Document ID: SEC-2005-0134-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: American Stock Exchange, LLC
Posted Date: 2005-10-20T04:00Z

[Federal Register: October 20, 2005 (Volume 70, Number 202)]
[Notices]               
[Page 61160-61162]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr20oc05-77]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-52598; File No. SR-Amex-2005-098]

 
Self-Regulatory Organizations; American Stock Exchange LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change 
Relating to the Adoption of an Options Licensing Fee for the First 
Trust Dow Jones Select MicroCap Index Fund (FDM)

October 13, 2005.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (the ``Act''), and Rule 19b-4 \2\ thereunder, notice is hereby 
given that on September 29, 2005, the American Stock Exchange LLC 
(``Amex'' or ``Exchange'') filed with the Securities and Exchange 
Commission (``Commission'') a proposed rule change as described in 
Items I, II, and III below, which Items have been prepared by the 
Exchange.

[[Page 61161]]

Amex has designated the proposed rule change as establishing or 
changing a due, fee, or other charge, pursuant to 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 modify its Options Fee Schedule by 
adopting a per contract license fee in connection with 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 Dow Jones Select MicroCap Index Fund 
(``FDM'').
    The text of the proposed rule change is available on Amex's Web 
site at http://www.amex.com, the Office of the Secretary, 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. 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
    The Exchange has entered into numerous agreements with issuers and 
owners of indexes for the purpose of trading options on certain 
exchange-traded funds (``ETFs'') and securities indexes. The 
requirement to pay an index license fee to third parties is a condition 
to the listing and trading of these ETF and index options. In many 
cases, the Exchange is required to pay a significant licensing fee to 
issuers or index owners 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 of 
specialists, registered options traders (``ROTs''), firms, non-member 
market makers and broker-dealers, that is collected on every option 
transaction in designated products in which such market participant is 
a party.\5\
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    \5\ See 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 the proposal is to establish an options licensing 
fee in connection with options on FDM. Specifically, Amex seeks to 
charge an options licensing fee of $0.12 per contract side in 
connection with FDM options for specialist, ROT, firm, non-member 
market maker and broker-dealer orders executed on the Exchange. In all 
cases, the fees set forth in the Options Fee Schedule are charged only 
to 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 FDM 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 requiring the 
payment of a per contract licensing fee in connection with FDM 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 in recent years it has revised a number of 
fees to better align Exchange fees with the actual cost of delivering 
services and reduce Exchange subsidies of such services.\6\ 
Implementation of this proposal is consistent with the reduction and/or 
elimination of these subsidies. Amex believes that these fees will help 
to allocate to those market participants engaging in FDM options a fair 
share of the related costs of offering such options.
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    \6\ See Securities Exchange Act Release Nos. 45360 (January 29, 
2002), 67 FR 5626 (February 6, 2002) (SR-Amex-2001-102) and 44286 
(May 9, 2001), 66 FR 27187 (May 16, 2001) (SR-Amex-2001-22).
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    The Exchange asserts that the proposal is equitable as required by 
Section 6(b)(4) of the Act.\7\ In connection with the adoption of an 
options licensing fee for FDM options, the Exchange notes 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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    \7\ 15 U.S.C. 78f(b)(4). Seciton 6(b)(4) states that the rules 
of a national securities 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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2. Statutory Basis
    Amex believes the proposed rule change is consistent with Section 
6(b)(4) of the Act \8\ because it is an equitable allocation of 
reasonable dues, fees and other charges among exchange members and 
other persons using exchange facilities.
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    \8\ 15 U.S.C. 78f(b)(4).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange 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 proposed rule change has become effective pursuant to 
Section 19(b)(3)(A)(ii) of the Act,\9\ and Rule 19b-4(f)(2) \10\ 
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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    \9\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \10\ 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-2005-098 on the subject line.

[[Page 61162]]

Paper Comments

     Send paper comments in triplicate to Jonathan G. Katz, 
Secretary, Securities and Exchange Commission, 100 F Street, NE., 
Washington, DC 20549-9303. All submissions should refer to File Number 
SR-Amex-2005-098. 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 the 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-2005-098 and should be 
submitted on or before November 10, 2005.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\11\
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    \11\ 17 CFR 200.30-3(a)(12).
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Jonathan G. Katz,
Secretary.
 [FR Doc. E5-5785 Filed 10-19-05; 8:45 am]

BILLING CODE 8010-01-P