Document ID: SEC-2008-0515-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: American Stock Exchange LLC
Posted Date: 2008-04-04T04:00Z

[Federal Register: April 4, 2008 (Volume 73, Number 66)]
[Notices]               
[Page 18592-18593]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr04ap08-118]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-57578; File No. SR-Amex-2008-34]

 
Self-Regulatory Organizations; American Stock Exchange LLC; 
Notice of Filing of Proposed Rule Change To Give Retroactive Effect to 
Its Revenue Sharing Program for ETF Quoting Participants

March 28, 2008.
    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 27, 2008, 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 substantially prepared by the 
Exchange. The Commission is publishing this notice to solicit comments 
on the proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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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 previously-adopted 
revenue sharing program (``RSP'') for Designated Amex Remote Traders 
(``DARTs''), ETF specialists, and registered traders (collectively, 
``ETF quoting participants'') on the Exchange. The text of the proposed 
rule change is available at Amex's principal office, the Commission's 
Public Reference Room, and http://www.amex.com.

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 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 Exchange proposes to retroactively apply its previously-adopted 
RSP for ETF quoting participants on the Exchange, as described below. 
The RSP was first put in place by the Exchange for ETF specialists and 
registered traders, effective July 1, 2007, and was to last through 
December 31, 2007 unless otherwise extended.\3\ The Exchange then 
inadvertently failed to file to extend the RSP at the expiration of 
that time period, but, upon realizing the error (when recently 
expanding the RSP to DARTs), promptly filed to reinstate the RSP for 
all ETF quoting participants, effective March 18, 2008.\4\ The RSP is 
now in effect through the end of September 2008.
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    \3\ 3 See Securities Exchange Act Release No. 55893 (June 29, 
2007), 72 FR 37059 (July 6, 2007) (SR-Amex-2007-68) (``RSP 
Release'').
    \4\ See Securities Exchange Act Release No. 57541 (March 20, 
2008) (SR-Amex-2008-25), 73 FR 16400 (March 27, 2008) (reinstating 
RSP for all ETF quoting participants); see also Securities Exchange 
Act Release No. 57540 (March 20, 2008), 73 FR 16399 (March 27, 2008) 
(SR-Amex-2008-23) (expanding RSP to DARTs).
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    The purpose of the instant filing is to seek approval to 
retroactively apply the now-reinstated RSP for the time period January 
1, 2008 through March 17, 2008 in order to effectively assure 
continuity of the RSP from its inception for all ETF quoting 
participants on the Exchange, who have continued to quote aggressively 
in the expectation of receiving RSP payments flowing therefrom. To 
date, the Exchange believes that the current RSP has been beneficial in 
creating incentives for ETF quoting participants and does not believe 
it fair to withhold RSP payments for the retroactive period from ETF 
quoting participants solely because of the Exchange's inadvertent 
error. Retroactive application of the RSP will satisfy all ETF quoting 
participants' expectations.
    For the retroactive period, the RSP will operate under the same 
terms established in the RSP Release.\5\ Specifically:
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    \5\ See supra note 3.
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     RSP payments will be made from the Exchange's general 
revenues and not be limited to a particular revenue source.
     ETF specialists may receive an aggregate RSP payment 
(calculated monthly) of as much as $0.0024 per share (or 24 cents per 
100 shares) whenever the specialist either buys or

[[Page 18593]]

sells his specialty ETF on the Exchange and is a provider of liquidity 
in that transaction (e.g., the specialist's quote is traded against or 
the specialist offsets an order imbalance as part of an opening or 
closing transaction). The RSP payment is comprised of $0.0004 per share 
(or 4 cents per 100 shares) for all shares executed on the Exchange in 
their specialty ETF (irrespective of whether the specialist is the 
provider of liquidity), plus another $0.0020 (or 20 cents per 100 
shares) if the specialist is the provider of liquidity in the 
transaction. If the specialist is not the liquidity provider, then the 
RSP payment is limited to $0.0004 per share executed on the Exchange in 
its specialty ETF.
     Registered traders in ETFs will receive an RSP payment of 
$0.0010 per share (or 10 cents per 100 shares) whenever the registered 
trader either buys or sells an ETF on the Exchange and is a provider of 
liquidity in that transaction.\6\
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    \6\ The RSP for DARTs, although described in SR-Amex-2008-23 and 
SR-Amex-2008-25 (see supra note 4), does not require any retroactive 
application because DARTs did not actually begin trading on the 
Exchange until after the effective date of Amex's filing reinstating 
the RSP.
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     No ETF quoting participant will receive an RSP payment 
when another ETF quoting participant is a contra-party to the same 
transaction.
     RSP payments will be made on transactions in securities 
trading at less than $1 only in amounts proportionate to the amount on 
which the Exchange collects revenue.
     Customer transaction charges are capped at $100 per 
transaction, meaning that the transaction charge of $0.0023 per share 
is assessed only on the first 43,478 shares executed, and an ETF 
quoting participant would receive an RSP payment based only on the 
first 43,478 shares executed.
2. Statutory Basis
    Amex believes the proposed rule change is consistent with Section 
6(b) of the Act \7\ in general, and furthers the objectives of Section 
6(b)(4) of the Act \8\ in particular, in that it is intended to assure 
the equitable allocation of reasonable dues, fees, and other charges 
among its members and issuers and other persons using its facilities. 
Specifically, the Exchange proposes to retroactively apply the RSP to 
assure continuity of the program from its inception and to assure 
fairness for the ETF quoting participants.
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    \7\ 15 U.S.C. 78f(b).
    \8\ 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

    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 the proposed rule change, or
    (B) Institute proceedings to determine whether the proposed rule 
change 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 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-2008-34 on the subject line.

Paper Comments

     Send paper comments in triplicate to Nancy M. Morris, 
Secretary, Securities and Exchange Commission, 100 F Street, NE., 
Washington, DC 20549-1090.

All submissions should refer to File Number SR-Amex-2008-34. 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, 100 F Street, NE., 
Washington, DC 20549, on official business days between the hours of 10 
a.m. and 3 p.m. Copies of the filing also will be available for 
inspection and copying at the principal office of the Exchange. 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-2008-34 and should be 
submitted on or before April 25, 2008.

    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. E8-7026 Filed 4-3-08; 8:45 am]

BILLING CODE 8011-01-P