Document ID: SEC-2006-0383-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: American Stock Exchange LLC
Posted Date: 2006-03-23T05:00Z

[Federal Register: March 23, 2006 (Volume 71, Number 56)]
[Notices]               
[Page 14755-14756]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr23mr06-79]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-53510; File No. SR-Amex-2006-24]

 
Self-Regulatory Organizations; American Stock Exchange LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change 
Relating to the Adoption of a Licensing Fee for Options on the First 
Trust Morningstar Dividend Leaders Index Fund Shares

March 17, 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 March 14, 2006, the American Stock Exchange LLC (``Amex'' or 
``Exchange'') submitted to 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 
filed the proposed rule change pursuant to Section 19(b)(3)(A)(ii) of 
the Act,\3\ and Rule 19b-4(f)(2) thereunder,\4\ 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 modify its Options Fee Schedule by 
adopting a per contract license fee for the orders of specialists, 
registered options traders (``ROTs''), firms, non-member market makers, 
and broker-dealers in connection with options transactions in the First 
Trust Morningstar Dividend Leaders Index Fund (symbol: FDL). The text 
of the proposed rule change is available on Amex's Web site at http://www.amex.com
, at the principal office of 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, 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. 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 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    Amex proposes to adopt a per contract licensing fee for options on 
FDL. This fee change will be assessed on members commencing March 15, 
2006.
    The Exchange has entered into numerous agreements with various 
index providers for the purpose of trading options on certain exchange-
traded funds (``ETFs''), such as FDL. This requirement to pay an index 
license fee to a third party is a condition to the listing and trading 
of these ETF options. In many cases, the Exchange is required to pay a 
significant licensing fee to the index provider that may not be 
reimbursed. In an effort to recoup the costs associated with certain 
index licenses, the Exchange has established a per contract licensing 
fee for the orders

[[Page 14756]]

of specialists, ROTs, firms, non-member market makers, and broker-
dealers, which is collected on every option transaction in designated 
products in which such market participant is a party.\5\
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    \5\ See, e.g., Securities Exchange Act Release No. 52493 
(September 22, 2005), 70 FR 56941 (September 29, 2005) (SR-Amex-
2005-087).
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    The purpose of this proposal is to charge an options licensing fee 
in connection with options on FDL. Specifically, Amex seeks to charge 
an options licensing fee of $0.10 per contract side for FDL options for 
specialist, ROT, firm, non-member market maker, and broker-dealer 
orders executed on the Exchange. In all cases, the fees will be charged 
only to the Exchange members through whom the orders are placed.
    The proposed options licensing fee will allow the Exchange to 
recoup its costs in connection with the index license fee for the 
trading of the FDL options. The fees will be collected on every order 
of a specialist, ROT, firm, non-member market maker, and broker-dealer 
executed on the Exchange. The Exchange believes that the proposal to 
require payment of a per contract licensing fee in connection with FDL 
options by those market participants that are the beneficiaries of 
Exchange index license agreements is justified and consistent with the 
rules of the Exchange.
    The Exchange notes that it has, in recent years, revised a number 
of fees to better align Exchange fees with the actual cost of 
delivering services and reduce Exchange subsidies of such services. 
Amex believes that the implementation of this proposal is consistent 
with the reduction and/or elimination of these subsidies. Amex also 
believes that these fees will help to allocate to those market 
participants engaging in transactions in FDL options a fair share of 
the related costs of offering such options.
    The Exchange asserts that the proposal is equitable as required by 
Section 6(b)(4) of the Act.\6\ In connection with the adoption of an 
options licensing fee for FDL options, the Exchange believes that 
charging an options licensing fee, where applicable, to all market 
participant orders except for customer orders is reasonable given the 
competitive pressures in the industry. Accordingly, the Exchange seeks, 
through this proposal, to better align its transaction charges with the 
cost of providing products.
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    \6\ Section 6(b)(4) of the Act requires that the rules of 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. See 15 U.S.C. 78f(b)(4).
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2. Statutory Basis
    Amex believes that the proposed fee change is consistent with 
Section 6(b)(4) of the Act \7\ regarding the equitable allocation of 
reasonable dues, fees and other charges among exchange members and 
other persons using exchange facilities.
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    \7\ 15 U.S.C. 78f(b)(4).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    Amex believes that the proposed rule change does not 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 rule change establishes or changes a due, fee, or 
other charge applicable only to a member imposed by the Exchange, and, 
therefore, has become effective pursuant to Section 19(b)(3)(A)(ii) of 
the Act \8\ and subparagraph (f)(2) of Rule 19b-4 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 furtherance 
of the purposes of the Act.
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    \8\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \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 Number SR-Amex-2006-24 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-2006-24. 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-2006-24 and should be submitted on or before April 13, 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. E6-4181 Filed 3-22-06; 8:45 am]

BILLING CODE 8010-01-P