Federal Register / Vol. 65, No. 77 / Thursday, April 20, 2000 / Notices 21223

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

2 17 CFR 240.19b–4.

3Letter from Scott Van Hatten, Legal Counsel,

Derivative Securities, Nasdaq-Amex, to Nancy

Sanow, Assistant Director, Division of Market

Regulation (‘‘Division’’), Commission, dated March

31, 2000 (‘‘Amendment No. 1’’). In response to

comments from Commission staff, the Exchange

submitted Amendment No. 1 to withdraw the

portion of the filing that would increase the equity

options transaction fees charged to non-member

broker-dealers. Amendment No. 1 also: (i) makes

certain technical corrections to the Amex’s options

fee schedule; (ii) proposes to increase the specialist

and market maker floor brokerage fee from $0.02 to

$0.03 per contract side for both equity and index

options; (iii) states that all fee changes are effective

April 1, 2000; and (iv) clarifies that the cost savings

estimate to customers is based on third quarter,

1999 trading volume.

4 Id.

5 Id.

6The current caps are set at 2,000 contracts for

customer trades and 3,000 contracts for member

firm proprietary, non-member broker-dealer,

specialist and market maker trades.

7See Securities Exchange Act Release No. 41370

(May 5, 1999), 64 FR 25931 (May 13, 1999).

8 Id.

9LEAPs are Long Term Equity Anticipation

Securities or options with durations of up to 36

months. See Amex Rule 903C.

10FLEX options are customized options with

individually specified terms such as strike price,

expiration date, and exercise style. See Amex Rule

900G.

11See Amendment No. 1, supra note 3.

12 Id.

redemption to the Index Series in

Creation Units only.

For the Commission, by the Division of

Investment Management, under delegated

authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 00–9939 Filed 4–19–00; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–42675; File No. SR–Amex–

00–15]

Self-Regulatory Organizations; Notice

of Filing and Immediate Effectiveness

of Proposed Rule Change by the

American Stock Exchange LLC

Relating to Transaction, Clearance,

and Floor Brokerage Fees

April 13, 2000.

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 March 10,

2000, the American Stock Exchange LLC

(‘‘Amex’’ or ‘‘Exchange’’) filed with the

Securities and Exchange Commission

(‘‘SEC’’ or ‘‘Commission’’) the proposed

rule change as described in Items I, II

and III below, which Items have been

prepared by the Exchange. On April 1,

2000, the Exchange filed Amendment

No. 1 to the proposed rule change with

the Commission, which amendment

replaces and supersedes the original

proposal.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 Amex proposes to eliminate

transaction, clearance, and floor

brokerage fees for customer equity

options orders. The Exchange also

proposes to increase the specialist and

market maker floor brokerage fee for

both equity and index options

transactions.4

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 Amex proposes to eliminate

transaction, clearance, and floor

brokerage fees for customer equity

options orders. The Exchange also

proposes to increase the specialist and

market maker floor brokerage fee for

both equity and index options

transactions. The proposed fee schedule

would be applicable to options

transactions effected on and after April

1, 2000.5

The Amex currently imposes a

transaction charge on options trades

executed on the Exchange. The charges

vary depending on whether the

transaction involves an equity or index

option and whether the transaction is

executed for a member firm proprietary

account, a specialist or market maker

account, or a customer account. The

Amex also imposes a charge for

clearance of options trades and an

options floor brokerage charge, which

also depends upon the type of account

for which the trade is executed. In

addition, all three of charges—

transaction, options clearance, and

options floor brokerage—are subject to

caps on the number of options contracts

subject to the charges on a given day.6

Current, for customer equity and

index options transactions, the Amex

does not charge a transaction fee for

market and marketable limit orders of

30 contracts or less.7 The Amex charges

a transaction fee of $0.10 for customer

equity and index options transactions

(per contract side) for limit orders up to

30 contracts and all orders exceeding 30

contracts.8 These customer options

transactions fees also apply to both

LEAPS 9 and FLEX 10 options. The

current clearance fee for customer

equity options transactions is $0.04 per

contract side. The floor brokerage fee for

customer equity options orders is $0.02

per contract side.

Under the revised fee schedule, the

Exchange proposes to eliminate all

transaction, clearance, and floor

brokerage fees for customer equity

options orders. Fees currently charged

to customers for transactions in index

options will remain unchanged. To

offset the Exchange’s elimination of

transaction, clearance, and floor

brokerage fees for customer equity

options transactions, the Exchange

proposes to raise certain fees charged to

members. Specifically the Exchange

proposes to increase the equity options

transaction fee from $0.07 to $0.19 per

contract side for member firm

proprietary orders and from $0.08 to

$0.17 per contract side for specialist and

market maker orders. Transaction

charges for broker-dealers facilitating

customer equity options orders will

remain unchanged at $0.07 per contract

side.

Under the Exchange’s proposal,

options clearance fees for member firms,

specialists, and market makers will

remain unchanged at $0.04 per contract

side. The Exchange proposes to increase

the specialist and market marker

options floor brokerage fee from $0.02 to

$0.03 per contract side for both equity

and index transactions.11 Options floor

brokerage fees for member firms will

remains unchanged at $0.03.

The Exchange represents that

customers will receive actual cost

savings of approximately $17.5 million,

based upon third quarter, 1999

annualized option contract volume.12

The Exchange believes that the

proposed fee changes are necessary to

make the Exchange’s options transaction

charges more competitive with other

options exchanges’ fees and with the

21224 Federal Register / Vol. 65, No. 77 / Thursday, April 20, 2000 / Notices

13 15 U.S.C. 78f(b).

14 15 U.S.C. 78f(b)(4).

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

16 17 CFT 240.19b–4(f)(2).

17 In reviewing this proposal, the Commission has

considered its impact on efficiency, competition,

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

18 17 CFR 200.30–3(a)(12)

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

2 17 CFR 240.19b–4

3See Securities Exchange Act Release No. 42307

(January 3, 2000), 65 FR 1206.

costs of trading other financial

instruments, and to increase the number

of options orders that are routed to the

Exchange. While the Exchange

anticipates that other options exchanges

may also reduce fees charged to

customers, it believes that the proposed

fee changes will increase options usage

among all investors and stimulate

industry-wide growth in the options

business.

2. Statutory Basis

The Exchange believes that the

proposed rule change is consistent with

Section 6(b) of the Act 13 in general, and

furthers the objectives of Section

6(b)(4) 14 in particular, in that it

provides for the equitable allocation of

reasonable dues, fees and other charges

among its members and other persons

using its facilities.

B. Self-Regulatory Organization’s

Statement on Burden on Competition

The Amex does not believe that the

proposed rule change will impose any

burden on competition.

C. Self-Regulatory Organization’s

Statement on Comments on the

Proposed Rule Change Received From

Members, Participants, or Others

The Exchange has neither solicited

nor received comments on the proposed

rule change.

III. Date of Effectiveness of the

Proposed Rule Change and Timing for

Commission Action

The proposed rule change has become

effective pursuant to Section

19(b)(3)(A)(ii) of the Act,15 and Rule

19b–4(f)(2) thereunder,16 in that it

establishes or changes a due, fee, or

other charge imposed by the Exchange.

At any time within 60 days of the filing

of such proposed rule change, the

Commission may summarily abrogate

such 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.17

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. Persons making written

submissions should file six copies

thereof with the Secretary, Securities

and Exchange Commission, 450 Fifth

Street, N.W., Washington, D.C. 20549–

0609. 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 at

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 refer to the File No.

SR–Amex–00–15 and should be

submitted by May 11, 2000.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.18

Jonathan G. Katz,

Secretary.

[FR Doc. 00–9917 Filed 4–19–00; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–42687; File No. SR–Amex–

99–25]

Self-Regulatory Organizations; Order

Granting Approval to Proposed

Amendments to the Amex Constitution

by the American Stock Exchange LLC

Eliminating the Requirement That the

Chairman Also Be the CEO

April 13, 2000.

I. Introduction

On July 16, 1999, the American Stock

Exchange, Inc. (‘‘Amex’’ or ‘‘Exchange’’)

submitted to the Securities and

Exchange Commission (‘‘Commission’’),

pursuant to Section 19(b)(1) of the

Securities Exchange Act of 1934

(‘‘Act’’)1 and Rule 19b–4 2 thereunder, a

proposed rule change. In its proposal,

Amex seeks to eliminate the

requirement that the Chairman also be

the Chief Executive Officer (‘‘CEO’’) of

the Exchange. The proposed rule change

was published for comments in the

Federal Register on January 7, 2000.3

The Commission received no comments

on the filing and this order approves the

proposal.

II. Description of the Proposal

Article II, Section 4(a) of the Amex

Constitution currently requires that the

Chairman of the Board also act as the

CEO of the Exchange. The Chairman

thus performs the standard functions of

a Board Chairman, as well as being

responsible to the Board for the

management and administration of the

affairs of the Exchange as CEO.

The Exchange proposes to amend

Article II, Section 4(a) of the

Constitution to eliminate the

requirement that the Chairman also act

as the CEO of the Exchange. Amex

represents that the NASD’s two other

subsidiaries (the Nasdaq Stock Market

and NASD Regulation), both have nonexecutive Chairmen. Amex believes that

having a non-executive Chairman attend

to the functions of a Chairman would

allow the CEO to focus on the

operations of the Exchange.

Nevertheless, the proposal gives Amex

the flexibility to choose to have two

people fill the Chairman and CEO

positions or to have the same person fill

these two positions.

As a result of the amendment to

Article II, Section 4(a) of the

Constitution, Amex made a number of

conforming changes to other provisions

of the Constitution and rules. Before this

proposal, Amex’s rules generally did not

make a distinction between whether the

Chairman/CEO was serving in his

capacity as the Chairman or the CEO

and used the term ‘‘Chairman’’ for both

of these functions. To allow for separate

persons to serve as Chairman and CEO,

Amex examined its rules and made a

determination as to whether a particular

function was normally handled by the

Chairman or CEO. Based on this

examination, Amex then changed the

term ‘‘Chairman’’ to CEO when it

determined that Chairman/CEO was

acting in his capacity as the CEO. Amex

had to make choices, however, when the

function was properly performed by

either the Chairman or the CEO. In

addition, Article II, Section 3

(Chairman) and Article II, Section 4(a)

(Chief Executive Officer), discussing the

selection and authority of the Chairman

and CEO respectively, have been

appropriately rearranged. Other than

splitting the Chairman and CEO roles

and making the above-mentioned

conforming changes, the Amex

represents that there are no substantive

changes being made.

III. Discussion

The Commission finds that the

proposed rule change is consistent with