Document ID: SEC-2007-1554-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: American Stock Exchange LLC
Posted Date: 2007-11-15T05:00Z

[Federal Register: November 15, 2007 (Volume 72, Number 220)]
[Notices]               
[Page 64259-64261]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr15no07-109]                         

-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-56766; File No. SR-Amex-2007-114]

 
Self-Regulatory Organizations; American Stock Exchange LLC; 
Notice of Filing and Immediate Effectiveness of a Proposed Rule Change 
Relating to Collection of the Activity Assessment Fee

November 7, 2007.
    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 October 26, 2007, 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 Amex. 
Amex filed the proposal pursuant to Section 19(b)(3)(A)(ii) of the Act 
\3\ and Rule 19b-4(f)(2) \4\ thereunder, as establishing or changing a 
due, fee, or other charge applicable to a member, which renders the 
proposed rule change effective upon filing with the Commission. The 
Commission is publishing this notice to solicit comments on the 
proposed rule change from interested persons.
---------------------------------------------------------------------------

    \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).
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend Amex Rule 393 and the Amex Fee 
Schedule to revise the procedures by which the Exchange collects fees 
from its members and member organizations to offset its fee obligations 
under Section 31 of the Act.\5\ The text of the proposed rule change is 
available on the Amex's Web site at http://www.amex.com, Amex's 

principal office, and the Commission's Public Reference Room.
---------------------------------------------------------------------------

    \5\ 15 U.S.C. 78ee.
---------------------------------------------------------------------------

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
Background
    Effective August 6, 2004, the Commission established new procedures 
that govern the calculation, payment, and collection of fees and 
assessments on securities transactions owed by each national securities 
exchange and association.\6\ Pursuant to the new procedures, each 
exchange and association must provide data on its securities 
transactions to the Commission using Form R31. Generally, only data 
obtained from a registered clearing agency may be submitted to the 
Commission for this purpose.\7\ The Commission in turn, calculates the 
amount of fees and assessments based on the aggregate dollar volume of 
these transactions and the fee rate in effect at that time and bills 
the exchange or association that amount twice annually.
---------------------------------------------------------------------------

    \6\ See Securities Exchange Act Release No. 49928 (June 28, 
2004), 69 FR 1060 (July 7, 2004).
    \7\ In connection with these new procedures the Commission 
concluded that the data collected by a registered clearing agency is 
the most reliable and auditable source for covered sales 
information. The National Securities Clearing Corporation (``NSCC'') 
is the primary source of data for equity transactions and the 
Options Clearing Corporation (``OCC'') is the primary source of data 
for option transactions.
---------------------------------------------------------------------------

    Historically, the Exchange has funded the payment of these fees by 
requiring members pursuant to Rule 393 to: (i) Report on a monthly 
basis the aggregate volume of equity sales, aggregate sales price of 
those equity sales, and the amount of the fee owed; and (ii) submit 
along with the monthly report a check in the amount of the fee owed. 
The funds collected by the Exchange pursuant to Rule 393 for all equity 
securities are then remitted to the Commission in accordance with Rule 
31. In addition, the Exchange uses the OCC to collect the funds to 
offset the payment of Section 31 fees owed based on the sales of 
options and sales of securities resulting from the exercise of physical 
delivery options. OCC collects fees directly from Exchange members 
through their clearing firms and remits the amount collected to the 
Commission on behalf of Amex.
Proposal
    The Exchange now proposes to amend Rule 393 and the Amex Fee 
Schedule to revise the current procedures used to

[[Page 64260]]

collect funds from its members to offset its obligations under Section 
31 of the Act. On December 1, 2007, the Exchange will end the current 
``self-reporting'' procedures using the Rule 393 Form for most 
transactions and will begin directly billing all members' and member 
organizations' designated clearing firms for the amount owed by the 
member to the Exchange. The fee will be identified as the Activity 
Assessment Fee and will be assessed monthly for all covered securities 
transactions (other than options transactions or sales of securities 
resulting from options exercises) whose settlement dates fall within 
the applicable computational period (which is generally a month). If 
the Section 31 fee rate changes in the middle of a computational period 
(i.e., in the middle of a month), the computational period may be 
broken up to facilitate the appropriate application of the old and new 
fee rates. The Activity Assessment Fee will be calculated based on 
securities transaction data reported by the NSCC (which is the same 
data used by the Exchange to prepare Form R31 to report its obligations 
under Section 31 to the Commission). Included in the Activity 
Assessment Fee will be covered sales resulting from orders entered on 
Amex but executed on another exchange through its private linkage.
    The Exchange will, however, continue to require firms participating 
in its After-Hours Trading program to continue self-reporting, on the 
Rule 393 Form, the aggregate volume and sales price of Aggregate Price-
Coupled orders. The execution of covered sales resulting from Aggregate 
Price-Coupled orders will not be included in the Exchange's calculation 
of the monthly Activity Assessment Fee.\8\
---------------------------------------------------------------------------

    \8\ Firms participating in Amex's After-Hours Trading program 
will continue to submit, with their filings of the Rule 393 Form, 
payment of the Activity Assessment Fee for their self-reported 
Aggregate Price-Coupled orders. Telephone conversation between 
Claire McGrath, Senior Vice President and General Counsel, Amex and 
David Michehl, Special Counsel, Division of Market Regulation, 
Commission on November 7, 2007.
---------------------------------------------------------------------------

    It is the Exchange's initial intention to collect or receive from 
the membership the Activity Assessment Fee in an amount that, as 
accurately as possible equals the Exchange's Section 31 obligation (for 
equities transactions). The Exchange, however, has incurred, and 
continues to incur, the costs of developing systems necessary for 
compliance with the Commission's Section 31 procedures and for 
calculating and billing the Activity Assessment Fee. Therefore, the 
Exchange might in the future determine to bill the membership some form 
of assessment to offset these or other Section 31 costs. The proposed 
amendment to Rule 393 will also provide that, to the extent the 
Exchange may collect more from members under Rule 393 than is due from 
the Exchange to the Commission pursuant to Section 31 of the Act, for 
example due to rounding differences, the excess monies collected may be 
used by the Exchange to fund its regulatory expenses.
    In addition, as discussed above, the OCC will continue to collect 
and remit to the Commission on Amex's behalf, the funds to offset the 
payment of Section 31 fees owed based on the sales of options and sales 
of securities resulting from the exercise of physical delivery options. 
Therefore, sales of options and exercises will not be included in the 
monthly Activity Assessment Fee.
2. Statutory Basis
    The proposed rule change is consistent with the objectives of 
Section 6(b) of the Act,\9\ in general, and furthers the objectives of 
Section 6(b)(4),\10\ in particular, in that 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 assess a monthly 
Activity Assessment Fee to its members to fund its obligation pursuant 
to Section 31 of the Act.
---------------------------------------------------------------------------

    \9\ 15 U.S.C. 78f(b).
    \10\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------

B. Self-Regulatory Organization's Statement on Burden on Competition

    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 proposed rule change has become effective upon filing 
with the Commission pursuant to Section 19(b)(3)(A)(ii) of the Act \11\ 
and Rule 19b-4(f)(2) \12\ thereunder, because it establishes or changes 
a due, fee, or other charge applicable only to a member.
---------------------------------------------------------------------------

    \11\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \12\ 17 CFR 240.19b-4(f)(2).
---------------------------------------------------------------------------

    At any time within 60 days of the filing of the 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 SRA-Amex-2007-114 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-2007-114. 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 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

[[Page 64261]]

should submit only information that you wish to make available 
publicly. All submissions should refer to File Number SR-Amex-2007-114 
and should be submitted on or before December 6, 2007.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\13\
---------------------------------------------------------------------------

    \13\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Florence E. Harmon,
Deputy Secretary.
 [FR Doc. E7-22203 Filed 11-14-07; 8:45 am]

BILLING CODE 8011-01-P