 Index is a modified capitalization-weighted index of the 100 largest and most active non-financial domestic and international issues listed on the Nasdaq Stock Market, Inc. A single component security is prohibited from representing more than 24% of the weight of the Index. The Index was developed with a base value of 125 as of February 1, 1985. See Securities Act Exchange Release No. 51884 (June 20, 2005), 70 FR 36973 (June 27, 2005) (File No. SR–Amex–2005–038) (options on the Nasdaq–100 Indexes). See also Securities Exchange Act Release Nos. 51121 (February 1, 2005), 70 FR 6476 (February 7, 2005) (File No. SR–ISE–2005–01); 33428 (January 5, 1994), 59 FR 1576 (January 11, 1994) (SR–CBOE–93–42); and 37659 (September 6, 1996), 61 FR 48722 (September 16, 1996) (SR– CBOE–96–40). 4 See Securities Exchange Act Release No. 46393 (August 21, 2002), 67 FR 55289 (August 28, 2002) (‘‘XMI/XII Permanent Approval Order’’). VerDate jul<14>2003 16:18 Aug 25, 2005 Jkt 205001 the XMI 5 and NDX was 948 and 45,820 contracts, respectively. Second, the Commission noted in the XMI/XII Permanent Approval Order that the financial requirements imposed by both the Exchange and the Commission help to address concerns that an Exchange member or its customer(s) may try to maintain an inordinately large unhedged position in options on these indexes. These financial requirements equally apply to NDX options. Under Amex rules, the Exchange also has the authority to impose additional margin upon accounts maintaining underhedged positions, and is further able to monitor accounts to determine when such action is warranted. As noted in the Exchange’s rules, the clearing firm carrying such an account would be subject to capital charges under Rule 15c3–1 under the Act 6 to the extent of any resulting margin deficiency.7 The Amex believes that the Commission in the XMI/XII Permanent Approval Order relied substantially on the Exchange’s ability to provide surveillance and reporting safeguards to detect and deter trading abuses arising from the elimination of position and exercise limits on XMI and XII options. The Exchange represents that it monitors the trading in NDX options in the same manner as trading in XMI options and that the current Amex surveillance procedures are adequate to continue monitoring NDX options. In addition, the Exchange proposes to impose a reporting requirement on Amex members (other than Amex specialists and registered options traders) and member organizations that trade NDX options. This reporting requirement, which is currently imposed on members and member organizations that trade XMI options, would require each member or member organization that maintains in excess of 100,000 NDX option contracts on the same side of the market, for its own accounts or for the account of customer, to report information as to whether the positions are hedged and provide documentation as to how such contracts are hedged, in a manner and form required by the Exchange.8 The Exchange may also specify other 5 Options on the XII are no longer listed and traded on the Exchange. 6 17 CFR 240.15c3–1. 7 See Commentary .03 to Amex Rule 904C. Clarified as per telephone conversation between Ira Brandriss, Special Counsel, and Theodore Venuti, Attorney, Division of Market Regulation, Commission, and Jeffery P. Burns, Associate General Counsel, Amex, on August 16, 2005 (‘‘Telephone Conversation of August 16, 2005’’). 8 See Amex Rule 906C. PO 00000 Frm 00142 Fmt 4703 Sfmt 4703 reporting requirements, as well as the limit at which the reporting requirement may be triggered.9 For consistency, the Exchange also proposes to amend its rules relating to the trading of FLEX broad-based index options to reflect that there shall be no position or exercise limits on NDX options and to adopt the 100,000 contract reporting requirement for NDX FLEX options.10 Thus, the provisions in Amex Rule 906G(b) applicable to XMI FLEX options shall also apply to NDX FLEX options.11 The Exchange believes that eliminating position and exercise limits for NDX options and FLEX options is consistent with Amex rules relating to similar broad-based indexes and also allows Amex members and their customers greater hedging and investment opportunities. 2. Statutory Basis The Exchange believes that the proposed rule change is consistent with Section 6 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, and to remove impediments to and perfect the mechanism of a free and open market and a national market system. B. Self-Regulatory Organization’s Statement on Burden on Competition The Amex believes that the proposed rule change would impose no burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. 9 Pursuant to Amex Rule 906, as referenced in Amex Rule 906C(a). Telephone conversation between Ira Brandriss, Special Counsel, and Theodore Venuti, Attorney, Division of Market Regulation, Commission, and Jeffery P. Burns, Associate General Counsel, Amex, on August 18, 2005. 10 See Amex Rules 906G and 907G. The text of Rule 907G is not amended by this proposed rule change. 11 This would include the authority of the Exchange to impose additional margin on accounts maintaining underhedged positions in these options. Telephone Conversation of August 16, 2005, supra note 7. 12 15 U.S.C. 78f. 13 15 U.S.C. 78f(b)(5). E:\FR\FM\26AUN1.SGM 26AUN1 Federal Register / Vol. 70, No. 165 / Friday, August 26, 2005 / Notices 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 Within 35 days of the date of publication of this notice in the Federal Register or within such longer period (i) as the Commission may designate up to 90 days of such date if it finds such longer period to be appropriate and publishes its reasons for so finding, or (ii) as to which the Amex consents, the Commission will: (A) By order approve such proposed rule change; or (B) Institute proceedings to determine whether the proposed rule change should be disapproved. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission’s Internet comment form (https://www.sec.gov/ rules/sro.shtml); or • Send an e-mail to rulecomments@sec.gov. Please include File Number SR–Amex–2005–063 on the subject line. 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 Section, 100 F Street, NE., Washington, DC 20549. Copies of such filing also will be available for inspection and copying at the principal office 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 publicly available. All submissions should refer to File Number SR–Amex–2005–063 and should be submitted on or before September 16, 2005. For the Commission, by the Division of Market Regulation, pursuant to delegated authority.14 Margaret H. McFarland, Deputy Secretary. [FR Doc. E5–4658 Filed 8–25–05; 8:45 am] BILLING CODE 8010–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–52313; File No. SR–CBOE– 2005–41] Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing of Proposed Rule Change Relating to the Elimination of Position and Exercise Limits on NDX Options August 22, 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 May 23, Paper Comments 2005, the Chicago Board Options • Send paper comments in triplicate Exchange, Incorporated (‘‘CBOE’’ or to Jonathan G. Katz, Secretary, ‘‘Exchange’’) filed with the Securities Securities and Exchange Commission, and Exchange Commission Station Place, 100 F Street, NE., (‘‘Commission’’) the proposed rule Washington, DC 20549–9303. All change as described in Items I, II, and submissions should refer to File III below, which Items have been Number SR–Amex–2005–063. This file prepared by the CBOE. The Commission number should be included on the is publishing this notice to solicit subject line if e-mail is used. To help the comments on the proposed rule change Commission process and review your from interested persons. comments more efficiently, please use only one method. The Commission will I. Self-Regulatory Organization’s post all comments on the Commission’s Statement of the Terms of Substance of the Proposed Rule Change Internet Web site (https://www.sec.gov/ rules/sro.shtml). Copies of the The Exchange proposes to amend its submission, all subsequent rules to eliminate position and exercise amendments, all written statements limits for options on the Nasdaq 100 with respect to the proposed rule Index (‘‘NDX’’). The text of the proposed change that are filed with the rule change is available on the CBOE’s Commission, and all written Web site (https://www.cboe.com), at the communications relating to the proposed rule change between the 14 17 CFR 200.30–3(a)(12). 1 15 U.S.C. 78s(b)(1). Commission and any person, other than 2 17 CFR 240.19b–4. those that may be withheld from the VerDate jul<14>2003 16:18 Aug 25, 2005 Jkt 205001 PO 00000 Frm 00143 Fmt 4703 Sfmt 4703 50433 CBOE’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 CBOE included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it had received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The CBOE 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 CBOE proposes to eliminate position and exercise limits for options on the NDX, a broad-based securities index. In November 2001, the Commission granted permanent approval to a CBOE pilot program that eliminated position and exercise limits for options on the S&P 500 Index (‘‘SPX’’), the S&P 100 Index (‘‘OEX’’), and the Dow Jones Industrial Average (‘‘DJX’’).3 The Exchange believes that the circumstances and considerations relied upon in approving the elimination of position and exercise limits for options on those broad-based indexes equally apply to this proposal relating to NDX position and exercise limits. In the Permanent Approval Order relating to SPX, OEX, and DJX options, the Commission cited several reasons for allowing the Exchange to eliminate position and exercise limits for these options. First, the Commission expressed its belief that the enormous capitalization of each index and the deep liquid markets for the securities underlying each index significantly reduced concerns of market manipulation or disruptions in the underlying markets.4 The Commission previously had also noted the active trading volume for options on the 3 See Securities Exchange Act Release No. 44994 (October 26, 2001), 66 FR 55722 (November 2, 2001) (order granting permanent approval to the elimination of position and exercise limits on the SPX, OEX, and DJX) (‘‘Permanent Approval Order’’). See also Securities Exchange Act Release No. 40969 (January 22, 1999), 64 FR 4911 (February 1, 1999) (order approving the original pilot program) (‘‘Pilot Approval Order’’). 4 See Permanent Approval Order, supra note 3. E:\FR\FM\26AUN1.SGM 26AUN1

Agencies

SECURITIES AND EXCHANGE COMMISSION

[Federal Register Volume 70, Number 165 (Friday, August 26, 2005)]
[Notices]
[Pages 50431-50433]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E5-4658]


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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-52312; File No. SR-Amex-2005-063]


Self-Regulatory Organizations; American Stock Exchange LLC; 
Notice of Filing of Proposed Rule Change Relating to the Elimination of 
Position and Exercise Limits on NDX Options

August 22, 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 June 9, 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, II, 
and III below, which Items have been prepared by the Amex. The 
Commission is publishing this notice to solicit comments on the 
proposed rule change from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

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

    The Exchange proposes to eliminate position and exercise limits for 
options on the Nasdaq-100 Index (``NDX''). The text of the proposed 
rule change is available on the Amex's Web site (https://www.amex.com), 
at the Amex'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 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 Amex has prepared summaries, set forth in Sections 
A, B, and C below, of the most significant aspects of such statements.

[[Page 50432]]

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

1. Purpose
    The Exchange proposes to eliminate position and exercise limits for 
options on the NDX, a broad-based securities index.\3\ In August 2002, 
the Commission granted permanent approval to an Amex pilot program that 
eliminated position and exercise limits for options on the Major Market 
Index (the ``XMI'') and the Institutional Index (the ``XII'').\4\ For 
similar reasons, the Exchange believes that position and exercise 
limits for NDX options should equally be eliminated.
---------------------------------------------------------------------------

    \3\ As described by Amex, the Nasdaq-100 Index is a modified 
capitalization-weighted index of the 100 largest and most active 
non-financial domestic and international issues listed on the Nasdaq 
Stock Market, Inc. A single component security is prohibited from 
representing more than 24% of the weight of the Index. The Index was 
developed with a base value of 125 as of February 1, 1985. See 
Securities Act Exchange Release No. 51884 (June 20, 2005), 70 FR 
36973 (June 27, 2005) (File No. SR-Amex-2005-038) (options on the 
Nasdaq-100 Indexes). See also Securities Exchange Act Release Nos. 
51121 (February 1, 2005), 70 FR 6476 (February 7, 2005) (File No. 
SR-ISE-2005-01); 33428 (January 5, 1994), 59 FR 1576 (January 11, 
1994) (SR-CBOE-93-42); and 37659 (September 6, 1996), 61 FR 48722 
(September 16, 1996) (SR-CBOE-96-40).
    \4\ See Securities Exchange Act Release No. 46393 (August 21, 
2002), 67 FR 55289 (August 28, 2002) (``XMI/XII Permanent Approval 
Order'').
---------------------------------------------------------------------------

    In the XMI/XII Permanent Approval Order, the Commission cited 
several reasons for allowing the Exchange to eliminate position and 
exercise limits for XMI and XII options. First, the Commission 
expressed its belief that the enormous capitalization of these indexes 
and the deep liquid markets for the securities underlying each of these 
indexes significantly reduced concerns of market manipulation or 
disruption in the underlying markets. The Amex believes that the NDX is 
similarly capitalized. As of June 1, 2005, the market capitalization of 
XMI and XII was $2.20 trillion and $6.65 trillion, respectively, while 
NDX had a market capitalization of $1.86 trillion. In addition, the 
average daily trading volume (``ADTV''), in aggregate, for the 
component securities of the XMI, XII, and NDX from January 1, 2005 
through May 31, 2005 was 113.9, 524.8, and 425.8 million shares, 
respectively. During the same time period, the ADTV for an average 
single component security of the XMI, XII, and NDX was 5.87, 7.014, and 
4.25 million shares, respectively. The ADTV for options on the XMI \5\ 
and NDX was 948 and 45,820 contracts, respectively.
    Second, the Commission noted in the XMI/XII Permanent Approval 
Order that the financial requirements imposed by both the Exchange and 
the Commission help to address concerns that an Exchange member or its 
customer(s) may try to maintain an inordinately large unhedged position 
in options on these indexes. These financial requirements equally apply 
to NDX options. Under Amex rules, the Exchange also has the authority 
to impose additional margin upon accounts maintaining underhedged 
positions, and is further able to monitor accounts to determine when 
such action is warranted. As noted in the Exchange's rules, the 
clearing firm carrying such an account would be subject to capital 
charges under Rule 15c3-1 under the Act \6\ to the extent of any 
resulting margin deficiency.\7\
---------------------------------------------------------------------------

    \5\ Options on the XII are no longer listed and traded on the 
Exchange.
    \6\ 17 CFR 240.15c3-1.
    \7\ See Commentary .03 to Amex Rule 904C. Clarified as per 
telephone conversation between Ira Brandriss, Special Counsel, and 
Theodore Venuti, Attorney, Division of Market Regulation, 
Commission, and Jeffery P. Burns, Associate General Counsel, Amex, 
on August 16, 2005 (``Telephone Conversation of August 16, 2005'').
---------------------------------------------------------------------------

    The Amex believes that the Commission in the XMI/XII Permanent 
Approval Order relied substantially on the Exchange's ability to 
provide surveillance and reporting safeguards to detect and deter 
trading abuses arising from the elimination of position and exercise 
limits on XMI and XII options. The Exchange represents that it monitors 
the trading in NDX options in the same manner as trading in XMI options 
and that the current Amex surveillance procedures are adequate to 
continue monitoring NDX options. In addition, the Exchange proposes to 
impose a reporting requirement on Amex members (other than Amex 
specialists and registered options traders) and member organizations 
that trade NDX options. This reporting requirement, which is currently 
imposed on members and member organizations that trade XMI options, 
would require each member or member organization that maintains in 
excess of 100,000 NDX option contracts on the same side of the market, 
for its own accounts or for the account of customer, to report 
information as to whether the positions are hedged and provide 
documentation as to how such contracts are hedged, in a manner and form 
required by the Exchange.\8\ The Exchange may also specify other 
reporting requirements, as well as the limit at which the reporting 
requirement may be triggered.\9\
---------------------------------------------------------------------------

    \8\ See Amex Rule 906C.
    \9\ Pursuant to Amex Rule 906, as referenced in Amex Rule 
906C(a). Telephone conversation between Ira Brandriss, Special 
Counsel, and Theodore Venuti, Attorney, Division of Market 
Regulation, Commission, and Jeffery P. Burns, Associate General 
Counsel, Amex, on August 18, 2005.
---------------------------------------------------------------------------

    For consistency, the Exchange also proposes to amend its rules 
relating to the trading of FLEX broad-based index options to reflect 
that there shall be no position or exercise limits on NDX options and 
to adopt the 100,000 contract reporting requirement for NDX FLEX 
options.\10\ Thus, the provisions in Amex Rule 906G(b) applicable to 
XMI FLEX options shall also apply to NDX FLEX options.\11\
---------------------------------------------------------------------------

    \10\ See Amex Rules 906G and 907G. The text of Rule 907G is not 
amended by this proposed rule change.
    \11\ This would include the authority of the Exchange to impose 
additional margin on accounts maintaining underhedged positions in 
these options. Telephone Conversation of August 16, 2005, supra note 
7.
---------------------------------------------------------------------------

    The Exchange believes that eliminating position and exercise limits 
for NDX options and FLEX options is consistent with Amex rules relating 
to similar broad-based indexes and also allows Amex members and their 
customers greater hedging and investment opportunities.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6 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, and to remove impediments to and perfect the mechanism of a 
free and open market and a national market system.
---------------------------------------------------------------------------

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

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

    The Amex believes that the proposed rule change would impose no 
burden on competition that is not necessary or appropriate in 
furtherance of the purposes of the Act.

[[Page 50433]]

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

    Within 35 days of the date of publication of this notice in the 
Federal Register or within such longer period (i) as the Commission may 
designate up to 90 days of such date if it finds such longer period to 
be appropriate and publishes its reasons for so finding, or (ii) as to 
which the Amex consents, the Commission will:
    (A) By order approve such proposed rule change; or
    (B) Institute proceedings to determine whether the proposed rule 
change should be disapproved.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's Internet comment form (https://
www.sec.gov/rules/sro.shtml); or
     Send an e-mail to rule-comments@sec.gov. Please include 
File Number SR-Amex-2005-063 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-2005-063. 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 Section, 100 F Street, NE., Washington, DC 20549. Copies of 
such filing also will be available for inspection and copying at the 
principal office 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 publicly available. All submissions should refer to 
File Number SR-Amex-2005-063 and should be submitted on or before 
September 16, 2005. 
---------------------------------------------------------------------------

    \14\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\14\
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. E5-4658 Filed 8-25-05; 8:45 am]
BILLING CODE 8010-01-P

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