Document ID: SEC-2005-0023-0001
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 56194-56196]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr26se05-73]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-52470; File No. SR-Amex-2005-090]

 
Self-Regulatory Organizations; American Stock Exchange, Inc.; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change to 
Adopt Options Licensing Fees for Spade Defense Index Option

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 
Spade Defense Index options (symbol: DXS).
    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.

[[Page 56195]]

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 exchange-traded funds (``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\
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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 the Spade Defense 
Index options. Specifically, Amex seeks 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 Spade Defense Index options. 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 fee will allow the Exchange to 
recoup its costs in connection with index licensing fees for the 
trading of the Spade Defense Index options. The fee will be collected 
on every Spade Defense Index 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 Spade Defense Index 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 
this fee will help to allocate to those market participants offering 
Spade Defense Index options a fair share of the related costs of 
offering such options. In connection with the adoption of an options 
licensing fee for the Spade Defense Index 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-2005-090 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-2005-090. 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

[[Page 56196]]

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-2005-090 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. E5-5170 Filed 9-23-05; 8:45 am]

BILLING CODE 8010-01-P