61274 Federal Register / Vol. 69, No. 199 / Friday, October 15, 2004 / Notices 

1 15 U.S.C. 78s(b)(1).

2 17 CFR 240.19b-4.

3See letter from William Floyd-Jones, Associate 

General Counsel, Amex, to Nancy J. Sanow, 

Assistant Director, Division of Market Regulation, 

Commission, dated September 23, 2004 

(‘‘Amendment No. 1’’). Amendment No. 1 replaced 

the original proposed rule change in its entirety. 

Amendment No. 1 amended the proposal to limit 

the reallocation of a relisted option to the original 

specialist to a one year period.

4 15 U.S.C. 78f(b).

5 15 U.S.C. 78f(b)(5).

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–50498; File No. SR–Amex–

2004–66] 

Self-Regulatory Organizations; Notice 

of Filing of Proposed Rule Change and 

Amendment No. 1 Thereto by the 

American Stock Exchange LLC 

Relating to Allocation Procedures for 

Relisted Options 

October 6, 2004. 

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 August 

10, 2004, 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 by the Exchange. 

On September 24, 2004, Amex filed 

Amendment No. 1 to the proposed rule 

change. 3 The Commission is publishing 

this notice to solicit comments on the 

proposed rule change, as amended, from 

interested persons.

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes to amend 

Amex Rule 27. The text of the proposed 

rule change is set forth below. Proposed 

new language is italicized. Deleted 

language is in brackets.

* * * * *

Allocations Committee 

Rule 27 (a) through (i) No change. 

Commentary .01 through .03 No 

change. 

.04 Relisted Securities. A specialist 

shall be automatically allocated a 

security in which the specialist 

previously was registered only if all of 

the following conditions are met: (1) the 

company relists within one year of 

delisting, (2) the company is 

substantially the same entity as prior to 

delisting, (3) the company has no 

objection, and (4) the specialist is not 

subject to an allocation prohibition. A 

relisted option shall [will] be 

automatically allocated to the 

previously registered specialist unless 

(1) that specialist is subject to a 

prohibition on the allocation of options 

at the time that the option is relisted, (2) 

the Exchange relists the option more 

than one year after it was delisted, or (3) 

the specialist declines the allocation in 

writing [pursuant to the procedures 

described in paragraph (b) of this Rule]. 

If any of these conditions exist, the 

Allocations Committee will allocate the 

relisted option pursuant to the 

Exchange’s regular options allocations 

procedures.

(.05) No change.

* * * * *

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 the 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

A relisted security is a security that 

previously traded on the Exchange, was 

delisted, and is subsequently readmitted 

to dealings. In the case of options, the 

Exchange’s rule on relisted securities 

currently provides that a relisted option 

will go to open allocation with no 

explicit preference given to the original 

specialist. Amex asserts that specialists, 

as a result, are reluctant to delist an 

inactive option because they are 

concerned that if they agree to delist the 

option, and it subsequently becomes 

active, they will have lost the 

opportunity to specialize in it. 

To encourage specialists to delist 

inactive options, the Exchange is 

proposing to amend the Exchange’s 

allocations rules on relisted securities to 

provide that a relisted option will be 

automatically allocated to its original 

specialist unless: (1) The specialist is 

subject to a prohibition on options 

allocations at the time that the option is 

relisted; (2) the Exchange relists the 

option more than one year after it was 

delisted; or (3) the specialist declines in 

writing to accept the allocation. If any 

of these conditions exists, the 

Exchange’s Allocations Committee will 

allocate the relisted option pursuant to 

its regular allocation procedures. The 

Exchange believes that this change in 

allocations policy will eliminate a 

disincentive to the delisting of inactive 

options. The Exchange further believes 

that this could benefit the options 

market and, consequently, investors in 

options by reducing quote traffic in 

options. 

2. Statutory Basis 

The Exchange believes that the 

proposed rule change, as amended, is 

consistent with Section 6(b) of the Act, 4

in general, and furthers the objectives of 

Section 6(b), 5 in particular, in that it is 

designed to prevent fraudulent and 

manipulative acts and practices, 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; and is 

not designed to permit unfair 

discrimination between customers, 

issuers, brokers, or dealers.

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 with respect to 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 the self-regulatory 

organization 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. 

Federal Register / Vol. 69, No. 199 / Friday, October 15, 2004 / Notices 61275

6 17 CFR 200.30–3(a)(12).

1 15 U.S.C. 78s(b)(1).

2 17 CFR 240.19b–4.

3 15 U.S.C. 78s(b)(3)(A)(ii).

4 17 CFR 240.19b–4(f)(2).

5See Section 3(a)(2) of the Act, 15 U.S.C. 

78c(a)(2).

6 15 U.S.C. 78o–3(b)(5). Nasdaq currently operates 

Brut pursuant to a Temporary Conditional 

Exemption (‘‘Exemption’’) issued by the 

Commission pursuant to Section 36(a) of the Act. 

See Securities Exchange Act Release No. 50311 

(September 3, 2004), 69 FR 54818 (September 10, 

2004). The Exemption requires Nasdaq to file 

proposed rule changes under Section 19(b) of the 

Act if it seeks to modify Brut’s fee schedule.

7 15 U.S.C. 78o–3.

IV. Solicitation of Comments 

Interested persons are invited to 

submit written data, views, and 

arguments concerning the foregoing, 

including whether the proposed rule 

change, as amended, 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 rulecomments@sec.gov. Please include File 

Number SR–Amex–2004–66 on the 

subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Jonathan G. Katz, Secretary, 

Securities and Exchange Commission, 

450 Fifth Street, NW., Washington, DC 

20549–0609. 

All submissions should refer to File 

Number SR–Amex–2004–66. 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 

Section, 450 Fifth Street, NW., 

Washington, DC 20549. Copies of such 

filing also will be available for 

inspection and copying at the principal 

offices of the Amex. 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–

2004–66 and should be submitted on or 

before November 5, 2004.

For the Commission, by the Division of 

Market Regulation, pursuant to delegated 

authority. 6

Margaret H. McFarland, 

Deputy Secretary.

[FR Doc. 04–23126 Filed 10–14–04; 8:45 am] 

BILLING CODE 8010–01–P

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–50502; File No. SR–NASD–

2004–49] 

Self-Regulatory Organizations; Notice 

of Filing and Immediate Effectiveness 

of Proposed Rule Change by the 

National Association of Securities 

Dealers, Inc. To Establish Access Fees 

for Nasdaq’s Brut Facility 

October 7, 2004. 

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 October 

4, 2004, the National Association of 

Securities Dealers, Inc. (‘‘NASD’’), 

through its subsidiary, The Nasdaq 

Stock Market, Inc. (‘‘Nasdaq’’), 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 by Nasdaq. Nasdaq 

has designated this proposal as one 

establishing or changing a due, fee or 

other charge imposed by the selfregulatory organization under Section 

19(b)(3)(A)(ii) 3 of the Act and Rule 19b–

4(f)(2) thereunder,4 which renders the 

proposal effective upon filing with the 

Commission. The Commission is 

publishing this notice to solicit 

comments on the proposed rule change 

from interested persons.

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

Nasdaq proposes to establish access 

fees for its Brut trading facility. The text 

of the proposed rule change is available 

at the Office of the Secretary, Nasdaq, 

and at the Commission. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, 

Nasdaq 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. Nasdaq 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 

Nasdaq represents that, on September 

7, 2004, Nasdaq completed its purchase 

of the Brut ECN (‘‘Brut’’). Once 

purchased by Nasdaq, Brut became a 

‘‘facility’’ of a national securities 

association,5 thereby making the pricing 

for Brut’s services subject to Section 

15A(b)(5) of the Act, which requires that 

the fees of a national securities 

association be equitably allocated 

among members and issuers and other 

persons using the facility.6 In this filing, 

Nasdaq proposes to establish such a fee 

structure for members who access 

orders residing in Brut’s system. Under 

the proposal, Nasdaq will create a tiered 

fee structure in which the per share fee 

charged to a member to access liquidity 

in Brut will vary based on the amount 

of liquidity added to Brut by that 

member. Members that provide an 

average daily volume of 50,000 shares or 

less over a calendar month will be 

charged $0.003 per share when 

accessing liquidity in the Brut system 

for that same month. Members that 

provide an average daily volume of 

50,001 shares or more over a calendar 

month will be charged $0.0027 per 

share when accessing liquidity in the 

Brut system for that same month.

Nasdaq believes that the above 

approach provides a uniform and 

objective method to impose fees for 

accessing liquidity in the Brut system 

that also encourages the provision of 

liquidity beneficial to all members. 

2. Basis 

Nasdaq believes that the proposed 

rule change is consistent with the 

provisions of Section 15A of the Act,7 in 

general, and with Section 15A(b)(5) of