
[Federal Register: May 30, 2008 (Volume 73, Number 105)]
[Notices]               
[Page 31162-31164]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr30my08-94]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-57852; File No. SR-Amex-2008-41]

 
Self-Regulatory Organizations; American Stock Exchange LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change 
Regarding Position and Exercise Limits for Options on the DIAMONDS 
Trust

May 22, 2008.
    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 May 16, 2008, the American Stock Exchange LLC (``Exchange'' or 
``Amex'') filed with the Securities and Exchange Commission 
(``Commission'') the 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 amend its rules to increase the position 
and exercise limits applicable to options on the DIAMONDS Trust, Series 
1 (``DIA''). The text of the proposed rule change is available on the 
Exchange's Web site (http://www.amex.com), at the offices of the 
Exchange, 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.

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

1. Purpose
    The Exchange is proposing to amend its rules pertaining to position 
and exercise limits for options on DIA. The Exchange proposes to 
increase position and exercise limits for options on DIA to 300,000 
contracts on the same side of the market. The Commission previously 
approved a similar proposal by the Chicago Board Options Exchange, Inc. 
(``CBOE'').\5\
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    \5\ See Securities Exchange Act Release No. 47346 (February 11, 
2003), 68 FR 8316 (February 20, 2003) (SR-CBOE-2002-26) (approving 
an increase in the position limits and exercise limits to 300,000 
for DIA options). The Commission stated that ``given the 
surveillance capabilities of the [CBOE] and the depth and liquidity 
in both the DIA options and the underlying cash market in DIAs, the 
Commission believes it is permissible to significantly raise 
position and exercise limits for DIA options without risk of 
disruption to the options or underlying cash markets.'' The 
Commission also stated that ``financial and reporting requirements * 
* * should allow [CBOE] to detect and deter trading abuses arising 
from the increased position and exercise limits, and will also allow 
[CBOE] to monitor large positions in order to identify instances of 
potential risk and to assess additional margin and/or capital 
charges, if deemed necessary.''

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[[Page 31163]]

    The Exchange also recently made permanent its increased position 
and exercise limits for certain equity options on the Amex which were 
in effect on a pilot basis.\6\ The Exchange stipulated, as part of its 
proposal for such permanent approval, that ``its surveillance 
procedures and options reporting procedures, in conjunction with the 
financial requirements and risk management review procedures generally 
in place at the clearing firms and the Options Clearing Corporation, 
will serve to adequately address any concerns the Commission may have 
with respect to account(s) engaging in any manipulative schemes or 
assuming too high a level of risk exposure.'' \7\ These representations 
also apply to the current proposal to increase the position and 
exercise limits for options on DIA. The Exchange now seeks to increase 
the position and exercise limits for options on DIA on the Amex to the 
level that such limits are in effect on the CBOE and other options 
exchanges (300,000 contracts on the same side of the market).
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    \6\ See Securities Exchange Act Release No. 57415 (March 3, 
2008), 73 FR 12479 (March 7, 2008) (SR-Amex-2008-16).
    \7\ Id.
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    The Exchange asserts that the justifications behind the 
Commission's approval of the CBOE proposal should support the same 
increased position and exercise limits on options on DIA on the Amex. 
Specifically, the Exchange believes that the ``structure of the DIA 
options and the considerable liquidity of both the underlying cash and 
options market for DIA options lessen the opportunity for manipulation 
of this product and disruption in the underlying market that a lower 
position limit may protect against.'' \8\
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    \8\ See Securities Exchange Act Release No. 47346, supra note 5.
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    The Exchange believes that the reporting requirements imposed under 
the Exchange's rules will help protect against potential 
manipulation.\9\ Additionally, the Exchange believes that such an 
increase in position and exercise limits on options on DIA on the Amex 
is required for competitive purposes as well as for purposes of 
consistency and uniformity among the competing options exchanges. This, 
taken in conjunction with the permanent establishment of other 
increased position and exercise limits for certain equity options on 
Amex, supports the Exchange's proposal to increase the position and 
exercise limits applicable to DIA.
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    \9\ See Amex Rule 906.
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2. Statutory Basis
    The Exchange believes that the proposal is consistent with the 
requirements of Section 6(b) of the Act \10\ in general, and Section 
6(b)(5) of the Act \11\ in particular, in that it is designed 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. Specifically, the Exchange believes that the structure of the 
DIA options and the considerable liquidity of the market for DIA 
options diminishes the opportunity for manipulation of this product and 
disruption in the underlying market that a lower position limit may 
protect against.
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    \10\ 15 U.S.C. 78f(b).
    \11\ 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 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 by the Exchange on 
this proposal.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    The Exchange has designated the proposed rule change as one that: 
(1) Does not significantly affect the protection of investors or the 
public interest; (2) does not impose any significant burden on 
competition; and (3) does not become operative for 30 days from the 
date of filing, or such shorter time as the Commission may designate if 
consistent with the protection of investors and the public interest. 
Therefore, the foregoing rule change has become effective pursuant to 
Section 19(b)(3)(A) of the Act \12\ and subparagraph (f)(6) of Rule 
19b-4 thereunder.\13\
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    \12\ 15 U.S.C. 78s(b)(3)(A).
    \13\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) 
requires a self-regulatory organization to provide the Commission 
with written notice of its intent to file the proposed rule change, 
along with a brief description and text of the proposed rule change, 
at least five business days prior to the date of filing of the 
proposed rule change, or such shorter time as designated by the 
Commission. The Exchange has fulfilled this requirement.
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    The Exchange has asked the Commission to waive the operative delay 
to permit the proposed rule change to become operative prior to the 
30th day after filing. The Exchange states that waiving the operative 
delay will allow the Exchange to match the position and exercise limits 
for the options on DIA that currently exist at other options exchanges. 
Because of the competitive nature of this proposal, the Exchange 
believes good cause exists to waive the 30-day operative delay. The 
Exchange notes that the Commission recently granted a waiver of the 
operative delay to a similar proposal by the ISE.\14\
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    \14\ See Securities Exchange Act Release No. 57736 (April 29, 
2008), 73 FR 25070 (May 6, 2008) (SR-ISE-2008-35).
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    The Commission believes that waiving the 30-day operative delay of 
the Exchange's proposal is consistent with the protection of investors 
and the public interest.\15\ Therefore, the Commission designates the 
proposal to be operative upon filing.
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    \15\ For purposes only of waiving the 30-day operative delay, 
the Commission has considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 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 the 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 (http://
www.sec.gov/rules/sro.shtml); or
     Send an e-mail to rule-comments@sec.gov. Please include 
File No. SR-Amex-2008-41 on the subject line.

[[Page 31164]]

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-2008-41. 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, 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 No. SR-Amex-2008-41 and should be 
submitted on or before June 20, 2008.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\16\
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    \16\ 17 CFR 200.30-3(a)(12).
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J. Lynn Taylor,
Assistant Secretary.
[FR Doc. E8-12032 Filed 5-29-08; 8:45 am]

BILLING CODE 8010-01-P
