Document ID: SEC-2006-1523-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: American Stock Exchange LLC
Posted Date: 2006-11-27T05:00Z

[Federal Register: November 27, 2006 (Volume 71, Number 227)]
[Notices]               
[Page 68652-68654]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr27no06-131]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-54777; File No. SR-Amex-2006-89]

 
Self-Regulatory Organizations; American Stock Exchange LLC; 
Notice of Filing of Proposed Rule Change and Amendment No. 1 Thereto To 
Establish Fees for the Receipt and Use of Proprietary Market Data 
Disseminated by the Exchange

 November 17, 2006.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(the ``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given 
that on September 22, 2006, 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 prepared by the Exchange. On 
November 15, 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, 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 replaces the original filing in its 
entirety.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend the Amex Fees Schedule to establish 
fees for the receipt and use of proprietary market data disseminated by 
the Exchange. The text of the proposed rule change is available on 
Amex's Web site (http://www.amex.com), at Amex's principal office, 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. 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 the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    Through the new Auction and Electronic Market Integration trading 
platform (known as AEMI), the Exchange's hybrid trading system, the 
Exchange plans to make available for dissemination on a real-time basis 
\4\ a compilation of all visible limit orders resident in the AEMI 
central limit order book (``AEMI Depth of Book''). The Exchange 
proposes that AEMI Depth of Book information be made available to 
market data vendors, broker-dealers, private network providers, and 
other entities by means of data feeds. The Exchange believes that, by 
making the AEMI Depth of Book available, the Exchange would be 
enhancing market transparency and fostering competition among orders 
and markets. With the adoption of Regulation NMS, the Commission 
rescinded ``the prohibition on SROs and their members from 
disseminating their trade reports independently.'' The Commission 
requires such dissemination to be fair, reasonable and not unreasonably 
discriminatory. The Exchange believes that the Exchange's data 
distribution and proposed fees would be consistent with these standards 
and reflect an equitable allocation of the Exchange's overall costs to 
users of its facilities.
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    \4\ It should be noted that the Exchange makes available to 
vendors the best bids and offers that are included in the AEMI limit 
order book data no earlier than it makes those best bids and offers 
available to the processors under the CQ Plan and the Reporting Plan 
for Nasdaq/National Market System Securities Traded on an Exchange 
on an Unlisted or Listed Basis (the ``UTP Plan'').
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    The Exchange proposes to establish the Market Data Fee Schedule for 
the receipt and use of various forms of Amex market data. The Market 
Data Fee Schedule being proposed is limited to market data for equities 
and exchange-traded fund shares (``ETFs'') trading on the AEMI system. 
Amex plans to implement use of the AEMI system over a period of time, 
commencing with four products. The Exchange will monitor the operation 
of AEMI and will deploy additional products when appropriate. It is 
anticipated that all equity and ETF products will be trading on AEMI 
prior to the implementation of Regulation NMS in February 2007. The 
Exchange would begin charging for the AEMI Depth of Book data once all 
products are trading on the AEMI system and the market data is 
available for all products. When AEMI is expanded to other product 
lines, such as options, the Exchange may further amend its fee schedule 
to include fees for the receipt and use of Amex market data for those 
products. As the Market Data Fee Schedule details, the Exchange is 
proposing to assess data access fees and professional and 
nonprofessional device fees for the AEMI Depth of Book. The Exchange 
states that these categories of fees are consistent with fees the New 
York Stock Exchange's (``NYSE'') charges for the receipt and use of 
their market data through the NYSE OpenBook \5\ and the fees proposed 
to be charged for the NYSE Arca, Inc.'s (``NYSE Arca'') ArcaBook.\6\
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    \5\ NYSE OpenBook provides information relating to limit orders.
    \6\ The ArcaBook provides a compilation of all limit orders 
resident in the NYSE Arca limit order book. See Securities Exchange 
Act Release No. 53952 (June 7, 2006), 71 FR 33496 (June 9, 2006) 
(notice of filing of proposed rule change for SR-NYSEArca-2006-21).
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     Data Access Fees. Direct Access.--The Exchange proposes to 
impose a monthly fee of $2,000 for a data recipient to gain direct 
access to the data feeds through which the Exchange makes AEMI market 
data available.
     Indirect Access.--The Exchange proposes to impose a 
monthly fee of $1,500 for a data recipient to gain indirect access to 
the data feeds through which the Exchange makes AEMI market data 
available. ``Indirect access'' refers to access to an AEMI market data

[[Page 68653]]

feed indirectly through one or more intermediaries, rather than by 
means of a direct connection or linkage with the Exchange's facilities.
    The Exchange believes that these Data Access Fees compare favorably 
with fees charged by other exchanges for similar products. For example, 
NYSE charges $5,000 per month for direct and indirect access to NYSE 
OpenBook. While NYSE Arca proposes to charge only $750 per month for 
direct access to ArcaBook, that access is limited to four ``Logons.'' 
Amex does not propose to place any limitation on the number of 
``Logons.''
     Device Fees.--The Exchange proposes to establish device 
fees for professional and nonprofessional subscribers for the display 
of AEMI Depth of Book. In differentiating between professional and 
nonprofessional subscribers, the Exchange proposes to apply the same 
criteria for nonprofessional qualification as used by the CTA and CQ 
Plan Participants.
    a. Professional Subscribers. For professional subscribers, the 
Exchange is proposing to establish a monthly fee of $20 per device for 
the receipt of AEMI Depth of Book data relating to all securities 
traded on AEMI. The Exchange believes this fee compares favorably with 
fees charged by other exchanges for similar products. For example, for 
professional subscribers, Nasdaq charges $76 for its combined TotalView 
\7\ and OpenView \8\ products and NYSE charges $60 for NYSE 
OpenBook.\9\ In addition, NYSE Arca proposes to charge a combined 
monthly professional subscriber device fee of $30 for receipt of 
ArcaBook data.\10\
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    \7\ Through TotalView, Nasdaq provides information relating to 
the displayed quotes and orders of Nasdaq participants in UTP Plan 
Securities. TotalView displays quotes and orders at multiple prices 
and is similar to AEMI Depth of Book.
    \8\ Through OpenView, Nasdaq provides information relating to 
the displayed quotes and orders of Nasdaq participants in CTA Plan 
Securities. OpenView displays quotes and orders at multiple prices 
and is similar to AEMI Depth of Book.
    \9\ Through NYSE OpenBook, NYSE provides information relating to 
limit orders.
    \10\ See Securities Exchange Act Release No. 53952 (June 7, 
2006), 71 FR 33496 (June 9, 2006) (notice of filing of proposed rule 
change for SR-NYSEArca-2006-21).
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    b. Nonprofessional subscribers. For nonprofessional subscribers, 
the Exchange is proposing to reduce those monthly fees to $10 per 
device for the receipt of AEMI Depth of Book data for securities traded 
on AEMI. NYSE Arca proposes to charge a combined monthly 
nonprofessional subscriber device fee of $10 for receipt of ArcaBook 
data.\11\
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    \11\ See id.
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    The Exchange would require each recipient of a data feed containing 
AEMI market data to enter into the form of ``vendor'' agreement into 
which the CTA and CQ Plans require recipients of the Network B data 
feeds to enter. The agreement would authorize the data feed recipient 
to provide AEMI Market Data services to its customers or to distribute 
the data internally.
    In addition, the Exchange would require each professional end-user 
that receives AEMI market data displays from a vendor or broker-dealer 
to enter into the form of professional subscriber agreement into which 
the CTA and CQ Plans require end users of Network B data to enter into. 
The Exchange would also require vendors and broker-dealers to subject 
nonprofessional subscribers to the same contract requirements as the 
CTA and CQ Plan Participants require of Network B nonprofessional 
subscribers.
    The Exchange proposes to provide its market data under the same 
contracts that the CTA and CQ Plans use since those contracts are 
drafted as generic, one-size-fits-all agreements and explicitly apply 
to the receipt and use of certain market data that individual exchanges 
make available in the same way as they apply to data made available 
under the CTA and CQ Plans. According to the Exchange, no amendments to 
those contracts are needed to cause them to govern the receipt and use 
of the Exchange's market data. Moreover, the Exchange is not imposing 
restrictions on the use or display of the AEMI market data beyond those 
set forth under these preexisting agreements.
    The Exchange believes that the proposed market data fees would 
reflect an equitable allocation of its overall costs to users of its 
facilities. As described above, the Exchange believes that the fees are 
fair and reasonable because they compare favorably to fees that other 
markets charge for similar products.
2. Statutory Basis \12\
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    \12\ See E-mail to David Hsu, Special Counsel, Division of 
Market Regulation, Commission, from Claire McGrath, Senior Vice 
President and General Counsel, Amex, dated November 17, 2006 
(clarifying the statutory basis of the proposed rule change).
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    The Exchange believes the proposed rule change is consistent with 
the Act and the rules and regulations under the Act applicable to a 
national securities exchange and, in particular, the requirements of 
Section 6(b) of the Act.\13\ Specifically, the Exchange believes the 
proposed rule change is consistent with the requirements of Section 
6(b)(5) of the Act \14\ that the rules of an exchange be designed to 
promote just and equitable principles of trade, to prevent fraudulent 
and manipulative acts and practices, and, in general, to protect 
investors and the public interest. In addition, the Exchange believes 
that the proposed rule change is consistent with the provisions of 
Section 6(b)(4) of the Act, \15\ which requires that the rules an 
exchange provide for the equitable allocation of reasonable dues, fees, 
and other charges among its members and issuers and other persons using 
its facilities.
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    \13\ 15 U.S.C. 78f(b).
    \14\ 15 U.S.C. 78f(b)(5).
    \15\ 15 U.S.C. 78f(b)(4).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The proposed rule change would impose no 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, 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

[[Page 68654]]

     Send an e-mail to rule-comments@sec.gov. Please include 
File Number SR-Amex-2006-89 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-2006-89. 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 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 Number 
SR-Amex-2006-89 and should be submitted on or before December 18, 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. E6-19980 Filed 11-24-06; 8:45 am]

BILLING CODE 8011-01-P