

[Federal Register: March 27, 2006 (Volume 71, Number 58)]
[Notices]               
[Page 15231-15232]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr27mr06-98]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-53525; File No. SR-Amex-2005-117]

 
Self-Regulatory Organizations; American Stock Exchange LLC; Order 
Granting Approval of Proposed Rule Change and Amendment Nos. 1 and 2 
Thereto Relating to Amendments to the Amex Membership Corporation's 
Certificate of Incorporation

March 21, 2006.

I. Introduction

    On November 23, 2005, the American Stock Exchange LLC (``Amex'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission''), pursuant to section 19(b)(1) of the Securities 
Exchange Act of 1934 (``Act'') \1\ andRule 19b-4 thereunder,\2\ a 
proposed rule change to amend the Amex Membership Corporation's 
(``AMC'') \3\ Restated Certificate of Incorporation (``AMC 
Certificate'') and AMC Constitution. On January 24, 2006, Amex filed 
Amendment No. 1 to the proposed rule change.\4\ On February 1, 2006, 
Amex filed Amendment No. 2 to the proposed rule change.\5\ The proposed 
rule change, as amended, was published for comment in the Federal 
Register on February 16, 2006.\6\ The Commission received no comments 
on the proposal. This order approves the proposed rule change, as 
amended.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ AMC is the sole owner of the Exchange. Amex members (Regular 
and Options Principal Members) are members of AMC. See Securities 
Exchange Act Release No. 50927 (December 23, 2004), 69 FR 78486 
(December 30, 2004).
    \4\ Amendment No. 1 replaced the original filing in its 
entirety.
    \5\ See Partial Amendment No. 2.
    \6\ See Securities Exchange Act Release No. 53264 (February 9, 
2006), 71 FR 8320.
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II. Description and Discussion

    Currently, section 6 of the AMC Certificate provides that AMC shall 
make available one Regular Trading Right for each Regular Member and 
one Options Principal Trading Right for each Options Principal Member 
and that such trading rights shall not be transferred or leased apart 
from those memberships. In addition, section 7(a)(ii) of the AMC 
Certificate requires the consent of the AMC members (i.e., the Amex 
members) to authorize, grant, or issue trading rights other than 
Regular Trading Rights, Options Principal Trading Rights, or Limited 
Trading Permits.
    The proposed rule change would amend the AMC Certificate to: (i) 
Eliminate the reference in section 6 to one trading right, thus 
allowing the issuance of more than one right to Regular Members and 
Options Principal Members; (ii) eliminate the prohibition in section 6 
on such trading rights being transferred or leased apart from Regular 
and Options Principal Memberships; and (iii) eliminate the requirement 
that a vote of the membership is required for the authorization, grant, 
or issuance of trading rights as described in section 7(a)(ii).\7\ The 
AMC Board determined to make these changes to give flexibility to Amex 
to take prompt action to implement new forms of trading rights designed 
to enhance Amex's position in an increasingly competitive and fast 
moving marketplace. AMC membership's consent will still be required for 
any action taken to increase the number of memberships issued by AMC. 
The proposed rule change, as amended, also makes other non-substantive 
changes to the AMC Certificate and the Amex Constitution.
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    \7\ Amex will still need to obtain the consent of the AMC Board 
to authorize, grant, or issue new trading rights. See Amex 
Constitution Article 11, section 8.
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    The Commission finds that the proposed rule change, as amended, is 
consistent with the requirements of section 6 of the Act,\8\ and the 
rules and regulations thereunder applicable to a national securities 
exchange.\9\ In particular, the Commission finds that the proposed rule 
change is consistent with section 6(b)(5) of the Act,\10\ which 
requires, among other things, that the Exchange's rules be designed to 
prevent fraudulent and manipulative acts and practices, to promote just 
and equitable principles of trade, to foster cooperation and 
coordination with persons engaged in facilitating transactions in 
securities, and 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. The Commission notes that 
Amex will still need to obtain AMC Board approval for

[[Page 15232]]

the issuance of new trading rights.\11\ The AMC Board can, if it so 
chooses, seek the consent of its full membership for any proposal 
calling for the issuance of new trading rights. Further, any new 
trading rights would be subject to approval by the Commission pursuant 
to the rule filing process of section 19 of the Act. The Commission 
also notes that the AMC membership's consent will be required for any 
action taken by Amex to increase the number of memberships issued by 
AMC.\12\ In addition, these changes to the AMC Certificate shall 
provide Amex with more flexibility to take prompt action to implement 
new forms of trading rights.
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    \8\ 15 U.S.C. 78f(b).
    \9\ In approving this proposed rule change, the Commission has 
considered the proposed rule's impact on efficiency, competition, 
and capital formation. 15 U.S.C. 78c(f).
    \10\ 15 U.S.C. 78f(b)(5).
    \11\  See Amex Constitution Article II, section 8. The AMC 
Nominating Committee nominates director candidates for the AMC board 
of directors, and AMC members have the right to put up their own 
nominees by petition. The AMC board is then elected by the members 
of AMC. See Amended and Restated By-Laws of The Amex Membership 
Corporation Sections 1.10, 1.13 and 3.03.
    \12\  See AMC Certificate section 7(a)(ii); Amex Constitution 
Article II, section 8; and Amex Constitution Article IV, section 
1(a)(1) and section 1(b)(1).
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    It is therefore ordered, pursuant to section 19(b)(2) of the 
Act,\13\ that the proposed rule change (SR-Amex-2005-117), as amended, 
is approved.
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    \13\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\14\
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    \14\ 17 CFR 200.30-3(a)(12).
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Nancy M. Morris,
Secretary.
 [FR Doc. E6-4368 Filed 3-24-06; 8:45 am]

BILLING CODE 8010-01-P
