Federal Register / Vol. 69, No. 24 / Thursday, February 5, 2004 / Notices 5619

12 15 U.S.C. 78k–1.

13 17 CFR 240.11Aa3–2.

14 17 CFR 200.30–3(a)(29).

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

2 17 CFR 240.19b–4.

3See Securities Exchange Act Release No. 47822 

(May 9, 2003), 68 FR 27115 (May 19, 2003) (SR–

Amex–2003–14).

4For example, specialists and registered options 

traders on the Exchange are subject to a $.10 per 

contract fee for transactions in QQQ options.

5Telephone conversation between Jeffrey Burns, 

Associate General Counsel, Amex, and Jennifer 

Colihan, Special Counsel, Division of Market 

Regulation, Commission on January 23, 2004 

clarifying that the previous approval of fees for 

Linkage Orders (see note 3, supra) did not include 

the Options Licensing Fee.

6See Securities Exchange Act Release No. 47298 

(January 31, 2003), 68 FR 6524 (February 7, 2003) 

(File No. 4–429). 7 15 U.S.C. 78f(b)(4).

relating to the effect of the operation of 

the pilot, is appropriate in the public 

interest, for the protection of investors 

and the maintenance of fair and orderly 

markets. Therefore, the Commission is 

extending the effectiveness of section 

8(c)(ii)(B)(2)(c) of the Plan for an 

additional five months, until June 30, 

2004.

IV. Conclusion 

It is therefore ordered, pursuant to 

section 11A of the Act 12 and Rule 

11Aa3–2 thereunder,13 that the 

proposed Plan Amendment No. 8 is 

approved on a pilot basis until June 30, 

2004.

For the Commission, by the Division of 

Market Regulation, pursuant to delegated 

authority.14

Jill M. Peterson, 

Assistant Secretary.

[FR Doc. 04–2362 Filed 2–4–04; 8:45 am] 

BILLING CODE 8010–01–P

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–49145; File No. SR–Amex–

2004–03] 

Self-Regulatory Organizations; Notice 

of Filing and Order Granting 

Accelerated Approval of Proposed 

Rule Change by the American Stock 

Exchange LLC Relating to the 

Extension of a Linkage Fee Pilot 

Program 

January 29, 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 January 

14, 2004, 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 prepared by the Exchange. The 

Commission is publishing this notice to 

solicit comments on the proposed rule 

change from interested persons and is 

approving the proposed rule change on 

an accelerated basis.

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes to extend for 

six (6) months, until July 31, 2004, the 

current pilot program regarding 

transaction fees for trades executed 

through the intermarket options linkage 

(the ‘‘Linkage’’) on the Exchange. 

The proposed fee schedule is 

available at the Exchange 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, the 

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 III 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 Amex is proposing to extend for 

six (6) months, until July 31, 2004, the 

current pilot program establishing 

Exchange fees for Principal Orders (‘‘P 

Orders’’) and Principal Acting As Agent 

Orders (‘‘P/A Orders’’) executed through 

the Linkage. The fees in connection 

with the pilot program are scheduled to 

expire on January 31, 2004.3 The fees 

charged by the Amex under the pilot 

program consist of a $0.26 per contract 

transaction fee, a $0.05 comparison fee, 

and a $0.05 floor brokerage fee. In 

addition to the previously approved 

fees, Amex is proposing to subject 

incoming P and P/A orders for certain 

licensed index products to a licensing 

fee 4 as part of the pilot.5 These are the 

same fees charged to specialists and 

Registered Options Traders (‘‘ROTs’’) for 

transactions executed on the Exchange. 

Consistent with the Linkage Plan, the 

Amex does not charge for the execution 

of Satisfaction Orders sent through the 

Linkage.6

As was the case in its filing for the 

original pilot program, the Exchange 

believes that the existing fee amount for 

equity options that currently is charged 

to Exchange specialists and ROTs 

should apply to executions resulting 

from Linkage Orders. Market makers 

from other option exchanges accessing 

the liquidity of the Exchange by sending 

P or P/A Orders accordingly pay the 

same fees applicable to Amex specialists 

and ROTs for such executions. 

Based on the limited experience 

operating the Linkage, the Exchange 

believes that an extension of the pilot 

program for six (6) months until July 31, 

2004 is appropriate. During this time, 

the Exchange intends to study the effect 

of Linkage fees and prepare to file a 

permanent Linkage fee proposal. 

2. Statutory Basis 

The Amex believes the proposed rule 

change is consistent with Section 6(b)(4) 

of the Act 7 regarding the equitable 

allocation of reasonable dues, fees and 

other charges among exchange members 

and other persons using exchange 

facilities.

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The Exchange believes that the 

proposed rule change will impose no 

burden on competition. 

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. 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. 

Persons making written submissions 

should file six copies thereof with the 

Secretary, Securities and Exchange 

Commission, 450 Fifth Street, NW., 

Washington, DC 20549–0609. 

Comments may also be submitted 

electronically at the following e-mail 

address: rule-comments@sec.gov. All 

comment letters should refer to File No. 

SR–Amex–2004–03. 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, comments 

should be sent in hardcopy or by e-mail 

but not by both methods. Copies of the 

submission, all subsequent 

5620 Federal Register / Vol. 69, No. 24 / Thursday, February 5, 2004 / Notices 

8 In approving this rule, the Commission notes 

that it has considered its impact on efficiency, 

competition, and capital formation. 15 U.S.C. 78c(f).

9 15 U.S.C. 78f(b).

10 15 U.S.C. 78f(b)(4).

11 15 U.S.C. 78s(b)(2).

12 Id.

13 17 CFR 200.30–3(a)(12).

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

2 17 CFR 240.19b-4.

3See letter from Stephen Youhn, CBOE, to Kelly 

Riley, Senior Special Counsel, Division of Market 

Regulation, Commission, dated January 6, 2004 

(‘‘Amendment No. 1’’). In Amendment No. 1, the 

CBOE proposed to limit its proposed rule change 

to 200 options classes trading on the CBOE’s Hybrid 

Trading System for a pilot period of six months. In 

addition, the CBOE agreed to provide the 

Commission with a pilot program report comparing 

the Average Quote Width Analysis (‘‘AQWA’’) 

scores for each pilot program option prior to the 

commencement of the pilot with the AQWA scores 

for each pilot program option during the pilot 

period. Finally, the CBOE amended Items 7 and 8 

of its Form 19b-4 to designate the filing as ‘‘noncontroversial’’ pursuant to Rule 19b-4(f)(6) and to 

indicate that its proposed rule change is 

substantially similar to an approved pilot program 

of the International Securities Exchange, Inc.

4 15 U.S.C. 78s(b)(3)(A).

5 17 CFR 240.19b-4(f)(6).

6For purposes of determining the effective date 

and abrogation date of this filing, the Commission 

considers January 7, 2004, the date on which the 

CBOE filed Amendment No. 1, to be the filing date 

of this proposed rule change.

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 such filing will also be 

available for inspection and copying at 

the principal office of the Exchange. All 

submissions should be submitted by 

February 26, 2004. 

IV. Commission’s Findings and Order 

Granting Accelerated Approval of 

Proposed Rule Change 

After careful consideration, the 

Commission finds that the proposed 

rule change is consistent with the 

requirements of the Act and the rules 

and regulations thereunder, applicable 

to a national securities exchange,8 and, 

in particular, with the requirements of 

section 6(b) of the Act 9 and the rules 

and regulations thereunder. The 

Commission finds that the proposed 

rule change is consistent with section 

6(b)(4) of the Act,10 which requires that 

the rules of the Exchange provide for the 

equitable allocation of reasonable dues, 

fees, and other charges among its 

members and other persons using its 

facilities. The Commission believes that 

the extension of the Exchange’s Linkage 

fee pilot program until July 31, 2004 

will give the Exchange and the 

Commission further opportunity to 

evaluate whether such fees are 

appropriate.

The Commission finds good cause, 

pursuant to section 19(b)(2) of the Act,11

for approving the proposed rule change 

prior to the thirtieth day after the date 

of publication of the notice of the filing 

thereof in the Federal Register. The 

Commission believes that granting 

accelerated approval will preserve the 

Exchange’s existing pilot program for 

Linkage fees without interruption as the 

Amex and the Commission further 

consider the appropriateness of Linkage 

fees.

V. Conclusion 

It is therefore ordered, pursuant to 

section 19(b)(2) of the Act,12 that the 

proposed rule change (SR–Amex–2004–

03) is hereby approved on an 

accelerated basis for a pilot period to 

expire on July 31, 2004.

For the Commission, by the Division of 

Market Regulation, pursuant to delegated 

authority.13

Jill M. Peterson, 

Assistant Secretary.

[FR Doc. 04–2358 Filed 2–4–04; 8:45 am] 

BILLING CODE 8010–01–P

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–49153; File No. SR–CBOE–

2003–50] 

Self-Regulatory Organizations; Notice 

of Filing and Immediate Effectiveness 

of Proposed Rule Change and 

Amendment No. 1 Thereto by the 

Chicago Board Options Exchange, 

Inc., Relating to a Pilot Program for 

Quotation Spreads in Hybrid Classes 

January 29, 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 

31, 2003, the Chicago Board Options 

Exchange, Inc. (‘‘CBOE’’ 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. 

The CBOE submitted Amendment No. 1 

to the proposed rule change on January 

7, 2004.3 The CBOE has submitted the 

proposed rule change under section 

19(b)(3)(A) of the Act 4 and Rule 19b4(f)(6) thereunder,5 which renders the 

proposal effective upon filing with the 

Commission.6 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 CBOE proposes to amend CBOE 

Rule 8.7, ‘‘Obligations of Market 

Makers,’’ to adopt a six-month pilot 

program through June 29, 2004 that 

would permit quote spread parameters 

of up to $5 on up to 200 option classes 

traded on the CBOE’s Hybrid Trading 

System (‘‘Hybrid’’). The text of the 

proposed rule change appears below. 

Proposed new language is italicized.

Rule 8.7 Obligations of Market 

Makers 

(a) No change. 

(b) 

(i)–(iii) No change. 

(iv) To price options contracts fairly 

by, among other things, bidding and/or 

offering so as to create differences of no 

more than 0.25 between the bid and 

offer for each option contract for which 

the bid is less than $2, no more than 

$0.40 where the bid is at least $2 but 

does not exceed $5, no more than $0.50 

where the bid is more than $5 but does 

not exceed $10, no more than $0.80 

where the bid is more than $10 but does 

not exceed $20, and no more than $1 

where the bid is more than $20, 

provided that the appropriate Market 

Performance Committee may establish 

differences other than the above for one 

or more options series. The bid/ask 

differentials stated above shall not apply 

to in-the-money series where the 

underlying securities market is wider 

than the differentials set forth above. 

For these series, the bid/ask differential 

may be as wide as the quotation on the 

primary market of the underlying 

security. 

(A) For a six month period expiring 

on August 5, 2004, the Exchange may 

designate options on up to two hundred 

(200) underlying securities that may be 

quoted with a difference not to exceed 

$5 between the bid and offer regardless 

of the price of the bid. The $5 quote 

widths shall only apply to classes 

trading on the Hybrid system and only 

following the opening rotation in each 

security i.e., the widths specified in 

paragraph (b)(iv) above shall apply 

during opening rotation).