

[Federal Register: May 1, 2007 (Volume 72, Number 83)]
[Notices]               
[Page 23862-23866]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr01my07-101]                         


[[Page 23862]]

-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-55661; File No. SR-Amex-2007-29]

 
Self-Regulatory Organizations; American Stock Exchange LLC; 
Notice of Filing of a Proposed Rule Change and Amendment No. 1 Thereto 
Relating to the Listing and Trading of Notes Linked to the Performance 
of the Dow Jones-AIG Commodity Index Total Return

April 24, 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 March 2, 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 prepared substantially by Amex. On 
April 5, 2007, 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.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to list and trade notes linked to the 
performance of the Dow Jones-AIG Commodity Index Total Return (the 
``Index''). The text of the proposal is available at Amex, the 
Commission's Public Reference Room, and http://www.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, 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, and the most significant aspects of such statements are 
set forth in sections A, B, and C below.

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

1. Purpose
    Under section 107(A) of the Amex Company Guide (the ``Company 
Guide''), the Exchange may approve for listing and trading securities 
which cannot be readily categorized under the listing criteria for 
common and preferred stocks, bonds, debentures, or warrants, including 
index and currency warrants. Amex proposes to list for trading under 
section 107(A) of the Company Guide floating rate notes (the ``Notes'') 
linked to the performance of the Index.\3\ The Exchange submits that it 
recently received approval to list and trade notes linked to the 
performance of the Dow Jones-AIG ExEnergy Sub-Index, which is a subset 
of the Index.\4\ The Notes will provide for participation in the 
positive performance of the Index during their term.
---------------------------------------------------------------------------

    \3\ Lehman Brothers Holdings Inc. (``Lehman''), Dow Jones & 
Company, Inc. (``Dow Jones'') and AIG International, Inc. (``AIGI'') 
have entered into a non-exclusive license agreement providing for 
the use of the Index by Lehman and certain affiliates and 
subsidiaries thereof in connection with certain securities including 
the Notes.
    \4\ See Securities Exchange Act Release No. 54790 (November 20, 
2006), 71 FR 68645 (November 27, 2006) (SR-Amex-2006-01).
---------------------------------------------------------------------------

    The Exchange states that the Notes will conform to the initial 
listing guidelines under section 107(A) of the Company Guide and the 
continued listing guidelines under sections 1001-1003 of the Company 
Guide. The Notes are senior, non-convertible debt securities of Lehman 
and have a term of thirteen months. The Notes are cash-settled in U.S. 
dollars and do not give the holder any right or other ownership 
interest in the Index or commodities comprising the Index. The Notes 
are designed for investors who desire to participate in, or gain 
exposure to, an index composed of a basket of actively-traded 
commodities and receive monthly coupon interest payments, and who are 
willing to forego principal protection on the Notes during such term. 
Lehman will issue the Notes in denominations of whole units, with each 
unit representing a single Note. The original public offering price 
will be $1,000 per Note.
    Unless the Notes have been redeemed earlier, at maturity, a holder 
would receive per each $1,000 Note, a cash amount equal to the Daily 
Value (as defined herein) per $1,000 Note as of the Valuation Date,\5\ 
plus accrued and unpaid coupon payments, to, but excluding, the stated 
maturity date. The ``Daily Value'' as of any Index Business Day \6\ is 
calculated as follows: $1,000 + ($1,000 x 3 x (Index Return \7\ - 
(Treasury Bill Return \8\ + Adjustment Rate \9\))). The sum of the 
Treasury Bill Return and the Adjustment Rate reflects a combination of 
(1) The cost of Lehman providing investors with exposure to the Index 
through the Notes, and (2) the fee to investors purchasing the Notes.
---------------------------------------------------------------------------

    \5\ The ``Valuation Date'' will generally be the third business 
day before the stated maturity date.
    \6\ An ``Index Business Day'' means a business day or, but for 
the occurrence of a Market Disruption Event (as defined herein), a 
day that would have been a business day, on which the Index is 
calculated by the Sponsors and published by Dow Jones, or if 
applicable, on which any successor Index is calculated. A ``Market 
Disruption Event'' means any of the following events, as determined 
in its sole discretion by Lehman Brothers Inc. (the ``Calculation 
Agent''): (1) The Index value is not calculated by the Sponsors and 
published by Dow Jones (or any successor Index is not calculated and 
published by the sponsors thereof); (2) the termination or 
suspension of, or material limitation or disruption in, the trading 
on a relevant exchange of any futures contract included in the Index 
(or any successor Index); (3) the settlement price on a relevant 
exchange of any futures contract included in the Index (or any 
successor Index) has increased or decreased by an amount equal to 
the maximum permitted price change from the previous day's 
settlement price; or (4) the settlement price of any futures 
contract included in the Index (or any successor Index) is not 
published by the relevant exchange.
    \7\ The ``Index Return'' is equal to the difference between the 
Closing Index Level (the closing level of the Index on any Index 
Business Day) and the Initial Index Level (the Closing Index Level 
on the date of the prospectus supplement), divided by the Initial 
Index Level. If the third business day before the stated maturity 
date is not an Index Business Day or the Calculation Agent 
determines that one or more Market Disruption Events has occurred on 
that day, the Calculation Agent will, subject to certain 
limitations, calculate the Index Return by determining the Closing 
Index Level on the next Index Business Day on which there is not a 
Market Disruption Event (the ``Final Index Level''). If such 
postponement causes the Valuation Date to occur within three 
business days prior to the scheduled stated maturity date, the 
stated maturity date will be postponed until three business days 
after the date that the Final Index Level is determined.
    \8\ The daily ``Treasury Bill Return'' on any calendar day is 
the one-day return calculated using the weekly auction high rate for 
the 91-day Treasury Bill. The Treasury Bill Return as of any Index 
Business Day means a rate determined by the Calculation Agent by 
compounding the daily Treasury Bill Return on each calendar day 
during the term of the Notes.
    \9\ The ``Adjustment Rate'' means a rate, as determined by the 
Calculation Agent, which will equal the quotient of (1) The product 
of 0.30% times the number of calendar days from and including the 
date of the prospectus supplement to and including the Index 
Business Day, and (2) 365.
---------------------------------------------------------------------------

    Lehman may redeem the Notes early if, on any Index Business Day 
prior to the Valuation Date, the Daily Value per $1,000 Note falls 
below a certain pre-determined amount. This day is known as the ``Early 
Redemption Determination Date.'' This pre-determined amount will be 
determined at the time of issuance of the Notes. In the event of 
redemption, Lehman will pay an amount per $1,000

[[Page 23863]]

Note equal to the Daily Value per $1,000 Note calculated as of the 
first Index Business Day following the Early Redemption Determination 
Date, plus accrued and unpaid coupon payments to, but excluding, the 
Early Redemption Determination Date.
    If an event of default occurs and the maturity of the Notes are 
accelerated, Lehman will pay holders an amount equal to the amount that 
would have been payable at maturity, calculated as though the date of 
acceleration was the stated maturity date, and the date three Index 
Business Days before the date of acceleration was the Valuation Date. 
If a bankruptcy proceeding is commenced, the claims of a holder of a 
Note may be limited.
Index Description
    The Index, developed by AIGI, is a proprietary index that is 
calculated by Dow Jones, AIGI, and AIG Financial Products Corp. (``AIG-
FP'' and, together with AIGI and Dow Jones, the ``Sponsors'') and 
published by Dow Jones.\10\ The methodology for determining the 
composition and weighting of the Index and for calculating its level is 
subject to modification by the Sponsors at any time. Dow Jones 
disseminates the Index level at least every 15 seconds from 8 a.m. to 3 
p.m. Eastern Time (``ET''),\11\ and publishes a daily Index level at 
approximately 4 p.m. ET on each DJ-AIG Business Day \12\ on its Web 
site at http://www.djindexes.com and on Bloomberg's Web site.

---------------------------------------------------------------------------

    \10\ AIG-FP is not a broker-dealer or futures commission 
merchant; however, AIG-FP may have such affiliates. Therefore, AIG-
FP (1) Maintains and agrees to continue to maintain procedures 
reasonably designed to prevent the use and dissemination by relevant 
employees of AIG-FP, in violation of applicable laws, rules and 
regulations, of material non-public information relating to changes 
in the composition or method of computation or calculation of the 
Index or the Dow Jones-AIG Commodity Index and (2) agrees to 
periodically check the application of such procedures as they relate 
to personnel of AIG-FP responsible for such changes. Dow Jones has 
informed the Exchange that it does not have any affiliates engaged 
in the securities or commodities trading businesses and, as such, do 
not believe that such firewall procedures are necessary in its case. 
In addition, the Supervisory and Advisory Committees (as defined 
herein) are subject to written policies that acknowledge their 
obligations with respect to material non-public information.
    \11\ Any disseminated Index value after 3 p.m. ET is static due 
to the close of auction trading of various commodities futures 
contracts.
    \12\ ``DJ-AIG Business Day'' is a day on which the weighting of 
the Index commodities that are open for trading, in the aggregate, 
is greater than 50% of the overall weight of the commodities 
comprising the Index. For example, based on the weighting of the 
Index commodities for 2007, if the Chicago Board of Trade (``CBOT'') 
and the New York Mercantile Exchange (``NYMEX'') are closed for 
trading on the same day, such day would not constitute a DJ-AIG 
Business Day.
---------------------------------------------------------------------------

    The Index is re-weighted and re-balanced each year in January on a 
price-percentage basis. The annual weightings for the Index are 
determined each year in June or July by AIG-FP under the supervision of 
the Index Supervisory Committee,\13\ announced after approval by such 
Committee and implemented the following January.
---------------------------------------------------------------------------

    \13\ On February 21, 2007, Dow Jones announced a change to the 
Dow Jones-AIG Commodity Index Oversight Committee structure 
providing for a two-tier committee structure consisting of a 
``Supervisory Committee'' and an ``Advisory Committee.'' The 
Supervisory Committee makes all final decisions relating to the 
Index with the advice and recommendation from the Advisory 
Committee.
---------------------------------------------------------------------------

    The Index is designed to track rolling futures positions in a 
diversified basket of 19 exchange-traded futures contracts on physical 
commodities. The 19 physical commodities selected for 2007 are 
aluminum, coffee, copper, corn, cotton, crude oil, gold, heating oil, 
lean hogs, live cattle, natural gas, nickel, silver, soybeans, soybean 
oil, sugar, unleaded gasoline, wheat, and zinc. Unlike equities, which 
typically entitle the holder to a continuing stake in a corporation, 
commodity futures contracts normally specify a certain date for the 
delivery of the underlying physical commodity. The Index tracks what is 
known as a rolling futures position, which is a position where, on a 
periodic basis, futures contracts on physical commodities specifying 
delivery on a nearby date must be sold and futures contracts on 
physical commodities that have not yet reached the delivery period must 
be purchased. An investor with a rolling futures position is able to 
avoid delivering underlying physical commodities while maintaining 
exposure to those commodities. The rollover for each Index component 
occurs over a period of five DJ-AIG Business Days each month according 
to a pre-determined schedule.
    The 19 physical commodities selected for inclusion in the Index for 
2007, and their respective weightings, are as follows:

------------------------------------------------------------------------
                                                             Weighting
                        Commodity                            (percent)
------------------------------------------------------------------------
crude oil...............................................       12.723561
natural gas.............................................       12.546191
soybeans................................................        7.747790
gold....................................................        6.825901
aluminum................................................        6.803820
copper..................................................        6.187758
live cattle.............................................        6.141286
corn....................................................        5.627129
wheat...................................................        4.715495
unleaded gasoline.......................................        3.940958
heating oil.............................................        3.789289
cotton..................................................        3.146094
sugar...................................................        3.122271
coffee..................................................        3.021718
lean hogs...............................................        3.013524
soybean oil.............................................        2.845646
zinc....................................................        2.798069
nickel..................................................        2.715318
silver..................................................        2.288179
                                                         ---------------
    Total (rounded).....................................      100.000000
------------------------------------------------------------------------

    Futures contracts on the Index are currently listed for trading on 
CBOT. The Index commodities currently trade on United States (``U.S.'') 
exchanges, with the exception of aluminum, nickel and zinc, which trade 
on the London Metal Exchange (``LME'').
Designated Contracts for Each Index Commodity
    The Sponsors have established a two-tier committee structure to 
assist them in connection with the operation of the Index.\14\ The two 
committees are the ``Supervisory Committee'' and the ``Advisory 
Committee.'' \15\ The Supervisory Committee provides final decisions 
regarding the composition and maintenance of the Index with the advice 
and recommendation of the Advisory Committee. The Supervisory Committee 
is comprised of three members appointed by Dow Jones and AIG-FP from 
their respective organizations. The Advisory Committee is comprised of 
nine prominent members of the financial and academic communities 
selected by AIG-FP. Both Committees meet annually to consider any 
changes to be made to the Index for the coming year. The Committees may 
also meet at such other times as may be necessary. A futures contract, 
known as a ``Designated Contract,'' is selected by the Supervisory 
Committee for each Index commodity.\16\ With the exception of several 
LME contracts, the Supervisory Committee selects the futures contract 
that is traded in the U.S. and denominated in U.S. dollars. If more 
than one of those contracts exists, the Supervisory Committee will 
select

[[Page 23864]]

the most actively traded contract. Data concerning this Designated 
Contract will be used to calculate the Index value. If a Designated 
Contract is terminated or replaced, a comparable futures contract would 
be selected, if available, to replace that Designated Contract.
---------------------------------------------------------------------------

    \14\ See id.
    \15\ Lehman has informed the Exchange that none of the members 
of the Supervisory or Advisory Committees is an officer, director, 
or employee of Lehman.
    \16\ The Supervisory Committee may exclude any otherwise 
eligible contract from the Index if it determines that it has 
inadequate liquidity. The Index currently includes contracts traded 
on LME, which is located in London. During the hours when the LME is 
closed, Dow Jones uses the last price and the settlement price once 
they are available in order to publish the Index value through the 
end of the trading day. The Index value does not reflect any after-
hours or overnight trading in contracts traded on LME.
---------------------------------------------------------------------------

    The Designated Contracts for the Index commodities included in the 
Index for 2007 are traded on LME, CBOT, the New York Board of Trade 
(``NYBOT''),\17\ the Chicago Mercantile Exchange, Inc. (``CME''), and 
NYMEX. The particular commodities futures exchanges for each commodity 
futures contract are as follows: (1) Aluminum, nickel, and zinc--LME at 
http://www.lme.com; (2) corn, soybeans, soybean oil, and wheat--CBOT at 

http://www.cbot.com; (3) live cattle and lean hogs--CME at http://www.cme.com; (4) coffee, cotton, and sugar--NYBOT at http://

http://www.nybot.com; and (5) copper, crude oil, gold, heating oil, natural 

gas, silver, and unleaded gasoline--NYMEX at http://www.nymex.com. In 

addition, various market data vendors and financial news publications 
publish futures prices and data. The Exchange represents that futures 
quotes and last sale information for the commodities underlying the 
Index are widely disseminated through a variety of major market data 
vendors worldwide, including Bloomberg and Reuters.
---------------------------------------------------------------------------

    \17\ NYBOT recently was purchased by the Intercontinental 
Exchange (``ICE'') and is now a regulated subsidiary of ICE.
---------------------------------------------------------------------------

Determination of Relative Weightings
    The relative weightings of the component commodities included in 
the Index are determined annually according to both liquidity and 
dollar-adjusted production data in \2/3\ and \1/3\ shares, 
respectively. Each June, for each commodity designated for potential 
inclusion in the Index, liquidity is measured by the commodity 
liquidity percentage (``CLP'') and production by the commodity 
production percentage (``CPP''). The CLP for each commodity is 
determined by taking a five-year average of the product of the trading 
volume and the historic dollar value of the designated contract for 
that commodity, and dividing the result by the sum of such products for 
all commodities which were designated for potential inclusion in the 
Index. The CPP is determined for each commodity by taking a five-year 
average of annual world production figures, adjusted by the historic 
dollar value of the designated contract, and dividing the result by the 
sum of such production figures for all the commodities which were 
designated for potential inclusion in the Index. The CLP and the CPP 
are then combined (using a ratio of 2:1) to establish the commodity 
index percentage (``CIP'') for each commodity. This CIP is then 
adjusted in accordance with certain diversification rules in order to 
determine the commodities which will be included in the Index and their 
respective percentage weights.
    The Index is designed to provide diversified exposure to 
commodities as an asset class. To ensure that no single commodity or 
commodity sector dominates the Index, the following diversification 
rules are applied to the annual re-weighting and re-balancing of the 
Index as of January of the applicable year:
     No related group of commodities designated as a commodity 
group (e.g., energy, precious metals, livestock, or grains) may 
constitute more than 33% of the Index.
     No single commodity may constitute more than 15% of the 
Index.
     No single commodity, together with its derivatives (e.g., 
crude oil, together with heating oil and unleaded gasoline), may 
constitute more than 25% of the Index.

Following the annual re-weighting and re-balancing of the Index in 
January, the percentage of any single commodity or group of commodities 
at any time prior to the next re-weighting or re-balancing will 
fluctuate and may exceed or be less than the percentages set forth 
above.

    Following application of the diversification rules, CIPs are 
incorporated into the Index by calculating the new unit weights for 
each Index commodity. Near the beginning of each new calendar year, the 
CIPs, along with the settlement prices on that date for designated 
contracts included in the Index, are used to determine a commodity 
index multiplier (``CIM'') for each Index commodity. This CIM is used 
to achieve the percentage weightings of the Index commodities, in 
dollar terms, indicated by their respective CIPs. After the CIMs are 
calculated, they remain fixed throughout the year. As a result, the 
observed price percentage of each Index commodity will float throughout 
the year until the CIMs are reset the following year based on new CIPs.
    The Index is calculated by the Sponsors by applying the impact of 
the changes to the futures prices of commodities included in the Index 
(based on their relative weightings). Once the CIMs are determined, the 
calculation of the Index is a mathematical process whereby the CIMs for 
the Index commodities are multiplied by the prices in U.S. dollars for 
the applicable designated contracts. These products are then summed 
(during the rollover period, the sum includes both nearby and deferred 
contracts weighted according to the specified roll percentage). The 
percentage change in this sum from the sum of the prior day is then 
applied to the prior Index level to arrive at the current Index value. 
Finally, the returns on cash collateral invested in Treasury Bills, 
which are calculated using the most recent weekly auction high rate for 
91-day Treasury Bills, are added to the current Index value to arrive 
at the Index level.
Index Calculation Disruption Events
    From time to time, disruptions can occur in trading futures 
contracts on various commodity exchanges. The daily calculation of the 
Index may be adjusted in the event that the Sponsors determine that any 
of the following Index calculation disruption events exists:
     The termination or suspension of, or material limitation 
or disruption in, the trading of any futures contract used in the 
calculation of the Index on that day;
     The settlement price of any futures contract used in the 
calculation of the Index reflects the maximum permitted price change 
from the previous day's settlement price;
     The failure of an exchange to publish settlement prices 
for any futures contract used in the calculation of the Index; or
     With respect to any futures contract used in the 
calculation of the Index that trades on LME, a business day on which 
LME is not open for trading.
The Exchange submits that for a temporary disruption in the trading of 
a futures contract, AIGI will typically use the prior day's price for 
an Index commodity or commodities. In exceptional cases, AIGI may 
employ a ``fair value'' price. However, the Exchange represents that if 
the use of a prior day's price or ``fair value'' pricing for an Index 
commodity or commodities continues for more than one day, the Exchange 
will commence delisting the Notes.
Exchange Rules Applicable to the Notes
    Amex represents that the Notes will trade on the Exchange subject 
to existing Amex trading rules applicable to the Notes \18\ including, 
among others,

[[Page 23865]]

rules governing priority, parity, and precedence of orders, specialist 
responsibilities, account opening, and customer suitability 
requirements. In addition, the Notes will be subject to the equity 
margin rules of the Exchange.\19\
---------------------------------------------------------------------------

    \18\ E-mail from Jeffrey P. Burns, Associate General Counsel, 
Amex, to Edward Cho, Special Counsel, Division of Market Regulation 
(``Division''), Commission, dated April 24, 2007 (clarifying the 
scope of the trading rules governing the Notes traded on the 
Exchange). See infra note 23.
    \19\ See Amex Rule 462.
---------------------------------------------------------------------------

Criteria for Initial and Continued Listing
    The Exchange represents that it prohibits the initial and/or 
continued listing of any security that is not in compliance with Rule 
10A-3 under the Act.\20\ The Exchange further represents that the Notes 
will meet the listing requirements set forth in Section 107(A) of the 
Company Guide as well as the continued listing requirements set forth 
in Sections 1001 through 1003 of the Company Guide. The Exchange also 
has a general policy that prohibits the distribution of material, non-
public information by its employees.
---------------------------------------------------------------------------

    \20\ See 17 CFR 240.10A-3(c)(1).
---------------------------------------------------------------------------

Trading Halts
    The Exchange states that it will halt trading in the Notes if the 
circuit breaker parameters of Amex Rule 117 have been reached. In 
exercising its discretion to halt or suspend trading in the Notes, the 
Exchange may consider factors such as those set forth in Amex Rule 
918C(b), in addition to other factors that may be relevant. In 
particular, if the Index value is not being disseminated as required, 
the Exchange may halt trading during the day in which the interruption 
to the dissemination of the Index value occurs. If the interruption to 
the dissemination of the Index value persists past the trading day on 
which it occurred, the Exchange will halt trading no later than the 
beginning of the trading day following the interruption.
Surveillance
    The Exchange represents that its surveillance procedures are 
adequate to properly monitor the trading of the Notes. Specifically, 
Amex will rely on its existing surveillance procedures governing index-
linked securities which are similar to its surveillance procedures 
governing exchange-traded funds and trust-issued receipts. With regard 
to the Index components, the Exchange currently has in place a 
comprehensive surveillance sharing arrangement with ICE, LME, and 
NYMEX, for the purpose of providing information in connection with 
trading in or related to futures contracts comprising the Index and 
traded on their respective exchanges. The Exchange also notes that 
CBOT, CME, and NYBOT are members of the Intermarket Surveillance Group 
(``ISG''). As a result, the Exchange asserts that it can obtain all 
necessary market surveillance information,\21\ including customer 
identity information, from CBOT, CME, ICE, LME, NYBOT, and NYMEX, if 
necessary, due to regulatory concerns that may arise in connection with 
the commodity futures contracts underlying the Index.
---------------------------------------------------------------------------

    \21\ E-mail from Jeffrey P. Burns, Associate General Counsel, 
Amex, to Edward Cho, Special Counsel, Division, Commission, dated 
April 16, 2007 (confirming the scope of ISG market surveillance 
information).
---------------------------------------------------------------------------

Information Circular
    The Exchange will, prior to trading the Notes, distribute an 
Information Circular to its membership providing guidance with regard 
to member firm compliance responsibilities (including suitability 
recommendations) \22\ when handling transactions in the Notes and 
highlighting the special risks and characteristics of the Notes. In 
addition, the Circular will disclose the applicable trading rules 
governing the trading of the Notes on the Exchange \23\ and that Lehman 
will deliver a prospectus in connection with the initial sales of the 
Notes and will reference that the Commission has no jurisdiction over 
the trading of the physical commodities or the futures contracts or on 
the commodities upon which the value of the Notes is based.
---------------------------------------------------------------------------

    \22\ With respect to suitability recommendations and risks, the 
Exchange will require members, member organizations, and employees 
thereof recommending a transaction in the Notes: (1) To determine 
that such transaction is suitable for the customer, and (2) to have 
a reasonable basis for believing that the customer can evaluate the 
special characteristics of, and is able to bear the financial risks 
of, such transaction.
    \23\ E-mail from Jeffrey P. Burns, Associate General Counsel, 
Amex, to Edward Cho, Special Counsel, Division, Commission, dated 
April 24, 2007 (specifying that information about the particular 
trading rules governing the Notes traded on the Exchange would also 
be identified in the Information Circular).
---------------------------------------------------------------------------

2. Statutory Basis
    The proposed rule change is consistent with Section 6 of the 
Act,\24\ in general, and furthers the objectives of Section 
6(b)(5),\25\ 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.
---------------------------------------------------------------------------

    \24\ 15 U.S.C. 78f.
    \25\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change would 
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

    The Exchange did not receive any written comments on 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 Amex 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.

Amex has requested accelerated approval of this proposed rule change 
prior to the 30th day after the date of publication of the notice of 
the filing thereof. The Commission has determined that a 15-day comment 
period is appropriate in this case.

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 (http://www.sec.gov/rules/sro.shtml.
); or     Send an e-mail to rule-comments@sec.gov. Please include 

File Number SR-Amex-2007-29 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.


[[Page 23866]]


All submissions should refer to File Number SR-Amex-2007-29. 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 Room. Copies of the 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-2007-29 and should be submitted on or before May 16, 2007.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\26\
---------------------------------------------------------------------------

    \26\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Florence E. Harmon,
Deputy Secretary.
 [FR Doc. E7-8224 Filed 4-30-07; 8:45 am]

BILLING CODE 8010-01-P
