Document ID: SEC-2006-0375-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: American Stock Exchange LLC
Posted Date: 2006-03-21T05:00Z

[Federal Register: March 21, 2006 (Volume 71, Number 54)]
[Notices]               
[Page 14258-14259]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr21mr06-126]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-53478; File No. SR-Amex-2006-21]

 
Self-Regulatory Organizations; American Stock Exchange LLC; 
Notice of Filing and Immediate Effectiveness of a Proposed Rule Change 
Relating to a Rebate of the Exchange's Options Cancellation Fee

March 14, 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 24, 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. The Amex 
has filed the proposed rule change as one establishing or changing a 
due, fee, or other charge imposed by the Amex under Section 
19(b)(3)(A)(ii) of the Act \3\ and Rule 19b-4(f)(2) \4\ thereunder, 
which renders the proposal 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 rebate the options cancellation fee 
collected by the Exchange for the months of September and October 2005. 
The text of the proposed rule change is available on the Amex's 
Internet Web site at (http://www.amex.com), at the principal office of 

the Amex, 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, the 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 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 the 
Statutory Basis for, the Proposed Rule Change

(1) Purpose
    In November 2001, the Amex established a fee for the cancellation 
of options orders.\5\ Pursuant to this fee, a clearing firm is subject 
to a charge of $1.00 for every order it cancels in any month in which 
the total number of orders cancelled by that clearing firm exceeds the 
total number of orders executed by that firm in that month. The fee 
does not apply to clearing firms that cancel fewer than 500 orders in a 
given month. The options cancellation fee was deemed to be necessary 
given the often disproportionate number of order cancellations received 
relative to order executions and the increased costs associated with 
the practice of immediately following an order routed through Exchange 
systems with a cancel request for that order.
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    \5\ See Securities Exchange Act Release No. 45110 (November 27, 
2001) 66 FR 63080 (December 4, 2001) (notice of filing and immediate 
effectiveness of SR-Amex-2001-90).
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    The Amex's billing system receives only completed transaction data 
and does not receive data regarding orders that have been cancelled. 
Therefore, the information necessary to determine whether the 
cancellation fee should be charged is compiled outside the billing 
system. It came to the Exchange's attention a few months ago that the 
options cancellation fee was not currently being charged and may never 
have been charged, even though some clearing firms may have triggered 
the charge. The problem was corrected, and, beginning with options 
orders and cancellations entered in September 2005, the Exchange began 
billing the cancellation fee to the clearing firms when appropriate. 
Unfortunately, notice of the application of this fee, almost 4 years 
after the fee was adopted, was not widely disseminated to the clearing 
firms. Many clearing firms first learned of the application of the fee 
when they received their September 2005 invoices. As a result, the 
clearing firms were unable to notify their customers of the fee or 
convert their billing systems to charge back this fee to their 
customers.
    The Exchange now proposes to rebate the amounts billed and 
collected pursuant to the options cancellation fee for the months of 
September and October 2005. The clearing firms were fully notified by 
November 1, 2005; therefore, the Exchange believes that it is only 
necessary to rebate the fees billed and collected for the months of 
September and October. The Exchange believes that the rebate of options 
cancellation fees for a limited period of time is appropriate given its 
failure to fully inform the clearing firms of the application of the 
fee.
(2) Statutory Basis
    The Amex believes that the proposed rule change is consistent with 
Section 6(b) of the Act,\6\ in general, and furthers the objectives of 
Section 6(b)(4) of the Act,\7\ in particular, in that it is intended to 
assure the equitable allocation of reasonable dues, fees and other 
charges

[[Page 14259]]

among its members and issuers and other persons using its facilities.
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    \6\ 15 U.S.C. 78f(b).
    \7\ 15 U.S.C. 78f(b)(4).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Amex does not believe that the proposed rule change imposes 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

    Because the foregoing proposed rule change establishes or changes a 
due, fee, or other charge imposed by the Exchange, it has become 
effective pursuant to Section 19(b)(3)(A) of the Act \8\ and Rule 19b-
4(f)(2) thereunder \9\. 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 the furtherance of the purposes of the Act.
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    \8\ 15 U.S.C. 78s(b)(3)(A).
    \9\ 17 CFR 240.19b-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-2006-21 on the subject line.

Paper Comments

     Send paper comments in triplicate to Nancy M. Morris, 
Secretary, Securities and Exchange Commission, Station Place, 100 F 
Street, NE., Washington, DC 20549-1090.
    All submissions should refer to File Number SR-Amex-2006-21. 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 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-2006-21 and should be submitted on or before April 
11, 2006.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\10\
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    \10\ 17 CFR 200.30-3(a)(12).
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Nancy M. Morris,
Secretary.
 [FR Doc. E6-4011 Filed 3-20-06; 8:45 am]

BILLING CODE 8010-01-P