Document ID: SEC-2006-0990-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: American Stock Exchange LLC
Posted Date: 2006-08-03T04:00Z

[Federal Register: August 3, 2006 (Volume 71, Number 149)]
[Notices]               
[Page 44055-44056]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr03au06-81]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-54227; File No. SR-Amex-2006-65]

 
Self-Regulatory Organizations; American Stock Exchange LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change 
and Amendment No. 1 Thereto Relating to the Suspension of Transaction 
Charges for Specialist Orders in the Nasdaq-100 Tracking Stock[supreg] 
(QQQQ)

July 27, 2006.
    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 July 13, 2006, the American Stock Exchange LLC (``Amex'' or 
``Exchange'') submitted to the Securities and Exchange Commission 
(``Commission'') the proposed rule change as described in Items I and 
II below, which Items have been prepared by Amex. On July 25, 2006, the 
Exchange submitted Amendment No. 1 to the proposed rule change.\3\ Amex 
has designated the proposal as one establishing or changing a due, fee, 
or other charge imposed by the Exchange pursuant to Section 
19(b)(3)(A)(iii) of the Act \4\ and Rule 19b-4(f)(2) thereunder,\5\ 
which renders it effective upon filing with the Commission. The 
Commission is publishing this notice to solicit comments on the 
proposed rule change, as amended, from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ In Amendment No. 1, the Exchange altered the proposed rule 
text to reflect that the transaction charges have been suspended in 
the Nasdaq-100 Index Tracking Stock (QQQQ) from July 13, 2006 
(rather than July 10, 2006), through August 31, 2006, for specialist 
orders. The Exchange made corresponding changes to the Purpose 
section. The Exchange also changed a reference to the annual 
technology fee in the Purpose section.
    \4\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \5\ 17 CFR 240.19b-4(f)(2).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend the Amex Exchange Traded Funds and 
Trust Issued Receipts Fee Schedule (the ``ETF Fee Schedule'') to 
suspend transaction charges for specialist orders in connection with 
the trading of the Nasdaq-100 Index Tracking Stock[supreg] (Symbol: 
QQQQ) from July 13, 2006 through August 31, 2006. The text of the 
proposed rule change is available on Amex's Web site (http://www.amex.com
), at Amex's Office of the Secretary, and at the 

Commission's Public Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, Amex included statements 
concerning the purpose of, and basis for, the proposed rule change, as 
amended, and discussed any comments it received on the proposal. 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 Exchange proposes to suspend transaction charges for specialist 
orders in the QQQQ from July 13, 2006 through August 31, 2006. The 
previous suspension of specialist transaction charges in the QQQQ 
terminated on June 30, 2006.
    Specialist orders currently are charged $0.0034 ($0.34 per 100 
shares), capped at $300 per trade (88,235 shares). Effective December 
1, 2004, the Nasdaq-100 Index Tracking Stock[supreg] formerly ``QQQ,'' 
transferred its listing from Amex to the Nasdaq Stock Market, Inc. It 
now trades on Nasdaq under the symbol QQQQ. After the transfer, Amex 
began trading QQQQ on an unlisted trading privileges basis. Amex 
previously suspended the transaction charges of specialist orders in 
connection with the QQQQ through June 30, 2006.\6\
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    \6\ See, e.g., Securities Exchange Act Release No. 53701 (April 
21, 2006), 71 FR 25253 (April 28, 2006).
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    The Exchange asserts that the proposed suspension of transaction 
fees for specialist orders in connection with the QQQQ is consistent 
with Section 6(b)(4) of the Act.\7\ Specifically, the Exchange believes 
that the proposal provides for an equitable allocation of reasonable 
fees among Exchange members largely based on the fact that a specialist 
has greater obligations than other members and are also subject to 
other Exchange fees, in addition to transaction fees.
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    \7\ Section 6(b)(4) states that the rules of a national 
securities exchange must provide for the equitable allocation of 
reasonable dues, fees, and other charges among its members and 
issuers and other persons using its facilities. 15 U.S.C. 78f(b)(4).
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    In connection with the proposal to suspend or waive transaction 
fees for specialist orders in the QQQQ, the Exchange notes that 
specialists are subject to a variety of Exchange fees other than 
transaction charges. For example, the Exchange imposes floor fees 
solely on specialists such as a floor clerk fee, a floor facility fee, 
a post fee, and a registration fee.\8\ In addition, for those members 
on the floor of the Exchange, a technology fee and membership fees are 
also charged by the Exchange.\9\ Certain market participants, such as 
customers, non-member broker-dealers and market-makers, and member 
broker-dealers are not subject to the majority of these fees. In 
addition, a specialist unit, in order to adequately ``make a market'' 
in assigned securities, must be sufficiently staffed \10\ and have 
adequate technology resources to handle the volume of orders 
(especially in the QQQQ) that are sent to the Exchange. The Exchange 
believes that these operational costs borne by a specialist further 
support the Exchange's proposal to temporarily suspend QQQQ transaction 
fees on specialist orders.
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    \8\ The floor clerk, floor facility, post, and registration 
fees, on an annual basis, are $900, $2,400, $1,000 and $800, 
respectively.
    \9\ A technology fee of $6,000 per year is assessed on all 
specialists and other floor participants at the Exchange. Annual 
membership dues of $1,500 must be paid by all members while annual 
membership fees are payable depending on the type of membership and 
circumstances. Non-members are not subject to these fees.
    \10\ See Securities Exchange Act Release No. 53386 (February 28, 
2006), 71 FR 11250 (March 6, 2006) (requiring specialists to employ 
an adequate number of clerks).
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    Specialists have certain obligations required by Exchange rules, as 
well as

[[Page 44056]]

the Act, that do not exist for other market participants. For example, 
pursuant to Amex Rule 170, a specialist is required to maintain a fair 
and orderly market in his or her assigned securities. Other members of 
the Exchange, as well as non-member market participants, do not have 
this obligation. As a result, the Exchange believes that the proposed 
suspension of transaction charges for specialist orders in the QQQQ is 
reasonable and equitable, given the obligations that specialists must 
adhere to in making markets. The Exchange further submits that the fee 
suspension will provide greater incentive to the specialist to continue 
to provide market liquidity, rendering the Exchange an attractive venue 
for market participants to execute orders.
2. Statutory Basis
    The Exchange believes that the proposed rule change, as amended, is 
consistent Section 6(b) of the Act,\11\ in general, and furthers the 
objectives of Section 6(b)(4) of the Act,\12\ in particular, in that it 
is an equitable allocation of reasonable dues, fees, and other charges 
among its members and issuers and other persons using its facilities.
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    \11\ 15 U.S.C. 78f(b).
    \12\ 15 U.S.C. 78f(b)(4).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange believes that the proposed rule change does not impose 
any 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

    The foregoing rule change, as amended, has become effective 
pursuant to Section 19(b)(3)(A)(iii) of the Act \13\ and subparagraph 
(f)(2) of Rule 19b-4 \14\ thereunder because 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.\15\
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    \13\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \14\ 17 CFR 240.19b-4(f)(2).
    \15\ The effective date of the original proposed rule change is 
July 13, 2006, and the effective date of Amendment No. 1 is July 25, 
2006. For purposes of calculating the 60-day period within which the 
Commission may summarily abrogate the proposed rule change, as 
amended, under section 19(b)(3)(C) of the Act, the Commission 
considers the period to commence on July 25, 2006, the date on which 
the Exchange submitted Amendment No. 1. See 15 U.S.C. 78s(b)(3)(C).
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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 rule-comments@sec.gov. Please include 

File Number SR-Amex-2006-65 on the subject line.

Paper Comments

     Send paper comments in triplicate to Nancy M. Morris, 
Secretary, Securities and Exchange Commission, Station Place, 100 F 
Street, NE., Washington, DC 20549-1090.
    All submissions should refer to File Number SR-Amex-2006-65. 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 Room. Copies of such 
filing also will be available for inspection and copying at the 
principal office of 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-2006-65 and should be submitted on or before August 24, 2006.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\16\
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    \16\ 17 CFR 200.30-3(a)(12).
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J. Lynn Taylor,
Assistant Secretary.
[FR Doc. E6-12524 Filed 8-2-06; 8:45 am]

BILLING CODE 8010-01-P