Document ID: SEC-2006-0216-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: American Stock Exchange LLC
Posted Date: 2006-02-16T05:00Z

[Federal Register: February 16, 2006 (Volume 71, Number 32)]
[Notices]               
[Page 8318-8319]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr16fe06-92]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-53263; File No. SR-Amex-2005-130]

 
Self-Regulatory Organizations; American Stock Exchange LLC; 
Notice of Filing and Order Granting Accelerated Approval of a Proposed 
Rule Change, and Amendment No. 1 Thereto, Relating to the Specialist 
Transaction Fee

February 9, 2006.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 
1934,\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that on 
December 19, 2005, 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 and 
II below, which Items have been prepared by the Amex. On February 1, 
2006, the Exchange filed Amendment No. 1 to the proposed rule 
change.\3\ The Commission is publishing this notice to solicit comments 
on the proposed rule change from interested persons and to approve the 
amended proposal on an accelerated basis.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ Amendment No. 1, which replaced the original filing in its 
entirety, made technical and clarifying changes to the proposed rule 
change.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to rebate the increase in the Specialist 
Transaction Fee that the Amex implemented on October 3, 2005 and which 
the Exchange has collected since that time. The text of the proposed 
rule change is available on the Amex's Web site at (http://www.amex.com
), the Office of the Secretary, the Amex 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 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 III below. The Amex 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
    Effective with transactions beginning October 3, 2005, the Exchange 
increased the Specialist Transaction Fee from $.00005 to $.00007 of the 
total value of a specialist's transactions in equities.\4\ After 
further consideration, analysis of the impact of the fee increase and 
discussions with its members, the Exchange has determined to rollback 
the increase in the Specialist Transaction Fee to $.00005.\5\ The 
increase in the Specialist Transaction Fee implemented in October 2005 
was part of a number of changes to the Equity Fee Schedule, the purpose 
of which was to generate additional revenue for the Exchange and to 
create additional incentives for market participants to send order flow 
to the Amex. According to the Exchange, for market participants other 
than the specialists, the changes in the aggregate contributed to the 
increase in revenue for the Exchange. The changes to fees imposed on 
the specialists, which also generated an increase in revenue, included 
an increase in the Specialist Transaction Fee and the elimination of a 
rarely used exemption from the Transaction Fee for trades in paired 
securities.
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    \4\ See Securities Exchange Act Release No. 52701 (October 28, 
2005), 70 FR 67504 (November 7, 2005) (notice of filing and 
immediate effectiveness of SR-Amex 2005-101).
    \5\ See Securities Exchange Act Release No. 53232 (February 6, 
2006) (notice of filing and immediate effectiveness of SR-Amex-2006-
008).
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    According to the Exchange, the Specialist Transaction Fee is based 
on the dollar value of equity shares executed by the specialist. As a 
result, specialists trading high-priced and/or high volume securities 
account for a disproportionate amount of the revenue generated by the 
fee. The recent increase in the fee exacerbated this result. The 
Exchange submits that rolling back the increase will alleviate, in 
part, this disproportionate impact on certain specialists.\6\ Although 
the rollback of the increase in the Specialist Transaction Fee will 
result in a decrease in the additional revenues expected to be 
generated by the recent changes to the Equity Fee Schedule, the 
Exchange represents that this decrease will not result in an increase 
or other revisions to fees charged to other market participants. In a 
separate filing submitted pursuant to Section 19(b)(3)(A) and Rule 19b-
4(f)(2), this proposed reduction in the Specialist Transaction Fee 
became effective upon filing.\7\
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    \6\ See supra note 5.
    \7\ See supra note 5. This reduction was effective upon filing 
on a prospective basis from February 6, 2006.
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    The Exchange is now requesting to rebate the increase in the 
Specialist Transaction Fee collected since October 3, 2005. Beginning 
October 3, 2005, the Exchange billed and collected the increased 
Specialist Transaction Fee. Upon approval of this proposal to allow a 
refund of the increased portion of the fee collected, the Amex will 
issue a credit to the specialists for the amount collected while the 
higher fee was in place. Notwithstanding the proposed rebate, the 
Exchange believes that the recent changes to the Equity Fee Schedule 
continue to be an equitable

[[Page 8319]]

allocation of reasonable fees among its members, issuers and other 
users of its facilities.
2. Statutory Basis
    The Amex believes that the proposed rule change, as amended, is 
consistent with Section 6(b) of the Act \8\ in general and furthers the 
objectives of Section 6(b)(4) of the Act \9\ in particular because it 
is designed to provide for the equitable allocation of reasonable dues, 
fees and other charges among its members and issuers and other persons 
using its facilities. Specifically, the Exchange is proposing to 
reimburse a recent fee increase that the Exchange believes 
disproportionately impacts some members.\10\
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    \8\ 15 U.S.C. 78f(b).
    \9\ 15 U.S.C. 78f(b)(4).
    \10\ Amex clarified that although it refers in this sentence to 
the elimination of a recent fee increase, this proposal requests 
approval to rebate the increased amount of the Specialist 
Transaction Fee collected between October 3, 2005 and February 6, 
2006. Telephone conversation between Claire McGrath, Senior Vice 
President and General Counsel, Amex, and Johnna B. Dumler, Attorney, 
Division of Market Regulation, Commission, on February 9, 2006. In a 
separate filing, SR-Amex-2006-008, which became effective upon 
filing, the Amex eliminated the increase in the Specialist 
Transaction Fee. See supra note 5.
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B. Self-Regulatory Organization's Statement on Burden on Competition

    Amex does not believe that the proposed rule change, as amended, 
will 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, as amended.

III. 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-2005-130 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-2005-130. 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 Section. Copies of such 
filing also will be available for inspection and copying at the 
principal office of the 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 No. SR-Amex-2005-130 and should be submitted on or before March 9, 
2006.

IV. Commission's Findings and Order Granting Accelerated Approval of 
Proposed Rule Change

    After careful review, the Commission finds that the proposed rule 
change, as amended, is consistent with the requirements of the Act and 
the rules and regulations thereunder applicable to a national 
securities exchange.\11\ Specifically, the Commission believes that the 
proposed rule change, as amended, is consistent with Section 6(b)(4) of 
the Act,\12\ which requires that the rules of the exchange provide for 
the equitable allocation of reasonable dues, fees, and other charges 
among its members and issuers and other persons using its facilities. 
The Commission notes that the Exchange believes that the increase in 
the Specialist Transaction Fee, which became effective on October 3, 
2005, resulted in a disproportionate burden on Specialists who trade 
high-priced and/or high volume securities because the Specialist 
Transaction Fee is based on the dollar value of equity shares executed 
by the specialist. Therefore, and as noted above, the Exchange has 
reduced the amount of the Specialist Transaction Fee from $.00007 to 
$.00005 in a separate filing (effective upon filing on February 6, 
2006) \13\ and now requests approval to reimburse the increased amount 
of the Specialist Transaction Fee collected since October 3, 2005. The 
Commission finds that the Exchange's proposal to rebate the increased 
amount of the Specialist Transaction Fee collected between October 3, 
2005 and February 6, 2006 is consistent with the Act and the rules and 
regulations thereunder applicable to a national securities exchange.
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    \11\ In approving this proposal, the Commission has considered 
the proposed rule's impact on efficiency, competition, and capital 
formation. 15 U.S.C. 78c(f).
    \12\ 15 U.S.C. 78f(b)(4).
    \13\ See supra note 5.
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    Moreover, the Commission finds good cause for approving this 
proposed rule change, as amended, before the thirtieth day after the 
date of publication of notice thereof in the Federal Register. The 
Commission believes that accelerated approval of the proposal is 
appropriate in order to allow Amex to issue credits to its Specialists 
as quickly as possible.

V. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\14\ that the proposed rule change, and Amendment No. 1 thereto, 
(SR-Amex-2005-130) be, and hereby is, approved on an accelerated basis.
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    \14\ 15 U.S.C. 78s(b)(2).

    For the Commission by the Division of Market Regulation, 
pursuant to delegated authority.\15\
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    \15\ 17 CFR 200.30-3(a)(12).
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J. Lynn Taylor,
Assistant Secretary.
 [FR Doc. E6-2199 Filed 2-15-06; 8:45 am]

BILLING CODE 8010-01-P