Document ID: SEC-2006-0245-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: American Stock Exchange LLC
Posted Date: 2006-02-24T05:00Z

[Federal Register: February 24, 2006 (Volume 71, Number 37)]
[Notices]               
[Page 9627-9629]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr24fe06-124]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-53328; File No. SR-Amex-2006-11]

 
Self-Regulatory Organizations; American Stock Exchange LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change 
Relating to the Adoption of an Options Licensing Fee for Options on 
Certain SPDR ETFs

February 16, 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 February 3, 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, II, 
and III below, which Items have been prepared by Amex. Amex has 
designated this proposal as one establishing or changing a due, fee, or 
other charge imposed by the self-regulatory organization under Section 
19(b)(3)(A)(ii) of the Act \3\ and Rule 19b-4(f)(2) thereunder,\4\ 
which renders it effective upon filing with the Commission. 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.
    \3\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \4\ 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 modify its Options Fee Schedule by 
adopting a per contract license fee for the orders of specialists, 
registered options traders (``ROTs''), firms, non-member market makers, 
and broker-dealers in connection with options transactions in three new 
exchange-traded funds (``ETFs''): the SPDR Biotech ETF (symbol: XBI); 
the SPDR Homebuilders ETF (symbol: XHB); and the SPDR Semiconductor ETF 
(symbol: XSD).
    The text of the proposed rule change is available on the Amex's Web 
site at http://www.amex.com, at the principal office of 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, 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. 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
    Amex proposes to to adopt a per contract licensing fee for options 
on XBI, XHB, and XSD. These fee changes will be assessed on members 
commencing February 6, 2006. Amex also proposes to correct the Options 
Fee Schedule to reflect the elimination of the equity option fee 
discount for member firms facilitation customer orders.\5\
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    \5\ See Securities Exchange Act Release No. 52754 (November 9, 
2005), 70 FR 69998 (November 18, 2005) (File No. SR-Amex-2005-113).
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    The Exchange has entered into numerous agreements with various 
index providers for the purpose of trading options on certain ETFs. 
This requirement to pay an index license fee to a third party is a 
condition to the listing and trading of these ETF options. In many 
cases, the Exchange is required to pay a significant licensing fee to 
the index provider that may not be reimbursed. In an effort to recoup 
the costs associated with certain index licenses, the Exchange has 
established a per contract licensing fee for the orders of specialists, 
ROTs, firms, non-member market makers and broker-dealers, which is 
collected on every option transaction in designated products in

[[Page 9628]]

which such market participant is a party.\6\
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    \6\ See, e.g., Securities Exchange Act Release No. 52493 
(September 22, 2005), 70 FR 56941 (September 29, 2005).
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    The purpose of this proposal is to charge an options licensing fee 
in connection with options on XBI, XHB and XSD (collectively, the 
``SPDR ETFs''). Specifically, Amex seeks to charge an options licensing 
fee of $0.09 per contract side for each SPDR ETF option for specialist, 
ROT, firm, non-member market maker and broker-dealer orders executed on 
the Exchange. In all cases, the fees will be charged only to the 
Exchange members through whom the orders are placed.
    The proposed options licensing fee will allow the Exchange to 
recoup its costs in connection with the index license fee for the 
trading of the SPDR ETF options. The fees will be collected on every 
order of a specialist, ROT, firm, non-member market maker, and broker-
dealer executed on the Exchange. The Exchange believes that the 
proposal to require payment of a per contract licensing fee in 
connection with the SPDR ETF options by those market participants that 
are the beneficiaries of Exchange index license agreements is justified 
and consistent with the rules of the Exchange.
    The Exchange notes that the Amex, in recent years, has revised a 
number of fees to better align Exchange fees with the actual cost of 
delivering services and reduce Exchange subsidies of such services.\7\ 
Amex believes that the implementation of this proposal is consistent 
with the reduction and/or elimination of these subsidies. Amex believes 
that these fees will help to allocate to those market participants 
engaging in SPDR ETF options, a fair share of the related costs of 
offering such options.
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    \7\ See, e.g., Securities Exchange Act Release Nos. 45360 
(January 29, 2002), 67 FR 5626 (February 6, 2002); and 44286 (May 9, 
2001), 66 FR 27187 (May 16, 2001).
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    The Exchange asserts that the proposal is equitable as required by 
Section 6(b)(4) of the Act.\8\ In connection with the adoption of an 
options licensing fee for SPDR ETF options, the Exchange believes that 
charging an options licensing fee, where applicable, to all market 
participant orders except for customer orders is reasonable, given the 
competitive pressures in the industry.\9\ Accordingly, the Exchange 
seeks, through this proposal, to better align its transaction charges 
with the cost of providing products.
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    \8\ Section 6(b)(4) states that the rules of a national 
securities exchange provide for the equitable allocation of 
reasonable dues, fees, and other charges among its members and 
issuers and other persons using its facilities.
    \9\ Telephone call between Jeffrey Burns, Vice President and 
Associate General Counsel, Amex, and Angela Muehr, Attorney, 
Division of Market Regulation (``Division''), Commission, on 
February 15, 2006.
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    In addition, the Exchange recently eliminated the equity options 
transaction fee discount for member firms facilitating customer 
orders.\10\ However, in a later filing, File No. SR-Amex-2005-126,\11\ 
the Exchange inadvertently failed to incorporate in the Options Fee 
Schedule the elimination of the equity option transaction fee discount 
for members firms; therefore, the current fee schedule is 
inaccurate.\12\ Accordingly, in this filing, the Exchange proposes to 
correct the Options Fee Schedule to once again reflect the elimination 
of the equity option transaction fee discount for member firms that was 
previously adopted by the Exchange.
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    \10\ See Securities Exchange Act Release No. 52754, supra note 
5. This proposal was immediately effective and was noticed in the 
Federal Register on November 18, 2005.
    \11\ See Securities Exchange Act Release No. 52925 (December 8, 
2005), 70 FR 74065 (December 14, 2005).
    \12\ Telephone call between Jeffrey Burns, Vice President and 
Associate General Counsel, Amex, and Angela Muehr, Attorney, 
Division of Market Regulation (``Division''), Commission, on 
February 15, 2006.
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2. Statutory Basis
    Amex believes that the proposed fee change is consistent with 
Section 6(b)(4) of the Act \13\ regarding the equitable allocation of 
reasonable dues, fees and other charges among exchange members and 
other persons using exchange facilities.
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    \13\ 15 U.S.C. 78f(b)(4).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    Amex 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 was filed pursuant to Section 
19(b)(3)(A)(ii) of the Act \14\ and Rule 19b-4(f)(2) thereunder,\15\ 
because it establishes or changes a due, fee, or other charge imposed 
by the self-regulatory organization.
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    \14\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \15\ 17 CFR 240.19b-4(f)(2).
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    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.

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-2006-11 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-2006-11. 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 the Amex. All comments received will be posted 
without change; the Commission does not edit personal identifying

[[Page 9629]]

information from submissions. You should submit only information that 
you wish to make available publicly. All submissions should refer to 
File Number SR-Amex-2006-11 and should be submitted on or before March 
17, 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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Nancy M. Morris,
Secretary.
 [FR Doc. E6-2644 Filed 2-23-06; 8:45 am]

BILLING CODE 8010-01-P