Document ID: SEC-2006-0278-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: American Stock Exchange LLC
Posted Date: 2006-03-03T05:00Z

[Federal Register: March 3, 2006 (Volume 71, Number 42)]
[Notices]               
[Page 11001-11003]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr03mr06-103]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-53363; File No. SR-Amex-2006-18]

 
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 
PowerShares Zacks SmallCap Portfolio

February 24, 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 15, 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 Amex. Amex has

[[Page 11002]]

designated this proposal as one establishing or changing a due, fee, or 
other charge imposed by the self-regulatory organization under Section 
19(b)(3)(A)(ii) of the Act \3\ and Rule 19b-4(f)(2) thereunder,\4\ 
which renders it 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\ 7 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 
PowerShares Zacks SmallCap Portfolio (symbol: PZJ).
    The text of the proposed rule change is available on the Amex's 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, 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 
PZJ. These fee changes will be assessed on members commencing February 
16, 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 PZJ. 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 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).
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    The purpose of this proposal is to charge an options licensing fee 
in connection with options on PZJ (the ``PowerShares SmallCap ETF''). 
Specifically, Amex seeks to charge an options licensing fee of $0.05 
per contract side for the PowerShares Small Cap ETF option 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 PowerShares SmallCap ETF option. 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 the PowerShares SmallCap ETF option 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 the Amex, in recent years, 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\ 
Amex believes that the 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 transactions in PowerShares SmallCap ETF options, a fair 
share of the related costs of offering such options.
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    \6\ See, e.g., Securities Exchange Act Release Nos. 45360 
(January 29, 2002), 67 FR 5626 (February 6, 2002); and 44286 (May 9, 
2001), 66 FR 27187 (May 16, 2001).
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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 PowerShares SmallCap ETF 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.\8\ 
Accordingly, the Exchange seeks, through this proposal, to better align 
its transaction charges with the cost of providing products.
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    \7\ Section 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.
    \8\ Telephone call between Jeffrey Burns, Vice President and 
Associate General Counsel, Amex, and Angela Muehr, Attorney, 
Division of Market Regulation (``Division''), Commission, on 
February 22, 2006.
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2. Statutory Basis
    Amex believes that the proposed fee change is consistent with 
Section 6(b)(4) of the Act \9\ regarding the equitable allocation of 
reasonable dues, fees and other charges among exchange members and 
other persons using exchange facilities.
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    \9\ 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 was filed pursuant to Section 
19(b)(3)(A)(ii) of the Act \10\ and Rule 19b-4(f)(2) thereunder,\11\ 
because it establishes or changes a due, fee, or other charge imposed 
by the self-regulatory organization.
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    \10\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \11\ 17 CFR 240.19b-4(f)(2).
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    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.

[[Page 11003]]

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-2006-18 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-2006-18. 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-2006-18 and should be submitted on or before March 
24, 2006.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\12\
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    \12\ 17 CFR 200.30-3(a)(12).
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Nancy M. Morris,
Secretary.
 [FR Doc. E6-3015 Filed 3-2-06; 8:45 am]

BILLING CODE 8010-01-P