Self-Regulatory Organizations; American Stock Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to Exchange Liability for the Actions or Omission of Amex Book Clerks, 70622-70625 [E7-23967]
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70622
Federal Register / Vol. 72, No. 238 / Wednesday, December 12, 2007 / Notices
report the actual number of shares for
each transaction, exclusive of odd-lots.
The Participants believe that reporting
transactions in the actual number of
shares traded rather than round lots will
add greater transparency to the
marketplace. The Participants also
believe that it remains appropriate to
exclude odd lots from CTA trade
reporting because the small size of oddlot trades adds little to marketplace
transparency and because the number of
odd-lot trades would merely serve to
clutter data feeds and make it more
difficult for investors to obtain a true
view of the markets for Eligible
Securities. The text of the proposed
Amendment is available on the CTA’s
Web site (https://www.nysedata.com/
cta), at the principal office of the CTA,
and at the Commission’s Public
Reference Room.
c. Method of Frequency of Processor
Evaluation
Not applicable.
d. Dispute Resolution
Not applicable.
B. Additional Information Required by
Rule 608(a)
E. Standards and Methods Ensuring
Promptness, Accuracy and
Completeness of Transaction Reports
1. Governing or Constituent Documents
Not applicable.
2. Implementation of the Amendment
The Participants propose to
implement the change soon after receipt
of Commission approval of the
Amendment, but no earlier than January
1, 2008.
mstockstill on PROD1PC66 with NOTICES
Not applicable.
C. Manner of Collecting, Processing,
Sequencing, Making Available and
Disseminating Last Sale Information
Not applicable.
D. Manner of Consolidation
Not applicable.
Not applicable.
F. Rules and Procedures Addressed to
Fraudulent or Manipulative
Dissemination
Not applicable.
G. Terms of Access to Transaction
Reports
III. Solicitation of Comments
6. Approval by Sponsors in Accordance
With Plan
Under Section IV(b) of the CTA Plan,
each Plan Participant must execute a
written amendment to the CTA Plan
before the amendment can become
effective. The amendment is so
executed.
Jkt 214001
B. Reporting Requirements
Not applicable.
5. Written Understanding or Agreements
relating to Interpretation of, or
Participation in, Plan
The Participants have no written
understandings or agreements relating
to interpretation of the CTA Plan as a
result of the amendment.
15:54 Dec 11, 2007
Not applicable.
H. Identification of Marketplace
Execution
4. Analysis of Impact on Competition
The amendment will impose no
burden on competition.
VerDate Aug<31>2005
A. Equity Securities for Which
Transaction Reports Shall Be Required
by the Plan
Not applicable.
3. Development and Implementation
Phases
See Item I(B)(2) above.
7. Description of Operation of Facility
Contemplated by the Proposed
Amendment
a. Terms and Conditions of Access
Not applicable.
b. Method of Determination and
Imposition, and Amount of, Fees and
Charges
Not applicable.
II. Rule 601(a)
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed
Eleventh Substantive 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
Number SR–CTA–2007–02 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–CTA–2007–02. This file
number should be included on the
PO 00000
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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 Plan amendment that
are filed with the Commission, and all
written communications relating to the
Plan amendment 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 a.m. and 3 p.m.
Copies of the CTA Plan amendment also
will be available for inspection and
copying at the principal office of the
CTA. 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–CTA–2007–02 and should
be submitted on or before January 2,
2008.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.4
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7–23966 Filed 12–11–07; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–56805; File No. SR–Amex–
2007–122]
Self-Regulatory Organizations;
American Stock Exchange LLC; Notice
of Filing and Immediate Effectiveness
of Proposed Rule Change Relating to
Exchange Liability for the Actions or
Omission of Amex Book Clerks
November 16, 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 November
16, 2007, the American Stock Exchange
LLC (‘‘Exchange’’ or ‘‘Amex’’) filed with
the Securities and Exchange
Commission (‘‘Commission’’) the
4 17
CFR 200.30–3(a)(27).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
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Federal Register / Vol. 72, No. 238 / Wednesday, December 12, 2007 / Notices
proposed rule change as described in
Items I and II below, which Items have
been substantially prepared by the
Exchange. The Exchange has designated
this proposal as non-controversial under
Section 19(b)(3)(A)(iii) of the Act 3 and
Rule 19b–4(f)(6) thereunder,4 which
renders the proposed rule change
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
The Exchange proposes to adopt new
Rule 996—ANTE providing for the
limited liability of the Exchange in
connection with the actions of Amex
Book Clerks (‘‘ABCs’’). The text of the
proposed rule change is available at
Amex, the Commission’s Public
Reference Room, and https://amex.com.
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 and discussed
any comments it received on the
proposed rule change. The text of these
statements may be examined at the
places specified in Item IV below. The
Exchange has prepared summaries, set
forth in Sections A, B, and C below, of
the most significant aspects of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
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1. Purpose
The purpose of the proposed rule
change is to permit members, member
organizations, and associated persons of
member organizations to bring a claim
or claims against the Exchange, in
limited circumstances, for the actions of
an ABC. The Commission, in April
2007, published for public comment in
the Federal Register the Exchange’s
proposal to eliminate the agency
obligations of specialists and establish
ABCs.5 In connection with the approval
of the ABC proposal, the Exchange
submits this filing relating to the
3 15
U.S.C. 78s(b)(3)(A)(iii).
CFR 240.19b–4(f)(6).
5 See Securities Exchange Act Release No. 55583
(April 5, 2007), 72 FR 18695 (April 13, 2007) (notice
of filing of SR–Amex–2006–107).
4 17
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15:54 Dec 11, 2007
Jkt 214001
liability of the Exchange for the actions
of ABCs.
The ABC will be an Exchange
employee or independent contractor
designated by the Exchange to be
responsible for: (i) Maintaining and
operating the customer limit order book
and display book for assigned options
classes; and (ii) effecting proper
executions of orders placed in the
customer order limit book. The ABC
will be prohibited from having an
affiliation with any member that is
approved to act as a specialist,
registered options trader (‘‘ROT’’),
remote registered options trader
(‘‘RROT’’) and supplemental registered
options trader (‘‘SROT’’) on the
Exchange. In addition, ABCs are also
responsible for handling Linkage
Orders 6 in all appointed options
classes. As a result, the ABC will have
the means to: (1) Utilize an options
specialist’s account to route P/A Orders
and Satisfaction Orders to away markets
based on prior instructions that must be
provided by the options specialist to the
ABC, and (2) handle all Linkage Orders
or portions of Linkage Orders received
by the Exchange that are not
automatically executed. The ABC also
would have the means to utilize the
options specialist’s account to fill
Satisfaction Orders that result from a
trade-through that the Exchange effects.
Article IV, Section 1(e) of the Amex
Constitution provides that the
Exchange, its affiliates, officers,
Governors, committee members,
employees or agents shall not be liable
to a member, member organization, or a
person associated with a member or a
member organization for any loss,
expense, damages or claims that arise
out of the use or enjoyment of the
facilities or services afforded by the
Exchange, any interruption in or failure
or unavailability of any such facilities or
services, or any action taken or omitted
to be taken in respect to the business of
the Exchange except to the extent such
loss, expense, damages or claims are
attributable to the willful misconduct,
6 ‘‘Linkage Order’’ means an immediate or cancel
order routed through the Linkage as permitted
under the Linkage Plan. There are three types of
Linkage Orders: (i) ‘‘Principal Acting as Agent (‘‘P/
A’’) Order,’’ which is an order for the principal
account of a specialist (or equivalent entity on
another Participant Exchange that is authorized to
represent Public Customer orders), reflecting the
terms of a related unexecuted Public Customer
order for which the specialist is acting as agent; (ii)
‘‘Principal Order,’’ which is an order for the
principal account of an Eligible Market Maker (or
equivalent entity on another Participant Exchange)
and is not a P/A Order; and (iii) ‘‘Satisfaction
Order,’’ which is an order sent through the Linkage
to notify a Participant Exchange of a Trade-Through
and to seek satisfaction of the liability arising from
that Trade-Through.
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70623
gross negligence, bad faith or fraudulent
or criminal acts of the Exchange or its
officers, employees or agent acting
within the scope of their authority.
However, Article IV, Section 1(e) does
permit the Board of Governors of the
Exchange to provide, by rule, Exchange
liability with respect to Exchange
facilities which implement the
electronic transmission of orders for the
purchase or sale of securities traded on
the Exchange to the floor of the
Exchange or between the floor of the
Exchange and other markets.
Accordingly, proposed Rule 996—ANTE
would permit Exchange liability, in
limited circumstances, relating to the
actions of ABCs for: (i) Maintaining and
operating the customer limit order book
and display book; and (ii) effecting
proper executions of orders placed in
the customer order limit book.
Limitation of Liability. The liability of
the Exchange for claims arising out of
errors or omissions made by ABCs will
be limited as follows:
• As to any one or more claims made
by a single member on a single trading
day, the Exchange shall not be liable in
excess of the larger of $75,000 or the
amount of any recovery obtained by the
Exchange under any applicable
insurance maintained by the Exchange.
• As to the aggregate of all claims
made by all members on a single trading
day, the Exchange shall not be liable in
excess of the larger of $100,000 or the
amount of the recovery obtained by the
Exchange under any applicable
insurance maintained by the Exchange.
• As to the aggregate of all claims
made by all members during a single
calendar month, the Exchange shall not
be liable in excess of the larger of
$250,000 or the amount of the recovery
obtained by the Exchange under any
applicable insurance maintained by the
Exchange.
If all of the claims arising out of errors
or omissions by an ABC cannot be fully
satisfied because they exceed the
applicable maximum amount of liability
provided for above, then the maximum
amount will be allocated among all such
claims arising on a single trading day or
during a single calendar month, as
applicable, based upon the proportion
that each such claim bears to the sum
of all such claims.
Exchange liability will also be limited
if a member, member organization or the
Exchange fails to close out an
uncompared trade as set forth in Rule
960.7 In such a case, the opposing
7 Commentary .01(b) to Rule 960 provides that all
rejected options transaction notices (‘‘ROTNs’’)
must be ‘‘OK’d’’ or ‘‘DK’d’’ not later than one-half
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Federal Register / Vol. 72, No. 238 / Wednesday, December 12, 2007 / Notices
mstockstill on PROD1PC66 with NOTICES
party’s liability with respect to any
claims arising from such trade will be
limited to the lesser of: (1) The loss
which would have been experienced by
the claimant if the uncompared trade
had been closed out at the opening of
trading on the next business day as
provided in Rule 960; or (2) the actual
loss realized by the claimant.
Furthermore, the Exchange’s potential
liability is also limited if any damage is
caused by an error or omission of an
ABC which is the result of any error or
omission of a member organization.
Under such circumstances, the member
organization will be required to
indemnify the Exchange and hold it
harmless from any claim of liability
resulting from or relating to such
damage.
Procedure. Absent reasonable
justification or excuse, any claim by a
member, member organization, or
persons associated with a member or
member organization for losses arising
from errors or omissions of an ABC, and
any claim by the Exchange for
indemnification under paragraph (g) of
Proposed Rule 996—ANTE, must be
presented in writing to the opposing
party within ten (10) business days
following the transaction giving rise to
the claim; provided, that if an error or
omission has resulted in an unmatched
trade, then any claim based thereon
shall be presented after the unmatched
trade has been closed out but within ten
(10) business days following such
resolution of the unmatched trade.
For purposes of proposed Rule 996—
ANTE, the term ‘‘transaction’’ means
any single order or instruction which is
placed with an ABC, or any series of
orders or instructions, which is placed
with an ABC at substantially the same
time by the same member and which
relates to any one or more series of
options of the same class. All errors and
omissions made by an ABC with respect
to or arising out of any transaction will
give rise to a ‘‘single claim’’ against the
Exchange. The Exchange will retain any
defenses to such claim or claims that it
may have. In addition, no claim will be
permitted to arise as to errors or
omissions which are found to have
resulted from any failure by a member
or by any person acting on behalf of a
member, to enter or cancel an order
with such ABC on a timely basis or
clearly and accurately to communicate
to such ABC:
hour prior to the opening of trading on the first
business day following the trade date unless an
agent (including a specialist) was involved in the
execution of a transaction, where the time limit
shall be extended to fifteen minutes prior to such
opening (these time limits may be extended by a
Floor Official).
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15:54 Dec 11, 2007
Jkt 214001
(i) The description or symbol of the
security involved; or
(ii) The exercise price or option
contract price; or
(iii) The type of option; or
(iv) The number of trading units; or
(v) The expiration month; or
(vi) Any other information or data
which is material to the transaction.
Arbitration. Pursuant to proposed
Rule 996—ANTE, all disputed claims
will be referred to binding arbitration
with the decision of a majority of the
arbitrators selected to hear and
determine the controversy deemed final.
There will be no appeal right to the
Board of Governors from any decision of
an arbitration panel. The arbitration
panel will be composed of an odd
number of panelists. Each of the parties
to the dispute will select one Exchange
member to serve as panelist on the
arbitration panel. The panelists so
selected shall then select one or more
additional panelist(s); provided that the
additional panelist(s) so selected are
members of the Exchange and that no
member of the arbitration panel may
have any direct or indirect financial
interest in the claim. In the event that
the initial panelists selected by the
parties to the dispute cannot agree on
the selection of the additional
panelist(s), such additional panelist(s)
shall be appointed by a Floor Official
chosen by a random draw who has no
direct or indirect financial interest in
the claim. The NASD Code of
Arbitration Procedure for Industry
Disputes (Article VIII of the Amex
Constitution) shall apply to any
arbitration proceeding.
2. Statutory Basis
The Exchange believes that the
proposed rule change is consistent with
Section 6 of the Act 8 in general and
furthers the objectives of Section 6(b)(5)
of the Act 9 in particular in that it would
remove impediments to and perfect the
mechanism of a free and open market in
a manner consistent with the protection
of investors and the public interest.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange believes that the
proposed rule change will not impose
any burden on competition that is not
necessary or appropriate in furtherance
of the purposes of the Act.
8 15
9 15
PO 00000
U.S.C. 78f.
U.S.C. 78f(b)(5).
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Fmt 4703
Sfmt 4703
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
The Exchange has filed the proposed
rule change pursuant to Section
19(b)(3)(A) of the Act 10 and
subparagraph (f)(6) of Rule 19b–4
thereunder.11 Because the foregoing
proposed rule change: (i) Does not
significantly affect the protection of
investors or the public interest; (ii) does
not impose any significant burden on
competition; and (iii) does not 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, the
proposed rule change has become
effective pursuant to Section 19(b)(3)(A)
of the Act and Rule 19b–4(f)(6)(iii)
thereunder.12
A proposed rule change filed under
Rule 19b–4(f)(6) normally does not
become operative for 30 days after the
date of filing. However, Rule 19b–
4(f)(6)(iii) permits the Commission to
waive the operative delay if such action
is consistent with the protection of
investors and the public interest. The
Exchange has asked the Commission to
waive the operative delay to permit the
proposed rule change to become
effective prior to the 30th day after
filing.
The Commission believes that
waiving the 30-day operative delay is
consistent with the protection of
investors and the public interest. The
Commission notes that the proposal is
substantially identical to the Chicago
Board Options Exchange’s (‘‘CBOE’’)
rules regarding limitation of exchange
liability for acts and omission of CBOE
Par Officials,13 previously published for
comment and approved by the
Commission,14 and the Exchange’s
10 15
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(6).
12 The Exchange has satisfied the requirement
under Rule 19b–4(f)(6)(iii) that it give written notice
to the Commission of its intent to file the proposed
rule change at least five business days prior to
filing.
13 See CBOE Rules 6.7, ‘‘Exchange Liability,’’ and
7.11, ‘‘Liability of Exchange for Actions of Order
Book Officials, and PAR Officials.’’
14 See Securities Exchange Act Release Nos.
52017 (July 12, 2005), 70 FR 41453 (July 19, 2005)
(notice of filing of SR–CBOE–2005–46) and 52798
(November 18, 2005), 70 FR 71344 (November 28,
2005) (order approving SR–CBOE–2005–46).
11 17
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Federal Register / Vol. 72, No. 238 / Wednesday, December 12, 2007 / Notices
proposal raises no new issues of
regulatory concern. Waiving the
operative delay will allow the proposal
to become effective simultaneously with
Amex’s proposal to establish ABCs,
which we are approving separately
today.15 Therefore, the Commission has
determined to waive the 30-day delay
and allow the proposed rule change to
become operative immediately.16
At any time within 60 days of the
filing of the 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.
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 (https://www.sec.gov/
rules/sro.shtml); or
• Send an e-mail to rulecomments@sec.gov. Please include File
No. SR–Amex–2006–67 on the subject
line.
mstockstill on PROD1PC66 with NOTICES
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–2007–122. 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 Commissions
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
15 See Securities Exchange Act Release No. 56804
(November 16, 2007) (order approving SR–Amex–
2006–107).
16 For purposes only of waiving the operative
delay of this proposal, the Commission notes that
it has considered the proposed rule’s impact on
efficiency, competition, and capital formation. 15
U.S.C. 78c(f).
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15:54 Dec 11, 2007
Jkt 214001
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 a.m. and 3 p.m.
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
Number SR–Amex–2007–122 and
should be submitted on or before
January 2, 2008.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.17
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7–23967 Filed 12–11–07; 8:45 am]
BILLING CODE 8011–01–P
70625
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to amend
complex orders procedures to allow the
adjustment of the options leg of the
order if market conditions prevent the
execution of the non-option leg at the
price agreed upon.
The text of the proposed rule change
is available at https://www.amex.com, at
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
Exchange 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
Exchange has prepared summaries, set
forth in sections A, B, and C below, of
the most significant aspects of such
statements.
SECURITIES AND EXCHANGE
COMMISSION
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
[Release No. 34–56901; File No. SR–Amex–
2007–20]
1. Purpose
Self-Regulatory Organizations;
American Stock Exchange LLC; Notice
of Filing of Proposed Rule Change and
Amendment No. 1 Thereto Related To
Amending Complex Orders
Procedures
December 5, 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 February
15, 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, II, and III below, which Items
have been substantially prepared by the
Amex. On November 28, 2007, the
Exchange filed Amendment No. 1 to the
proposed rule change. The Commission
is publishing this notice to solicit
comments on the proposed rule change,
as amended, from interested persons.
17 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
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Amendment No. 1 makes revisions to
the 19b–4, as originally filed, and
replaces and supersedes the original
filing in its entirety.
Complex orders involving orders
consisting of stock or securities futures
and option legs are effective hedging
strategies that would permit Members to
initially offset the risk of price
movements in an option position, with
a corresponding purchase or sale of
stock underlying the option position or
securities futures. The Exchange
recently adopted language to allow for
the execution of stock-option orders and
security future-option orders.3 These
rules currently provide that complex
orders consisting of stock or security
futures and options legs that fall within
their proposed definition will be
afforded the same priorities as spread,
straddle, ratio, and combination orders.4
Amex Rule 953–ANTE provides the
execution procedures for stock-option
orders and security future-options
orders. Currently, under Amex Rule
953–ANTE, if the security or security
3 See Exchange Act Release No. 53588 (April 3.
2006), 71 FR 18122 (April 10, 2006).
4 See Commentary .01 to Rule 950–ANTE(d).
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]]>Agencies
[Federal Register Volume 72, Number 238 (Wednesday, December 12, 2007)]
[Notices]
[Pages 70622-70625]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E7-23967]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-56805; File No. SR-Amex-2007-122]
Self-Regulatory Organizations; American Stock Exchange LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change
Relating to Exchange Liability for the Actions or Omission of Amex Book
Clerks
November 16, 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 November 16, 2007, the American Stock Exchange LLC (``Exchange'' or
``Amex'') filed with the Securities and Exchange Commission
(``Commission'') the
[[Page 70623]]
proposed rule change as described in Items I and II below, which Items
have been substantially prepared by the Exchange. The Exchange has
designated this proposal as non-controversial under Section
19(b)(3)(A)(iii) of the Act \3\ and Rule 19b-4(f)(6) thereunder,\4\
which renders the proposed rule change 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\ 15 U.S.C. 78s(b)(3)(A)(iii).
\4\ 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 adopt new Rule 996--ANTE providing for the
limited liability of the Exchange in connection with the actions of
Amex Book Clerks (``ABCs''). The text of the proposed rule change is
available at Amex, the Commission's Public Reference Room, and https://
amex.com.
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 and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
Sections A, B, and C below, of the most significant aspects of such
statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The purpose of the proposed rule change is to permit members,
member organizations, and associated persons of member organizations to
bring a claim or claims against the Exchange, in limited circumstances,
for the actions of an ABC. The Commission, in April 2007, published for
public comment in the Federal Register the Exchange's proposal to
eliminate the agency obligations of specialists and establish ABCs.\5\
In connection with the approval of the ABC proposal, the Exchange
submits this filing relating to the liability of the Exchange for the
actions of ABCs.
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\5\ See Securities Exchange Act Release No. 55583 (April 5,
2007), 72 FR 18695 (April 13, 2007) (notice of filing of SR-Amex-
2006-107).
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The ABC will be an Exchange employee or independent contractor
designated by the Exchange to be responsible for: (i) Maintaining and
operating the customer limit order book and display book for assigned
options classes; and (ii) effecting proper executions of orders placed
in the customer order limit book. The ABC will be prohibited from
having an affiliation with any member that is approved to act as a
specialist, registered options trader (``ROT''), remote registered
options trader (``RROT'') and supplemental registered options trader
(``SROT'') on the Exchange. In addition, ABCs are also responsible for
handling Linkage Orders \6\ in all appointed options classes. As a
result, the ABC will have the means to: (1) Utilize an options
specialist's account to route P/A Orders and Satisfaction Orders to
away markets based on prior instructions that must be provided by the
options specialist to the ABC, and (2) handle all Linkage Orders or
portions of Linkage Orders received by the Exchange that are not
automatically executed. The ABC also would have the means to utilize
the options specialist's account to fill Satisfaction Orders that
result from a trade-through that the Exchange effects.
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\6\ ``Linkage Order'' means an immediate or cancel order routed
through the Linkage as permitted under the Linkage Plan. There are
three types of Linkage Orders: (i) ``Principal Acting as Agent (``P/
A'') Order,'' which is an order for the principal account of a
specialist (or equivalent entity on another Participant Exchange
that is authorized to represent Public Customer orders), reflecting
the terms of a related unexecuted Public Customer order for which
the specialist is acting as agent; (ii) ``Principal Order,'' which
is an order for the principal account of an Eligible Market Maker
(or equivalent entity on another Participant Exchange) and is not a
P/A Order; and (iii) ``Satisfaction Order,'' which is an order sent
through the Linkage to notify a Participant Exchange of a Trade-
Through and to seek satisfaction of the liability arising from that
Trade-Through.
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Article IV, Section 1(e) of the Amex Constitution provides that the
Exchange, its affiliates, officers, Governors, committee members,
employees or agents shall not be liable to a member, member
organization, or a person associated with a member or a member
organization for any loss, expense, damages or claims that arise out of
the use or enjoyment of the facilities or services afforded by the
Exchange, any interruption in or failure or unavailability of any such
facilities or services, or any action taken or omitted to be taken in
respect to the business of the Exchange except to the extent such loss,
expense, damages or claims are attributable to the willful misconduct,
gross negligence, bad faith or fraudulent or criminal acts of the
Exchange or its officers, employees or agent acting within the scope of
their authority. However, Article IV, Section 1(e) does permit the
Board of Governors of the Exchange to provide, by rule, Exchange
liability with respect to Exchange facilities which implement the
electronic transmission of orders for the purchase or sale of
securities traded on the Exchange to the floor of the Exchange or
between the floor of the Exchange and other markets. Accordingly,
proposed Rule 996--ANTE would permit Exchange liability, in limited
circumstances, relating to the actions of ABCs for: (i) Maintaining and
operating the customer limit order book and display book; and (ii)
effecting proper executions of orders placed in the customer order
limit book.
Limitation of Liability. The liability of the Exchange for claims
arising out of errors or omissions made by ABCs will be limited as
follows:
As to any one or more claims made by a single member on a
single trading day, the Exchange shall not be liable in excess of the
larger of $75,000 or the amount of any recovery obtained by the
Exchange under any applicable insurance maintained by the Exchange.
As to the aggregate of all claims made by all members on a
single trading day, the Exchange shall not be liable in excess of the
larger of $100,000 or the amount of the recovery obtained by the
Exchange under any applicable insurance maintained by the Exchange.
As to the aggregate of all claims made by all members
during a single calendar month, the Exchange shall not be liable in
excess of the larger of $250,000 or the amount of the recovery obtained
by the Exchange under any applicable insurance maintained by the
Exchange.
If all of the claims arising out of errors or omissions by an ABC
cannot be fully satisfied because they exceed the applicable maximum
amount of liability provided for above, then the maximum amount will be
allocated among all such claims arising on a single trading day or
during a single calendar month, as applicable, based upon the
proportion that each such claim bears to the sum of all such claims.
Exchange liability will also be limited if a member, member
organization or the Exchange fails to close out an uncompared trade as
set forth in Rule 960.\7\ In such a case, the opposing
[[Page 70624]]
party's liability with respect to any claims arising from such trade
will be limited to the lesser of: (1) The loss which would have been
experienced by the claimant if the uncompared trade had been closed out
at the opening of trading on the next business day as provided in Rule
960; or (2) the actual loss realized by the claimant.
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\7\ Commentary .01(b) to Rule 960 provides that all rejected
options transaction notices (``ROTNs'') must be ``OK'd'' or ``DK'd''
not later than one-half hour prior to the opening of trading on the
first business day following the trade date unless an agent
(including a specialist) was involved in the execution of a
transaction, where the time limit shall be extended to fifteen
minutes prior to such opening (these time limits may be extended by
a Floor Official).
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Furthermore, the Exchange's potential liability is also limited if
any damage is caused by an error or omission of an ABC which is the
result of any error or omission of a member organization. Under such
circumstances, the member organization will be required to indemnify
the Exchange and hold it harmless from any claim of liability resulting
from or relating to such damage.
Procedure. Absent reasonable justification or excuse, any claim by
a member, member organization, or persons associated with a member or
member organization for losses arising from errors or omissions of an
ABC, and any claim by the Exchange for indemnification under paragraph
(g) of Proposed Rule 996--ANTE, must be presented in writing to the
opposing party within ten (10) business days following the transaction
giving rise to the claim; provided, that if an error or omission has
resulted in an unmatched trade, then any claim based thereon shall be
presented after the unmatched trade has been closed out but within ten
(10) business days following such resolution of the unmatched trade.
For purposes of proposed Rule 996--ANTE, the term ``transaction''
means any single order or instruction which is placed with an ABC, or
any series of orders or instructions, which is placed with an ABC at
substantially the same time by the same member and which relates to any
one or more series of options of the same class. All errors and
omissions made by an ABC with respect to or arising out of any
transaction will give rise to a ``single claim'' against the Exchange.
The Exchange will retain any defenses to such claim or claims that it
may have. In addition, no claim will be permitted to arise as to errors
or omissions which are found to have resulted from any failure by a
member or by any person acting on behalf of a member, to enter or
cancel an order with such ABC on a timely basis or clearly and
accurately to communicate to such ABC:
(i) The description or symbol of the security involved; or
(ii) The exercise price or option contract price; or
(iii) The type of option; or
(iv) The number of trading units; or
(v) The expiration month; or
(vi) Any other information or data which is material to the
transaction.
Arbitration. Pursuant to proposed Rule 996--ANTE, all disputed
claims will be referred to binding arbitration with the decision of a
majority of the arbitrators selected to hear and determine the
controversy deemed final. There will be no appeal right to the Board of
Governors from any decision of an arbitration panel. The arbitration
panel will be composed of an odd number of panelists. Each of the
parties to the dispute will select one Exchange member to serve as
panelist on the arbitration panel. The panelists so selected shall then
select one or more additional panelist(s); provided that the additional
panelist(s) so selected are members of the Exchange and that no member
of the arbitration panel may have any direct or indirect financial
interest in the claim. In the event that the initial panelists selected
by the parties to the dispute cannot agree on the selection of the
additional panelist(s), such additional panelist(s) shall be appointed
by a Floor Official chosen by a random draw who has no direct or
indirect financial interest in the claim. The NASD Code of Arbitration
Procedure for Industry Disputes (Article VIII of the Amex Constitution)
shall apply to any arbitration proceeding.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with Section 6 of the Act \8\ in general and furthers the objectives of
Section 6(b)(5) of the Act \9\ in particular in that it would remove
impediments to and perfect the mechanism of a free and open market in a
manner consistent with the protection of investors and the public
interest.
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\8\ 15 U.S.C. 78f.
\9\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange believes that the proposed rule change will 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
The Exchange has filed the proposed rule change pursuant to Section
19(b)(3)(A) of the Act \10\ and subparagraph (f)(6) of Rule 19b-4
thereunder.\11\ Because the foregoing proposed rule change: (i) Does
not significantly affect the protection of investors or the public
interest; (ii) does not impose any significant burden on competition;
and (iii) does not 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,
the proposed rule change has become effective pursuant to Section
19(b)(3)(A) of the Act and Rule 19b-4(f)(6)(iii) thereunder.\12\
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\10\ 15 U.S.C. 78s(b)(3)(A).
\11\ 17 CFR 240.19b-4(f)(6).
\12\ The Exchange has satisfied the requirement under Rule 19b-
4(f)(6)(iii) that it give written notice to the Commission of its
intent to file the proposed rule change at least five business days
prior to filing.
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A proposed rule change filed under Rule 19b-4(f)(6) normally does
not become operative for 30 days after the date of filing. However,
Rule 19b-4(f)(6)(iii) permits the Commission to waive the operative
delay if such action is consistent with the protection of investors and
the public interest. The Exchange has asked the Commission to waive the
operative delay to permit the proposed rule change to become effective
prior to the 30th day after filing.
The Commission believes that waiving the 30-day operative delay is
consistent with the protection of investors and the public interest.
The Commission notes that the proposal is substantially identical to
the Chicago Board Options Exchange's (``CBOE'') rules regarding
limitation of exchange liability for acts and omission of CBOE Par
Officials,\13\ previously published for comment and approved by the
Commission,\14\ and the Exchange's
[[Page 70625]]
proposal raises no new issues of regulatory concern. Waiving the
operative delay will allow the proposal to become effective
simultaneously with Amex's proposal to establish ABCs, which we are
approving separately today.\15\ Therefore, the Commission has
determined to waive the 30-day delay and allow the proposed rule change
to become operative immediately.\16\
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\13\ See CBOE Rules 6.7, ``Exchange Liability,'' and 7.11,
``Liability of Exchange for Actions of Order Book Officials, and PAR
Officials.''
\14\ See Securities Exchange Act Release Nos. 52017 (July 12,
2005), 70 FR 41453 (July 19, 2005) (notice of filing of SR-CBOE-
2005-46) and 52798 (November 18, 2005), 70 FR 71344 (November 28,
2005) (order approving SR-CBOE-2005-46).
\15\ See Securities Exchange Act Release No. 56804 (November 16,
2007) (order approving SR-Amex-2006-107).
\16\ For purposes only of waiving the operative delay of this
proposal, the Commission notes that it has considered the proposed
rule's impact on efficiency, competition, and capital formation. 15
U.S.C. 78c(f).
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At any time within 60 days of the filing of the 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.
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 (https://
www.sec.gov/rules/sro.shtml); or
Send an e-mail to rule-comments@sec.gov. Please include
File No. SR-Amex-2006-67 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-2007-122. 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 Commissions 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 a.m. and 3
p.m. 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 Number SR-Amex-2007-122 and should be submitted on
or before January 2, 2008.
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\17\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets, pursuant
to delegated authority.\17\
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7-23967 Filed 12-11-07; 8:45 am]
BILLING CODE 8011-01-P
