(a) Definitions --
(i) For purposes of this rule the terms "aggregate quotation size", "best bid and best offer", "bid and offer", "quotation size", "quotation vendor", "reported security", "listed option", "option class", "option series" and "trading rotation" shall have the meanings set forth in SEC Rule 11Ac1-1.
(ii) For purposes of this rule and SEC Rule 11Ac1-1 as applied to the Exchange and its members, the term "responsible broker or dealer" shall mean, with respect to any bid or offer for any listed option made available by the Exchange to quotation vendors, either:
(A) the specialist and any registered options traders voluntarily joining the specialist's quote constituting the trading crowd in such option series shall collectively be the responsible broker or dealer to the extent of the aggregate quotation size specified. In conjunction with their obligation as the responsible broker or dealer, specialists and registered options traders may on a voluntary basis collectively agree to the best bid, best offer and aggregate quotation size required to be communicated to the Exchange pursuant to paragraph (c)(i) of this rule; or
(B) any registered options traders inputting their own quotes, either manually on a series-by-series basis or through the use of an Exchange provided or proprietary automated quote calculation system, shall each be considered a responsible broker or dealer for their bids or offers to the extent of their quotation size.
The allocation of contracts executed in accordance with this rule will be done pursuant to the Exchange Rule 935 --ANTE and Rule 950 --ANTE (l), Commentary .03.
(b) Dissemination Requirements of the Exchange --
(i) with respect to paragraph (b) of SEC Rule 11Ac1-1, the Exchange shall, at all times it is open for trading, (A) collect, process and make available to quotation vendors the best bid, the best offer, quotation sizes and aggregate quotation sizes associated therewith for each option series that is a reported security and for which a responsible broker or dealer is obligated to execute any customer order as set forth in paragraph (c)(i)(A) below; and (B) shall for each listed option class, establish and periodically publish the quotation size for which the responsible broker or dealer is obligated to execute an order for the account of a U.S. registered or foreign registered broker or dealer to buy or sell an option series that is a reported security at its published bid or offer as set forth in paragraph (c)(i)(B) below. The Exchange may collect, process and make available to quotation vendors a best bid or best offer determined by an automated quotation system.
(ii) The Exchange's obligation to collect, process and make available data as set forth above shall not include (A) collecting, processing or making available any such bid or offer which is executed immediately after being made in the crowd and any such bid or offer which is cancelled or withdrawn if not executed immediately after being made; or (B) data communicated during any period when trading in such reported security has been suspended or halted; prior to the commencement of trading in such reported security on any trading day; or during a trading rotation.
(c) Obligations of a Responsible Broker or Dealer --(i) Pursuant to SEC Rule 11Ac1-1 each responsible broker or dealer for each series of each listed option class shall promptly communicate to the Exchange its best bid, best offer, quotation size and aggregate quotation size. No responsible broker or dealer shall communicate a quotation size or aggregate quotation size for less than ten contracts with the exception that the size of customer limit orders representing the best bid or offer may be disseminated at less than ten (10) contracts, even though the responsible broker or dealer continues to have the obligation to quote a ten contract minimum. This obligation may be fulfilled by the use of an automated quotation system.
(A) Subject to the provisions of paragraph (d) of this rule, each responsible broker or dealer shall be obligated to execute any customer order in an option series in an amount up to its published quotation size.
(B) Subject to the provisions of paragraph (d) of this rule, each responsible broker or dealer shall be obligated to execute any order for the account of a U.S. registered or foreign broker or dealer in a listed option in an amount up to the quotation size established and periodically published by the Exchange which quotation size shall be for at least one contract.
(C) Subject to the provisions of paragraph (d) of this Rule, each responsible broker or dealer shall comply with the Thirty Second Response provisions set forth in paragraph (d)(3) of SEC Rule 11Ac1-1.
(ii) No responsible broker or dealer shall be obligated to execute a transaction for any listed option as provided in paragraph (c)(i) when:
(A) (1) Prior to the presentation of an order to sell (buy), a responsible broker or dealer has communicated to the exchange, a revised quotation size;
(2) At the time an order to sell (buy) is presented, a responsible broker or dealer is in the process of effecting a transaction in such series of option, and immediately after the completion of such transaction it communicates to the Exchange a revised quotation size, such responsible broker or dealer shall not be obligated by paragraph (c)(i) if this Rule to sell (buy) that option in an amount greater than such revised quotation size;
(3) Before the order sought to be executed is presented, a responsible broker or dealer has communicated to the Exchange a revised bid or offer; or
(4) At the time the order sought to be executed is presented, a responsible broker or dealer is in the process of effecting a transaction in such series of option, and, immediately after the completion of such transaction, a responsible broker or dealer communicates to the exchange a revised bid or offer; provided, however, that the responsible broker or dealer shall nonetheless be obligated to execute any such order as provided in paragraph (c)(i) at its revised bid or offer in any amount up to its published quotation size or revised quotation size; or
(B) The order for the purchase or sale of a listed option is presented during a trading rotation in that listed option.
(d) Use of Unusual Market Exception --Notwithstanding paragraphs (b) and (c) above and pursuant to paragraph (b)(3) of SEC Rule 11Ac1-1, if the Exchange determines, in accordance with the procedures set forth below, that the level of trading activity or the existence of unusual market conditions is such that the Exchange is incapable of collecting, processing and making available quotation data in a manner which accurately reflects the current state of the market at the Exchange, it shall immediately notify the persons specified in paragraph (b)(3) of SEC Rule 11Ac1-1 and, upon such notification, the obligation imposed upon Exchange members under paragraph (c)(2) of SEC Rule 11Ac1-1 and the Exchange under paragraphs (b)(1) and (2) of SEC Rule 11Ac1-1 shall be suspended, until a determination by the Exchange that the unusual market activity or condition has terminated and the specified persons have been notified that the unusual market activity or condition has terminated:
(i) If a responsible broker or dealer is unable to update his quotations on a timely basis due to the high level of trading activity or the existence of an unusual market condition, he shall promptly notify a Floor Official.
(ii) Upon notification by a responsible broker or dealer, the Floor Official, with the advice and participation of a member of the regulatory staff, shall promptly verify the existence of the unusual market activity or condition and if, in his judgment, the responsible broker or dealer is unable to update his quotations on a timely basis, the Floor Official shall promptly notify the Market Operations Division of the Exchange. If a Floor Official, independent of notification by a responsible broker or dealer, becomes aware of any unusual market activity or condition which adversely affects a responsible broker or dealer's ability to promptly communicate quotation data, he shall likewise, with the advice and participation of a member of the regulatory staff, promptly advise the Market Operations Division.
(iii) If the Exchange is unable to accurately collect, process, and/or disseminate quotation data owing to the high level of trading activity or the existence of unusual market conditions, the Market Operations Division of the Exchange, after consultation with a Floor Official, shall make a determination that this is the case.
(iv) The Market Operations Division, after receiving notification from a Floor Official pursuant to either subparagraphs (i) and (iii) above, shall notify the persons specified in paragraph (b)(3) of SEC Rule 11Ac1-1 regarding the Exchange's inability to accurately collect, process, and make available the quotation data required by SEC Rule 11Ac1-1. The Exchange shall append to each quotation made available to a quotation vendor an identifier which will indicate that the obligation imposed upon Exchange members and the Exchange by SEC Rule 11Ac1-1 has been suspended.
(v) The Floor Official, with the advice and participation of a member of the regulatory staff, or the Market Operations Division (as the case may be) shall monitor the unusual market activity or condition until it has terminated. Thereupon, the Market Operations Division shall immediately notify the persons specified in paragraph (b)(3) of SEC Rule 11Ac1-1 that the Exchange is once again capable of disseminating the quotation data required by Rule SEC 11Ac1-1 and responsible brokers or dealers shall be once again obligated under SEC Rule 11Ac1-1 as made applicable to Exchange members pursuant to this Rule 958A --ANTE.
(e) Customer Limit Orders: (1) Specialists shall publish immediately upon receipt the price and size of each customer options limit order held by the specialist that is at a price or size that would improve the displayed bid or offer in the option that is the subject of the limit order. "Immediately upon receipt" shall mean, under normal market conditions, as soon as practicable but no later than 30 seconds after receipt.
(2) The requirement in subparagraph (1) shall not apply to any customer options limit order that: (i) is executed upon receipt of the order; (ii) is placed by a customer that expressly requests, either at the time that the order is placed or prior thereto pursuant to an individually negotiated agreement with respect to each customer's order, that the order not be displayed and upon receipt of the order, the specialist announces to the trading crowd the information concerning the order that would be displayed absent the customer's request; (iii) is in excess of 100 contracts, unless the customer placing the order requests the order be displayed; (iv) is received prior to or during the opening trading rotation whether at the beginning of the trading day or after a trading halt provided the order is displayed immediately upon the conclusion of the trading rotation; (v) is an order type set forth in Rules 131 (c), (e), (i), (k), (l), (q), (r) and (s), 950(e) and 950 --ANTE (e); or (vi) the terms of which are delivered by the specialist to another exchange for an execution.
(3) For purposes of this rule, the term "customer options limit order" shall mean an order to buy or sell an option at a specified price and size that is for the account of a customer as defined in paragraph (a)(26) of Rule 11Ac1-1 under the Securities Exchange Act of 1934.
(4) In connection with the specialist's obligation to execute or display customer options limit orders immediately or in no event later than 30 seconds after receipt, the specialist shall maintain and keep active the ANTE limit order quote assist feature. The Exchange will establish the time frame within which the quote assist feature will display eligible customer limit orders. The specialist may deactivate the quote assist feature provided Floor Official approval is obtained. Such approval must be obtained no later than three minutes after deactivation. Use of the quote assist feature will be on a one-year pilot program basis, which will expire on or about April 30, 2006.
Adopted.
May 20, 2004 (Amex-2003-89).
Amendments.
January 21, 2005 (Amex-2000-027)
June 30, 2005 (Amex-2005-057) [Pilot Program extended until April 30, 2006].
September 29, 2005 (Amex-2005-052).
l l l Commentary ...
.01 No specialist or registered options trader shall be deemed to be a responsible broker or dealer with respect to a published bid or offer that is erroneous as a result of an error or omission made by the Exchange or any quotation vendor. If a published bid or published offer is accurate but the published quotation size (or published aggregate quotation size, as the case may be) associated with it is erroneous as a result of an error or omission made by the Exchange or any quotation vendor, then the specialist and registered options traders responsible for the published bid or published offer shall be obligated as set forth in paragraph (c) of Rule 11Ac1-1 but only to the extent of ten contracts or in cases where the best bid or offer is represented by a customer order the actual size of such order(s) if less that ten contracts.
.02 Absent unusual market conditions, the responsible broker or dealer shall honor any bid or offer then being displayed by quotation vendors which is erroneous, up to the quotation size then being so displayed, which has been displayed for six minutes or more. Provided, however, that the responsible broker or dealer shall not be required to honor such a bid or offer which is erroneous as to either price or size or both if:
(i) as a matter or record, an execution, cancellation or update of such bid or offer was in effect or in process;
(ii) in honoring such a bid or offer, the resulting transaction would violate applicable Exchange rules or federal regulations;
(iii) equipment failure prevents the specialist from monitoring such bid or offer; or
(iv) the price sought upon such quotation is above the current bid or below the current offer, on the Floor, by (a) $.25 or more in the case of a reported security trading at $3 or less or (b) $.50 or more in the case of a reported security trading at more than $3.
Adopted.
May 20, 2004 (Amex-2003-89).
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