Document ID: SEC-2005-0043-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: American Stock Exchange LLC
Posted Date: 2005-09-29T04:00Z

[Federal Register: September 29, 2005 (Volume 70, Number 188)]
[Notices]               
[Page 56941-56943]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr29se05-77]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-52493; File No. SR-Amex-2005-087]

 
Self-Regulatory Organizations; American Stock Exchange LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Revise Its Options Transaction Fees

September 22, 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 August 31, 2005, 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 prepared by the Exchange. Amex has 
designated the proposed rule change as one establishing or changing a 
due, fee, or other charge imposed by Amex 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

    Amex proposes to: (i) Increase transaction fees for customer and 
firm orders on index options from the current rate of $0.22 per 
contract side to $0.45 per contract side; (ii) eliminate the fee 
exception for machine delivered index option orders of less than 30 
contracts; (iii) adopt transaction fees of $0.15 per contract side in 
connection with customer orders for options on trust issued receipts 
(``TIRs'') and exchange-traded funds (``ETFs''); and (iv) adopt options 
licensing fees for firm, non-member market maker, and broker-dealer 
orders.
    The text of the proposed rule change is available on Amex's Web 
site (http://www.amex.com), at Amex's principal office, and from the 

Commission's Public Reference Room.

[[Page 56942]]

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
    Amex proposes to amend its Options Fee Schedule to adopt and/or 
increase certain transaction fees applicable to index options, ETF 
options, and TIR options. The fee changes proposed in this rule filing 
will be effective September 1, 2005. The Exchange, for the purpose of 
clarity and ease of reference, has also added additional references to 
specific option types throughout its Options Fee Schedule. The types of 
options set forth in the Options Fee Schedule now will include Equity 
Options, Exchange-Traded Fund Share Options (excluding QQQQ Options), 
QQQQ Options, Trust Issued Receipt (HOLDR) Options, Index Options (in 
some cases, excluding MNX and NDX Options), and MNX and NDX Options.\5\
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    \5\ Currently, the Options Fee Schedule lists equity options, 
index options, and options on the S&P 100 iShares.
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    Amex currently charges transaction fees for customer and firm 
orders in index options executed on the Exchange at the total rate of 
$0.22 per contract side. The Exchange proposes to increase total 
transaction fees to $0.45 per contract side \6\ for customer and firm 
index option orders executed on the Exchange, with the exception of MNX 
and NDX options, which will remain at the current total rate of $0.22 
per contract side. In addition, the Exchange also proposes to eliminate 
the fee exception in which machine-delivered index option orders of 
less than 30 contracts are not subject to transaction fees. This change 
will provide that all index option orders executed on the Exchange will 
be subject to transaction fees.
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    \6\ The $0.45 per contract side charge would consist of an 
options transaction fee of $0.38 per contract side, an options 
comparison fee of $0.04 per contract side, and an options floor 
brokerage fee of $0.03 per contract side.
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    The transaction fees in connection with ETF and TIR options 
transactions are currently provided under the category ``Equity 
Options,'' set forth in the Options Fee Schedule.\7\ As a result, 
customer orders are not charged transaction fees. The one exception is 
that customer orders are charged a $0.15 options transaction fee in the 
iShares S&P 100 Index Fund option. Amex is proposing to levy a 
transaction fee on customer orders of TIR and ETF options (excluding 
QQQQ options) at a total rate of $0.15 per contract side.\8\ In order 
to remain competitive with the other options exchanges, the Exchange 
will continue not to charge a transaction fee on customer QQQQ option 
orders.
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    \7\ As set forth above, ETF and TIR options will now be 
separately listed in the Options Fee Schedule.
    \8\ The $0.15 per contract side charge would consist of an 
options transaction fee of $0.08 per contract side, an options 
comparison fee of $0.04 per contract side, and an options floor 
brokerage fee of $0.03 per contract side.
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    Currently, the Exchange does not charge firm, non-member market 
maker, or broker-dealer orders a fee for transactions in certain 
licensed options products. The Exchange proposes to levy an options 
licensing fee on these orders consistent with the licensing fee 
currently assessed on orders of specialists and registered options 
traders. The proposed fee varies from $0.05 per contract side to $0.20 
per contract side, depending upon the particular index-based product 
that is subject to a license agreement. These fees are set forth in the 
Options Licensing Fee section of the Options Fee Schedule.
2. Statutory Basis
    The Exchange believes that the proposed fee change is consistent 
with the requirements of Section 6(b) of the Act,\9\ in general, and 
Section 6(b)(4) of the Act,\10\ 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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    \9\ 15 U.S.C. 78f(b).
    \10\ 15 U.S.C. 78f(b)(4).
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    The Exchange asserts that the proposed increase in transaction fees 
for index, ETF, and TIR options is equitable as required by Section 
6(b)(4) of the Act.\11\ In connection with the proposed increase in the 
index option transaction fee for customer and firm orders, the Exchange 
notes that the proposal will better align its index option fees with 
its competitors. Customer orders will now also be charged $0.15 per 
contract side in connection with ETF and TIR options instead of not 
being subject to transaction fees. The Exchange believes that this is 
reasonable and equitable given the fact that the orders of other market 
participants are subject to transaction charges. The Exchange also 
maintains 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.
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    \11\ Section 6(b)(4) states that the rules of a national 
securities exchange must provide for ``the equitable allocation of 
reasonable dues, fees, and other charges among its members and 
issuers and other persons using its facilities.'' 15 U.S.C. 
78f(b)(4).
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    The Exchange further believes that eliminating the fee exception 
for machine-delivered index option orders of less than 30 contracts is 
equitable and fair since all index option orders will now be 
potentially subject to transaction charges regardless of the size of 
the order. In the past, the Exchange and certain market participants 
have largely subsidized the cost of providing index options. The 
Exchange now seeks to better align these fees with the cost of 
providing these products, maintaining the trading floor and systems, 
and generating revenue to fund Exchange operations.

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 proposed rule change has become effective upon filing pursuant 
to Section 19(b)(3)(A)(ii) of the Act \12\ and Rule 19b-4(f)(2) 
thereunder,\13\ 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 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,

[[Page 56943]]

or otherwise in furtherance of the purposes of the Act.
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    \12\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \13\ 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-2005-087 on the subject line.

Paper Comments

     Send paper comments in triplicate to Jonathan G. Katz, 
Secretary, Securities and Exchange Commission, 100 F Street, NE., 
Washington, DC 20549-9303.
    All submissions should refer to File Number SR-Amex-2005-087. 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 the Exchange. 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-2005-087 and should be submitted on or before 
October 20, 2005.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\14\
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    \14\ 17 CFR 200.30-3(a)(12).
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Jonathan G. Katz,
Secretary.
[FR Doc. 05-19495 Filed 9-28-05; 8:45 am]

BILLING CODE 8010-01-P