Document ID: SEC-2007-0936-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: American Stock Exchange LLC
Posted Date: 2007-07-10T04:00Z

[Federal Register: July 10, 2007 (Volume 72, Number 131)]
[Notices]               
[Page 37548-37549]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr10jy07-91]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-56002; File No. SR-Amex-2007-55]

 
Self-Regulatory Organizations; American Stock Exchange LLC; 
Notice of Filing and Immediate Effectiveness of a Proposed Rule Change, 
as Modified by Amendment No. 1 Thereto, Relating to the Options SROT 
Fee Rebate Program

July 2, 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 June 1, 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 the 
Exchange. On June 7, 2007, the Amex submitted Amendment No. 1 to the 
proposed rule change.\3\ Amex has designated this proposal as one 
establishing or changing a due, fee, or other charge imposed by Amex 
under Section 19(b)(3)(A)(ii) of the Act \4\ and Rule 19b-4(f)(2) 
thereunder,\5\ which renders the proposal effective upon filing with 
the Commission. The Commission is publishing this notice to solicit 
comments on the proposed rule change, as amended, from interested 
persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ Amendment No. 1 clarifies that the SROT fee rebate program 
is a separate program from the options marketing fee program.
    \4\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \5\ 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 establish fee rebates applicable to 
supplemental registered options traders (``SROTs'') that receive 
directed orders.
    The text of the proposed rule change is available at the Exchange, 
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, 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 IV below. Amex has substantially 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 is proposing to provide options transaction fee 
rebates to SROTs that provide liquidity to the Exchange and receive 
electronic directed customer orders (the ``SROT Fee Rebate Program''). 
This SROT Fee Rebate Program will provide fee rebates to SROTs that 
provide order flow to the Exchange from their own firm's orders.\6\
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    \6\ The Exchange anticipates shortly filing a proposed rule 
change with the Commission to implement a Directed Order Flow 
Program. Generally, for purposes of the Directed Order Flow Program, 
a directed order is deemed to be an electronic customer order from 
an order flow provider that is directed to a specific specialist, 
registered options trader (``ROT''), SROT or remote registered 
options trader (``RROT''). Once the Directed Order Flow Program is 
implemented, in addition to SROTs, the Exchange intends to expand 
this proposed SROT Fee Rebate Program to any specialist, ROT, and/or 
RROT that participates in the Exchange's Directed Order Program.
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    This proposal would allow the Exchange to provide SROTs with 
options transaction fee rebates for the number of options contracts 
that are electronically directed to them and executed on the Exchange. 
The following rebate schedule is proposed:

------------------------------------------------------------------------
Monthly  directed  order volume  (in     Rebate per     Total rebate per
             contracts)                   contract         volume tier
------------------------------------------------------------------------
0-1,000,000.........................              $.05           $50,000
1,000,001-2,000,000.................               .10           100,000
2,000,001-3,000,000.................              .125           125,000

[[Page 37549]]

3,000,001 and up....................               .15           150,000
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    Rebates would be capped at 100% of options transaction fee charges 
so that once an SROT's options transaction charges reach zero, the 
Exchange would not pay out any additional credits.
    The Exchange notes that SROTs are entitled to the options 
transaction fee rebate, which is separate and apart from the Payment 
for Order Flow arrangements, which SROTs may negotiate with any firm 
from which they receive the guaranteed SROT allocation (i.e., 
affiliated SROTs).\7\ The proposed options transaction fee rebate, 
which is provided to SROTs will not come from the marketing fees 
collected on SROT transactions.\8\
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    \7\ Under the current plan, the Exchange charges an equity 
options marketing fee of $0.75 per contract (and $1.00 for SPY 
Options) solely to customer orders that are from payment accepting 
firms with whom an SROT receives the guaranteed SROT allocation, 
pursuant to 935-ANTE(a)(7). As noted in the Options Fee Schedule, 
the $0.35 options marketing fee applies to those series of Equity 
Options, Exchange Traded Fund Share Options, and Trust Issued 
Receipt Options that quote and trade in one cent increments under 
the penny pilot program.
    \8\ See Amendment No. 1, supra note 3.
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2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act \9\ in general, and Section 6(b)(4) of the 
Act \10\ in particular, in that it is designed to provide for the 
equitable allocation of reasonable dues, fees, and other charges among 
Exchange members and issuers and other persons using Exchange 
facilities.
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    \9\ 15 U.S.C. 78f(b).
    \10\ 15 U.S.C. 78f(b)(4).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change 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.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    The foregoing proposed rule change has been designated as a fee 
change 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 imposed by the Exchange. Accordingly, the proposal 
will take effect upon filing with the Commission. 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.\13\
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    \11\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \12\ 17 CFR 240.19b-4(f)(2).
    \13\ For purposes of calculating the 60-day period within which 
the Commission may summarily abrogate the proposed rule change, the 
Commission considers the period to commence on June 7, 2007, the 
date on which the Exchange filed Amendment No. 1.
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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-2007-55 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-2007-55. 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 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-2007-55 and should be 
submitted on or before July 31, 2007.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\14\
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    \14\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7-13312 Filed 7-9-07; 8:45 am]

BILLING CODE 8010-01-P