Self-Regulatory Organizations; American Stock Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to Odd-Lot Rejections by Away Markets in the AEMI-One Pilot, 71598-71600 [E6-20966]
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71598
Federal Register / Vol. 71, No. 237 / Monday, December 11, 2006 / Notices
mstockstill on PROD1PC61 with NOTICES
Securities as if they were equity options
and not FCO Securities, with the result
that during the period when
subparagraph (c)(iii) of Section VIII is in
effect, access to market information
pertaining to New FCO Securities is not
subject to the separate fees and charges
that apply to OPRA’s FCO service, and
revenues and expenses pertaining to
market information pertaining to New
FCO Securities are not allocated to
OPRA’s FCO accounting center, but
instead are allocated to its basic
accounting center.
The ISE recently advised OPRA that
it intends to commence trading in
certain classes of FCOs, and it
represented that none of the FCOs it
intends to trade will be fungible with
classes of FCOs traded on the Phlx.
Since by its terms Section VIII(c)(iii) of
the OPRA Plan currently applies only to
new classes of FCOs that are listed on
the Phlx, in response to the ISE’s
request, OPRA now proposes to amend
that Section to make it apply to all
classes of FCOs newly listed by any
exchange that is a party to the OPRA
Plan while that Section remains in
effect. This will assure that all classes of
newly listed FCOs will be treated the
same by being included in OPRA’s basic
service, rather than in its FCO service
regardless of the exchange on which
those classes are traded.
The text of the proposed amendment
to the OPRA Plan is set forth below.
Text additions are in italics; deletions
are bracketed.
*
*
*
*
*
VIII. Financial Matters
(a)–(b) No Change.
(c) FCO Accounting Center Costs and
Revenues
(i)–(ii) No Change.
(iii) Special Temporary Provision for
Newly Traded FCO Securities.
This paragraph (c)(iii) applies only to
FCO Securities that are introduced for
trading in the securities markets
maintained by any of the parties to the
Plan [on the Philadelphia Stock
Exchange (‘‘PHLX’’)] during the period
while this paragraph is in effect. FCO
Securities introduced for trading by any
of the parties [PHLX] during this period
are referred to as ‘‘New FCO Securities.’’
Notwithstanding anything in the Plan
to the contrary, effective during a
temporary period ending on December
31, 2007, or on such earlier date as may
be established by the party or parties
trading New FCO Securities, written
notice of which shall be given to the
other parties (‘‘period of effectiveness’’),
access to information and facilities
pertaining to New FCO Securities shall
not be subject to the separate fees and
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15:15 Dec 08, 2006
Jkt 211001
charges that would otherwise apply to
such access pertaining to FCO
Securities, but instead shall be subject
to those fees and charges that apply to
Eligible Securities other than FCO
Options and Index Options. During the
period of effectiveness, revenues
derived from New FCO Securities shall
be allocated to OPRA’s basic accounting
center and shall be further allocated
among the parties as described in
section VIII(a)(iv), and trades in New
FCO Securities shall be treated as trades
in Eligible Securities other than FCO
Options and Index Options and not as
trades in FCO Securities. At the close of
business on the last day of the period of
effectiveness, this section VIII(c)(iii)
shall automatically terminate and cease
to be of any further effect.
*
*
*
*
*
II. Implementation of the OPRA Plan
Amendment
The proposed amendment will be
effective upon its approval by the
Commission pursuant to Section 11A of
the Act 5 and Rule 608 thereunder.6
III. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed OPRA
Plan amendment 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
No. SR–OPRA–2006–02 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–OPRA–2006–02. 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 plan
5 15
6 17
PO 00000
U.S.C. 78k–1.
CFR 242.608.
Frm 00096
Fmt 4703
Sfmt 4703
amendment that are filed with the
Commission, and all written
communications relating to the
proposed plan amendment 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 OPRA. 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–OPRA–2006–02 and should
be submitted on or before January 2,
2007.
For the Commission, by the Division of
Market Regulation, pursuant to delegated
authority.7
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E6–20964 Filed 12–8–06; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–54866; File No. SR–Amex–
2006–111]
Self-Regulatory Organizations;
American Stock Exchange LLC; Notice
of Filing and Immediate Effectiveness
of Proposed Rule Change Relating to
Odd-Lot Rejections by Away Markets
in the AEMI-One Pilot
December 4, 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 November
29, 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, II, and III below, which Items
have been substantially prepared by the
Exchange. Amex has filed this proposal
pursuant to Section 19(b)(3)(A) of the
Act 3 and Rule 19b–4(f)(5) thereunder,4
which renders it effective upon filing
with the Commission. The Commission
is publishing this notice to solicit
7 17
CFR 200.30–3(a)(29).
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)(5).
1 15
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Federal Register / Vol. 71, No. 237 / Monday, December 11, 2006 / Notices
comments on the proposed rule change
from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to adopt
changes to its AEMI-One rules to
provide for the execution of an
unexecuted odd-lot balance on an
aggressing order as the result of an
unexecuted odd-lot balance on an away
market obligation that was routed to
another market by the AEMI platform to
access a better-priced protected
quotation.
The text of the proposed rule change
is available on the Amex’s Web site at
https://www.amex.com, the Exchange’s
principal office, 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
self-regulatory organization included
statements concerning the purpose of
and basis for the proposed rule change
and discussed any comments it received
on the proposed rule change. The text
of these statements may be examined at
the places specified in Item IV below.
Amex has prepared summaries, set forth
in sections A, B, and C below, of the
most significant aspects of such
statements.
mstockstill on PROD1PC61 with NOTICES
A. Self-Regulatory Organization’s
Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The Exchange has recently adopted
new rules to implement an initial
version of AEMI, its proposed new
hybrid market trading platform for
equity products and exchange-traded
funds.5 This initial version of AEMI is
referred to as AEMI-One and is
operational on a pilot basis through
February 4, 2007. Under the AEMI-One
pilot, the AEMI platform will route
orders to better-priced protected
quotations of away markets. Such ‘‘away
market obligations’’ (as defined in
Exchange Rule 131–AEMI-One) are sent
only in round lots. Although the
quotation of an away market that AEMI
is attempting to execute against is also
expressed in a round lot, the possibility
exists that fills at certain away markets
may include odd lots since AEMI uses
private linkages instead of ITS to access
5 See Securities Exchange Act Release No. 54709
(November 3, 2006), 71 FR 65847 (November 9,
2006).
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15:15 Dec 08, 2006
Jkt 211001
such quotations in the AEMI-One pilot.
For example, if Nasdaq is displaying a
better bid than Amex for 200 shares of
XYZ Corp. and there is an aggressing
sell order in AEMI, Amex will send an
away market obligation to Nasdaq (in
the form of an immediate or cancel
order or an intermarket sweep order)
and could receive back an execution in
the form of two trades for 160 shares
and 40 shares, respectively.
Consequently, the possibility exists
that, under unusual circumstances,
AEMI might receive only a partial fill on
a round-lot order and be left with a
rejected odd-lot portion of a round-lot
order that was suspended on the AEMI
Book. In the example cited above, it is
possible that 160 shares out of the 200
shares routed away would be filled but
that the balance of 40 shares would be
rejected. The Exchange’s current Rule
205–AEMI-One addresses odd-lot orders
that are submitted to AEMI as such, but
it is not applicable to a rejected odd-lot
portion of an order submitted for a
round lot, since the latter was not
intentionally for an odd lot but became
an odd lot due to the action of another
market.
The Exchange believes that the
situation described above, in which the
Exchange would be left with a rejected
odd-lot portion of an away market
obligation that was transmitted to
another market as a round-lot order, will
be a rare event. However, it is necessary
to make appropriate changes to the
AEMI platform and to the Exchange’s
AEMI-One rules to provide for this
possibility.
The Exchange is therefore proposing
to add language to Rule 205–AEMI-One
(Manner of Executing Odd-Lot Orders)
to distinguish such occurrences from
the treatment of odd-lot orders that are
submitted as such and to provide for the
proper treatment of such odd-lot
rejections by other markets. Proposed
new paragraph (b)(viii) of the rule
would provide that, if a partial-lot trade
is received from an away market in
response to an away market obligation
sent by AEMI, resulting in an
unexecuted balance which comprises an
odd lot, then any unexecuted odd-lot
balance on the aggressing order
(including the unexecuted odd-lot
balance from the away market
obligation) shall be traded immediately
against the Specialist at the last trade
price of the away market obligation, and
any remaining unexecuted round-lot
balance shall reaggress the AEMI Book
in accordance with Rule 126A–AEMIOne.6
6 In a situation where the original aggressing
order in AEMI was a non-exempt short sale and the
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71599
The following examples illustrate
how the proposed additional rule
provision would operate:
Example 1: Assume an incoming client
order to buy 100 shares of XYZ Corp. AEMI
routes the entire order to Nasdaq to access a
better-priced offer. If the Exchange receives
back a trade for only 80 shares at the limit
price and a rejection for 20 shares, that 20share odd-lot balance would trade against the
Specialist at the same price as the 80-share
execution on Nasdaq.
Example 2: Assume an incoming client
order to buy 130 shares of XYZ Corp. AEMI
routes 100 shares to Nasdaq to access a
better-priced offer. If the Exchange receives
back a trade for only 80 shares at the limit
price and a rejection for 20 shares, the
unexecuted odd-lot balance on the order of
50 shares (including the unexecuted odd-lot
balance of 20 shares from the away market
obligation) would trade against the Specialist
at the same price as the 80-share execution
on Nasdaq. This is the same outcome for the
order that would have resulted if the
execution at the away market had been for
the entire 100 shares that was routed to that
market.
Example 3: Assume an incoming client
order to buy 280 shares of XYZ Corp. AEMI
routes 200 shares to Nasdaq to access a
better-priced offer. If the Exchange receives
back a trade for 70 shares at the limit price,
followed by a trade for 100 shares at the limit
price and a rejection for 30 shares, the
remaining unexecuted 110-share balance of
the order would include an odd-lot balance
of 10 shares that would trade against the
Specialist at the same price as the 100-share
execution on Nasdaq and a round-lot balance
of 100 shares that would reaggress the AEMI
Book.
The Exchange asserts that the
proposal to effect the foregoing change
to the AEMI trading system does not
significantly affect the protection of
investors or the public interest, does not
impose any significant burden on
competition, and does not have the
effect of limiting the access to or
availability of the system.
2. Statutory Basis
The proposed rule change is designed
to be consistent with Regulation NMS,7
as well as consistent with Section 6(b)
of the Act,8 in general, and furthers the
objectives of Section 6(b)(5),9 in
aforementioned unexecuted odd-lot balance from
the away market obligation could not be traded
against the Specialist at the last trade price of the
away market obligation without violating the
Exchange’s short sale tick test (Amex Rule 7), the
Exchange would need to have received exemptive
or no-action relief from the Commission from the
requirements of Rule 10a–1 under the Act and the
Exchange’s related short sale rule in order to avoid
leaving that odd-lot balance unexecuted. The
Exchange has prepared a request for such relief and
is submitting it to the Commission separately.
7 17 CFR 242.600 et seq.
8 15 U.S.C. 78f(b).
9 15 U.S.C. 78f(b)(5).
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71600
Federal Register / Vol. 71, No. 237 / Monday, December 11, 2006 / Notices
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 proposed rule change does not
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.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Because the proposed rule change
does not: (1) Significantly affect the
protection of investors or the public
interest; (2) impose any significant
burden on competition; and (3) have the
effect of limiting the access to or
availability of an existing order entry or
trading system of the Exchange, the
foregoing rule change has become
effective immediately pursuant to
Section 19(b)(3)(A)(iii) of the Act10 and
Rule 19b–4(f)(5) 11 thereunder. At any
time within 60 days of the filing of such
proposed rule change, the Commission
may summarily abrogate such rule
change if it appears to the Commission
that such action is necessary or
appropriate in the public interest, for
the protection of investors, or otherwise
in the furtherance of the purposes of the
Act.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
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 No.
SR–Amex–2006–111. 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 available publicly. All
submissions should refer to File No.
SR–Amex–2006–111 and should be
submitted on or before January 2, 2007.
For the Commission, by the Division of
Market Regulation, pursuant to delegated
authority.12
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E6–20966 Filed 12–8–06; 8:45 am]
mstockstill on PROD1PC61 with NOTICES
U.S.C. 78s(b)(3)(A)(iii).
CFR 240.19b–4(f)(5).
VerDate Aug<31>2005
15:15 Dec 08, 2006
December 5, 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 November
7, 2006, the National Association of
Securities Dealers, Inc. (‘‘NASD’’),
through its subsidiary, The Nasdaq
Stock Market, Inc. (‘‘Nasdaq’’), 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 Nasdaq. On November
30, 2006, Nasdaq filed Amendment No.
1.3 Nasdaq filed the proposal as a ‘‘noncontroversial’’ rule change pursuant to
Section 19(b)(3)(A) of the Act,4 and Rule
19b–4(f)(6) thereunder,5 which renders
the proposal effective upon filing with
the Commission. The Commission is
publishing this notice to solicit
comments on the proposed rule change
from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
Nasdaq is providing guidance
regarding factors it generally considers
in adjudicating clearly erroneous
transactions under NASD Rule 11890.
The text of the proposed rule change
is below. Proposed new language is in
italics.
*
*
*
*
*
Nasdaq is providing the following
guidance on how it generally considers:
• All complaints filed by market
participants under Rule 11890(a); and
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 Amendment No. 1 replaced the text of the
original filing in its entirety in order to make
several clarifying edits to the rule text and the
description thereof.
4 15 U.S.C. 78s(b)(3)(A).
5 17 CFR 240.19b–4(f)(6).
2 17
12 17
Jkt 211001
Self-Regulatory Organizations;
National Association of Securities
Dealers, Inc.; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change and Amendment No. 1
Regarding Guidance for Adjudicating
Clearly Erroneous Transactions Under
NASD Rule 11890
IM–11890–4. Clearly Erroneous
Transaction Guidance for Filings Under
Rule 11890(a) and Single Stock Events
Under Rule 11890(b)(1)
• Use the Commission’s Internet
comment form at https://www.sec.gov/
rules/sro.shtml; or
• Send an e-mail to rulecomments@sec.gov. Please include File
No. SR–Amex–2006–111 on the subject
line.
11 17
[Release No. 34–54873; File No. SR–NASD–
2006–123]
BILLING CODE 8011–01–P
Electronic Comments
10 15
SECURITIES AND EXCHANGE
COMMISSION
PO 00000
CFR 200.30–3(a)(12).
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]]>Agencies
[Federal Register Volume 71, Number 237 (Monday, December 11, 2006)]
[Notices]
[Pages 71598-71600]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E6-20966]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-54866; File No. SR-Amex-2006-111]
Self-Regulatory Organizations; American Stock Exchange LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change
Relating to Odd-Lot Rejections by Away Markets in the AEMI-One Pilot
December 4, 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 November 29, 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, II,
and III below, which Items have been substantially prepared by the
Exchange. Amex has filed this proposal pursuant to Section 19(b)(3)(A)
of the Act \3\ and Rule 19b-4(f)(5) thereunder,\4\ which renders it
effective upon filing with the Commission. The Commission is publishing
this notice to solicit
[[Page 71599]]
comments on the proposed rule change from interested persons.
---------------------------------------------------------------------------
\1\ 15 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)(5).
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to adopt changes to its AEMI-One rules to
provide for the execution of an unexecuted odd-lot balance on an
aggressing order as the result of an unexecuted odd-lot balance on an
away market obligation that was routed to another market by the AEMI
platform to access a better-priced protected quotation.
The text of the proposed rule change is available on the Amex's Web
site at https://www.amex.com, the Exchange's principal office, 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 self-regulatory organization
included statements concerning the purpose of and basis for the
proposed rule change and discussed any comments it received on the
proposed rule change. The text of these statements may be examined at
the places specified in Item IV below. Amex 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 the
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange has recently adopted new rules to implement an initial
version of AEMI, its proposed new hybrid market trading platform for
equity products and exchange-traded funds.\5\ This initial version of
AEMI is referred to as AEMI-One and is operational on a pilot basis
through February 4, 2007. Under the AEMI-One pilot, the AEMI platform
will route orders to better-priced protected quotations of away
markets. Such ``away market obligations'' (as defined in Exchange Rule
131-AEMI-One) are sent only in round lots. Although the quotation of an
away market that AEMI is attempting to execute against is also
expressed in a round lot, the possibility exists that fills at certain
away markets may include odd lots since AEMI uses private linkages
instead of ITS to access such quotations in the AEMI-One pilot. For
example, if Nasdaq is displaying a better bid than Amex for 200 shares
of XYZ Corp. and there is an aggressing sell order in AEMI, Amex will
send an away market obligation to Nasdaq (in the form of an immediate
or cancel order or an intermarket sweep order) and could receive back
an execution in the form of two trades for 160 shares and 40 shares,
respectively.
---------------------------------------------------------------------------
\5\ See Securities Exchange Act Release No. 54709 (November 3,
2006), 71 FR 65847 (November 9, 2006).
---------------------------------------------------------------------------
Consequently, the possibility exists that, under unusual
circumstances, AEMI might receive only a partial fill on a round-lot
order and be left with a rejected odd-lot portion of a round-lot order
that was suspended on the AEMI Book. In the example cited above, it is
possible that 160 shares out of the 200 shares routed away would be
filled but that the balance of 40 shares would be rejected. The
Exchange's current Rule 205-AEMI-One addresses odd-lot orders that are
submitted to AEMI as such, but it is not applicable to a rejected odd-
lot portion of an order submitted for a round lot, since the latter was
not intentionally for an odd lot but became an odd lot due to the
action of another market.
The Exchange believes that the situation described above, in which
the Exchange would be left with a rejected odd-lot portion of an away
market obligation that was transmitted to another market as a round-lot
order, will be a rare event. However, it is necessary to make
appropriate changes to the AEMI platform and to the Exchange's AEMI-One
rules to provide for this possibility.
The Exchange is therefore proposing to add language to Rule 205-
AEMI-One (Manner of Executing Odd-Lot Orders) to distinguish such
occurrences from the treatment of odd-lot orders that are submitted as
such and to provide for the proper treatment of such odd-lot rejections
by other markets. Proposed new paragraph (b)(viii) of the rule would
provide that, if a partial-lot trade is received from an away market in
response to an away market obligation sent by AEMI, resulting in an
unexecuted balance which comprises an odd lot, then any unexecuted odd-
lot balance on the aggressing order (including the unexecuted odd-lot
balance from the away market obligation) shall be traded immediately
against the Specialist at the last trade price of the away market
obligation, and any remaining unexecuted round-lot balance shall
reaggress the AEMI Book in accordance with Rule 126A-AEMI-One.\6\
---------------------------------------------------------------------------
\6\ In a situation where the original aggressing order in AEMI
was a non-exempt short sale and the aforementioned unexecuted odd-
lot balance from the away market obligation could not be traded
against the Specialist at the last trade price of the away market
obligation without violating the Exchange's short sale tick test
(Amex Rule 7), the Exchange would need to have received exemptive or
no-action relief from the Commission from the requirements of Rule
10a-1 under the Act and the Exchange's related short sale rule in
order to avoid leaving that odd-lot balance unexecuted. The Exchange
has prepared a request for such relief and is submitting it to the
Commission separately.
---------------------------------------------------------------------------
The following examples illustrate how the proposed additional rule
provision would operate:
Example 1: Assume an incoming client order to buy 100 shares of
XYZ Corp. AEMI routes the entire order to Nasdaq to access a better-
priced offer. If the Exchange receives back a trade for only 80
shares at the limit price and a rejection for 20 shares, that 20-
share odd-lot balance would trade against the Specialist at the same
price as the 80-share execution on Nasdaq.
Example 2: Assume an incoming client order to buy 130 shares of
XYZ Corp. AEMI routes 100 shares to Nasdaq to access a better-priced
offer. If the Exchange receives back a trade for only 80 shares at
the limit price and a rejection for 20 shares, the unexecuted odd-
lot balance on the order of 50 shares (including the unexecuted odd-
lot balance of 20 shares from the away market obligation) would
trade against the Specialist at the same price as the 80-share
execution on Nasdaq. This is the same outcome for the order that
would have resulted if the execution at the away market had been for
the entire 100 shares that was routed to that market.
Example 3: Assume an incoming client order to buy 280 shares of
XYZ Corp. AEMI routes 200 shares to Nasdaq to access a better-priced
offer. If the Exchange receives back a trade for 70 shares at the
limit price, followed by a trade for 100 shares at the limit price
and a rejection for 30 shares, the remaining unexecuted 110-share
balance of the order would include an odd-lot balance of 10 shares
that would trade against the Specialist at the same price as the
100-share execution on Nasdaq and a round-lot balance of 100 shares
that would reaggress the AEMI Book.
The Exchange asserts that the proposal to effect the foregoing
change to the AEMI trading system does not significantly affect the
protection of investors or the public interest, does not impose any
significant burden on competition, and does not have the effect of
limiting the access to or availability of the system.
2. Statutory Basis
The proposed rule change is designed to be consistent with
Regulation NMS,\7\ as well as consistent with Section 6(b) of the
Act,\8\ in general, and furthers the objectives of Section 6(b)(5),\9\
in
[[Page 71600]]
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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\7\ 17 CFR 242.600 et seq.
\8\ 15 U.S.C. 78f(b).
\9\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition
The proposed rule change does not 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.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Because the proposed rule change does not: (1) Significantly affect
the protection of investors or the public interest; (2) impose any
significant burden on competition; and (3) have the effect of limiting
the access to or availability of an existing order entry or trading
system of the Exchange, the foregoing rule change has become effective
immediately pursuant to Section 19(b)(3)(A)(iii) of the Act\10\ and
Rule 19b-4(f)(5) \11\ thereunder. At any time within 60 days of the
filing of such proposed rule change, the Commission may summarily
abrogate such rule change if it appears to the Commission that such
action is necessary or appropriate in the public interest, for the
protection of investors, or otherwise in the furtherance of the
purposes of the Act.
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\10\ 15 U.S.C. 78s(b)(3)(A)(iii).
\11\ 17 CFR 240.19b-4(f)(5).
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IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's Internet comment form at https://
www.sec.gov/rules/sro.shtml; or
Send an e-mail to rule-comments@sec.gov. Please include
File No. SR-Amex-2006-111 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 No. SR-Amex-2006-111. 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 available publicly. All submissions should refer to
File No. SR-Amex-2006-111 and should be submitted on or before January
2, 2007.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\12\
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\12\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E6-20966 Filed 12-8-06; 8:45 am]
BILLING CODE 8011-01-P
