[Federal Register Volume 64, Number 92 (Thursday, May 13, 1999)]
[Notices]
[Pages 25931-25932]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-12062]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-41370; File No. SR-Amex-99-12]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change and Amendment No. 1 to the 
Proposed Rule Change by the American Stock Exchange LLC, Decreasing 
Options Transaction Fees

May 5, 1999.
    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 March 30, 1999, the American Stock Exchange LLC (``Amex'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``SEC'' or ``Commission'') the proposed rule change as described in 
Items I, II, and III below, which Items have been prepared by the 
Exchange. On April 22, 1999, the Exchange filed Amendment No. 1 \3\ 
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\ Letter from Scott G. Van Hatten, Legal Counsel, Derivative 
Securities, Nasdaq-Amex, to Richard Strasser, Assistant Director, 
Division of Market Regulations, SEC, dated April 21, 1999. In 
Amendment No. 1, the Exchange corrected the statutory basis of the 
original filing to refer to Section 6(b)(4) of the Act.
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I. Self-Regulatory Organization's Statement of the Terms of 
Substance of the Proposed Rule Change

    The Exchange proposes to reduce options transaction fees. The text 
of the proposed rule change is available at the Exchange, and at the 
Commission.

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

I. Purpose
    The Amex currently imposes a transaction charge on options trades 
executed on the Exchange. These charges vary depending on whether the 
transaction involves an equity or index option, and whether the 
transaction is executed for a specialist or market marker account, a 
member firm's proprietary account, or a customer account. The Amex also 
imposes a charge for clearance of options trades and an options floor 
brokerage charge, which also depend upon the type of account for which 
the trade is executed. In addition, all three types of charges 
(transaction, options clearance, and options floor brokerage) are 
subject to caps on the number of options contracts subject to the 
charges on a given day.\4\
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    \4\ The current caps are set at 2000 contracts for customer 
trades, and 3000 contracts for member firm proprietary, specialist, 
and market maker traders.
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    Currently, a transaction fee in an amount equal to either $.15, 
$.20, $.30, or $.40 per contract side is assessed for each customer 
option transaction, depending on the size of the premium involved 
(greater than or equal to $1, or less than $1) and the type of option 
(equity or index).\5\ For example, a charge is incurred in an amount 
equal to $.30 for equity and $.40 for index option customer 
transactions (per contract side) when the premium is greater than or 
equal to $1. When the premium is less than $1, the transaction charge 
incurred is equal to $.15 for equity and $.20 for index option 
transactions (per contract side). These customer transaction charges 
also apply to both Long Term Equity Anticipation Securities (``LEAPS'') 
\6\ and FLEX \7\ options.
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    \5\ See Securities Exchange Act Release No. 38859 (July 22, 
1997), 62 FR 40561 (July 29, 1997) (File No. SR-Amex-97-22).
    \6\ LEAPS are long-term index option series that expire from 12 
to 36 months from their date of issuance. See Amex Rule 903C.
    \7\ FLEX options are customized options with individually 
specified terms such as strike price, expiration date and exercise 
style. See Amex Rules 900G-909G.
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    Under the revised fee schedule, these transaction charges will be 
determined by the number of contracts in the order. As a result, for 
customer market and marketable limit orders of 30 or fewer contracts, 
no transaction charge will apply. For customer limit orders for 30 or 
fewer contracts, a charge of $.10 per contract side will be assessed 
for both equity and index options. For all customer orders in excess of 
30 contracts, a transaction charge equal to $.10 per contract side will 
be assessed.
    The Exchange believes this reduction in transaction charges will 
result in an overall 50% reduction of customer transaction charges 
during 1999. The Exchange believes that this will provide an actual 
cost savings to customers of approximately $15-16 million (based on 
1998 option contract volume) or approximately $12-13 million (based on 
1999 budget option contract volume). The Exchange also believes that 
the reductions are necessary to make the Exchange's options transaction 
charges more competitive with other options exchanges' fees and with 
the cost of trading other financial instruments, and to increase the 
number of options orders that are routed to the Exchange. While the 
Exchange anticipates that other options exchanges may also cut costs to 
customers, it believes that the proposed reductions will increase 
options usage among all investors and stimulate industry-wide growth in 
the options business.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act \8\ in general, and furthers the 
objectives of Section 6(b)(4) of the Act \9\ in particular in that it 
is designed to provide for the equitable allocation of reasonable dues, 
fees, and other charges among its members and issuers and other persons 
using its facilities.
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    \8\ 15 U.S.C. 78f(b).
    \9\ 15 U.S.C. 78f(b)(4).

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[[Page 25932]]

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.

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

    Because the foregoing rule change establishes or changes a due, 
fee, or other change imposed by the Exchange, it has become effective 
pursuant to Section 19(b)(3)(A)(ii) of the Act \10\ and subparagraph 
(f)(2) of Rule 19b-4 thereunder. \11\ 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. \12\
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    \10\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \11\ 17 CFR 240.19b-4(f)(2).
    \12\ In reviewing this proposal, the Commission has considered 
its impact on efficiency, competition, and capital formation. 15 
U.S.C. 78c(f).
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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 proposal is 
consistent with the Act. Persons making written submissions should file 
six copies thereof with the Secretary, Securities and Exchange 
Commission, 450 Fifth Street, N.W., Washington, D.C. 20549-0609. 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 avaiable for inspection and copying in the 
Commission's Public Reference Room. Copies of such filing will also be 
available for inspection and copying at the principal office of the 
Amex. All submissions should refer to file number SR-Amex-99-12, and 
should be submitted by June 3, 1999.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority. \13\
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    \13\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 99-12062 Filed 5-12-99; 8:45 am]
BILLING CODE 8010-01-M