Document ID: SEC-2008-0524-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: American Stock Exchange LLC
Posted Date: 2008-04-07T04:00Z

[Federal Register: April 7, 2008 (Volume 73, Number 67)]
[Notices]               
[Page 18827-18828]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr07ap08-103]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-57589; File No. SR-Amex-2008-09]

 
Self-Regulatory Organizations; American Stock Exchange LLC; Order 
Approving Proposed Rule Change, as Modified by Amendment No. 1 Thereto, 
Relating to Options Linkage Fees

April 1, 2008.

I. Introduction

    On February 8, 2008, the American Stock Exchange LLC (``Amex'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission''), pursuant to Section 19(b)(1) of the Securities 
Exchange Act of 1934 (the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ a 
proposed rule change relating to fees for trades executed through the 
intermarket options linkage (the ``Options Linkage''). On February 19, 
2008, Amex submitted Amendment No. 1 to the proposed rule change. The 
proposed rule change was published for comment in the Federal Register 
on

[[Page 18828]]

February 28, 2008.\3\ The Commission received no comments on the 
proposal. This order approves the proposed rule change, as amended.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 57373 (February 22, 
2008), 73 FR 10835 (``Notice'').
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II. Description of the Proposal

    The Exchange proposes to clarify the application of options 
transaction fees for trades executed through the Options Linkage on the 
Exchange. Currently, the Amex Options Fee Schedule (the ``Options Fee 
Schedule'') provides that, under the Linkage Fee Pilot Program that is 
effective through July 31, 2008, the fees applicable to specialists, 
registered options traders, and market maker apply to members of other 
options exchanges (``Non-Member Market Makers'') executing Linkage 
transactions except for Satisfaction Orders. As a result, the fees for 
Principal Orders (``P Orders'') and Principal Acting As Agent Orders 
(``P/A Orders'') (collectively, ``Linkage Orders'') submitted through 
the Options Linkage are: (i) $0.10 per contract side options 
transaction fee for equity options, exchange traded fund share 
(``ETF'') options, QQQQ options and trust issued receipt options; (ii) 
$0.21 per contract side options transaction fee for index options 
(including MNX and NDX options); (iii) $0.05 per contract side options 
comparison fee; (iv) $0.05 per contract side options floor brokerage 
fee; and (v) an options licensing fee for certain ETF and index option 
products ranging from $0.15 per contract side to $0.05 per contract 
side depending on the particular ETF or index option.\4\
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    \4\ See Options Fee Schedule section of the Amex Price List 
available at http://www.amex.com. See also Securities Exchange Act 
Release No. 56102 (July 19, 2007), 72 FR 40908 (July 25, 2007) (SR-
Amex-2007-64).
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    The Options Fee Schedule also provides that broker-dealer orders 
that are automatically executed on the Exchange are subject to Broker-
Dealer Auto-Ex Fees (``BD Auto-Ex Fee'') that include: (i) $0.50 per 
contract side options transaction fee for equity options, ETF options, 
QQQQ options and trust issued receipt options; (ii) $0.05 per contract 
side options comparison fee; and (iii) $0.05 per contract side options 
floor brokerage fee.\5\ Broker-dealer orders that are subject to the BD 
Auto-Ex Fee include specialist orders, registered options trader 
orders, Non-Member Market Maker orders, and orders for the account of 
registered broker-dealers. The Exchange charges this fee to member 
firms through customary monthly billing. The BD Auto-Ex Fee was 
implemented prior to the introduction and roll-out of the Options 
Linkage which commenced on January 31, 2003 in two phases. The entire 
roll-out of the Options Linkage was completed by July 2003.
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    \5\ See Securities Exchange Act Release No. 47216 (January 17, 
2003), 68 FR 5059 (January 31, 2003) (SR-Amex-2002-114).
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    The Exchange in this proposal seeks to clarify the Options Fee 
Schedule to make clear that automatically executed Linkage Orders will 
be charged the BD Auto Ex Fee that includes: (i) $0.50 per contract 
side options transaction fee; (ii) $0.05 per contract side options 
comparison fee; and (iii) $0.05 per contract side options floor 
brokerage fee. Accordingly, the total transaction fee for such orders 
would be $0.60 per contract side. In contrast to the initial period of 
time when the Options Linkage was introduced, most Linkage Orders on 
the Exchange are automatically executed via the ANTE platform. In the 
Notice, the Exchange acknowledged that the current Options Fee Schedule 
does not clearly reflect the fact that for automatically executed 
Linkage Orders, the BD Auto-Ex Fee would apply.

III. Discussion and Commission Findings

    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.\6\ In 
particular, the Commission finds that the proposal is consistent with 
Section 6(b)(4) of the Act,\7\ which requires that an exchange have 
rules that provide for the equitable allocation of reasonable dues, 
fees, and other charges among its members and other persons using its 
facilities.
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    \6\ In approving this proposed rule change, the Commission notes 
that it has considered the proposed rule's impact on efficiency, 
competition, and capital formation. 15 U.S.C. 78c(f).
    \7\ 15 U.S.C. 78f(b)(4).
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    Under the current Options Fee Schedule, only non-Linkage Orders on 
the behalf of broker-dealers automatically executed orders in ANTE are 
subject to the BD Auto-Ex Fee; Linkage Orders that are automatically 
executed orders in ANTE are not subject to the BD Auto-Ex Fee. The 
Exchange proposed to clarify that all automatically executed orders in 
ANTE, whether Linkage Orders or non-Linkage Orders on the behalf of 
broker-dealers, are subject to the BD Auto-Ex Fee set forth in the 
Options Fee Schedule. Accordingly, the Commission believes that the 
Exchange's proposed Options Fee Schedule clearly sets forth the fees 
imposed on Linkage Orders.
    The Commission notes that the Exchange acknowledges that prior 
versions of its Options Fee Schedule did not represent that the $.60 
per side BD Auto-Ex Fee was applied to electronically executed Linkage 
Orders. Because the Exchange may have assessed the BD Auto-Ex Fee on 
Linkage Orders prior to this approval and, therefore, without 
authority, any parties assessed the BD Auto-Ex Fee for Linkage Orders 
prior to the approval of this proposed rule change may seek 
reimbursement. In addition, the Commission notes that the Options 
Linkage fees are assessed pursuant to a pilot scheduled to end on July 
31, 2008 and that the Commission is continuing to evaluate whether such 
fees are appropriate.

IV. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\8\ that the proposed rule change (SR-Amex-2008-09) is hereby 
approved.
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    \8\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\9\
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    \9\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
 [FR Doc. E8-7121 Filed 4-4-08; 8:45 am]

BILLING CODE 8011-01-P