Self-Regulatory Organizations; American Stock Exchange LLC; Order Approving Proposed Rule Change Establishing a De Minimis Exception to the 80/20 Test, 53033-53034 [E5-4834]

Download as PDF Federal Register / Vol. 70, No. 171 / Tuesday, September 6, 2005 / Notices to certain outstanding pollution control revenue bonds (‘‘PCRBs’’) that were issued to finance pollution control equipment related to the purchased plants.4 If PCRB obligations are assumed by FE GenCo at or prior to closing, then the principal amount of the assumed obligations would reduce the principal amount of the applicable FE GenCo Note delivered by FE GenCo at closing. If FE GenCo assumes PCRB obligations after closing, the principal amount assumed would represent a payment of principal on the applicable FE GenCo Note delivered at closing. For the Commission, by the Division of Investment Management, pursuant to delegated authority. Jonathan G. Katz, Secretary. [FR Doc. E5–4839 Filed 9–2–05; 8:45 am] BILLING CODE 8010–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–52349; File No. SR–Amex– 2005–048] Self-Regulatory Organizations; American Stock Exchange LLC; Order Approving Proposed Rule Change Establishing a De Minimis Exception to the 80/20 Test August 26, 2005. I. Introduction On April 28, 2005, the American Stock Exchange LLC (‘‘Amex’’ or ‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘Commission’’), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’) 1 and Rule 19b–4 thereunder,2 a proposed rule change seeking to amend Amex Rule 944 to provide a de minimis exception to the limitation on principal order access imposed by the Plan for the Purpose of Creating and Operating an Intermarket Option Linkage (‘‘Linkage Plan’’) 3 and related rules. 4 Currently, the Utility Subsidiaries have outstanding obligations in respect of PCRBs in approximately the following principal amounts: Ohio Edison—$471 million; Penn Power—$63 million; Cleveland Electric—$362 million; and Toledo Edison—$69 million. 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 3 On July 28, 2000, the Commission approved a national market system plan for the purpose of creating and operating an intermarket options market linkage (‘‘Linkage’’) proposed by Amex, Chicago Board Options Exchange, Inc., and International Securities Exchange, Inc. See Securities Exchange Act Release No. 43086 (July 28, 2000), 65 FR 48023 (August 4, 2000). Subsequently, Philadelphia Stock Exchange, Inc., Pacific Exchange, and Boston Stock Exchange, Inc. joined VerDate Aug<18>2005 13:21 Sep 02, 2005 Jkt 205001 The proposed rule change was noticed for comment in the Federal Register on July 27, 2005.4 The Commission received no comments on the proposed rule change. This order approves the proposed rule change. II. Description The purpose of this proposed rule change is to implement proposed Joint Amendment No. 17 to the Linkage Plan. Joint Amendment No. 17, together with this proposed rule change, would establish a de minimis exception to the ‘‘80/20 Test’’ set forth in Section 8(b)(iii) of the Linkage Plan and Amex Rule 944. Section 8(b)(iii) of the Linkage Plan provides that Eligible Market Makers should send Principal Orders 5 through the Linkage on a limited basis and not as a primary aspect of their business. The 80/20 Test implements this policy in the Linkage Plan and Amex Rule 944 by prohibiting a specialist or registered options trader (‘‘ROT’’) from sending Principal Orders in an eligible option class if, in the last calendar quarter, the specialist or ROT’s Principal Order contract volume is disproportionate to the specialist or ROT’s contract volume executed against customer orders in its own market. The Exchange believes that applying the 80/20 Test has resulted in anomalies for ROTs with limited volume in an eligible option class. In particular, if a ROT has very little overall trading volume in an option, the execution of one or two Principal Orders during a calendar quarter could result in the ROT failing to meet the 80/20 Test. This would then prohibit the ROT from using the Linkage to send Principal Orders in that options class for the following calendar quarter. The Exchange believes that it is not the intention of the Participants to the Linkage Plan to prohibit ROTs with limited volume from sending Principal Orders through the Linkage in these circumstances since such trading clearly is not ‘‘a primary aspect of their business.’’ Accordingly, the proposed rule change seeks to establish a de minimis exception from the 80/20 Test in Amex Rule 944 for specialists and ROTs that have total contract volume of less than 1,000 contracts in an option class for a calendar quarter. the Linkage Plan. See Securities Exchange Act Release Nos. 43573 (November 16, 2000), 65 FR 70851 (November 28, 2000); 43574 (November 16, 2000), 65 FR 70850 (November 28, 2000); and 49198 (February 5, 2004), 69 FR 7029 (February 12, 2004). 4 See Securities Exchange Act Release No. 52067 (July 20, 2005), 70 FR 43470. 5 A ‘‘Principal Order’’ is an order for the principal account of an eligible market maker that does not relate to a customer order the market maker is holding. See Section 2(16)(b) of the Linkage Plan. PO 00000 Frm 00055 Fmt 4703 Sfmt 4703 53033 III. Discussion After careful review, the Commission finds that the proposed rule change is consistent with the requirements of the Act and the rules and regulations thereunder applicable to a national securities exchange. 6 In particular, the Commission finds that the proposed rule change is consistent with the requirements of Section 6(b)(5) of the Act 7 which requires, among other things, that the rules of an exchange be designed to promote just and equitable principles of trade, to remove impediments to and perfect the mechanism of a free and open market, and to protect investors and the public interest. The Commission believes that the proposed rule change will increase the availability of Linkage to members of the Participants by limiting the applicability of the 80/20 Test in situations where market makers have minimal trading volume in a particular options class. The Commission recognizes that the Exchange does not believe that it is necessary to bar market makers with limited volume from sending Principal Orders through the Linkage, as such trading does not raise concerns that a member is sending such orders as ‘‘a primary aspect of their business.’’ The Commission believes that the de minimis exemption from the 80/20 Test proposed by the Exchange for market makers that have a total contract volume of less than 1,000 contracts in an options class for a calendar quarter should ensure that specialists and ROTs with relatively low volume in a particular options class can send a reasonable number of Principal Orders without being barred from using the Linkage by application of the 80/20 Test in the following calendar quarter. IV. Conclusion For the foregoing reasons, the Commission finds that the proposed rule change is consistent with the requirements of the Act and the rules and regulations thereunder. It is therefore ordered, pursuant to Section 19(b)(2) of the Act,8 that the proposed rule change (SR–Amex–2005– 048) is approved. 6 In approving this proposed rule change, the Commission has considered the proposed rule’s impact on efficiency, competition, and capital formation. 15 U.S.C. 78c(f). 7 15 U.S.C. 78f(b)(5). 8 15 U.S.C. 78s(b)(2). E:\FR\FM\06SEN1.SGM 06SEN1 53034 Federal Register / Vol. 70, No. 171 / Tuesday, September 6, 2005 / Notices For the Commission by the Division of Market Regulation, pursuant to delegated authority.9 Margaret H. McFarland, Deputy Secretary. [FR Doc. E5–4834 Filed 9–2–05; 8:45 am] the proposed rule change. This order approves the proposed rule change. BILLING CODE 8010–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–52346; File No. SR–BSE– 2005–16] Self-Regulatory Organizations; Boston Stock Exchange, Inc.; Order Approving Proposed Rule Change Establishing a De Minimis Exception to the 80/20 Test Relating to Linkage Trades on the Boston Options Exchange August 26, 2005. I. Introduction On May 19, 2005, the Boston Stock Exchange, Inc. (‘‘BSE’’ or ‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘Commission’’), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’) 1 and Rule 19b–4 thereunder, 2 a proposed rule change seeking to amend its rules governing its operation of intermarket linkage on the Boston Options Exchange (‘‘BOX’’). Specifically, the Exchange is proposing to amend Chapter XII, Section 5(b) of the BOX Rules to establish a de minimis exception to the limitation on Principal Order 3 access imposed by the Plan for the Purpose of Creating and Operating an Intermarket Option Linkage (‘‘Linkage Plan’’) 4 and related rules. The proposed rule change was noticed for comment in the Federal Register on July 27, 2005.5 The Commission received no comments on 9 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 3 A ‘‘Principal Order’’ is an order for the principal account of an eligible market maker that does not relate to a customer order the market maker is holding. See Section 2(16)(b) of the Linkage Plan. 4 On July 28, 2000, the Commission approved a national market system plan for the purpose of creating and operating an intermarket options market linkage (‘‘Linkage’’) proposed by the American Stock Exchange, LLC, Chicago Board Options Exchange, Inc., and the International Stock Exchange, Inc. See Securities Exchange Act Release No. 43086 (July 28, 2000), 65 FR 48023 (August 4, 2000). Subsequently, the Philadelphia Stock Exchange, Inc., the Pacific Exchange, Inc. and the BSE joined the Linkage Plan. See Securities Exchange Act Release Nos. 43573 (November 16, 2000), 65 FR 70851 (November 28, 2000); 43574 (November 16, 2000), 65 FR 70850 (November 28, 2000); and 49198 (February 5, 2004), 69 FR 7029 (February 12, 2004). 5 See Securities Exchange Act Release No. 52071 (July 20, 2005), 70 FR 43472 (July 27, 2005). 1 15 VerDate Aug<18>2005 13:21 Sep 02, 2005 Jkt 205001 II. Description The purpose of this proposed rule change is to implement proposed Joint Amendment No. 17 to the Linkage Plan. Section 8(b)(iii) of the Linkage Plan provides that Eligible Market Makers should send Principal Orders through the Linkage on a limited basis and not as a primary aspect of their business. Joint Amendment No. 17, together with this proposed rule change, would change Section 8(b)(iii) of the Linkage Plan and Chapter XII, Section 5(b) of the BOX Rules to establish an exemption from the provision in the rule that states that a Market Maker that effected 20 percent or more of its volume in a particular option by sending Principal Orders through the Linkage in a calendar quarter is prohibited from sending Principal Orders via the Linkage in such option during the following calendar quarter (the ‘‘80/20 Test’’). The Exchange believes that applying the 80/20 Test has resulted in anomalies for Market Makers with limited volume in an eligible option class. Specifically, if a Market Maker has very little overall trading volume in an option, the execution of one or two Principal Orders during a calendar quarter could result in the Market Maker failing to meet the 80/20 Test. This would bar the Market Maker from using the Linkage to send Principal Orders for the following calendar quarter. The BOX contends that it was not its intention to bar Market Makers with limited volume from sending Principal Orders through the Linkage in these circumstances, since such trading does not constitute a primary aspect of their business. Thus, the Exchange’s proposed rule would create a de minimis exemption from the 80/20 Test for Market Makers that have a total contract volume of less than 1,000 contracts in an options class for a calendar quarter. III. Discussion After careful review, the Commission finds that the proposed rule change is consistent with the requirements of the Act and the rules and regulations thereunder applicable to a national securities exchange.6 In particular, the Commission finds that the proposed rule change is consistent with the requirements of Section 6(b)(5) of the Act 7 which requires, among other 6 In approving this proposed rule change, the Commission has considered the proposed rule’s impact on efficiency, competition, and capital formation. 15 U.S.C. 78c(f). 7 15 U.S.C. 78f(b)(5). PO 00000 Frm 00056 Fmt 4703 Sfmt 4703 things, that the rules of an exchange be designed to promote just and equitable principles of trade, to remove impediments to and perfect the mechanism of a free and open market, and to protect investors and the public interest. The Commission believes that the proposed rule change will increase the availability of Linkage to members of the Participants by limiting the applicability of the 80/20 Test in situations where market makers have minimal trading volume in a particular options class. The Commission recognizes that the Exchange does not believe that it is necessary to bar market makers with limited volume from sending Principal Orders through the Linkage, as such trading does not raise concerns that a member is sending such orders as ‘‘a primary aspect of their business.’’ The Commission believes that the de minimis exemption from the 80/20 Test proposed by the Exchange for market makers that have a total contract volume of less than 1,000 contracts in an options class for a calendar quarter should ensure that market makers with relatively low volume in a particular options class can send a reasonable number of Principal Orders without being barred from using the Linkage by application of the 80/20 Test in the following calendar quarter. IV. Conclusion For the foregoing reasons, the Commission finds that the proposed rule change is consistent with the requirements of the Act and the rules and regulations thereunder. It is therefore ordered, pursuant to Section 19(b)(2) of the Act,8 that the proposed rule change (SR–BSE–2005– 16) is approved. For the Commission by the Division of Market Regulation, pursuant to delegated authority.9 Margaret H. McFarland, Deputy Secretary. [FR Doc. E5–4833 Filed 9–2–05; 8:45 am] BILLING CODE 8010–01–P 8 15 9 17 E:\FR\FM\06SEN1.SGM U.S.C. 78s(b)(2). CFR 200.30–3(a)(12). 06SEN1

Agencies

SECURITIES AND EXCHANGE COMMISSION

[Federal Register Volume 70, Number 171 (Tuesday, September 6, 2005)]
[Notices]
[Pages 53033-53034]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E5-4834]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-52349; File No. SR-Amex-2005-048]


Self-Regulatory Organizations; American Stock Exchange LLC; Order 
Approving Proposed Rule Change Establishing a De Minimis Exception to 
the 80/20 Test

August 26, 2005.

I. Introduction

    On April 28, 2005, the American Stock Exchange LLC (``Amex'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission''), pursuant to Section 19(b)(1) of the Securities 
Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder,\2\ a 
proposed rule change seeking to amend Amex Rule 944 to provide a de 
minimis exception to the limitation on principal order access imposed 
by the Plan for the Purpose of Creating and Operating an Intermarket 
Option Linkage (``Linkage Plan'') \3\ and related rules.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ On July 28, 2000, the Commission approved a national market 
system plan for the purpose of creating and operating an intermarket 
options market linkage (``Linkage'') proposed by Amex, Chicago Board 
Options Exchange, Inc., and International Securities Exchange, Inc. 
See Securities Exchange Act Release No. 43086 (July 28, 2000), 65 FR 
48023 (August 4, 2000). Subsequently, Philadelphia Stock Exchange, 
Inc., Pacific Exchange, and Boston Stock Exchange, Inc. joined the 
Linkage Plan. See Securities Exchange Act Release Nos. 43573 
(November 16, 2000), 65 FR 70851 (November 28, 2000); 43574 
(November 16, 2000), 65 FR 70850 (November 28, 2000); and 49198 
(February 5, 2004), 69 FR 7029 (February 12, 2004).
---------------------------------------------------------------------------

    The proposed rule change was noticed for comment in the Federal 
Register on July 27, 2005.\4\ The Commission received no comments on 
the proposed rule change. This order approves the proposed rule change.
---------------------------------------------------------------------------

    \4\ See Securities Exchange Act Release No. 52067 (July 20, 
2005), 70 FR 43470.
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II. Description

    The purpose of this proposed rule change is to implement proposed 
Joint Amendment No. 17 to the Linkage Plan. Joint Amendment No. 17, 
together with this proposed rule change, would establish a de minimis 
exception to the ``80/20 Test'' set forth in Section 8(b)(iii) of the 
Linkage Plan and Amex Rule 944.
    Section 8(b)(iii) of the Linkage Plan provides that Eligible Market 
Makers should send Principal Orders \5\ through the Linkage on a 
limited basis and not as a primary aspect of their business. The 80/20 
Test implements this policy in the Linkage Plan and Amex Rule 944 by 
prohibiting a specialist or registered options trader (``ROT'') from 
sending Principal Orders in an eligible option class if, in the last 
calendar quarter, the specialist or ROT's Principal Order contract 
volume is disproportionate to the specialist or ROT's contract volume 
executed against customer orders in its own market.
---------------------------------------------------------------------------

    \5\ A ``Principal Order'' is an order for the principal account 
of an eligible market maker that does not relate to a customer order 
the market maker is holding. See Section 2(16)(b) of the Linkage 
Plan.
---------------------------------------------------------------------------

    The Exchange believes that applying the 80/20 Test has resulted in 
anomalies for ROTs with limited volume in an eligible option class. In 
particular, if a ROT has very little overall trading volume in an 
option, the execution of one or two Principal Orders during a calendar 
quarter could result in the ROT failing to meet the 80/20 Test. This 
would then prohibit the ROT from using the Linkage to send Principal 
Orders in that options class for the following calendar quarter. The 
Exchange believes that it is not the intention of the Participants to 
the Linkage Plan to prohibit ROTs with limited volume from sending 
Principal Orders through the Linkage in these circumstances since such 
trading clearly is not ``a primary aspect of their business.''
    Accordingly, the proposed rule change seeks to establish a de 
minimis exception from the 80/20 Test in Amex Rule 944 for specialists 
and ROTs that have total contract volume of less than 1,000 contracts 
in an option class for a calendar quarter.

III. Discussion

    After careful review, the Commission finds that the proposed rule 
change is consistent with the requirements of the Act and the rules and 
regulations thereunder applicable to a national securities exchange. 
\6\ In particular, the Commission finds that the proposed rule change 
is consistent with the requirements of Section 6(b)(5) of the Act \7\ 
which requires, among other things, that the rules of an exchange be 
designed to promote just and equitable principles of trade, to remove 
impediments to and perfect the mechanism of a free and open market, and 
to protect investors and the public interest. The Commission believes 
that the proposed rule change will increase the availability of Linkage 
to members of the Participants by limiting the applicability of the 80/
20 Test in situations where market makers have minimal trading volume 
in a particular options class.
---------------------------------------------------------------------------

    \6\ In approving this proposed rule change, the Commission has 
considered the proposed rule's impact on efficiency, competition, 
and capital formation. 15 U.S.C. 78c(f).
    \7\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    The Commission recognizes that the Exchange does not believe that 
it is necessary to bar market makers with limited volume from sending 
Principal Orders through the Linkage, as such trading does not raise 
concerns that a member is sending such orders as ``a primary aspect of 
their business.'' The Commission believes that the de minimis exemption 
from the 80/20 Test proposed by the Exchange for market makers that 
have a total contract volume of less than 1,000 contracts in an options 
class for a calendar quarter should ensure that specialists and ROTs 
with relatively low volume in a particular options class can send a 
reasonable number of Principal Orders without being barred from using 
the Linkage by application of the 80/20 Test in the following calendar 
quarter.

IV. Conclusion

    For the foregoing reasons, the Commission finds that the proposed 
rule change is consistent with the requirements of the Act and the 
rules and regulations thereunder.
    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\8\ that the proposed rule change (SR-Amex-2005-048) is approved.
---------------------------------------------------------------------------

    \8\ 15 U.S.C. 78s(b)(2).


[[Page 53034]]


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    For the Commission by the Division of Market Regulation, 
pursuant to delegated authority.\9\
---------------------------------------------------------------------------

    \9\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Margaret H. McFarland,
Deputy Secretary.
[FR Doc. E5-4834 Filed 9-2-05; 8:45 am]
BILLING CODE 8010-01-P

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