Document ID: SEC-2006-0711-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: American Stock Exchange LLC
Posted Date: 2006-06-01T04:00Z

[Federal Register: June 1, 2006 (Volume 71, Number 105)]
[Notices]               
[Page 31236-31237]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr01jn06-116]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-53871; File No. SR-Amex-2006-42]

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

May 25, 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 May 2, 2006, 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 May 
12, 2005, 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.
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    \1\ 15 U.S.C 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ Amendment No. 1, which replaced and superseded the original 
filing in its entirety, is incorporated in this notice.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to retroactively apply a suspension of 
transaction charges for specialist orders in connection with the 
trading of the Nasdaq-100 Index Tracking Stock[supreg] (Symbol: QQQQ) 
from March 1, 2006, through April 5, 2006.
    The text of the proposed rule change is available on Amex's Web 
site at http://www.amex.com, at Amex's principal office, 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, the Exchange included statements 
concerning the purpose of, and basis for, the proposed rule change, as 
amended, and discussed any comments it received on the proposed rule 
change, as amended. The text of these statements may be examined at the 
places specified in Item IV below, and is set forth in Sections A, B, 
and C below.

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

1. Purpose
    The Exchange, in a companion filing (File No. SR-Amex-2006-30), 
adopted a suspension of transaction charges for specialist orders in 
the Nasdaq-100 Tracking Stock (``QQQQ'') from April 6, 2006, through 
June 30, 2006.\4\ In order to waive transaction fees for specialist 
orders in the QQQQ from March 1, 2006, through June 30, 2006, the 
Exchange has proposed to retroactively suspend transaction fees for 
specialist transactions from March 1, 2006, through April 5, 2006.
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    \4\ See Securities Exchange Act Release No. 53701 (April 21, 
2006), 71 FR 25253 (April 28, 2006). The Exchange previously adopted 
the suspension of specialist transaction charges in connection with 
the QQQQ from July 1, 2005, through December 31, 2005. See 
Securities Exchange Act Release Nos. 52268 (August 15, 2005), 70 FR 
49336 (August 23, 2005); 52267 (August 15, 2005), 70 FR 49338 
(August 23, 2005); 52460 (September 16, 2005), 70 FR 55639 
(September 22, 2005); 52516 (September 27, 2005), 70 FR 58247 
(October 5, 2005); and 52736 (November 4, 2005), 70 FR 69171 
(November 14, 2005) (proposals previously introducing and extending 
this specialist transaction fee waiver). However, from January 1, 
2006, through April 5, 2006, the specialist fee suspension for the 
QQQQ lapsed; therefore, the QQQQ specialists have been subject to 
transaction fees in connection with QQQQ executions during that time 
period.
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    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 
(``Nasdaq''). It now trades on Nasdaq under the symbol QQQQ. After the 
transfer, Amex began trading QQQQ on an unlisted trading privileges 
basis.
    The Exchange believes that the retroactive suspension of 
transaction charges for specialist transactions in the QQQQ from March 
1, 2006, through April 5, 2006, is consistent with the adoption of the 
proposal to suspend transaction charges for specialist orders generally 
in the QQQQ through June 30, 2006. The Exchange further believes that a 
retroactive suspension of transaction fees on specialist orders in the 
QQQQ is appropriate to enhance the competitiveness of executions on 
Amex. The Exchange proposes to amend the Amex Fee Schedule to indicate 
that transaction charges for specialist orders in the QQQQ have been 
suspended from March 1, 2006, through June 30, 2006.
    As detailed in File No. SR-Amex-2006-30, the Exchange submits that 
a suspension of transaction fees for specialist orders in connection 
with the QQQQ is consistent with section 6(b)(4) of the Act.\5\ 
Specifically, the Exchange believes that suspending transaction charges 
for QQQQ specialist orders is an equitable allocation of reasonable 
fees among Exchange members. The Exchange believes that the fact that 
specialists have greater obligations than other members and are also 
subject to other Exchange fees, in addition to transaction fees, 
supports this proposal

[[Page 31237]]

to retroactively apply the fee suspension.
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    \5\ 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.
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    The Exchange notes that specialists are subject to a variety of 
Exchange fees other than transaction charges, such as a floor clerk 
fee, a floor facility fee, a post fee, and a registration fee.\6\ In 
addition, specialists and other floor members of the Exchange are 
subject to technology and membership fees.\7\ 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 
\8\ 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 proposal to temporarily suspend QQQQ transaction 
fees on specialist orders.
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    \6\ The floor clerk, floor facility, post, and registration 
fees, on an annual basis, are $900, $2,400, $1,000, and $800, 
respectively.
    \7\ A technology fee of $3,000 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.
    \8\ See Securities Exchange Act Release No. 53386 (February 28, 
2006), 71 FR 11250 (March 6, 2006).
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    Specialists have certain obligations under Exchange rules, as well 
as the Act, that do not exist for other market participants. For 
example, a specialist, pursuant to Amex Rule 170, 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 retroactive 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 fee change is consistent 
with section 6(b) of the Act,\9\ in general, and furthers the 
objectives of section 6(b)(4) of the Act,\10\ 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.\11\
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    \9\ 15 U.S.C. 78f(b).
    \10\ 15 U.S.C. 78f(b)(4).
    \11\ At the request of the Exchange, the Commission staff 
conformed this sentence to the statement made by the Exchange in the 
statutory basis section of the Exchange's Form 19b-4 for this filing 
(Section 3(b)).
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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 1934 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 Exchange consents, the Commission will:
    (A) By order approve such proposed rule change, as amended, or
    (B) Institute proceedings to determine whether the proposed rule 
change, as amended, should be disapproved.

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-2006-42 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-2006-42. 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-2006-42 and should be submitted on or before June 22, 2006.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\12\
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    \12\ 17 CFR 200.30-3(a)(12).
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J. Lynn Taylor,
Assistant Secretary.
 [FR Doc. E6-8486 Filed 5-31-06; 8:45 am]

BILLING CODE 8010-01-P