Document ID: SEC-2006-1086-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: American Stock Exchange LLC
Posted Date: 2006-08-24T04:00Z

[Federal Register: August 24, 2006 (Volume 71, Number 164)]
[Notices]               
[Page 50110-50111]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr24au06-88]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-54324; File No. SR-Amex-2006-63]

 
Self-Regulatory Organizations; American Stock Exchange LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change 
Relating to Transaction Based Fees for Supplemental Registered Options 
Traders

August 16, 2006.
    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 August 15, 2006, 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. Amex has designated the proposed rule change as establishing 
or changing a due, fee, or other charge applicable only to members, 
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

    Amex proposes to amend its Options Fee Schedule to adopt 
transaction-based fees for Supplemental Registered Options Traders 
(``SROTs'').
    The text of the proposed rule change is available on Amex's Web 
site at http://www.amex.com, at Amex's Office of the Secretary, 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
    Amex proposes to amend its Options Fee Schedule to subject SROTs to 
the Exchange's options transactions fee, options comparison fee, 
options floor brokerage fee, options marketing fee and options 
licensing fee. SROTs are members of the Exchange.\5\
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    \5\ See Securities Exchange Act Release No. 53635 (April 12, 
2006), 71 FR 20144 (April 19, 2006).
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    The Exchange proposes to adopt an aggregate transaction-based fee 
for SROTs of $0.23 per contract side (consisting of an options 
transaction fee of $0.13 per contract side, an options comparison fee 
of $.05 per contract side and an options floor brokerage fee of $0.05 
per contract side) for equity options, ETF options, and trust issued 
receipt options. In addition, an aggregate transaction-based fee for 
SROTs of $0.36 per contract side (consisting of an options transaction 
fee of $0.26 per contract side, an options comparison fee of $0.05 per 
contract side and an options floor brokerage fee of $0.05 per contract 
side) for index options (including MNX and NDX options) is also 
proposed by the Exchange. The aggregate transaction-based fee for SROTs 
is set higher than the specialist and Registered Options Trader 
(``ROT'') transaction fees because the Exchange will incur additional 
systems and logistical costs in order to establish and maintain the 
infrastructure needed to enable the participation of a SROT.
    The Exchange further proposes that the current options marketing 
fee for specialists and ROTs of $0.75 per contract side for equity 
options, ETF options (excluding SPY options), trust issued receipt 
options, and NDX and RUT Options, and $1.00 per contract side for SPY 
options, be equally applicable to SROTs.
    In addition, the Exchange also proposes that the options licensing 
fee on certain index options and ETF options be applicable to SROTs. 
The options licensing fee proposal for SROTs in connection with equity 
options, ETF options, and trust issued receipt options will equal the 
current charges applicable to specialists, ROTs, firms, non-member 
market makers, and broker-dealers. This options licensing fee varies in 
amount from $0.05 to $0.20 per contract side, depending on the 
particular index or ETF option.
    Both the options order cancellation fee and broker-dealer auto-ex 
fees will be inapplicable to SROTs and RROTs, according to current 
footnote 4 and proposed footnote 10. Pursuant to footnote 4, 
cancellation fees are currently charged only to orders sent through the 
Amex Order File (``AOF''), which are not typically delivered in a 
market making capacity by an Amex specialist or ROT. Since, according 
to Amex rules, SROTs and RROTs act only in a market making capacity, 
and their orders are not delivered to the Exchange through AOF, the 
cancellation fee shall not apply to these participants.
    Likewise, broker-dealer auto-ex fees are typically charged only to 
orders for the accounts of firms, broker-dealers and non-member market 
makers because these orders are not delivered to the Exchange in a 
market making capacity.\6\ Currently, orders from ROTs and specialists 
in their market making capacity (i.e., liquidity providers) are not 
charged a broker-dealer auto-ex fee. However, orders of ROTs and 
specialists, if delivered to the Exchange via AOF, would be charged a 
broker-dealer auto-ex fee because these orders would not be part of 
their market making function. RROT and SROT orders will not be charged 
the broker-dealer auto-ex fee because these market participants act 
only in a market making capacity, and their orders are not delivered 
through AOF.
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    \6\ Telephone conversation between Kristie Diemer, Special 
Counsel, Division of Market Regulation, Commission and Jeffrey P. 
Burns, Vice President and Associate General Counsel, Exchange, on 
August 16, 2006.
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    Finally, the Exchange proposes to amend several of the footnotes to 
its Options Fee Schedule. Footnote 3 provides that the marketing fee 
will also be collected on SROT transactions involving electronically 
executed customer orders from firms accepting payment for directing 
their orders to the Exchange. Furthermore, if a specialist has 
negotiated a payment to a firm of less than the marketing fee, the 
difference between the marketing fee and the actual payment will also 
be

[[Page 50111]]

refunded to the SROT. Footnote 7 currently states that transactions by 
specialists and ROTs in connection with the Exchange's Broker-Dealer 
Auto-Ex Program are not subject to the options transactions fee, the 
options comparison fee, the options floor brokerage fee, the options 
marketing fee and the options licensing fee. The Exchange proposes to 
amend footnote 7 to provide that options allocated to SROTs and RROTs, 
in addition to specialists and ROTs, in connection with the Exchange's 
Broker-Dealer Auto-Ex Program are not subject to the options 
transactions fee, the options comparison fee, the options floor 
brokerage fee, the options marketing fee, and the options licensing 
fee.\7\ The Exchange also proposes to add footnote 10 to its Options 
Fee Schedule to provide that the fees applicable to specialists and 
market makers (ROTs) also include RROTs, except for the broker-dealer 
auto-ex fee and the cancellation fee, as discussed above.
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    \7\ The inapplicability of these fees acts as a rebate for those 
market participants acting as liquidity providers including, in this 
filing, SROTs and RROTs. See Securities Exchange Act Release No. 
48219 (July 23, 2003), 68 FR 44823 (July 30, 2003).
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2. Statutory Basis
    Amex believes that 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, applicable only to members. 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-2006-63 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-2006-63. 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-2006-63 and should be submitted on or before September 14, 
2006.
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    \11\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\11\
Nancy M. Morris,
Secretary.
[FR Doc. E6-14025 Filed 8-23-06; 8:45 am]

BILLING CODE 8010-01-P