Document ID: SEC-2005-0065-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: American Stock Exchange LLC
Posted Date: 2005-10-03T04:00Z

[Federal Register: October 3, 2005 (Volume 70, Number 190)]
[Notices]               
[Page 57634-57635]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr03oc05-151]                         

-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-52510; File No. SR-Amex-2005-094]

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

September 26, 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 19, 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.
---------------------------------------------------------------------------

    \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).
---------------------------------------------------------------------------

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 
certain PowerShares 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 and securities indexes. The requirement to pay an index 
licensing 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 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\
---------------------------------------------------------------------------

    \5\ See File No. SR-Amex-2005-087 (became immediately effective 
on August 31, 2005).
---------------------------------------------------------------------------

    The purpose of the proposal is to charge per-contract side 
licensing fees in connection with options on the following three (3) 
ETFs (``PowerShares ETFs''):
    (1) PowerShares Dividend Achievers Portfolio (symbol: PFM);
    (2) PowerShares High Growth Rate Dividend Achievers Portfolio 
(symbol: PHJ); and
    (3) PowerShares International Dividend Achievers Portfolio (symbol: 
PID)
    Specifically, Amex seeks to charge options licensing fees of $0.05, 
$0.10, and $0.10 per contract side, in connection with options on PFM, 
PHJ, and PID, respectively, 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 fees will allow the Exchange to 
recoup its costs in connection with index licensing fees for the 
trading of PowerShares ETF options. The fees will be collected on every 
PowerShares 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 per-contract side licensing fees in 
connection with PFM, PHJ, and PID 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 
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 
PowerShares ETF options a fair share of the related costs of offering 
such options.
---------------------------------------------------------------------------

    \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).
---------------------------------------------------------------------------

    In connection with the adoption of an options licensing fee for 
PowerShares 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.
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.
---------------------------------------------------------------------------

    \7\ 15 U.S.C. 78f(b).
    \8\ 15 U.S.C. 78f(b)(4).

---------------------------------------------------------------------------

[[Page 57635]]

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.
---------------------------------------------------------------------------

    \9\ 15 U.S.C. 78s(b)(3)(a)(ii).
    \10\ 17 CFR 240.19b-4(f)(2).
---------------------------------------------------------------------------

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-2005-094 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-2005-094. 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-2005-094 and should be submitted on or before October 24, 2005.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\11\
---------------------------------------------------------------------------

    \11\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Jonathan G. Katz,
Secretary.
 [FR Doc. E5-5347 Filed 9-30-05; 8:45 am]

BILLING CODE 8010-01-P