Self-Regulatory Organizations; American Stock Exchange LLC; Notice of Filing of Proposed Rule Change and Amendment No. 1 Thereto Relating to the Integration of Regulatory Staff Into Floor Official Rulings and the Review of Floor Official Rulings and Expediting the Process for Appealing Floor Official Rulings, 51392-51394 [E5-4727]
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51392
Federal Register / Vol. 70, No. 167 / Tuesday, August 30, 2005 / Notices
required to indemnify its managers in
certain situations, as described in the
Application.
SECURITIES AND EXCHANGE
COMMISSION
F. CEHouston Electric Capitalization
[Release No. 34–52325; File No. SR–Amex–
2005–052]
Finally, Applicants also request an
exemption from the Commission’s 30%
common equity ratio in order to carry
out the Texas Financing Order, as
discussed in the Commission’s June 29,
2005 Omnibus Financing Order.23
Applicants state that CEHouston
Electric’s common equity ratio is
projected to decrease below the
Commission’s standard of 30% during
part of the period that the Additional
Transition Bonds are outstanding,
because the Additional Transition
Bonds are categorized as debt.
Applicants state, however, that
inasmuch as the bonds will be (1) nonrecourse to CEHouston Electric and (2)
serviced by Transition Charges cash
flows in accordance with the Texas
Financing Order (not CEHouston
Electric utility operation revenues), the
Additional Transition Bonds do not
represent the type of financial leverage
that the Commission’s 30% common
equity standard is intended to address.
For the Commission, by the Division of
Investment Management, pursuant to
delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. E5–4725 Filed 8–29–05; 8:45 am]
Self-Regulatory Organizations;
American Stock Exchange LLC; Notice
of Filing of Proposed Rule Change and
Amendment No. 1 Thereto Relating to
the Integration of Regulatory Staff Into
Floor Official Rulings and the Review
of Floor Official Rulings and
Expediting the Process for Appealing
Floor Official Rulings
August 23, 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 11,
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. On August 12,
2005, the Exchange submitted
Amendment No. 1 to the proposed rule
change.3 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
BILLING CODE 8010–01–P
The Exchange proposes to (1) amend
Amex Rules 22(c), 115, 958A(d), 958A–
ANTE(d), 118(n), 135A and Amex Rule
155, Commentary .05 to integrate
regulatory staff into Floor Official
rulings and the review of Floor Official
rulings; and (2) amend Amex Rule 22(d)
to expedite the process for appealing a
Floor Official’s ruling.
The text of the proposed rule change,
as amended, is available on the Amex’s
Web site at https://www.amex.com, the
Office of the Secretary, the Amex, and
at the Commission’s Public Reference
Room.
23 See
note 1, above. As discussed in the June 29,
2005 Omnibus Financing Order, CEHouston
Electric may have less than the Commission’s
common equity ratio standard 30% when the
securitization debt of the Additional Transition
Bonds is included. Applicants anticipate, however,
that its equity ratio will improve as the Additional
Transition Bonds are paid down, although it is not
expected to reach 30% until 2010 with
securitization debt included in the calculation.
Applicants note that, in their request for the June
29, 2005 Omnibus Financing Order, they asked the
Commission to take into account the particular
nature of this debt in issuing that order.
VerDate Aug<18>2005
15:17 Aug 29, 2005
Jkt 205001
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 In Amendment No. 1 Amex made minor
revisions to the proposed rule text and clarified
certain details of its proposal. Amendment No. 1
replaced and superseded Amex’s original filing in
its entirety. The Commission made clarifications to
the description in Item II, pursuant to telephone
conversations with Amex, as noted herein.
Telephone conversations between Nyieri Nazarian,
Assistant General Counsel, Amex, and Rahman
Harrison, Attorney, Commission, on August 23,
2005.
2 17
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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, as amended, 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
Incorporation of Regulatory Staff into
Floor Official Rulings
Floor Officials are officers of the
Exchange,4 who are authorized to (1)
make rulings on behalf of the Exchange
with respect to certain matters that
require a decision by the Exchange, and
(2) resolve trading disputes submitted to
them by members. Floor Official
decisions are currently subject to same
day, on-floor appeal at the request of an
aggrieved member, first by an Exchange
Official, then by a Governor and finally
by a panel of three Governors.5 The
Exchange proposes to integrate
regulatory staff into specified categories
of Floor Official rulings and the review
of Floor Official rulings (‘‘Covered
Rulings and Reviews’’) on an advisory,
i.e., non-approving, basis. The Exchange
believes that incorporation of regulatory
staff in Covered Rulings and Reviews
will contribute to a more consistent
application of Exchange rules, and
better ensure that proper documentation
is completed.
The proposed rules would require a
member of the regulatory staff to be
present during a Floor Official’s ruling
on an advisory basis. This member of
the regulatory staff would give his or her
4 There are three levels of Floor Officials on the
floor, each with ascending levels of responsibility:
Floor Officials, Exchange Officials and Senior Floor
Officials. All are considered to be Floor Officials.
Article II, Section 3 of the Amex Constitution
provides that the Chairman of the Board of
Governors may appoint members of the Exchange
and individuals employed by, or associated with, a
member organization in a senior capacity as
Exchange Officials to serve on committees of the
Board. Amex Rule 21 provides for the appointment
of Senior Floor Officials and Floor Officials.
5 Telephone conversation between Nyieri
Nazarian, Assistant General Counsel, Amex, and
Rahman Harrison, Attorney, Commission, on
August 23, 2005.
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Federal Register / Vol. 70, No. 167 / Tuesday, August 30, 2005 / Notices
opinion on the matter and, although the
Floor Official would be required to take
this opinion into consideration, the
Floor Official would not be required to
rule according to the regulatory staff
member’s opinion. Once the Floor
Official’s decision is documented by the
Floor Official, the participating
regulatory staff member will also sign
the form, indicating whether he or she
agrees or disagrees with the ruling.6 The
regulatory staff member will be
responsible for maintaining the
documentation related to Covered
Rulings and Reviews, and will forward
such documentation, as appropriate, to
the NASD Amex Regulation Division.7
Amex Rule 22(c) currently provides
Floor Officials with the authority to
make rulings in the following areas:
• Trading halts;
• Indications and reopenings;
• Non-regular way trades;
• Unusual market exception to the
Commission’s Firm Quote Rule;
• Turning Auto-Ex off;
• ITS disputes;
• Member disputes;
• Cancellations or revisions to trades;
• Voluntary publication of
imbalances;
• Enforcing standards of floor
decorum.
The Exchange proposes to amend
Amex Rule 22(c) to require that a
member of the regulatory staff
participate in an advisory capacity in
the following categories of Floor Official
rulings:
• Unusual market exception to the
Commission’s Firm Quote Rule;
• ITS disputes;
• Member disputes;
• Cancellations or revisions to trades.
Corresponding amendments are also
proposed to Amex Rules 115, 958A(d),
958A–ANTE(d), 118(n), 135A and 155,
Commentary .05, which are the existing
rules governing the application of the
unusual market exceptions to the
Commission’s Firm Quote Rule and the
Amex rules governing cancellation or
revisions to trades. Amex Rules 936,
936C, 936–ANTE, 936C–ANTE,
governing the cancellation and
adjustment to equity and index option
transactions, are not being amended
because regulatory staff is already
6 Commentary .02 to Amex Rule 22 requires that
a written record of all Floor Official decisions or
rulings be documented on a form and prepared as
soon as practicable after the decision or ruling is
made.
7 The NASD Amex Regulation Division will
utilize documentation of such rulings, as
appropriate, in order to verify that an appropriate
ruling was obtained as required by applicable Amex
rules, as well as to enable review of situations in
which a Floor Official may have issued an improper
ruling contrary to the advice of the regulatory staff.
VerDate Aug<18>2005
15:43 Aug 29, 2005
Jkt 205001
required to participate in such rulings.
At the present time, regulatory staff
would not be required to participate in
Floor Official rulings relating to trading
halts, indications and reopenings, nonregular way trades, turning Auto-Ex off,
voluntary publication of imbalances,
and enforcing standards of floor
decorum.
Amex Rule 22(d)
The Amex also is proposing to amend
Amex Rule 22(d) in two respects. Amex
Rule 22(d) currently provides for three
on-Floor tiers of review in the appeal of
a Floor Official’s initial ruling. First, any
member wishing prompt on-Floor
review of a Floor Official’s market
decision may present the matter to an
Exchange Official, who may confirm,
amend or overrule the decision. Second,
an Exchange Official’s decision may be
promptly appealed to a Governor.
Finally, a Governor’s decision may be
appealed to a panel of three Governors.
A decision by a panel of three
Governors is binding on members, with
the option that at any point after
establishing a loss or profit and
complying with the highest decision
made in a matter, either party to the
matter may submit it to arbitration.8 The
Exchange is proposing to amend Amex
Rule 22(d) to clarify that Senior Floor
Officials have the same authority as
Governors with respect to matters
arising on the Floor that require review
or action by Governors.9 The
amendment will replace each reference
to ‘‘Governor’’ with ‘‘Senior Floor
Official.’’ 10
8 A decision to cancel or revise an option trade
may also be appealed to the Board of Governors.
See Amex Rules 936, 936C, 936 ANTE and 936C
ANTE.
9 Telephone conversation between Nyieri
Nazarian, Assistant General Counsel, Amex, and
Rahman Harrison, Attorney, Commission, on
August 23, 2005. The Commission recently
approved an amendment to Amex Rule 21 which
provides that: ‘‘An Exchange Official who has been
appointed as a Senior Floor Official has the same
authority and responsibilities as a Floor Governor
with respect to matters that arise on the Floor and
require review or action by a Floor Governor or
Senior Floor Official.’’ Securities Exchange Act
Release No. 51503 (April 7, 2005), 70 FR 19534
(April 13, 2005).
10 Based on the recent amendment to Amex Rule
21 (see supra note 9), the Exchange also proposes
to make conforming changes to Amex Rule
118(n)(iii) (Trading in Nasdaq National Market
Securities) and Amex 135A(c) (Cancellations of,
and Revisions in, Transactions Where Both the
Buying and Selling Members Do Not Agree to the
Cancellation or Revision) to replace ‘‘Governor’’
and ‘‘Floor Governor,’’ as applicable, with ‘‘Senior
Floor Official.’’ Amex Rules 118(n)(iii) and 135A(c)
address the process for review of transactions, and
the ability of a Floor Governor to declare a
transaction null or void, in the event of an
operational malfunction or ‘‘extraordinary market
conditions.’’ Telephone conversation between
Nyieri Nazarian, Assistant General Counsel, Amex,
PO 00000
Frm 00066
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51393
Second, the Exchange proposes to
amend Amex Rule 22(d) to eliminate the
second tier in the current review
process, i.e., review of an Exchange
Official’s decision by a Governor. The
proposed rule will provide that a Floor
Official’s initial decision will be
reviewable by an Exchange Official and
then a three Senior Floor Official panel.
The Exchange believes that two levels of
on-Floor review following a Floor
Official’s original decision are sufficient
to assure a fair and impartial review and
that three levels of on-Floor review may
unnecessarily delay the resolution of
disputed matters. The Exchange notes
that under the proposal, regulatory staff
would advise and participate in each
level of a review of a Floor Official
decision or ruling that required the
advice and participation of a member of
the regulatory staff in the initial Floor
Official ruling. The increased
involvement of regulatory staff should
help ensure that rulings are in
accordance with applicable rules.
2. Statutory Basis
The Exchange believes that the
proposed rule change, as amended, is
consistent with Section 6(b) of the Act 11
in general, and furthers the objectives of
Section 6(b)(5) 12 in particular, in that it
is designed to prevent fraudulent and
manipulative acts and practices, to
promote just and equitable principles of
trade, and, in general, to protect
investors and the public interest.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposed rule change, as amended,
would impose any burden on
competition that is 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
Written comments were neither
solicited nor received.
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
and Rahman Harrison, Attorney, Commission, on
August 23, 2005.
11 15 U.S.C. 78f(b).
12 15 U.S.C. 78f(b)(5).
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Federal Register / Vol. 70, No. 167 / Tuesday, August 30, 2005 / Notices
(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
should be submitted on or before
September 20, 2005.
For the Commission, by the Division of
Market Regulation, pursuant to delegated
authority.13
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. E5–4727 Filed 8–29–05; 8:45 am]
BILLING CODE 8010–01–P
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed rule
change, as amended, is consistent with
the Act. Comments may be submitted by
any of the following methods:
Electronic Comments
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an e-mail to rulecomments@sec.gov. Please include File
Number SR–Amex–2005–052 on the
subject line.
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–52326; File No. SR–CHX–
2005–22]
Self-Regulatory Organizations;
Chicago Stock Exchange, Inc.; Notice
of Filing and Immediate Effectiveness
of a Proposed Rule Change To Extend
the Pilot Rule Interpretation Relating to
Trading of Nasdaq National Market
Securities in Sub-Penny Increments
August 23, 2005.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’) 1 and Rule 19b–4 thereunder,2
Paper Comments
notice is hereby given that on August
• Send paper comments in triplicate
17, 2005, the Chicago Stock Exchange,
to Jonathan G. Katz, Secretary,
Inc. (‘‘CHX’’ or ‘‘Exchange’’) filed with
Securities and Exchange Commission,
the Securities and Exchange
Station Place, 100 F Street, NE.,
Commission (‘‘Commission’’) the
Washington, DC 20549–9303.
proposed rule change as described in
Items I and II below, which Items have
All submissions should refer to File
been prepared by CHX. The Exchange
Number SR–Amex–2005–052. This file
has filed this proposal pursuant to
number should be included on the
3
subject line if e-mail is used. To help the Section 19(b)(3)(A) of the Act and Rule
19b–4(f)(6) thereunder,4 which renders
Commission process and review your
the proposal effective upon receipt of
comments more efficiently, please use
only one method. The Commission will this filing by the Commission. The
post all comments on the Commission’s Commission is publishing this notice to
solicit comments on the proposed rule
Internet Web site (https://www.sec.gov/
change from interested persons.
rules/sro.shtml). Copies of the
submission, all subsequent
I. Self-Regulatory Organization’s
amendments, all written statements
Statement of the Terms of Substance of
with respect to the proposed rule
the Proposed Rule Change
change that are filed with the
CHX requests an extension, until
Commission, and all written
January 31, 2006, the compliance date of
communications relating to the
new Rule 612 of Regulation NMS,5 of a
proposed rule change between the
Commission and any person, other than pilot rule interpretation (Article XXX,
Rule 2, Interpretation and Policy .06
those that may be withheld from the
‘‘Trading in Nasdaq/NM Securities in
public in accordance with the
Subpenny Increments’’) which requires
provisions of 5 U.S.C. 552, will be
a CHX specialist (including a market
available for inspection and copying in
maker who holds customer limit orders)
the Commission’s Public Reference
Room. Copies of such filing also will be to better the price of a customer limit
order in his book which is priced at the
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 publicly available. All
submissions should refer to File
Number SR–Amex–2005–052 and
VerDate Aug<18>2005
15:17 Aug 29, 2005
Jkt 205001
13 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 15 U.S.C. 78s(b)(3)(A).
4 17 CFR 240.19b–4(f)(6).
5 17 CFR 242.612. The Commission recently
extended the compliance date for Rule 612 to
January 31, 2006. See Securities Exchange Act
Release No. 52196 (August 2, 2005) 70 FR 45529
(August 8, 2005).
1 15
PO 00000
Frm 00067
Fmt 4703
Sfmt 4703
national best bid or offer (‘‘NBBO’’) by
at least one penny if the specialist
determines to trade with an incoming
market or marketable limit order. The
pilot, which was approved in
conjunction with exemptive relief
granted by the Commission to allow for
trading in Nasdaq National Market
securities in sub-penny increments,
expires on August 29, 2005. The
Exchange proposes that the pilot remain
in effect until January 31, 2006, the
compliance date of Rule 612.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission,
CHX included statements concerning
the purpose of, and basis for, the
proposed rule change and discussed any
comments it received regarding the
proposal. The text of these statements
may be examined at the places specified
in Item IV below. CHX 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
On April 6, 2001, the Commission
approved, on a pilot basis through July
9, 2001, a pilot rule interpretation
(Article XXX, Rule 2, Interpretation and
Policy .06 ‘‘Trading in Nasdaq/NM
Securities in Subpenny Increments’’) 6
that requires a CHX specialist (including
a market maker who holds customer
limit orders) to better the price of a
customer limit order in his book which
is priced at the NBBO by at least one
penny if the specialist determines to
trade with an incoming market or
marketable limit order. The pilot, which
was approved in conjunction with
exemptive relief granted by the
Commission to allow for trading in
Nasdaq National Market securities in
sub-penny increments, has been
extended many times and now is set to
expire on August 29, 2005.7 The
6 See Securities Exchange Act Release No. 44164
(April 6, 2001), 66 FR 19263 (April 13, 2001) (SR–
CHX–2001–07).
7 See Securities Exchange Act Release Nos. 44535
(July 10, 2001), 66 FR 37251 (July 17, 2001)
(extending pilot through November 5, 2001); 45062
(November 15, 2001), 66 FR 58768 (November 23,
2001) (extending pilot through January 14, 2002);
Securities Exchange Act Release No. 45386
(February 1, 2002), 67 FR 6062 (February 8, 2002)
(extending the pilot through April 15, 2002); 45755
(April 15, 2002), 67 FR 19607 (April 22, 2002)
(extending the pilot through September 30, 2002);
46587 (October 2, 2002), 67 FR 63180 (October 10,
E:\FR\FM\30AUN1.SGM
30AUN1
]]>Agencies
[Federal Register Volume 70, Number 167 (Tuesday, August 30, 2005)]
[Notices]
[Pages 51392-51394]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E5-4727]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-52325; File No. SR-Amex-2005-052]
Self-Regulatory Organizations; American Stock Exchange LLC;
Notice of Filing of Proposed Rule Change and Amendment No. 1 Thereto
Relating to the Integration of Regulatory Staff Into Floor Official
Rulings and the Review of Floor Official Rulings and Expediting the
Process for Appealing Floor Official Rulings
August 23, 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 11, 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. On August
12, 2005, the Exchange submitted Amendment No. 1 to the proposed rule
change.\3\ 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 Amex made minor revisions to the proposed
rule text and clarified certain details of its proposal. Amendment
No. 1 replaced and superseded Amex's original filing in its
entirety. The Commission made clarifications to the description in
Item II, pursuant to telephone conversations with Amex, as noted
herein. Telephone conversations between Nyieri Nazarian, Assistant
General Counsel, Amex, and Rahman Harrison, Attorney, Commission, on
August 23, 2005.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to (1) amend Amex Rules 22(c), 115, 958A(d),
958A-ANTE(d), 118(n), 135A and Amex Rule 155, Commentary .05 to
integrate regulatory staff into Floor Official rulings and the review
of Floor Official rulings; and (2) amend Amex Rule 22(d) to expedite
the process for appealing a Floor Official's ruling.
The text of the proposed rule change, as amended, is available on
the Amex's Web site at https://www.amex.com, the Office of the
Secretary, the Amex, 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, as
amended, 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
Incorporation of Regulatory Staff into Floor Official Rulings
Floor Officials are officers of the Exchange,\4\ who are authorized
to (1) make rulings on behalf of the Exchange with respect to certain
matters that require a decision by the Exchange, and (2) resolve
trading disputes submitted to them by members. Floor Official decisions
are currently subject to same day, on-floor appeal at the request of an
aggrieved member, first by an Exchange Official, then by a Governor and
finally by a panel of three Governors.\5\ The Exchange proposes to
integrate regulatory staff into specified categories of Floor Official
rulings and the review of Floor Official rulings (``Covered Rulings and
Reviews'') on an advisory, i.e., non-approving, basis. The Exchange
believes that incorporation of regulatory staff in Covered Rulings and
Reviews will contribute to a more consistent application of Exchange
rules, and better ensure that proper documentation is completed.
---------------------------------------------------------------------------
\4\ There are three levels of Floor Officials on the floor, each
with ascending levels of responsibility: Floor Officials, Exchange
Officials and Senior Floor Officials. All are considered to be Floor
Officials. Article II, Section 3 of the Amex Constitution provides
that the Chairman of the Board of Governors may appoint members of
the Exchange and individuals employed by, or associated with, a
member organization in a senior capacity as Exchange Officials to
serve on committees of the Board. Amex Rule 21 provides for the
appointment of Senior Floor Officials and Floor Officials.
\5\ Telephone conversation between Nyieri Nazarian, Assistant
General Counsel, Amex, and Rahman Harrison, Attorney, Commission, on
August 23, 2005.
---------------------------------------------------------------------------
The proposed rules would require a member of the regulatory staff
to be present during a Floor Official's ruling on an advisory basis.
This member of the regulatory staff would give his or her
[[Page 51393]]
opinion on the matter and, although the Floor Official would be
required to take this opinion into consideration, the Floor Official
would not be required to rule according to the regulatory staff
member's opinion. Once the Floor Official's decision is documented by
the Floor Official, the participating regulatory staff member will also
sign the form, indicating whether he or she agrees or disagrees with
the ruling.\6\ The regulatory staff member will be responsible for
maintaining the documentation related to Covered Rulings and Reviews,
and will forward such documentation, as appropriate, to the NASD Amex
Regulation Division.\7\
---------------------------------------------------------------------------
\6\ Commentary .02 to Amex Rule 22 requires that a written
record of all Floor Official decisions or rulings be documented on a
form and prepared as soon as practicable after the decision or
ruling is made.
\7\ The NASD Amex Regulation Division will utilize documentation
of such rulings, as appropriate, in order to verify that an
appropriate ruling was obtained as required by applicable Amex
rules, as well as to enable review of situations in which a Floor
Official may have issued an improper ruling contrary to the advice
of the regulatory staff.
---------------------------------------------------------------------------
Amex Rule 22(c) currently provides Floor Officials with the
authority to make rulings in the following areas:
Trading halts;
Indications and reopenings;
Non-regular way trades;
Unusual market exception to the Commission's Firm Quote
Rule;
Turning Auto-Ex off;
ITS disputes;
Member disputes;
Cancellations or revisions to trades;
Voluntary publication of imbalances;
Enforcing standards of floor decorum.
The Exchange proposes to amend Amex Rule 22(c) to require that a
member of the regulatory staff participate in an advisory capacity in
the following categories of Floor Official rulings:
Unusual market exception to the Commission's Firm Quote
Rule;
ITS disputes;
Member disputes;
Cancellations or revisions to trades.
Corresponding amendments are also proposed to Amex Rules 115,
958A(d), 958A-ANTE(d), 118(n), 135A and 155, Commentary .05, which are
the existing rules governing the application of the unusual market
exceptions to the Commission's Firm Quote Rule and the Amex rules
governing cancellation or revisions to trades. Amex Rules 936, 936C,
936-ANTE, 936C-ANTE, governing the cancellation and adjustment to
equity and index option transactions, are not being amended because
regulatory staff is already required to participate in such rulings. At
the present time, regulatory staff would not be required to participate
in Floor Official rulings relating to trading halts, indications and
reopenings, non-regular way trades, turning Auto-Ex off, voluntary
publication of imbalances, and enforcing standards of floor decorum.
Amex Rule 22(d)
The Amex also is proposing to amend Amex Rule 22(d) in two
respects. Amex Rule 22(d) currently provides for three on-Floor tiers
of review in the appeal of a Floor Official's initial ruling. First,
any member wishing prompt on-Floor review of a Floor Official's market
decision may present the matter to an Exchange Official, who may
confirm, amend or overrule the decision. Second, an Exchange Official's
decision may be promptly appealed to a Governor. Finally, a Governor's
decision may be appealed to a panel of three Governors. A decision by a
panel of three Governors is binding on members, with the option that at
any point after establishing a loss or profit and complying with the
highest decision made in a matter, either party to the matter may
submit it to arbitration.\8\ The Exchange is proposing to amend Amex
Rule 22(d) to clarify that Senior Floor Officials have the same
authority as Governors with respect to matters arising on the Floor
that require review or action by Governors.\9\ The amendment will
replace each reference to ``Governor'' with ``Senior Floor Official.''
\10\
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\8\ A decision to cancel or revise an option trade may also be
appealed to the Board of Governors. See Amex Rules 936, 936C, 936
ANTE and 936C ANTE.
\9\ Telephone conversation between Nyieri Nazarian, Assistant
General Counsel, Amex, and Rahman Harrison, Attorney, Commission, on
August 23, 2005. The Commission recently approved an amendment to
Amex Rule 21 which provides that: ``An Exchange Official who has
been appointed as a Senior Floor Official has the same authority and
responsibilities as a Floor Governor with respect to matters that
arise on the Floor and require review or action by a Floor Governor
or Senior Floor Official.'' Securities Exchange Act Release No.
51503 (April 7, 2005), 70 FR 19534 (April 13, 2005).
\10\ Based on the recent amendment to Amex Rule 21 (see supra
note 9), the Exchange also proposes to make conforming changes to
Amex Rule 118(n)(iii) (Trading in Nasdaq National Market Securities)
and Amex 135A(c) (Cancellations of, and Revisions in, Transactions
Where Both the Buying and Selling Members Do Not Agree to the
Cancellation or Revision) to replace ``Governor'' and ``Floor
Governor,'' as applicable, with ``Senior Floor Official.'' Amex
Rules 118(n)(iii) and 135A(c) address the process for review of
transactions, and the ability of a Floor Governor to declare a
transaction null or void, in the event of an operational malfunction
or ``extraordinary market conditions.'' Telephone conversation
between Nyieri Nazarian, Assistant General Counsel, Amex, and Rahman
Harrison, Attorney, Commission, on August 23, 2005.
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Second, the Exchange proposes to amend Amex Rule 22(d) to eliminate
the second tier in the current review process, i.e., review of an
Exchange Official's decision by a Governor. The proposed rule will
provide that a Floor Official's initial decision will be reviewable by
an Exchange Official and then a three Senior Floor Official panel. The
Exchange believes that two levels of on-Floor review following a Floor
Official's original decision are sufficient to assure a fair and
impartial review and that three levels of on-Floor review may
unnecessarily delay the resolution of disputed matters. The Exchange
notes that under the proposal, regulatory staff would advise and
participate in each level of a review of a Floor Official decision or
ruling that required the advice and participation of a member of the
regulatory staff in the initial Floor Official ruling. The increased
involvement of regulatory staff should help ensure that rulings are in
accordance with applicable rules.
2. Statutory Basis
The Exchange believes that the proposed rule change, as amended, is
consistent with Section 6(b) of the Act \11\ in general, and furthers
the objectives of Section 6(b)(5) \12\ in particular, in that it is
designed to prevent fraudulent and manipulative acts and practices, to
promote just and equitable principles of trade, and, in general, to
protect investors and the public interest.
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\11\ 15 U.S.C. 78f(b).
\12\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change, as
amended, would impose any burden on competition that is 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
Written comments were neither solicited nor received.
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
[[Page 51394]]
(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, as amended, is consistent with the Act. Comments may be
submitted by any of the following methods:
Electronic Comments
Use the Commission's Internet comment form (https://
www.sec.gov/rules/sro.shtml); or
Send an e-mail to rule-comments@sec.gov. Please include
File Number SR-Amex-2005-052 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-2005-052. 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 publicly available. All submissions should refer to
File Number SR-Amex-2005-052 and should be submitted on or before
September 20, 2005.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\13\
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\13\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. E5-4727 Filed 8-29-05; 8:45 am]
BILLING CODE 8010-01-P
