Document ID: SEC-2007-0421-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: American Stock Exchange LLC
Posted Date: 2007-03-21T04:00Z

[Federal Register: March 21, 2007 (Volume 72, Number 54)]
[Notices]               
[Page 13320-13322]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr21mr07-98]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-55458; File No. SR-Amex-2007-23]

 
Self-Regulatory Organizations; American Stock Exchange LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change 
Relating to Transaction Charges for Equities, ETFs, and Nasdaq UTP 
Securities

March 13, 2007.
    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 22, 2007, 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 substantially prepared by the 
Exchange. Amex has designated this proposal as one establishing or 
changing a due, fee, or other charge imposed by a self-regulatory 
organization 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 revise the equities, Exchange Traded Funds 
and Trust Issued Receipts (``ETFs''), and Nasdaq UTP Fee Schedules 
(collectively, the ``Fee Schedule'') to modify transaction charges in 
equities, ETFs, and Nasdaq UTP securities.
    The text of the proposed rule change is available on the Exchange's 
Web site (http://www.amex.com), at the Exchange's principal office, 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 Exchange 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 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange recently adopted new transaction charges for its 
members and member organizations largely relating to the Exchange's new 
hybrid market trading platform (known as AEMI), the upcoming 
implementation of Regulation NMS, and changes in the competitive 
landscape for equities and ETFs.\5\ These new transaction charges 
became effective January 2, 2007.\6\ Since the adoption of the new 
transaction fees, the Exchange has been having difficulty with its 
billing system's ability to obtain the data necessary to calculate an 
accurate bill and provide data to the clearing firms in a timely manner 
so they can accurately pass these charges on to their customers. As a 
result, the Exchange in this filing proposes to revert back to 
transaction charges for customers \7\ in equities and ETFs in effect 
prior to January 2, 2007. In

[[Page 13321]]

addition, as an incentive to member firms to send order flow to the 
Exchange, a five percent discount will be applied to each firm's total 
charges for customer orders. Transaction charges for specialists in 
equities and specialists and registered traders in ETFs will be made 
consistent across the product lines and will generally be applied in 
the same manner as under the prior schedule, but at a lower rate. The 
five percent discount will not be applied to charges for specialists 
and registered traders. In addition, for transactions charges in Nasdaq 
UTP securities, the Exchange will also revert back to the fee schedule 
in effect prior to January 2, 2007 and will apply the five percent 
discount to charges for member and non-member customer transactions.
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    \5\ See Securities Exchange Act Release No. 55195 (January 30, 
2007) 72 FR 5469 (February 6, 2007) (Amex File No. 2006-117).
    \6\ This discussion originally stated, at various points, that 
the new transaction charges became effective January 3, 2007; 
however, the approved date of effectiveness was actually January 2, 
2007. E-mail communication between Leah Mesfin, Special Counsel, 
Division of Market Regulation, Commission, and Claire P. McGrath, 
Senior Vice President and General Counsel, Amex, on March 2, 2007.
    \7\ Customers are defined for purposes of the Equity and ETF Fee 
Schedules to include all market participants except specialists and 
registered traders. Therefore, customers (and the fees charged to 
them) include members' off-floor proprietary accounts, competing 
market makers and other member and non-member broker-dealers. The 
Nasdaq UTP Fee Schedule defines customers to include any market 
participant other than a ``competing market maker.''
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    Currently, under the recently adopted fee schedule, transaction 
charges for equities, ETFs, and Nasdaq UTP securities differ based on 
whether the charge is for a customer or specialist and registered 
trader. Transaction charges for executions in equities and ETFs are 
divided into two tiers based on the average daily volume as reported by 
the appropriate NMS Plan in the security industry-wide.\8\ Transaction 
charges for all securities traded by Amex pursuant to unlisted trading 
privileges (including Nasdaq UTP securities) regardless of average 
daily trading volume are priced based on one of the tiers as noted 
below. The transaction charges vary within each tier depending on the 
type of orders submitted for the customer account and the types of 
quotes and orders submitted for specialist and registered trader 
accounts.
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    \8\ Tier One pricing is applied to equities and ETFs whose 
industry-wide average daily trading volume is 500,000 shares or 
greater during the previous rolling quarter. In addition, Tier One 
pricing applies to all securities traded on the Exchange pursuant to 
unlisted trading privileges (``UTP'') (including Nasdaq UTP 
securities) regardless of the their average daily trading volume. 
All new listings including IPOs, transfers, and dual listings are 
initially categorized as Tier One securities until the next 
quarterly recalculation. Tier Two pricing is applied to all equities 
and ETFs whose industry-wide average daily trading volume is less 
than 500,000 shares during the previous rolling quarter.
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Transaction Charges for Equities
    The Exchange is now proposing that transaction charges for equities 
be assessed based generally on the previous fee schedule for all market 
participants on a per-share basis with the application of various caps 
and discounts. Specifically, the Exchange is proposing the following 
changes to the current Equity Fee Schedule: (i) Adoption of a monthly 
transaction charge to customers of $0.0030 per share for up to 50 
million shares and $0.0025 per share for amounts over 50 million 
shares; (ii) adoption of a fee cap so that transaction charges are 
assessed only on the first 5,000 shares of each executed transaction; 
(iii) adoption of a fee waiver of transaction charges for certain 
electronic orders of up to 500 shares (this fee waiver will not apply 
to electronic orders of a member or member organization trading as an 
agent for the account of a non-member competing market maker); \9\ and 
(iv) adoption of a five percent discount on total amount of customer 
transaction charges. For transaction charges assessed to specialists in 
equities, the Exchange will not revert back to the previous fee 
schedule where the per-share charge was waived and a charge based on 
the total dollar value of specialist transactions was imposed, but will 
instead impose a specialist transaction charge at the rate of $0.03 per 
100 shares.
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    \9\ A ``competing market maker'' is defined as a specialist or 
market maker registered as such on a registered stock exchange 
(other than Amex), or a market maker bidding and offering over-the-
counter, in an Amex-traded security. The Exchange has subsequently 
filed another proposed rule change (SR-Amex-2007-30) to remove the 
provision barring the application of the fee waiver to non-member 
competing market makers retroactively to March 1, 2007. Hence, as of 
March 1, 2007, non-member competing market makers are eligible for 
the fee waiver.
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    The other provisions of the current Equity Fee Schedule including 
the ``Equities Order Cancellation Fee,'' ``Clearing Charges for Orders 
Routed to Another Market Center,'' and ``Pass-Through Charges to Orders 
Routed to Another Market Center Through the NMS Linkage Plan'' will 
remain the same.
Transaction Charges for ETFs
    Similar to equities as set forth above, Amex is proposing that 
transaction charges for ETFs be assessed based generally on the 
previous fee schedule for all market participants monthly on a per-
share basis with the application of various caps and discounts. 
Specifically, the Exchange is proposing the following changes to the 
current ETF Fee Schedule: (i) Adoption of transaction charges for 
customers of $0.34 per 100 shares for all ETFs; \10\ (ii) adoption of a 
$100 cap on the fee charged per transaction for each customer trade; 
(iii) adoption of a waiver of transaction charges for electronic orders 
of up to 2,400 shares (this fee waiver will not apply to electronic 
orders of a member or member organization trading as an agent for the 
account of a non-member competing market maker); \11\ (iv) adoption of 
a five percent discount on the total amount of customer transaction 
charges; (v) adoption of an additional value-based fee for transactions 
of non-member competing market makers of $0.000075 times the total 
value of orders entered by a member or member organization trading as 
agent for the account of a non-member competing market makers; \12\ 
(vi) adoption of transaction charges for specialists and registered 
traders of $0.03 per 100 shares per trade for all ETFs; and (vii) 
adoption of a monthly specialist fee cap of $400,000.
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    \10\ This charge was reduced to $0.30 by a subsequent filing 
that the Exchange submitted, SR-Amex-2007-28.
    \11\ SR-Amex-2007-30 also eliminates the provision barring the 
application of the fee waiver to non-member competing market makers 
retroactively to March 1, 2007. Hence, as of March 1, 2007, non-
member competing market makers are eligible for this fee waiver.
    \12\ This fee was subsequently eliminated by SR-Amex-2007-28.
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    The other provisions of the current ETF Fee Schedule including the 
``Order Cancellation Fee,'' ``Clearing Charges for Orders Routed to 
Another Market Center,'' and ``Pass-Through Charges to Orders Routed to 
Another Market Center Through the NMS Linkage Plan'' will remain the 
same.
Nasdaq UTP Equity Fee Schedule
    The separate Nasdaq UTP Equity Fee Schedule was eliminated with the 
adoption of the new Equity Fee Schedule since all securities traded on 
the Exchange based on unlisted trading privileges (including Nasdaq UTP 
securities) were covered under the Tier One pricing provisions of the 
new Equity Fee Schedule. The Exchange is now proposing to revert back 
to the Nasdaq UTP Equity Fee Schedule in place prior to January 2, 
2007. Specifically, the Exchange proposes to: (i) Adopt a transaction 
charge for specialists of $0.10 per 100 shares; however, the Exchange 
will waive this transaction charge to those specialists that do not 
charge commissions to customers in Nasdaq UTP securities; (ii) adopt a 
transaction charge for member and non-member customers of $0.15 per 100 
shares; (iii) adopt a five percent discount on the total amount of 
customer transaction charges; (iv) adopt a transaction charge for 
member and non-member competing market makers of $0.15 per 100 shares; 
(v) adopt a transaction charge for Amex Equity Traders of $0.15 per 100 
shares; and (vi) adopt a $50 cap on the fee charged for each side of a 
cross transaction.
* * * * *
    The Exchange will impose these transaction charges on its members 
and

[[Page 13322]]

member organizations effective February 22, 2007.
2. Statutory Basis
    The proposed fee change is consistent with Section 6(b)(4) of the 
Act \13\ regarding the equitable allocation of reasonable dues, fees, 
and other charges among exchange members and other persons using 
exchange facilities.
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    \13\ 15 U.S.C. 78f(b)(4).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    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 \14\ and Rule 19b-4(f)(2) thereunder 
\15\ 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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    \14\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \15\ 17 CFR 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-2007-23 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-2007-23. 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-2007-23 and should be submitted on or before April 10, 2007.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\16\
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    \16\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
 [FR Doc. E7-5059 Filed 3-20-07; 8:45 am]

BILLING CODE 8010-01-P