Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”),  and Rule 19b-4 thereunder,  notice is hereby given that on August 10, 2004, 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 prepared by the Exchange. On September 24, 2004, Amex 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.
I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change
The Exchange proposes to amend Amex Rule 27. The text of the proposed rule change is set forth below. Proposed new language is italicized. Deleted language is in brackets.
Rule 27 (a) through (i) No change.
Commentary .01 through .03 No change.
.04 Relisted Securities. A specialist shall be automatically allocated a security in which the specialist previously was registered only if all of the following conditions are met: (1) the company relists within one year of delisting, (2) the company is substantially the same entity as prior to delisting, (3) the company has no objection, and (4) the specialist is not subject to an allocation prohibition. A relisted option shall [will] be automatically allocated to the previously registered specialist unless (1) that specialist is subject to a prohibition on the allocation of options at the time that the option is relisted, (2) the Exchange relists the option more than one year after it was delisted, or (3) the specialist declines the allocation in writing [pursuant to the procedures described in paragraph (b) of this Rule]. If any of these conditions exist, the Allocations Committee will allocate the relisted option pursuant to the Exchange's regular options allocations procedures.
(.05) No change.
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 the Statutory Basis for, the Proposed Rule Change
A relisted security is a security that previously traded on the Exchange, was delisted, and is subsequently readmitted to dealings. In the case of options, the Exchange's rule on relisted securities currently provides that a relisted option will go to open allocation with no explicit preference given to the original specialist. Amex asserts that specialists, as a result, are reluctant to delist an inactive option because they are concerned that if they agree to delist the option, and it subsequently becomes active, they will have lost the opportunity to specialize in it.
To encourage specialists to delist inactive options, the Exchange is proposing to amend the Exchange's allocations rules on relisted securities to provide that a relisted option will be automatically allocated to its original specialist unless: (1) The specialist is subject to a prohibition on options allocations at the time that the option is relisted; (2) the Exchange relists the option more than one year after it was delisted; or (3) the specialist declines in writing to accept the allocation. If any of these conditions exists, the Exchange's Allocations Committee will allocate the relisted option pursuant to its regular allocation procedures. The Exchange believes that this change in allocations policy will eliminate a disincentive to the delisting of inactive options. The Exchange further believes that this could benefit the options market and, consequently, investors in options by reducing quote traffic in options.
2. Statutory Basis
The Exchange believes that the proposed rule change, as amended, is consistent with Section 6(b) of the Act,  in general, and furthers the objectives of Section 6(b),  in particular, in that it is designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, to remove impediments to and perfect the mechanism of a free and open market and a national market system, and, in general, to protect investors and the public interest; and is not designed to permit unfair discrimination between customers, issuers, brokers, or dealers.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange believes that the proposed rule change will impose no 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
Within 35 days of the date of publication of this notice in the Federal Register or within such longer period (i) as the Commission may designate up to 90 days of such date if it finds such longer period to be appropriate and publishes its reasons for so finding or (ii) as to which the self-regulatory organization consents, the Commission will:
(A) By order approve such proposed rule change, or
(B) Institute proceedings to determine whether the proposed rule change should be disapproved. Start Printed Page 61275
IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change, as amended, is consistent with the Act. Comments may be submitted by any of the following methods:
- Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
- Send an e-mail to email@example.com. Please include File Number SR-Amex-2004-66 on the subject line.
- Send paper comments in triplicate to Jonathan G. Katz, Secretary, Securities and Exchange Commission, 450 Fifth Street, NW., Washington, DC 20549-0609.
All submissions should refer to File Number SR-Amex-2004-66. 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 (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for inspection and copying in the Commission's Public Reference Section, 450 Fifth Street, NW., Washington, DC 20549. Copies of such filing also will be available for inspection and copying at the principal offices of the Amex. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR-Amex-2004-66 and should be submitted on or before November 5, 2004.Start Signature
For the Commission, by the Division of Market Regulation, pursuant to delegated authority. 
Margaret H. McFarland,
3. See letter from William Floyd-Jones, Associate General Counsel, Amex, to Nancy J. Sanow, Assistant Director, Division of Market Regulation, Commission, dated September 23, 2004 (“Amendment No. 1”). Amendment No. 1 replaced the original proposed rule change in its entirety. Amendment No. 1 amended the proposal to limit the reallocation of a relisted option to the original specialist to a one year period.Back to Citation
[FR Doc. 04-23126 Filed 10-14-04; 8:45 am]
BILLING CODE 8010-01-P