Document ID: SEC-2005-0024-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: American Stock Exchange LLC
Posted Date: 2005-09-26T04:00Z

[Federal Register: September 26, 2005 (Volume 70, Number 185)]
[Notices]               
[Page 56193-56194]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr26se05-72]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-52469; File No. SR-Amex-2005-089]

 
Self-Regulatory Organizations; American Stock Exchange, Inc.; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change to 
Adopt Options Licensing Fees for Certain Vanguard ETF Options

September 19, 2005.
    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 September 9, 2005, the American Stock Exchange, Inc. (``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 prepared by Amex. Amex submitted 
the proposed rule change under Section 19(b)(3)(A) 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).
    \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 side licensing fee for the orders of 
specialists, registered options traders (``ROTs''), firms, non-member 
market makers, and broker-dealers in connection with transactions in 
options on certain Vanguard exchange-traded funds (``ETFs'').
    The text of the proposed rule change is available on Amex's Web 
site http://www.amex.com, at Amex'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, 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
    The Exchange has entered into numerous license agreements with 
issuers and owners of indexes for the purpose of trading options on 
certain ETFs. The requirement to pay an index licensing fee to third 
parties 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 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 side licensing fee for the 
orders of specialists, ROTs, firms, non-member market makers, and 
broker-dealers collected on every transaction in certain designated 
products in which such market participant is a party.\5\
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    \5\ See File No. SR-Amex-2005-087 (filed on August 31, 2004, and 
pending before the Commission).
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    The purpose of the proposal is to charge a per-contract side 
licensing fee in connection with transactions in certain options on the 
Vanguard ETFs (``Vanguard ETF Options''). Specifically, Amex seeks to 
charge an options licensing fee of $0.10 per contract side for 
specialist, ROT, firm, non-member market maker, and broker-dealer 
orders executed on the Exchange in connection with the following 
Vanguard ETFs:
    (1) Vanguard Consumer Discretionary VIPERs (symbol: VCR);
    (2) Vanguard Consumer Staples VIPERs (symbol: VDC);
    (3) Vanguard Energy VIPERs (symbol: VDE);
    (4) Vanguard Financials VIPERs (symbol: VFH);
    (5) Vanguard Health Care VIPERs (symbol: VHT);
    (6) Vanguard Industrials VIPERs (symbol: VIS);
    (7) Vanguard Information Technology VIPERs (symbol: VGT);
    (8) Vanguard Materials VIPERs (symbol: VAW);
    (9) Vanguard Utilities VIPERs (symbol: VPU);
    (10) Vanguard Telecommunication Services VIPERs (symbol: VOX);
    (11) Vanguard REIT VIPERs (symbol: VNQ);
    (12) Vanguard Small-Cap Growth VIPERs (symbol: VBK);
    (13) Vanguard Small-Cap Value VIPERs (symbol: VBR);
    (14) Vanguard Mid-Cap VIPERs (symbol: VO);
    (15) Vanguard Large-Cap VIPERs (symbol: VV);
    (16) Vanguard Growth VIPERs (symbol: VUG);
    (17) Vanguard Value VIPERs (symbol: VTV); and
    (18) Vanguard Small-Cap VIPERs (symbol: VB).
    In addition, the Exchange also proposes to charge an options 
licensing fee of $0.09 per contract side for specialist, ROT, firm, 
non-member market maker, and broker-dealer orders executed on the 
Exchange in connection with the Vanguard Extended Market VIPERs 
(symbol: VXF). The proposal also revises Section V (Options Licensing 
Fee) of the Options Fee Schedule to designate the SPDR O-Strip by its 
symbol ``OOO.'' 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 fees will allow the Exchange to 
recoup its costs in connection with index licensing fees for the 
trading of the Vanguard ETF Options. The fees will be collected on 
every Vanguard ETF Option order of a specialist, ROT, firm, non-member 
market maker, and broker-dealer executed on the Exchange. The Exchange 
believes that collection of a per-contract side licensing fee in 
connection with Vanguard ETF Options orders placed by those market 
participants that are the beneficiaries of the Exchange's index license 
agreements is justified and consistent with the rules of the Exchange.
    The Exchange notes that Amex in recent years has revised a number 
of fees to better align Exchange fees with the actual cost of 
delivering services and to reduce Exchange subsidies of such

[[Page 56194]]

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 offering 
Vanguard ETF Options a fair share of the related costs of offering such 
options. In connection with the adoption of an options licensing fee 
for the Vanguard ETF Options, the Exchange notes that the proposal will 
better align its licensing fees with its competitors. The Exchange also 
maintains that charging an options licensing fee, where applicable, for 
all market participant orders executed on the Exchange except for 
customer orders is reasonable given the competitive pressures in the 
industry. Accordingly, the Exchange seeks, through this proposal, to 
better align its charges with the cost of providing these products and 
maintaining the trading floor and systems.
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    \6\ See 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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2. Statutory Basis
    The Exchange believes that its proposed rule change is consistent 
with Section 6(b) of the Act,\7\ in general, and furthers the 
objectives of Section 6(b)(4) of the Act,\8\ in particular, 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).
    \8\ 15 U.S.C. 78f(b)(4).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition 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

    The Exchange has neither solicited nor received comments on the 
proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    The proposed rule change has become effective pursuant to Section 
19(b)(3)(A)(ii) of the Act \9\ and subparagraph (f)(2) of Rule 19b-4 
thereunder,\10\ because it establishes or changes a due, fee, or other 
charge imposed by Amex. 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-2005-089 on the subject line.

Paper Comments

     Send paper comments in triplicate to Jonathan G. Katz, 
Secretary, Securities and Exchange Commission, Station Place, 100 F 
Street, NE., Washington, DC 20549-9303.
    All submissions should refer to File Number SR-Amex-2005-089. 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 offices 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-2005-089 and should be submitted on or before October 17, 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. E5-5169 Filed 9-23-05; 8:45 am]

BILLING CODE 8010-01-P