Document ID: SEC-2006-0233-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: American Stock Exchange LLC
Posted Date: 2006-02-23T05:00Z

[Federal Register: February 23, 2006 (Volume 71, Number 36)]
[Notices]               
[Page 9392-9394]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr23fe06-101]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-53318; File No. SR-Amex-2006-12]

 
Self-Regulatory Organizations; American Stock Exchange LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Establish a Technology Assessment Fee for the Use of Legacy Options 
Trading Systems

February 15, 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 6, 2006, the American Stock Exchange LLC (``Exchange'' or 
``Amex'') 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. 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 
\3\ and Rule 19b-4(f)(2) thereunder,\4\ 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.
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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 adopt a Technology Assessment Fee to be 
assessed on its members for the continued use of legacy options trading 
systems. 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.

[[Page 9393]]

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. 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 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    On May 20, 2004, the Commission approved the Amex's proposal to 
implement a new options trading platform known as the Amex New Trading 
Environment (the ``ANTE System'' or ``ANTE'').\5\ ANTE is intended to 
replace the following legacy options trading systems: the Amex Options 
Display Book (AODB), Amex's theoretical price calculator (XTOPS), and 
Auto-Ex. On May 25, 2004, the Amex began rolling out the ANTE System on 
its trading floor on a specialist's post-by-specialist's post basis. At 
that time it was anticipated the roll-out would be completed by the end 
of the second quarter of 2005. The implementation date for the full 
roll-out of the ANTE System was subsequently extended to June 30, 
2006.\6\ Amex has rolled out the ANTE System to all its option classes 
except one--the Nasdaq 100 Index options (``NDX''). NDX has the largest 
notional value of any option class, with average premiums of $40. The 
specialist for this product is concerned that the theoretical price 
calculator provided by the ANTE System may not accurately price the 
options on this index. The specialist has installed its own theoretical 
index price calculator, which currently calculates prices for the 
firm's other options products, including the Mini Nasdaq Index (MNX), 
an index valued at one-tenth the value of NDX.
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    \5\ See Securities Exchange Act Release No. 49747, 69 FR 30344 
(May 27, 2004) (File No. SR-Amex-2003-89).
    \6\ In a separate filing submitted February 6, 2006, for 
immediate effectiveness pursuant to Section 19(b)(3)(A)(iii) of the 
Act, 15 U.S.C. 78s(b)(3)(A)(iii), the Exchange proposed to extend 
the deadline for implementation of ANTE System for all option 
classes from December 31, 2005, to June 30, 2006. See File No. SR-
Amex-2006-13, notice of which the Commission is separately 
publishing for comment today (Securities Exchange Act Release No. 
53319).
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    The specialist firm continues to resist moving NDX off the legacy 
options trading systems and onto the ANTE System as it seeks to gain 
experience using its proprietary price calculator. The NDX specialist 
is concerned about the magnitude of errors that could occur using a 
theoretical price calculator with NDX, given its large notional value 
and the size of the underlying index.
    Although the Exchange is mindful of the specialist's concerns, 
maintaining two platforms for the trading of options--the legacy 
options trading systems and ANTE--is costly for the Exchange. 
Therefore, the Exchange is proposing to assess the specialist firm a 
fee to cover the Exchange's costs for maintaining its legacy options 
trading systems at the Securities Industry Automation Corporation 
(``SIAC''). The Exchange currently pays a monthly maintenance fee to 
SIAC of $12,000. The proposal will require the specialist firm to 
reimburse the Exchange for these maintenance costs until it transitions 
all of its options classes to the ANTE System.\7\
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    \7\ The Exchange expects that the NDX specialist will move NDX 
onto the ANTE System by June 30, 2006, the new deadline for 
implementation of the ANTE System. See supra note 6.
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2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with section 6(b) of the Act \8\ in general and furthers the objectives 
of section 6(b)(4) \9\ in particular in that it is intended 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 the one 
member organization continuing to use its legacy options trading 
systems in order to recover its costs for maintaining these systems.
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    \8\ 15 U.S.C. 78f(b).
    \9\ 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 become effective pursuant to 
section 19(b)(3)(A) of the Act \10\ and Rule 19b-4(f)(2) \11\ 
thereunder because it establishes or changes a due, fee, or other 
charge imposed by the Exchange. 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.
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    \10\ 15 U.S.C. 78s(b)(3)(A).
    \11\ 17 CFR 19b-4(f)(2).
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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 No. SR-Amex-2006-12 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-2006-12. 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

[[Page 9394]]

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 information from submissions. You should submit only 
information that you wish to make available publicly. All submissions 
should refer to File Number SR-Amex-2006-12 and should be submitted on 
or before March 16, 2006.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\12\
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    \12\ 17 CFR 200.30-3(a)(12).
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J. Lynn Taylor,
Assistant Secretary.
 [FR Doc. E6-2521 Filed 2-22-06; 8:45 am]

BILLING CODE 8010-01-P