Self-Regulatory Organizations; American Stock Exchange LLC; Notice of Filing and Order Granting Accelerated Approval of a Proposed Rule Change and Amendment No. 1 Thereto To Adjust the Close of Normal Trading Hours in Equity Options and Narrow-Based Index Options, 8008-8010 [E6-2109]
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8008
Federal Register / Vol. 71, No. 31 / Wednesday, February 15, 2006 / Notices
cprice-sewell on PROD1PC66 with NOTICES
Now that the Nasdaq exchange
registration application has been
approved,9 the Commission is
approving the amendments detailed in
Category 1 of Amendment 13, as
published in the Federal Register.10
The Commission received one
comment letter on the 13th Amendment
from BrokerageAmerica (‘‘BA’’).11
However, this comment letter discussed
changes proposed in Categories 2, 3, and
4 of Amendment 13, and the comment
letter was discussed fully in the Partial
Temporary Approval of Amendment
No. 13.12
The Commission finds that the
Category 1 changes included in the 13th
Amendment are consistent with the
requirements of the Act and the rules
and regulations thereunder, and, in
particular, Section 12(f) 13 and Section
11A(a)(1) 14 of the Act and Rules 601
and 608 thereunder.15 Section 11A of
the Act directs the Commission to
facilitate the development of a national
market system for securities, ‘‘having
due regard for the public interest, the
protection of investors, and the
maintenance of fair and orderly
markets,’’ and cites as an objective of
that system ‘‘fair competition * * *
between exchange markets and markets
other than exchange markets.’’ 16 When
the Commission first approved the Plan
on a pilot basis, it found that the Plan
‘‘should enhance market efficiency and
fair competition, avoid investor
confusion, and facilitate surveillance of
concurrent exchange and OTC
trading.’’ 17 The Commission believes
unless the sponsors of such amendment consent to
an extension. The sponsors of the 13th Amendment
consented to final action on the Category 1
amendments being contingent upon a subsequent
trigger event. See letter from Jeffrey T. Brown,
Chairman, Operating Committee, to Jonathan G.
Katz, Secretary, Commission, dated May 30, 2002
(‘‘13th Amendment Filing’’).
9 See Securities Exchange Act Release No. 53128
(January 13, 2006), 71 FR 3550 (January 23, 2006).
10 See supra note 4, 13th Amendment Notice.
11 See letter from Sam Guidetti, Senior Vice
President & Chief Compliance Officer,
BrokerageAmerica, to Jonathan Katz, Secretary,
Commission, dated September 17, 2002.
12 See supra note 7.
13 15 U.S.C. 78l(f). The Commission finds that
extending the Plan is consistent with fair and
orderly markets, the protection of investors and the
public interest, and otherwise in furtherance of the
purposes of the Act. The Commission has taken into
account the public trading activity in securities
traded pursuant to the Plan, the character of the
trading, the impact of the trading of such securities
on existing markets, and the desirability of
removing impediments to, and the progress that has
been made toward the development of a national
market system.
14 15 U.S.C. 78k–1(a)(1).
15 17 CFR 242.601 and 17 CFR 242.608.
16 15 U.S.C. 78k–1(a).
17 See Securities Exchange Act Release No. 28146
(June 26, 1990), 55 FR 27917 (July 6, 1990).
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that amending the Plan to incorporate
the amendments detailed in Category 1
of Amendment 13 furthers these goals.
It is therefore ordered, pursuant to
Sections 12(f) and 11A of the Act 18 and
paragraph (b)(4) of Rule 608
thereunder,19 that the operation of the
Plan, as modified by the amendments
detailed in Category 1 of Amendment 13
be, and hereby is, approved.
For the Commission, by the Division of
Market Regulation, pursuant to delegated
authority.20
J. Lynn Taylor,
Assistant Secretary.
[FR Doc. E6–2108 Filed 2–14–06; 8:45 am]
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–53244; File No. SR–Amex–
2006–003]
Self-Regulatory Organizations;
American Stock Exchange LLC; Notice
of Filing and Order Granting
Accelerated Approval of a Proposed
Rule Change and Amendment No. 1
Thereto To Adjust the Close of Normal
Trading Hours in Equity Options and
Narrow-Based Index Options
February 7, 2006.
Pursuant to section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on January 5,
2006, the American Stock Exchange LLC
(‘‘Amex’’ or ‘‘Exchange’’) filed with the
Securities and Exchange Commission
(‘‘Commission’’) the proposed rule
change as described in Items I and II
below, which Items have been prepared
by the Amex. On January 31, 2006, the
Exchange filed 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
and to approve the amended proposal
on an accelerated basis.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Amex proposes to amend
Exchange Rules 1, 918—ANTE, 936C—
ANTE and 903C to adjust the close of
normal trading hours in equity options
18 15
U.S.C. 78(f) and 15 U.S.C. 78k–1.
CFR 242.608(b)(4).
20 17 CFR 200.30–3(a)(27).
1 15 U.S.C 78s(b)(1).
2 17 CFR 240.19b–4.
3 In Amendment No. 1, the Exchange requested
that the implementation date for the new closing
time be changed from February 1, 2006, as was
originally proposed, to February 13, 2006.
19 17
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Frm 00097
Fmt 4703
Sfmt 4703
and options based on stock index
industry groups (‘‘narrow-based index
options’’) from 4:02 p.m. eastern time
(‘‘e.t.’’) to 4 p.m. e.t. The Exchange
proposes that these changes be
implemented on February 13, 2006.4
The text of the proposed rule change, as
amended, is available on the Amex’s
Web site at (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
Exchange 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, as
amended. The text of these statements
may be examined at the places specified
in Item III 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
According to the Exchange, the
purpose of the proposed rule change, as
amended, is to amend the Amex’s rules
to conform to an industry-wide
consensus to change the close of trading
hours for equity options and narrowbased index options from 4:02 p.m. e.t.
to 4 p.m. e.t. After the change, the time
of the close of trading in these Amex
options will correspond to the normal
time set for the close of trading on the
primary exchanges listing the stocks
underlying the Amex options. The
primary exchanges generally close at 4
p.m. e.t.
The Exchange notes that, on May 14,
1997, the Amex received approval to
move the close of equity options trading
from 4:10 p.m. to 4:02 p.m.5 The change
was prompted by improvements in the
dissemination of closing prices in the
underlying securities, the limited ability
of public customers to reach as quickly
as professional traders news
announcements in the last ten minutes
of trading, and the difficulties
experienced by options specialists and
4 Id.
5 See Securities Exchange Act Release No. 38640
(May 14, 1997), 62 FR 28081 (May 22, 1997).
According to the Exchange, from 1978 through
1997, equity options were traded until 4:10 p.m. to
allow investors to trade options based upon the
final closing prices of the underlying securities.
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15FEN1
cprice-sewell on PROD1PC66 with NOTICES
Federal Register / Vol. 71, No. 31 / Wednesday, February 15, 2006 / Notices
registered options traders to make
orderly markets without the ability to
hedge or otherwise offset market risk
with transactions in the underlying
stock.
The rationale to continue trading
options for a period of time after the
close of trading on the primary markets
for the underlying securities was that
the extended time period allowed
options traders to respond to later
reports of closing prices over the
consolidated tape. If the price of a late
reported trade on an underlying security
was substantially different from the
previous reported price, the extended
trading session would give options
traders the opportunity to bring options
quotes in line with the closing price of
the underlying security.
However, the Exchange submits that
because of technological advances in the
processing and reporting of transactions,
this two minute time period is no longer
necessary to trade options after the
underlying securities close trading.
Additionally, price aberrations can
occur if an option is traded when the
underlying stock is no longer trading,
since there is a close relationship in the
price of the underlying stock and the
overlying options. As a result, it is
difficult for the market to price options
accurately when the underlying security
is not trading.
The Exchange also proposes to change
the closing time for narrow-based index
options, as defined in Amex Rule 900C,
because such indexes are subject to the
same pricing problems as options on
individual stocks. A significant news
announcement on one component of a
narrow-based index could have a
significant effect on that index. The
Exchange is not at this time proposing
to change the closing time of 4:15 p.m.
for options on a broad-based index, as
defined in Amex Rule 900C, because it
is unlikely that a significant news
announcement by the issuer on one
component stock of a broad-based index
is likely to have a significant effect on
the price of that broad-based index.
The Exchange notes that all options
exchanges have determined to make
similar uniform changes to their rules,
to modify the closing time in equity
options and narrow-based index options
from 4:02 p.m. e.t. to 4 p.m. e.t. on a
coordinated basis. These industry-wide
changes are proposed to be effective on
February 13, 2006.6
2. Statutory Basis
The Exchange believes that the
proposed rule change, as amended, is
6 See
Amendment No. 1, supra note 3.
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13:17 Feb 14, 2006
Jkt 208001
consistent with section 6(b) of the Act 7
in general, and furthers the objectives of
section 6(b)(5) of the Act 8 in particular,
because 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,
to remove impediments to and perfect
the mechanisms of a free and open
market and a national market system,
and, in general, to protect investors and
the public interest.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Amex does not believe that the
proposed rule change, as amended, will
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
No written comments were solicited
or received with respect to the proposed
rule change, as amended.
8009
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. 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 available publicly. All
submissions should refer to File
Number SR–Amex–2006–003 and
should be submitted on or before March
8, 2006.
III. 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:
IV. Commission’s Findings and Order
Granting Accelerated Approval of
Proposed Rule Change
After careful review, the Commission
finds that the proposed rule change, as
amended, is consistent with the
requirements of the Act and the rules
and regulations thereunder applicable to
a national securities exchange.9 In
Electronic Comments
particular, the Commission finds that
• Use the Commission’s Internet
the proposal is consistent with section
comment form at (https://www.sec.gov/
6(b)(5) of the Act,10 which requires,
rules/sro.shtml); or
among other things, that the rules of a
• Send an e-mail to rulenational securities exchange be
comments@sec.gov. Please include File
designed to prevent fraudulent and
Number SR–Amex–2006–003 on the
manipulative acts and practices, to
subject line.
promote just and equitable principles of
Paper Comments
trade, to foster cooperation and
coordination with persons engaged in
• Send paper comments in triplicate
facilitating transactions in securities, to
to Nancy M. Morris, Secretary,
remove impediments to and perfect the
Securities and Exchange Commission,
mechanism of a free and open market
100 F Street, NE., Washington, DC
and a national market system, and, in
20549–1090.
general, to protect investors and the
All submissions should refer to File
public interest.
Number SR–Amex–2006–003. This file
The Commission notes that the
number should be included on the
Exchange believes that the need to
subject line if e-mail is used. To help the continue trading options for some
Commission process and review your
period of time after the close of trading
comments more efficiently, please use
in the underlying securities markets is
no longer necessary because
7 15 U.S.C. 78f(b).
improvements in the processing and
8 15 U.S.C. 78f(b)(5). The statutory basis with
reporting of transactions have obviated
which the Exchange believes that the proposed rule
change is consistent has been corrected from
Section 6(b)(4) of the Act to Section 6(b)(5) of the
Act. Telephone conversation between Nyieri
Nazarian, Assistant General Counsel, Amex, and
Johnna B. Dumler, Attorney, Division of Market
Regulation, Commission, on January 11, 2006.
PO 00000
Frm 00098
Fmt 4703
Sfmt 4703
9 In approving this proposal, the Commission has
considered the proposed rule’s impact on
efficiency, competition, and capital formation. 15
U.S.C. 78c(f).
10 15 U.S.C. 78f(b)(5).
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8010
Federal Register / Vol. 71, No. 31 / Wednesday, February 15, 2006 / Notices
cprice-sewell on PROD1PC66 with NOTICES
the need to respond to late reports of
closing prices over the consolidated
tape in order to bring options quotes in
line with the closing price of the
underlying security. Moreover, the
Exchange believes that allowing two
additional minutes of options trading
after trading on the underlying primary
exchanges has ended may actually
result in pricing aberrations. Because
the two minute delay between the close
of normal trading in equity options and
narrow-based index options and the
corresponding underlying equity
markets is no longer necessary, the
Commission believes that eliminating
the delay is in the public interest and
appropriate for the protection of
investors and the maintenance of fair
and orderly markets. Therefore, the
Commission finds that it is consistent
with the Act for the Exchange to amend
its rules to change the close of normal
trading hours in equity and narrowbased index options from 4:02 p.m. (e.t.)
to 4 p.m. (e.t).
The Commission finds good cause for
approving this proposed rule change, as
amended, before the thirtieth day after
publication of notice thereof in the
Federal Register. The Commission notes
that all of the options exchanges have
filed substantially similar proposals and
seek to implement these industry-wide
changes simultaneously on February 13,
2006.11 For example, on December 20,
2005, the Commission published for
comment in the Federal Register a
similar proposed rule change submitted
by the Chicago Board Options Exchange,
Incorporated (‘‘CBOE’’).12 The
Commission received no comments on
the CBOE’s proposed rule change. The
Commission believes that the Amex’s
proposed rule change, as amended,
raises no new issues or novel regulatory
questions. Accordingly, the Commission
finds good cause, pursuant to section
19(b)(2) of the Act,13 for approving the
proposed rule change, as amended,
prior to the thirtieth day after
publication in the Federal Register. In
addition, because the existence of
dissimilar closing times among the
options exchanges could lead to
confusion for options investors and
broker-dealers, the Commission finds
good cause to accelerate approval of the
proposed rule change, as amended, to
enable the six options exchanges to
simultaneously amend their hours of
11 See
note 14, infra.
Securities Exchange Act Release No. 52949
(December 13, 2005), 70 FR 75513 (December 20,
2005) (SR–CBOE–2005–104). See also Securities
Exchange Act Release No. 53055 (January 5, 2006),
71 FR 2279 (January 13, 2006) (SR–ISE–2005–58).
13 15 U.S.C. 78s(b)(2).
12 See
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13:17 Feb 14, 2006
Jkt 208001
trading on an industry-wide basis in a
uniform manner.14
V. Conclusion
It is therefore ordered, pursuant to
section 19(b)(2) of the Act,15 that the
proposed rule change and Amendment
No. 1 thereto (SR–Amex–2006–003) be,
and hereby are, approved on an
accelerated basis.
For the Commission, by the Division of
Market Regulation, pursuant to delegated
authority.16
J. Lynn Taylor,
Assistant Secretary.
[FR Doc. E6–2109 Filed 2–14–06; 8:45 am]
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–53245; File No. SR–BSE–
2006–02]
Self-Regulatory Organizations; Boston
Stock Exchange, Inc.; Notice of Filing
and Order Granting Accelerated
Approval of a Proposed Rule Change
and Amendment No. 1 Thereto To
Amend and Clarify Its Rules Governing
the Hours of Trading on the Boston
Options Exchange
February 7, 2006.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on January
11, 2006, the Boston Stock Exchange,
Inc. (‘‘BSE’’ or ‘‘Exchange’’) filed with
the Securities and Exchange
Commission (‘‘Commission’’) the
proposed rule change as described in
Items I and II below, which Items have
been prepared by the BSE. On February
2, 2006, the Exchange filed 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 and to approve the amended
proposal on an accelerated basis.
14 The Commission notes that it is simultaneously
approving similar proposals from the other options
exchanges. See Securities Exchange Act Release
Nos. 53245 (SR–BSE–2006–02); 53446 (SR–CBOE–
2005–104); 53248 (SR–ISE–2005–58); 53249 (SR–
PCX–2005–138); and 53247 (SR–Phlx–2006–01)
(February 7, 2006).
15 15 U.S.C. 78s(b)(2).
16 17 CFR 200.30–3(a)(12).
1 15 U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 In Amendment No. 1, the Exchange requested
that the implementation date for the new closing
time be changed from February 1, 2006, as was
originally proposed, to February 13, 2006.
PO 00000
Frm 00099
Fmt 4703
Sfmt 4703
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The BSE proposes to amend and
clarify its rules governing its hours of
trading on the Boston Options Exchange
(‘‘BOX’’). The Exchange proposes that
these changes be implemented on
February 13, 2006.4 The text of the
proposed rule change, as amended, is
available on the BSE’s Web site (https://
www.bostonstock.com), at the principal
office of the BSE, 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
Exchange 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, as
amended. The text of these statements
may be examined at the places specified
in Item III 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
According to the Exchange, the
purpose of the proposed rule change, as
amended, is to amend and clarify its
rules with respect to the hours of
trading on BOX. Currently, Chapter V,
Section 3(a) of BOX’s rules states that
the Boston Options Exchange
Regulation LLC (‘‘BOXR’’) Board shall
determine the days BOX shall be open
for options business and the hours of
such days during which options
transactions may be made on BOX.
When BOX launched trading in
February of 2004, the BOXR Board set
the closing time for the hours of
business for options trading on
individual stocks at 4:02 p.m. e.s.t. to
conform to the business hours of the
other five options exchanges.5 It is the
BSE’s understanding that all of the
options exchanges collectively have
determined to change their rules to
adjust the closing time in options on
individual stocks from 4:02 p.m. e.s.t. to
4 Id.
5 According to the Exchange, the BOXR Board has
also set the hours of business for options on Fund
Shares, as defined in Chapter 4, Section 3(i) of BOX
Rules, to be 4:15 p.m. e.s.t.
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15FEN1
]]>Agencies
[Federal Register Volume 71, Number 31 (Wednesday, February 15, 2006)]
[Notices]
[Pages 8008-8010]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E6-2109]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-53244; File No. SR-Amex-2006-003]
Self-Regulatory Organizations; American Stock Exchange LLC;
Notice of Filing and Order Granting Accelerated Approval of a Proposed
Rule Change and Amendment No. 1 Thereto To Adjust the Close of Normal
Trading Hours in Equity Options and Narrow-Based Index Options
February 7, 2006.
Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on January 5, 2006, the American Stock Exchange LLC (``Amex'' or
``Exchange'') filed with the Securities and Exchange Commission
(``Commission'') the proposed rule change as described in Items I and
II below, which Items have been prepared by the Amex. On January 31,
2006, the Exchange filed 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 and to
approve the amended proposal on an accelerated basis.
---------------------------------------------------------------------------
\1\ 15 U.S.C 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ In Amendment No. 1, the Exchange requested that the
implementation date for the new closing time be changed from
February 1, 2006, as was originally proposed, to February 13, 2006.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Amex proposes to amend Exchange Rules 1, 918--ANTE, 936C--ANTE
and 903C to adjust the close of normal trading hours in equity options
and options based on stock index industry groups (``narrow-based index
options'') from 4:02 p.m. eastern time (``e.t.'') to 4 p.m. e.t. The
Exchange proposes that these changes be implemented on February 13,
2006.\4\ The text of the proposed rule change, as amended, is available
on the Amex's Web site at (https://www.amex.com), at the Amex's Office
of the Secretary, and at the Commission's Public Reference Room.
---------------------------------------------------------------------------
\4\ Id.
---------------------------------------------------------------------------
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 Exchange 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, as amended. The text of these statements may be examined at the
places specified in Item III 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
According to the Exchange, the purpose of the proposed rule change,
as amended, is to amend the Amex's rules to conform to an industry-wide
consensus to change the close of trading hours for equity options and
narrow-based index options from 4:02 p.m. e.t. to 4 p.m. e.t. After the
change, the time of the close of trading in these Amex options will
correspond to the normal time set for the close of trading on the
primary exchanges listing the stocks underlying the Amex options. The
primary exchanges generally close at 4 p.m. e.t.
The Exchange notes that, on May 14, 1997, the Amex received
approval to move the close of equity options trading from 4:10 p.m. to
4:02 p.m.\5\ The change was prompted by improvements in the
dissemination of closing prices in the underlying securities, the
limited ability of public customers to reach as quickly as professional
traders news announcements in the last ten minutes of trading, and the
difficulties experienced by options specialists and
[[Page 8009]]
registered options traders to make orderly markets without the ability
to hedge or otherwise offset market risk with transactions in the
underlying stock.
---------------------------------------------------------------------------
\5\ See Securities Exchange Act Release No. 38640 (May 14,
1997), 62 FR 28081 (May 22, 1997). According to the Exchange, from
1978 through 1997, equity options were traded until 4:10 p.m. to
allow investors to trade options based upon the final closing prices
of the underlying securities.
---------------------------------------------------------------------------
The rationale to continue trading options for a period of time
after the close of trading on the primary markets for the underlying
securities was that the extended time period allowed options traders to
respond to later reports of closing prices over the consolidated tape.
If the price of a late reported trade on an underlying security was
substantially different from the previous reported price, the extended
trading session would give options traders the opportunity to bring
options quotes in line with the closing price of the underlying
security.
However, the Exchange submits that because of technological
advances in the processing and reporting of transactions, this two
minute time period is no longer necessary to trade options after the
underlying securities close trading. Additionally, price aberrations
can occur if an option is traded when the underlying stock is no longer
trading, since there is a close relationship in the price of the
underlying stock and the overlying options. As a result, it is
difficult for the market to price options accurately when the
underlying security is not trading.
The Exchange also proposes to change the closing time for narrow-
based index options, as defined in Amex Rule 900C, because such indexes
are subject to the same pricing problems as options on individual
stocks. A significant news announcement on one component of a narrow-
based index could have a significant effect on that index. The Exchange
is not at this time proposing to change the closing time of 4:15 p.m.
for options on a broad-based index, as defined in Amex Rule 900C,
because it is unlikely that a significant news announcement by the
issuer on one component stock of a broad-based index is likely to have
a significant effect on the price of that broad-based index.
The Exchange notes that all options exchanges have determined to
make similar uniform changes to their rules, to modify the closing time
in equity options and narrow-based index options from 4:02 p.m. e.t. to
4 p.m. e.t. on a coordinated basis. These industry-wide changes are
proposed to be effective on February 13, 2006.\6\
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\6\ See Amendment No. 1, supra note 3.
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2. Statutory Basis
The Exchange believes that the proposed rule change, as amended, is
consistent with section 6(b) of the Act \7\ in general, and furthers
the objectives of section 6(b)(5) of the Act \8\ in particular, because
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, to remove impediments to and perfect the
mechanisms of a free and open market and a national market system, and,
in general, to protect investors and the public interest.
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\7\ 15 U.S.C. 78f(b).
\8\ 15 U.S.C. 78f(b)(5). The statutory basis with which the
Exchange believes that the proposed rule change is consistent has
been corrected from Section 6(b)(4) of the Act to Section 6(b)(5) of
the Act. Telephone conversation between Nyieri Nazarian, Assistant
General Counsel, Amex, and Johnna B. Dumler, Attorney, Division of
Market Regulation, Commission, on January 11, 2006.
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B. Self-Regulatory Organization's Statement on Burden on Competition
The Amex does not believe that the proposed rule change, as
amended, will 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
No written comments were solicited or received with respect to the
proposed rule change, as amended.
III. 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 at (https://
www.sec.gov/rules/sro.shtml); or
Send an e-mail to rule-comments@sec.gov. Please include
File Number SR-Amex-2006-003 on the subject line.
Paper Comments
Send paper comments in triplicate to Nancy M. Morris,
Secretary, Securities and Exchange Commission, 100 F Street, NE.,
Washington, DC 20549-1090.
All submissions should refer to File Number SR-Amex-2006-003. 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. 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 available publicly. All submissions should refer to
File Number SR-Amex-2006-003 and should be submitted on or before March
8, 2006.
IV. Commission's Findings and Order Granting Accelerated Approval of
Proposed Rule Change
After careful review, the Commission finds that the proposed rule
change, as amended, is consistent with the requirements of the Act and
the rules and regulations thereunder applicable to a national
securities exchange.\9\ In particular, the Commission finds that the
proposal is consistent with section 6(b)(5) of the Act,\10\ which
requires, among other things, that the rules of a national securities
exchange be designed to prevent fraudulent and manipulative acts and
practices, to promote just and equitable principles of trade, to foster
cooperation and coordination with persons engaged in facilitating
transactions in securities, to remove impediments to and perfect the
mechanism of a free and open market and a national market system, and,
in general, to protect investors and the public interest.
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\9\ In approving this proposal, the Commission has considered
the proposed rule's impact on efficiency, competition, and capital
formation. 15 U.S.C. 78c(f).
\10\ 15 U.S.C. 78f(b)(5).
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The Commission notes that the Exchange believes that the need to
continue trading options for some period of time after the close of
trading in the underlying securities markets is no longer necessary
because improvements in the processing and reporting of transactions
have obviated
[[Page 8010]]
the need to respond to late reports of closing prices over the
consolidated tape in order to bring options quotes in line with the
closing price of the underlying security. Moreover, the Exchange
believes that allowing two additional minutes of options trading after
trading on the underlying primary exchanges has ended may actually
result in pricing aberrations. Because the two minute delay between the
close of normal trading in equity options and narrow-based index
options and the corresponding underlying equity markets is no longer
necessary, the Commission believes that eliminating the delay is in the
public interest and appropriate for the protection of investors and the
maintenance of fair and orderly markets. Therefore, the Commission
finds that it is consistent with the Act for the Exchange to amend its
rules to change the close of normal trading hours in equity and narrow-
based index options from 4:02 p.m. (e.t.) to 4 p.m. (e.t).
The Commission finds good cause for approving this proposed rule
change, as amended, before the thirtieth day after publication of
notice thereof in the Federal Register. The Commission notes that all
of the options exchanges have filed substantially similar proposals and
seek to implement these industry-wide changes simultaneously on
February 13, 2006.\11\ For example, on December 20, 2005, the
Commission published for comment in the Federal Register a similar
proposed rule change submitted by the Chicago Board Options Exchange,
Incorporated (``CBOE'').\12\ The Commission received no comments on the
CBOE's proposed rule change. The Commission believes that the Amex's
proposed rule change, as amended, raises no new issues or novel
regulatory questions. Accordingly, the Commission finds good cause,
pursuant to section 19(b)(2) of the Act,\13\ for approving the proposed
rule change, as amended, prior to the thirtieth day after publication
in the Federal Register. In addition, because the existence of
dissimilar closing times among the options exchanges could lead to
confusion for options investors and broker-dealers, the Commission
finds good cause to accelerate approval of the proposed rule change, as
amended, to enable the six options exchanges to simultaneously amend
their hours of trading on an industry-wide basis in a uniform
manner.\14\
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\11\ See note 14, infra.
\12\ See Securities Exchange Act Release No. 52949 (December 13,
2005), 70 FR 75513 (December 20, 2005) (SR-CBOE-2005-104). See also
Securities Exchange Act Release No. 53055 (January 5, 2006), 71 FR
2279 (January 13, 2006) (SR-ISE-2005-58).
\13\ 15 U.S.C. 78s(b)(2).
\14\ The Commission notes that it is simultaneously approving
similar proposals from the other options exchanges. See Securities
Exchange Act Release Nos. 53245 (SR-BSE-2006-02); 53446 (SR-CBOE-
2005-104); 53248 (SR-ISE-2005-58); 53249 (SR-PCX-2005-138); and
53247 (SR-Phlx-2006-01) (February 7, 2006).
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V. Conclusion
It is therefore ordered, pursuant to section 19(b)(2) of the
Act,\15\ that the proposed rule change and Amendment No. 1 thereto (SR-
Amex-2006-003) be, and hereby are, approved on an accelerated basis.
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\15\ 15 U.S.C. 78s(b)(2).
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\16\
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\16\ 17 CFR 200.30-3(a)(12).
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J. Lynn Taylor,
Assistant Secretary.
[FR Doc. E6-2109 Filed 2-14-06; 8:45 am]
BILLING CODE 8010-01-P
