Self-Regulatory Organizations; American Stock Exchange, LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change, as Modified by Amendment No. 1 Thereto, Relating to Commentary .02 to Amex Rule 950-ANTE(d), 52589-52591 [E7-18131]

Download as PDF Federal Register / Vol. 72, No. 178 / Friday, September 14, 2007 / Notices By the Commission. Florence E. Harmon, Deputy Secretary. [FR Doc. 07–4584 Filed 9–12–07; 12:00 pm] BILLING CODE 8010–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–56377; File No. SR–Amex– 2007–84] Self-Regulatory Organizations; American Stock Exchange, LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change, as Modified by Amendment No. 1 Thereto, Relating to Commentary .02 to Amex Rule 950–ANTE(d) September 10, 2007. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (the ‘‘Act’’),1 and Rule 19b–4 thereunder,2 notice is hereby given that on August 7, 2007, 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 substantially by the Exchange. On September 7, 2007, the Exchange filed Amendment No. 1 to the proposal.3 The Exchange filed the proposal as a ‘‘non-controversial’’ proposed rule change pursuant to Section 19(b)(3)(A),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 rmajette on PROD1PC64 with NOTICES The Exchange proposes to amend Commentary .02 to Rule 950–ANTE(d) to permit the member firm guarantee to be set at either 20% or 40% and to permit the guarantee to apply to certain specified solicited orders. The text of the proposed rule change is available on the Amex’s Web site at https://www.amex.com, the Amex’s Office of the Secretary, and at the Commission’s Public Reference Room. 1 15 U.S.C. 78s(b)(1). CFR 240.19b–4. 3 In Amendment No. 1, the Exchange made technical, non-substantive corrections to the filing. 4 15 U.S.C. 78s(b)(3)(A). 5 17 CFR 240.19b–4(f)(6). 2 17 VerDate Aug<31>2005 15:44 Sep 13, 2007 Jkt 211001 II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the Amex included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Amex has prepared summaries, set forth in Sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The purpose of this proposed rule change is to permit the Facilitation Procedures Committee (‘‘Committee’’), appointed by the Board, on a class-byclass basis, to apply the member firm guarantee currently available for facilitation crosses, to solicited orders which improve the quoted market. The Exchange proposes either a 20% or a 40% guarantee, to be determined by the Committee. The current member firm guarantee provides that a member firm is entitled to a participation guarantee of 40% if the order is traded at a price that matches or improves the market. The Amex submits that the proposal is similar to amendments adopted by the Chicago Board Options Exchange, Incorporated (‘‘CBOE’’).6 A solicited order is an order solicited by a member firm (floor broker) to trade with another order. The Amex submits that orders which improve the quoted market that are solicited in order to facilitate a public customer order should receive a similar guaranteed participation as a member firm facilitating its customer’s order if so determined by the Facilitation Procedures Committee. Pursuant to Commentary .02(a)–(c) to Rule 950–ANTE(d), a floor broker holding an order for its public customer and a facilitation order is permitted to cross the orders if (i) floor broker discloses on its order ticket for the public customer order which is subject to facilitation, all the terms of such order, including, if applicable, any contingency involving other options, underlying securities, or related securities; (ii) the floor broker requests bids and offers for the option series 6 See Securities Exchange Act Release No. 53543 (March 23, 2006), 71 FR 15780 (March 29, 2006) (SR–CBOE–2006–21). PO 00000 Frm 00052 Fmt 4703 Sfmt 4703 52589 subject to facilitation, then discloses the public customer order and any contingency respecting such order which is subject to facilitation and identifies the order as being subject to facilitation; and (iii) after providing an opportunity for such bids and offers to be made, the floor broker on behalf of the public customer whose order is subject to facilitation, either bids at or above the highest bid or at or below the lowest offer in the market. After all other market participants are given an opportunity to accept the bid or offer made on behalf of the public customer whose order is subject to facilitation, the floor broker may cross all or any remaining part of such order and the facilitation order at such customer’s bid or offer by announcing in public outcry that he is crossing such orders, stating the quantity and price(s). Notwithstanding the provisions provided for in Commentary .02(a)–(c) of 950–ANTE(d), in cases where a member firm is seeking to facilitate its own public customer’s order, Commentary .02(d)(1) to Rule 950– ANTE(d) currently provides that member firms are entitled to participate in the firm’s proprietary account as the contra-side of that order to the extent of 40% of the remaining contracts, after public customer orders on the specialist’s book or customer orders represented by a floor broker in the crowd have been filled, provided the order trades at a price that matches or improves the market. This member firm guarantee provides, under certain conditions, the ability to cross 40% of the customer order on behalf of a member organization before the specialist and/or registered options traders in the crowd can participate in the transaction. The provision generally applies to orders of 400 contracts or more. However, the Exchange is currently permitted to establish smaller eligible order sizes, on a class-by-class basis, provided that size is not for fewer than 50 contracts. The proposed amendments to Commentary .02(d) to Rule 950–ANTE would allow the Committee to (i) determine if solicited orders which improve the quoted market may be crossed in the same manner as facilitation cross transactions, including that the floor broker complies with the disclosure and quote request process described above and (ii) to establish smaller eligible order sizes (i.e., less than 400 contracts but not less than 50 contracts), a determination that is currently made by the Exchange. Current Commentary .02(d)(1) to Rule 950–ANTE(d) permits a member seeking to facilitate its own public customer’s E:\FR\FM\14SEN1.SGM 14SEN1 rmajette on PROD1PC64 with NOTICES 52590 Federal Register / Vol. 72, No. 178 / Friday, September 14, 2007 / Notices option order to participate as the contraside of that order to the extent of 40% of the remaining contracts provided certain criteria are satisfied. In February 2005, the Exchange received Commission approval to implement a member firm guarantee of 40% for facilitation crosses for orders traded at the market or better than the market.7 The proposed changes would provide the Exchange with discretion by permitting participation to the extent of either 20% or 40% as determined on a class-by-class basis by the Committee. Additionally, the proposal would eliminate references to equity option orders and index options orders so that all options orders would be subject to the proposed changes. The Exchange further proposes amendments to Commentary .02(d)(3) and (4) to Rule 950–ANTE(d) to include both facilitation and solicited orders. Furthermore, the proposed amendments would also allow the Committee, under authority properly delegated by the Amex, to exempt a particular option class from the application of Commentary .02 to Rule 950–ANTE(d). The Exchange also notes that Commentary .04 to Rule 950–ANTE(d) still applies to solicited orders. Notwithstanding Commentary .04 to Rule 950–ANTE(d), however, the participation guarantees of 20% or 40% set forth in amended Commentary .02(d)(1) will apply in those cases where a member firm is seeking to cross a public customer order with a solicited order. Section 11(a)(1) of the Act 8 makes it unlawful for a member of an exchange to effect a transaction for its own account on that exchange unless a specific exception applies. The exceptions are set forth in Section 11(a)(1) 9 and in various rules adopted by the Commission subsequent to the enactment of Section 11(a). In connection with the use of affiliated or ‘‘house’’ floor brokers by Amex members, Section 11(a)(1)(G) of the Act 10 provides an exemption from the prohibitions of Section 11(a) for transactions effected for a member’s own account (‘‘G Orders’’), if the member meets a business mix test that requires it to be primarily engaged in the business of underwriting and distributing securities, selling securities to customers and/or acting as a broker, and provided more than 50% of its gross 7 See Securities Exchange Act Release No. 51275 (February 28, 2005), 70 FR 10709 (March 4, 2005). 8 15 U.S.C. 78k(a)(1). 9 Id. 10 15 U.S.C. 78k(a)(1)(G). VerDate Aug<31>2005 15:44 Sep 13, 2007 Jkt 211001 revenues is derived from such businesses and related activities.11 However, all G Orders must yield priority to any bid or offer at the same price for the account of a person who is not or is not associated with a member. Therefore, if a G Order is entered by a floor broker as part of a solicited transaction, the G Order will not be permitted an execution ahead of any non–member order on the book.12 The Committee will meet quarterly and will be chaired by the Chairman of the Board (‘‘Chairman’’) or his or her designee who will vote to break ties. Each quarter the composition of the Committee will be determined by the Chairman or his or her designee who will choose two (2) specialist representatives, two (2) ROT representatives and two (2) floor broker representatives from a pool annually chosen by the Board to serve on the Committee. 2. Statutory Basis The proposed rule change is consistent with Section 6(b) of the Act 13 in general, and furthers the objectives of Section 6(b)(5) of the Act 14 in particular, in that it is designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, to foster cooperation and coordination with persons engaged in facilitating transactions in securities, and to remove impediments to and perfect the mechanism of a free and open market and a national market system. B. Self-Regulatory Organization’s Statement on Burden on Competition The 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. 11 Rule 11a1–1(T)(b) under the Act, 17 CFR 240.11a1–1(T)(b), provides additional guidance to members seeking to meet the business mix test requirements of Section 11(a)(1)(G)(i), 15 U.S.C. 78k(a)(1)(G)(i). 12 Because the ANTE System is not programmed to recognize ‘‘G’’ orders and provide for the order to yield to all non-member accounts, affiliated floor brokers are prohibited from sending ‘‘G’’ orders in options into the ANTE System. This prohibition is necessary in order to prevent a violation of Section 11(a)(1) of the Act, 15 U.S.C. 78k(a)(1), by a member using an affiliated broker to represent a ‘‘G’’ order. 13 15 U.S.C. 78f. 14 15 U.S.C. 78f(b)(5). PO 00000 Frm 00053 Fmt 4703 Sfmt 4703 III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Because the foregoing rule does not: (i) Significantly affect the protection of investors or the public interest; (ii) impose any significant burden on competition; and (iii) become operative for 30 days from the date on which it was filed, or such shorter time as the Commission may designate if consistent with the protection of investors and the public interest, provided that the selfregulatory organization has given the Commission written notice of its intent to file the proposed rule change at least five business days prior to the date of filing of the proposed rule change or such shorter time as designated by the Commission, the proposed rule change has become effective pursuant to Section 19(b)(3)(A) of the Act 15 and Rule 19b–4(f)(6) thereunder.16 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 furtherance of the purposes of the Act. Amex has asked that the Commission waive the 30-day operative delay contained in Rule 19b–4(f)(6)(iii) under the Act.17 Because the proposal would establish rules that are substantially similar to rules that have been adopted by another exchange,18 the Commission believes that the proposal does not raise new regulatory issues, and that waiver of the 30-day operative delay is consistent with the protection of investors and the public interest. Accordingly, the Commission designates the proposal to be effective and operative upon filing with the Commission.19 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: 15 15 U.S.C. 78s(b)(3)(A). CFR 240.19b–4(f)(6). 17 17 CFR 240.19b–4(F)(6)(iii). 18 See supra note 6. 19 For purposes only of waiving the 30-day operative delay of this proposal, the Commission has considered the proposed rule’s impact on efficiency, competition, and capital formation. 15 U.S.C. 78c(f). 16 17 E:\FR\FM\14SEN1.SGM 14SEN1 Federal Register / Vol. 72, No. 178 / Friday, September 14, 2007 / Notices Electronic Comments • Use the Commission’s Internet comment form (https://www.sec.gov/ rules/sro.shtml); or • Send an e-mail to rulecomments@sec.gov. Please include File Number SR–Amex–2007–84 on the subject line. Paper Comments rmajette on PROD1PC64 with NOTICES • Send paper comments in triplicate to Nancy M. Morris, Secretary, Securities and Exchange Commission, 100 F Street, NE., Washington, DC 20549–1090. SECURITIES AND EXCHANGE COMMISSION [Release No. 34–56379; File No. SR–ISE– 2007–79] Self-Regulatory Organizations; International Securities Exchange, LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to Fee Changes September 10, 2007. 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 August 31, 2007, the International Securities All submissions should refer to File Exchange, LLC (‘‘ISE’’ or ‘‘Exchange’’) Number SR–Amex–2007–84. This file filed with the Securities and Exchange number should be included on the Commission (‘‘Commission’’) the subject line if e-mail is used. To help the proposed rule change as described in Commission process and review your Items I, II, and III below, which Items comments more efficiently, please use have been substantially prepared by the only one method. The Commission will ISE. The ISE has designated this post all comments on the Commission’s proposal as one establishing or changing Internet Web site (https://www.sec.gov/ a due, fee, or other charge imposed by rules/sro.shtml). Copies of the the ISE under section 19(b)(3)(A)(ii) of the Act,3 and Rule 19b–4(f)(2) submission, all subsequent thereunder,4 which renders the proposal amendments, all written statements effective upon filing with the with respect to the proposed rule Commission. The Commission is change that are filed with the publishing this notice to solicit Commission, and all written comments on the proposed rule change communications relating to the from interested persons. proposed rule change between the Commission and any person, other than I. Self-Regulatory Organization’s those that may be withheld from the Statement of the Terms of Substance of public in accordance with the the Proposed Rule Change provisions of 5 U.S.C. 552, will be The ISE proposes to amend the available for inspection and copying in Schedule of Fees to clarify and amend the Commission’s Public Reference its Trading Application Software Fees Room, 100 F Street, NE., Washington, with respect to FIX and API sessions. DC 20549, on official business days The text of the proposed rule change is between the hours of 10 am and 3 pm. available on the ISE’s Web site (https:// Copies of such filing also will be www.ise.com), at the principal office of available for inspection and copying at the ISE, and at the Commission’s Public the principal office of Amex. All Reference Room. comments received will be posted II. Self-Regulatory Organization’s without change; the Commission does Statement of the Purpose of, and not edit personal identifying Statutory Basis for, the Proposed Rule information from submissions. You Change should submit only information that In its filing with the Commission, the you wish to make available publicly. All ISE included statements concerning the submissions should refer to File Number SR–Amex–2007–84 and should purpose of, and basis for, the proposed rule change and discussed any be submitted on or before October 5, comments it received on the proposed 2007. rule change. The text of these statements For the Commission, by the Division of may be examined at the places specified Market Regulation, pursuant to delegated in Item IV below. The ISE has prepared authority.20 summaries, set forth in sections A, B, Florence E. Harmon, and C below, of the most significant aspects of such statements. Deputy Secretary. [FR Doc. E7–18131 Filed 9–13–07; 8:45 am] 1 15 U.S.C. 78s(b)(1). CFR 240.19b–4. 3 15 U.S.C. 78s(b)(3)(A)(ii). 4 17 CFR 240.19b–4(f)(2). BILLING CODE 8010–01–P 2 17 20 17 CFR 200.30–3(a)(12). VerDate Aug<31>2005 15:44 Sep 13, 2007 Jkt 211001 PO 00000 Frm 00054 Fmt 4703 Sfmt 4703 52591 A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The Exchange proposes to amend the Schedule of Fees with respect to Electronic Access Member (‘‘EAM’’) Trading Application Software Fees. A member can connect via an Application Programming Interface (‘‘API’’) session or a Financial Information eXchange (‘‘FIX’’) session. The ISE uses an open API which members program to in order to develop applications that send trading commands and/or queries to and receive broadcasts and/or transactions from the trading system. The API processes quotes, receives orders from EAMs, tracks activity in the underlying markets, when applicable, executes trades in the matching engine, and broadcasts trade details to the participating members. The ISE pays a licensing fee for the use of the options API, whereas ISE owns the proprietary rights to the equity API. Accordingly, fees are higher for options API sessions than they are for equity API sessions. FIX is an industry-wide messaging standard protocol. While the FIX specification is open and free, implementing FIX requires planning, software, and network services that ISE provides. On December 5, 2006, the Exchange filed to adopt fees related to the trading of equity securities on the ISE Stock Exchange, LLC, a facility of ISE. In ISE– 2006–76, the Exchange proposed to charge a Session/API 5 fee of $250 per month to connect to the ISE Stock Exchange, with a waiver until June 30, 2007 for second and subsequent connections.6 The Exchange allowed this waiver to expire on June 30, 2007, at which time the fee to connect to the ISE Stock Exchange, on a monthly basis, became $250 per session, i.e., for each connection to the ISE Stock Exchange, regardless of whether the Equity EAM is connected via FIX or API. Subsequent to the fee increase, the Exchange analyzed the impact of the fee increase on Equity EAMs and determined that the disparity between the increase in fees and the additional work required to assist the Equity EAMs in maintaining additional lines to the Exchange was not accurately 5 Historically, the Schedule of Fees referred to ‘‘FIX’’ as ‘‘Session.’’ However, in this filing the Exchange is proposing to clarify this by defining session fees as either FIX or API. 6 See Securities Exchange Act Release No. 54897 (December 8, 2006), 71 FR 75593 (December 15, 2006) (SR–ISE–2007–76) (Notice of filing and immediate effectiveness of proposed rule change relating to ISE Stock Exchange fees). E:\FR\FM\14SEN1.SGM 14SEN1

Agencies

SECURITIES AND EXCHANGE COMMISSION

[Federal Register Volume 72, Number 178 (Friday, September 14, 2007)]
[Notices]
[Pages 52589-52591]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E7-18131]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-56377; File No. SR-Amex-2007-84]


Self-Regulatory Organizations; American Stock Exchange, LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change, 
as Modified by Amendment No. 1 Thereto, Relating to Commentary .02 to 
Amex Rule 950-ANTE(d)

September 10, 2007.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given 
that on August 7, 2007, 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 substantially by the 
Exchange. On September 7, 2007, the Exchange filed Amendment No. 1 to 
the proposal.\3\ The Exchange filed the proposal as a ``non-
controversial'' proposed rule change pursuant to Section 
19(b)(3)(A),\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.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ In Amendment No. 1, the Exchange made technical, non-
substantive corrections to the filing.
    \4\ 15 U.S.C. 78s(b)(3)(A).
    \5\ 17 CFR 240.19b-4(f)(6).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend Commentary .02 to Rule 950-ANTE(d) 
to permit the member firm guarantee to be set at either 20% or 40% and 
to permit the guarantee to apply to certain specified solicited orders.
    The text of the proposed rule change is available on the Amex's Web 
site at https://www.amex.com, the Amex's Office of the Secretary, and at 
the Commission's Public Reference Room.

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

    In its filing with the Commission, the Amex included statements 
concerning the purpose of and basis for the proposed rule change and 
discussed any comments it received on the proposed rule change. The 
text of these statements may be examined at the places specified in 
Item IV below. The Amex has prepared summaries, set forth in Sections 
A, B, and C below, of the most significant aspects of such statements.

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

1. Purpose
    The purpose of this proposed rule change is to permit the 
Facilitation Procedures Committee (``Committee''), appointed by the 
Board, on a class-by-class basis, to apply the member firm guarantee 
currently available for facilitation crosses, to solicited orders which 
improve the quoted market. The Exchange proposes either a 20% or a 40% 
guarantee, to be determined by the Committee. The current member firm 
guarantee provides that a member firm is entitled to a participation 
guarantee of 40% if the order is traded at a price that matches or 
improves the market. The Amex submits that the proposal is similar to 
amendments adopted by the Chicago Board Options Exchange, Incorporated 
(``CBOE'').\6\
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    \6\ See Securities Exchange Act Release No. 53543 (March 23, 
2006), 71 FR 15780 (March 29, 2006) (SR-CBOE-2006-21).
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    A solicited order is an order solicited by a member firm (floor 
broker) to trade with another order. The Amex submits that orders which 
improve the quoted market that are solicited in order to facilitate a 
public customer order should receive a similar guaranteed participation 
as a member firm facilitating its customer's order if so determined by 
the Facilitation Procedures Committee.
    Pursuant to Commentary .02(a)-(c) to Rule 950-ANTE(d), a floor 
broker holding an order for its public customer and a facilitation 
order is permitted to cross the orders if (i) floor broker discloses on 
its order ticket for the public customer order which is subject to 
facilitation, all the terms of such order, including, if applicable, 
any contingency involving other options, underlying securities, or 
related securities; (ii) the floor broker requests bids and offers for 
the option series subject to facilitation, then discloses the public 
customer order and any contingency respecting such order which is 
subject to facilitation and identifies the order as being subject to 
facilitation; and (iii) after providing an opportunity for such bids 
and offers to be made, the floor broker on behalf of the public 
customer whose order is subject to facilitation, either bids at or 
above the highest bid or at or below the lowest offer in the market. 
After all other market participants are given an opportunity to accept 
the bid or offer made on behalf of the public customer whose order is 
subject to facilitation, the floor broker may cross all or any 
remaining part of such order and the facilitation order at such 
customer's bid or offer by announcing in public outcry that he is 
crossing such orders, stating the quantity and price(s).
    Notwithstanding the provisions provided for in Commentary .02(a)-
(c) of 950-ANTE(d), in cases where a member firm is seeking to 
facilitate its own public customer's order, Commentary .02(d)(1) to 
Rule 950-ANTE(d) currently provides that member firms are entitled to 
participate in the firm's proprietary account as the contra-side of 
that order to the extent of 40% of the remaining contracts, after 
public customer orders on the specialist's book or customer orders 
represented by a floor broker in the crowd have been filled, provided 
the order trades at a price that matches or improves the market. This 
member firm guarantee provides, under certain conditions, the ability 
to cross 40% of the customer order on behalf of a member organization 
before the specialist and/or registered options traders in the crowd 
can participate in the transaction. The provision generally applies to 
orders of 400 contracts or more. However, the Exchange is currently 
permitted to establish smaller eligible order sizes, on a class-by-
class basis, provided that size is not for fewer than 50 contracts.
    The proposed amendments to Commentary .02(d) to Rule 950-ANTE would 
allow the Committee to (i) determine if solicited orders which improve 
the quoted market may be crossed in the same manner as facilitation 
cross transactions, including that the floor broker complies with the 
disclosure and quote request process described above and (ii) to 
establish smaller eligible order sizes (i.e., less than 400 contracts 
but not less than 50 contracts), a determination that is currently made 
by the Exchange.
    Current Commentary .02(d)(1) to Rule 950-ANTE(d) permits a member 
seeking to facilitate its own public customer's

[[Page 52590]]

option order to participate as the contra-side of that order to the 
extent of 40% of the remaining contracts provided certain criteria are 
satisfied. In February 2005, the Exchange received Commission approval 
to implement a member firm guarantee of 40% for facilitation crosses 
for orders traded at the market or better than the market.\7\ The 
proposed changes would provide the Exchange with discretion by 
permitting participation to the extent of either 20% or 40% as 
determined on a class-by-class basis by the Committee. Additionally, 
the proposal would eliminate references to equity option orders and 
index options orders so that all options orders would be subject to the 
proposed changes.
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    \7\ See Securities Exchange Act Release No. 51275 (February 28, 
2005), 70 FR 10709 (March 4, 2005).
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    The Exchange further proposes amendments to Commentary .02(d)(3) 
and (4) to Rule 950-ANTE(d) to include both facilitation and solicited 
orders.
    Furthermore, the proposed amendments would also allow the 
Committee, under authority properly delegated by the Amex, to exempt a 
particular option class from the application of Commentary .02 to Rule 
950-ANTE(d).
    The Exchange also notes that Commentary .04 to Rule 950-ANTE(d) 
still applies to solicited orders. Notwithstanding Commentary .04 to 
Rule 950-ANTE(d), however, the participation guarantees of 20% or 40% 
set forth in amended Commentary .02(d)(1) will apply in those cases 
where a member firm is seeking to cross a public customer order with a 
solicited order.
    Section 11(a)(1) of the Act \8\ makes it unlawful for a member of 
an exchange to effect a transaction for its own account on that 
exchange unless a specific exception applies. The exceptions are set 
forth in Section 11(a)(1) \9\ and in various rules adopted by the 
Commission subsequent to the enactment of Section 11(a). In connection 
with the use of affiliated or ``house'' floor brokers by Amex members, 
Section 11(a)(1)(G) of the Act \10\ provides an exemption from the 
prohibitions of Section 11(a) for transactions effected for a member's 
own account (``G Orders''), if the member meets a business mix test 
that requires it to be primarily engaged in the business of 
underwriting and distributing securities, selling securities to 
customers and/or acting as a broker, and provided more than 50% of its 
gross revenues is derived from such businesses and related 
activities.\11\ However, all G Orders must yield priority to any bid or 
offer at the same price for the account of a person who is not or is 
not associated with a member. Therefore, if a G Order is entered by a 
floor broker as part of a solicited transaction, the G Order will not 
be permitted an execution ahead of any non-member order on the 
book.\12\
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    \8\ 15 U.S.C. 78k(a)(1).
    \9\ Id.
    \10\ 15 U.S.C. 78k(a)(1)(G).
    \11\ Rule 11a1-1(T)(b) under the Act, 17 CFR 240.11a1-1(T)(b), 
provides additional guidance to members seeking to meet the business 
mix test requirements of Section 11(a)(1)(G)(i), 15 U.S.C. 
78k(a)(1)(G)(i).
    \12\ Because the ANTE System is not programmed to recognize 
``G'' orders and provide for the order to yield to all non-member 
accounts, affiliated floor brokers are prohibited from sending ``G'' 
orders in options into the ANTE System. This prohibition is 
necessary in order to prevent a violation of Section 11(a)(1) of the 
Act, 15 U.S.C. 78k(a)(1), by a member using an affiliated broker to 
represent a ``G'' order.
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    The Committee will meet quarterly and will be chaired by the 
Chairman of the Board (``Chairman'') or his or her designee who will 
vote to break ties. Each quarter the composition of the Committee will 
be determined by the Chairman or his or her designee who will choose 
two (2) specialist representatives, two (2) ROT representatives and two 
(2) floor broker representatives from a pool annually chosen by the 
Board to serve on the Committee.
2. Statutory Basis
    The proposed rule change is consistent with Section 6(b) of the Act 
\13\ in general, and furthers the objectives of Section 6(b)(5) of the 
Act \14\ in particular, in that it is designed to prevent fraudulent 
and manipulative acts and practices, to promote just and equitable 
principles of trade, to foster cooperation and coordination with 
persons engaged in facilitating transactions in securities, and to 
remove impediments to and perfect the mechanism of a free and open 
market and a national market system.
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    \13\ 15 U.S.C. 78f.
    \14\ 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 foregoing rule does not: (i) Significantly affect the 
protection of investors or the public interest; (ii) impose any 
significant burden on competition; and (iii) become operative for 30 
days from the date on which it was filed, or such shorter time as the 
Commission may designate if consistent with the protection of investors 
and the public interest, provided that the self-regulatory organization 
has given the Commission written notice of its intent to file the 
proposed rule change at least five business days prior to the date of 
filing of the proposed rule change or such shorter time as designated 
by the Commission, the proposed rule change has become effective 
pursuant to Section 19(b)(3)(A) of the Act \15\ and Rule 19b-4(f)(6) 
thereunder.\16\
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    \15\ 15 U.S.C. 78s(b)(3)(A).
    \16\ 17 CFR 240.19b-4(f)(6).
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    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 furtherance of the purposes of the Act.
    Amex has asked that the Commission waive the 30-day operative delay 
contained in Rule 19b-4(f)(6)(iii) under the Act.\17\ Because the 
proposal would establish rules that are substantially similar to rules 
that have been adopted by another exchange,\18 \ the Commission 
believes that the proposal does not raise new regulatory issues, and 
that waiver of the 30-day operative delay is consistent with the 
protection of investors and the public interest. Accordingly, the 
Commission designates the proposal to be effective and operative upon 
filing with the Commission.\19 \
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    \17\ 17 CFR 240.19b-4(F)(6)(iii).
    \18\ See supra note 6.
    \19\ For purposes only of waiving the 30-day operative delay of 
this proposal, the Commission has considered the proposed rule's 
impact on efficiency, competition, and capital formation. 15 U.S.C. 
78c(f).
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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:

[[Page 52591]]

Electronic Comments

     Use the Commission's Internet comment form (https://
www.sec.gov/rules/sro.shtml); or
     Send an e-mail to rule-comments@sec.gov. Please include 
File Number SR-Amex-2007-84 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-2007-84. 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, 100 F Street, 
NE., Washington, DC 20549, on official business days between the hours 
of 10 am and 3 pm. Copies of such filing also will be available for 
inspection and copying at the principal office of 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-2007-84 and should be 
submitted on or before October 5, 2007. 

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\20\
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    \20\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
 [FR Doc. E7-18131 Filed 9-13-07; 8:45 am]
BILLING CODE 8010-01-P

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