www.amex.com/amextrader
The purpose of this notice is to remind members and member organizations of the requirements applicable to the use of electronic communications and proprietary trading systems on the Trading Floor. Amex Rules 220 and 220-AEMI 1, provide that no member shall establish or maintain any telephonic or electronic communication between the Floor and any other location, or between locations on the Floor without prior written approval of the Exchange.
Members are therefore required to submit an application to the Exchange and receive written Exchange approval prior to:
To use any such system on the Floor, members must certify in the application that the use of the system will comply with recordkeeping requirements under the Securities Exchange Act of 1934 Section 17(a) 2 and Rules 17a-3 and 17a-4 thereunder, as well as Amex Rules, including Rules 153, 153-AEMI, 220, 220-AEMI and 324. Members must also certify that use of the system will be supervised pursuant to written compliance and supervisory policies and procedures in accordance with Amex Rule 320(e).
Who Must Obtain Approval
Members who wish to install or use new Electronic Communications or Proprietary Trading Systems on the Floor or make substantive enhancements to such systems must obtain approval. In addition, members currently using a system or application on the Floor that has not been approved in writing by the Exchange must complete and submit the appropriate application to the Exchange to request approval for its usage. Applications for approval of existing systems or applications must be submitted by Monday, April 14, 2008. Applications will not be accepted from vendors. Only members may apply for and obtain approval.
Members are advised that the Exchange's approval does not, however, serve as a safe harbor, or excuse a member's failure to retain Electronic Communications, or other required records, or excuse a member's failure otherwise to comply with Amex rules, policies and procedures relating to the use and supervision of an approved system and/or applicable legal requirements.
Following is a more detailed discussion of what must be approved and how to obtain approval:
Written (Text) Communications
Electronic text communications, including, for example, "chat" programs, message boards, instant messaging ("IM"), text messaging, email, blogs and any other user-to-user communication facilities ("Electronic Communications"), may not be installed or used on the Floor without prior written approval by the Exchange.
Members must obtain approval for all facilities which have Electronic Communications capabilities, even if the Electronic Communications capability is not the primary purpose of the facility and even if it is a third party facility.
For instance, if a member organization is seeking Exchange approval to use its clearing firm's broadband connection to access the clearing firm's intra-day comparison system, and that connection will also provide internet access on the Floor, the member must obtain Exchange approval not only for the broadband connection, but also for the internet connection. If a member is seeking a connection to its firm's intranet system and that system then permits internet access, both uses must be disclosed to, and approved by, the Exchange. 3
To obtain Exchange approval for such Electronic Communications, members should complete the "Application for Electronic Communication Facilities on the Amex Trading Floor", which can be downloaded at http://www.amex.com/amextrader/membership/becomingAMember/Electronic_Communications_Application.doc.
In determining whether to grant approval, the Exchange will consider, among other things, whether the member or member organization:
The member or member organization applicant will be required to provide a written attestation with its application that it will comply with these requirements.
Telephonic Communication Devices, Cell Phones, Blackberries, Landlines
Members who wish to use portable phones on the Floor may only use Amex-issued cell phones or "headsets"; the use of personal cell phones or other portable telephone-type devices 5 on the Floor during market hours is not permitted under any circumstances.
Members who wish to use Amex-issued wireless telephones, install traditional landlines, 6 add additional lines or upgrade their telecommunication systems should contact the Communications Help Desk at 212-306-1010.
Use of Proprietary Trading, Quoting, or Order Management Systems on the Floor
Written approval from the Exchange is required prior to installing and/or using any proprietary trading, quoting, order management or other electronic facility pertaining to trading on the Floor ("Proprietary Trading System"), including, but not limited to:
When considering the approval of any such Proprietary Trading System, the Exchange conducts a review of the system, pursuant to Rule 220 or 220-AEMI, to ensure that the proposed technology is compatible with, and poses no threat to, the Exchange's infrastructure and trading systems. In addition, in accordance with Rule 220 or 220-AEMI, as well as other Exchange record-keeping rules, 7 members and member organizations using such Proprietary Trading Systems to initiate orders or enter quotes for financial instruments traded in other markets, must maintain a record of all such orders and quotes (both executed and unexecuted) including, at a minimum, the following information:
Further, any Proprietary Trading System approved by the Exchange must have the functionality to comply with the requirements of the Consolidated Options Audit Trail System (COATS), pursuant to Amex Rule 153, Commentary .01.
When considering whether to grant approval of any proprietary trading system, the Exchange will consider, among other things, whether the member or member organization:
The member or member organization applicant will be required to certify that the member's use of the system will comply with the Exchange's rules, federal securities laws and regulations, and Exchange technology requirements.
When seeking Exchange approval for such Proprietary Trading Systems, members should complete the "Application for Proprietary Systems on the American Stock Exchange Trading Floor", which can be downloaded at http://www.amex.com/amextrader/membership/becomingAMember/Application_Propietary_Systems_Amex_Trading_Floor.doc
Questions
Please direct regulatory questions to Ellen O'Rourke at 212-306-1865 or to Rick Farber at 212-306-5310. Technology questions may be directed to colocation@amex.com.
1 Approved Amex rules can be accessed at http://wallstreet.cch.com/AMEX/Rules/.
2 Section 17(a) of the Securities Exchange Act of 1934 can be accessed at http://www.law.uc.edu/CCL/34Act/sec17.html.
3 Therefore, for example, if an Electronic Communications connection permits members to set-up and use a commercial e-mail account from the Floor, such as AOL, Gmail or Hotmail, the member's application to the Exchange must disclose all such Electronic Communications accounts which employees will be permitted to use, and attest that such use meets requirements 1 - 4. Any other Electronic Communications accounts which do not meet these requirements must be blocked, or the firm must have reasonable procedures to monitor that only disclosed and approved accounts are used.
4 Rule 17a-4(f) of the Securities Exchange Act of 1934 sets forth standards that records stored electronically must satisfy in order to be an acceptable method of record preservation under Rule 17a-4. Rule 17a-4 can be accessed at http://www.law.uc.edu/CCL/34ActRls/rule17a-4p5203.html.
5 Such prohibited portable devices also include, but are not limited to, portable phones connected to a landline, Skype, Vonage and other Voice-over-Internet Protocol (VOIP) communications.
6 Internet phones may only be used if appropriate records can be maintained and must be approved by Amex.
7 Including, but not limited to, Rules 153, 153-AEMI, 191, 324, 950-ANTE and 957.
8 See footnote 4, above.