[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