Document ID: SEC-2008-0737-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: American Stock Exchange LLC
Posted Date: 2008-05-23T04:00Z

[Federal Register: May 23, 2008 (Volume 73, Number 101)]
[Notices]               
[Page 30173-30174]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr23my08-122]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-57829; File No. SR-Amex-2007-107]

 
Self-Regulatory Organizations; American Stock Exchange LLC; Order 
Approving Proposed Rule Change, as Modified by Amendment Nos. 3 and 4 
Thereto, Relating to Section 31 Related Fees

May 16, 2008.
    On October 2, 2007, the American Stock Exchange LLC (``Amex'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission'' or ``SEC''), pursuant to section 19(b)(1) of the 
Securities Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 
thereunder,\2\ a proposal to allow member firms to voluntarily submit, 
during a six-month period after the effective date of this proposal, 
funds previously accumulated by the member firms pursuant to Rule 393. 
In addition, the proposed rule change would allow the Exchange to use 
accumulated funds to pay its current section 31 fees or, to the extent 
of any surplus, offset other Exchange regulatory costs. The Amex filed 
Amendment No. 2 to the proposed rule change on March 19, 2008.\3\ The 
Amex filed Amendment No. 3 to the proposed rule change on April 7, 
2008.\4\ The proposed rule change was published for comment in the 
Federal

[[Page 30174]]

Register on April 16, 2008.\5\ The Amex filed Amendment No. 4 to the 
proposed rule change on May 15, 2008.\6\ The Commission received no 
comment letters regarding the proposed rule change. This order approves 
the proposed rule change, as modified.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ The Amex previously filed and withdrew Amendment No. 1 sto 
the proposed rule change.
    \4\ Amendment No. 3 replaced all previous amendments in their 
entirety, added new effective dates of the proposed rule change, 
would eliminate non-substantive and extraneous text from proposed 
Commentary .01 to Rule 393.
    \5\ Securities Exchange Act Release No. 57641 (April 9, 2008), 
73 FR 20724.
    \6\ Amendment No. 4 makes minor changes, discussed in Amendment 
No. 3, to the proposed rule text to reflect that the date of 
effectiveness of the proposed rule change would be the date the 
Commission order approving the proposed rule change is published in 
the Federal Register and that the effectiveness of Commentary .01 to 
Rule 393, once approved, would be for a period of six months. 
Amendment No. 4 is a technical amendment not subject to notice and 
comment.
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    Pursuant to section 31 of the Act \7\ and Rule 31 thereunder,\8\ 
national securities exchanges and associations (collectively ``SROs'') 
are required to pay a transaction fee to the Commission that is 
designed to recover the costs related to the government's supervision 
and regulation of the securities markets and securities professionals. 
To offset this obligation, the Amex assesses its clearing and self-
clearing members a regulatory fee in accordance with Rule 393, which 
mirrors section 31 in both scope and amount. Clearing members may in 
turn seek to charge a fee to their customers or correspondent firms. 
Any allocation of the fee between a clearing member and its 
correspondent firm or customer is the responsibility of the clearing 
member.
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    \7\ 15 U.S.C. 78ee.
    \8\ 17 CFR 240.31.
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    Reconciling the amounts reported to the Amex and the amounts 
collected from the customers historically had been difficult for member 
firms, causing surpluses to accumulate at some member firms (referred 
to as ``accumulated funds''). These accumulated funds were not remitted 
to the Amex by certain members, despite the fact that these charges may 
have been previously identified as ``Section 31 Fees'' or ``SEC Fees'' 
by the firms.\9\ In addition, since the Amex uses a ``self-reporting'' 
methodology for its members to report and remit amounts payable 
pursuant to Rule 393, the Amex has and continues to accumulate amounts 
in excess of the amounts paid by the Amex to the Commission pursuant to 
section 31 and Rule 31 (``Exchange accumulated funds'').
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    \9\ The Commission stated in its release adopting new Rule 31 
and Rule 31T that ``it is misleading to suggest that a customer or 
[SRO] member incurs an obligation to the Commission under section 
31.'' Securities Exchange Act Release No. 49928 (June 28, 2004), 69 
FR 41060, 41072 (July 7, 2004). In response to this statement, the 
Exchange issued a notice to members regarding its Rule 393 Fee and 
the Commission's ``Section 31 Fee,'' and provided guidance for 
members and member organizations that choose to charge their 
customers fees. See Amex Notice REG 2004-42 Finance (October 29, 
2004).
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    The Exchange is proposing a new Commentary to Rule 393 that will 
allow firms, on a one-time-only basis, voluntarily to remit 
historically accumulated funds to the Exchange. These funds then would 
be used to pay the Exchange's current Section 31 fees in conformity 
with prior representations made by member firms. In addition, a member 
or member organization may designate all or part of the Exchange-
accumulated excess held by the Exchange and allocated to such member be 
used by the Exchange in accordance with the new Commentary to Rule 393. 
Finally, to the extent the payment of these historically accumulated 
funds or Exchange accumulated funds is in excess of the Section 31 fees 
due the Commission from the Amex, such surplus shall be used by the 
Exchange to offset regulatory costs.
    The Amex proposes that the effective date of the proposed rule 
change would be the date the Commission Order approving the proposed 
rule filing is published in the Federal Register and the effectiveness 
of Commentary .01 to Rule 393, once approved, would be for a period of 
six months.
    After carefully considering the proposal, the Commission finds that 
the proposed rule change is consistent with the requirements of the Act 
and the rules and regulations thereunder applicable to a national 
securities exchange.\10\ The Commission previously found a similar 
proposal from another SRO to be consistent with the Act.\11\ The 
Commission is not aware of any issue that should cause it to revisit 
that finding or preclude the Commission from approving the Amex 
proposal on the same basis. The Commission notes that, because the 
program is voluntary, it imposes no obligation on any Amex member that 
believes that accumulated funds should be retained or disposed of in 
another manner.
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    \10\ In approving this proposal, the Commission has considered 
the proposed rule's impact on efficiency, competition, and capital 
formation. See 15 U.S.C. 78c(f).
    \11\ See Securities Exchange Act Release No. 55886 (June 8, 
2007), 72 FR 32935 (SR-NASD-2007-027).
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    It is therefore ordered, pursuant to section 19(b)(2) of the 
Act,\12\ that the proposed rule change (File No. SR-AMEX-2007-107), as 
modified by Amendment Nos. 3 and 4 thereto, be, and hereby is, 
approved.
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    \12\ 15 U.S.C. 78s(b)(2).

For the Commission, by the Division of Trading and Markets, pursuant 
to delegated authority.\13\
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    \13\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
 [FR Doc. E8-11522 Filed 5-22-08; 8:45 am]

BILLING CODE 8010-01-P