[Federal Register Volume 65, Number 182 (Tuesday, September 19, 2000)]
[Notices]
[Pages 56606-56608]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-24011]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-43279; File No. SR-Amex-00-44]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by American Stock Exchange LLC 
Relating to an Increase in the Fees for Associate Members and Off-floor 
Traders

September 11, 2000.
    Pursuant to section 19(b)(1) of the Securities Exchange of 1934 
(``Exchange Act'' or ``Act'') \1\ notice is hereby given that on August 
11, 2000, 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. 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).
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I. Self-Regulatory Organization's Statement of the Terms of 
Substance of the Proposed Rule Change

    Pursuant to the provisions of section 19(b)(1) under the Exchange 
Act,\2\ the Exchange is herewith filing a proposed rule change to amend 
Article IV, sections 1(d) and (f) and Article VII, Section (3) of the 
Exchange Constitution to increase the fees for Associate Members and 
off-floor traders. Below is the text of the proposed rule change. 
Additions are italicized; deletions are in brackets.
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    \2\ Id.
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American Stock Exchange Constitution

Article IV

    Sec. 1(a)-(c) No change.
    (d) Associate membership--The number of associate members shall 
be such as may be determined by the Board of Governors from time to 
time. Any person not less than the minimum age of majority required 
to be responsible for his contracts in each jurisdiction in which he 
conducts business either as a partner of a firm or as a director or 
executive officer of a corporation may make application for 
associate membership.
    An application for associate membership shall be in writing and 
shall be in such form, and contain such information, as the Exchange 
may from time to time prescribe. No person may be admitted to 
associate membership unless his application is approved by the 
Exchange, in accordance with the provisions of Section 1(g) of this 
Article IV. Any person admitted to associate membership in the 
American Stock Exchange LLC [Inc.] prior to September 4, 1962, as an 
individual or as a partner of a firm shall remain an associated 
member only so long as he is actively engaged in the business of 
buying and selling securities as broker or dealer. Any person 
admitted to associate membership in the Exchange or in the American 
Stock Exchange LLC [Inc.] after September 4, 1962, as a partner of a 
firm shall remain as associate member only so long as he remains a 
partner of such firm or of another firm continuing the business of 
the first firm or a director or executive officer of a corporation 
continuing the business of the first firm. Any person admitted to 
associate membership in the Exchange or in the American Stock 
Exchange LLC [Inc.], whether before of after September 4, 1962, as a 
director or executive officer of a corporation shall remain an 
associate member only so long as he remains a director or executive 
officer of such corporation or of another corporation continuing the 
business of the first corporation.
    An associate member and the member firm or member corporation of 
which he is a partner or a director or executive officer shall have 
such rights and privileges, as may, from time to time, be prescribed 
by the Board of Governors. Where an associate member and partner or 
director or executive officer of a member firm or corporation ceases 
to be such a partner, director or officer of such firm or 
corporation such firm or corporation may, within thirty days 
following such death, retirement and resignation or termination of 
office or within such further time as the Exchange may authorize, 
nominate for associate membership a general partner in such form or 
a director or executive officer, the Exchange may authorize the firm 
in which he as a partner or the corporation in which he was a 
director or executive officer to have the status of a temporary 
associate member firm or a temporary associate member corporation, 
as the case may be, for a period of thirty days from the date of 
such death or for such further time as the Exchange shall determine, 
and upon such conditions as the Exchange may fix, and the exchange 
may at any time during such period withdraw such authorization in 
which event such status shall terminate.
    [Each] A[a]ssociate members for whom the Exchange is the 
Designated Examining Authority shall be required to pay [who has 
paid] an annual membership fee as set forth in Article VII, Section 
1 herein[,] and, upon payment of the optional annual electronic 
access fee shall be entitled, [during the period for which such fee 
has been paid and] while such member remains in good standing, to 
maintain electronic access to (i) the PER/AMOS system of the 
Exchange, and (ii) such other automated systems of the Exchange as 
the Board may from time to time determine. Effective August 7, 2000, 
all new associate members shall be required to pay the annual 
electronic access fee as well as the monthly and/or annual fees.
    An associate member may, if accompanied by a regular member, 
visit the Floor of the Exchange but shall not have the privilege of 
transacting business thereon.
    (e) No change.
    (f) No person shall be approved for regular, options principal 
or associate membership or admitted to the privileges thereof until 
the

[[Page 56607]]

Exchange shall have received the initiation fee, and, in the case of 
associate members, [who have elected to maintain] the fee for 
electronic access to Exchange systems as provided in Article IV, 
Section 1(d)[,] and the monthly and/or annual membership fees, 
required by Article VII[.], Section 1(e).
    (g)-(j) No change.
* * * * *

Article VII

    Sec. 1(a)-(d) No change.
    (e) Associate members--The initiation fee for associate 
membership shall be a sum equal to 5% of the latest price at which a 
regular membership shall have been sold and transferred to an 
applicant for regular membership, otherwise than for a nominal 
consideration or through a private sale prior to the date when such 
initiation fee is due, provided, however, that the initiation fee 
for an associate member who is approved as the nominee of an 
associate member firm or corporation pursuant to Article IV, Section 
1(d) shall be $100. The annual membership fee for associate 
membership shall be $4,000 per month for associate member firms and 
$3,000 per year for individual associate members and off-floor 
traders. Associate members shall be permitted to waive these fees by 
demonstrating to the Exchange's Financial Regulatory Services 
Department that ten percent (10%) of the associate member's and/or 
individual off-floor trader's volume is transacted on the Floor of 
the Exchange. The annual membership fee for associated membership 
access to the Exchange electronic systems as provided in Article IV, 
Section 1(d) shall be fixed by the Board once a year, and shall be a 
sum equal to 10% of the average price at which regular memberships 
shall have been sold and transferred to applicants for regular 
membership, otherwise than for nominal consideration or through 
private sale, during the preceding twelve months. Effective August 
7, 2000, all new associate members shall be required to pay the 
annual electronic access fee as well as the monthly and/or annual 
fees. Such initiation, [and/or] monthly and/or annual and electronic 
access fees shall be paid prior to the approval by the Exchange of 
an applicant for associate membership, and prior to renewal of such 
membership at the end of the period for which such fees have[s] been 
paid.
    (f) No change.

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
    Recently, other exchanges \3\ have increased the fees and dues 
charged to off-floor traders to deter applicants who apply for exchange 
membership merely to satisfy the SEC's exchange membership requirement, 
while most of the trading is done away from the exchange. The Exchange 
has been subject to significantly increased costs in the areas of 
admissions, examinations and enforcement because it is the Designated 
Examining Authority (``DEA'') for a number of joint back-office and 
day-trading operations which bring little, if any, business to the 
Exchange, but represent a serious regulatory concern.
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    \3\ See Securities Exchange Act Release No. 42497 (Mar. 6, 
2000), 65 FR 14005 (Mar. 15, 2000) [File No. SR-PHLX-00-09] and 
Securities Exchange Act Release No. 43074 (July 26, 2000), 65 FR 
47529 (Aug. 2, 2000) [File No. SR-CHX-00-23] relating to 
registrations and annual fees for off-floor traders; but see 
Securities Exchange Act Release No. 43257 (Sept. 6, 2000) [File No. 
SR-PHLX-00-73].
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    To cover increased administrative and examination costs, the 
Exchange proposes to charge Associate Members, where the Exchange is 
the DEA, a fee of $4,000 per month for Associate Member Firms and 
$3,000 per year for individual off-floor trader.\4\ Associate Members 
will be permitted to waive these fees by demonstrating to the 
Exchange's Financial Regulatory Services Department that ten percent 
(10%) of the Associate Member's and/or individual off-floor trader's 
volume is transacted on the Floor of the Exchange. Effective August 7, 
2000, all new Associate Members and individual off-floor traders will 
be required to pay the annual electronic access fee as well as the 
monthly and/or annual fees.
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    \4\ This increase in fees will be effective November 1, 2000. 
Telephone conversation between Florence Harmon, Senior Special 
Counsel, SEC, and Robert Kline Jr., Managing Director, Membership 
Services, AMEX (Sept. 8, 2000).
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2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the provisions of section 6(b) of the Act \5\ in general and 
furthers the objectives of section 6(b)(4) of the Act \6\ 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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    \5\ 15 U.S.C. 78f(b).
    \6\ 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 
result in any burden on competition that is not necessary or 
appropriate in furtherance of the purposes of the Act, as amended.

(C) Self-Regulatory Organization's Statement on Comments on the 
Proposed Rule Change Received from Members, Participants or Others

    Written comments were neither solicited nor received.

III. Date of Effectiveness of the Proposed Rule Change and Timing 
for Commission Action

    The foregoing rule change has become effective pursuant to section 
19(b)(3)(A) of the Exchange Act \7\ and subparagraph (f) of Rule 19b-4 
\8\ under the Act in that it is establishing or changing a due, fee, or 
other charge. 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, or 
otherwise in furtherance of the purposes of the Act.
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    \7\ 15 U.S.C. 78s(b)(3)(A).
    \8\ 17 CFR 240.19(b)(4).
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IV. Solicitation of Comments

    Interested persons are invited to submit written data, views and 
arguments concerning the foregoing. Persons making written submissions 
should file six copies thereof with the Secretary, Securities and 
Exchange Commission, 450 Fifth Street, NW., Washington, DC 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 available 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 the File No. SR-Amex-00-44 and 
should be submitted by October 10, 2000.

[[Page 56608]]

    For the Commission by the Division of Market Regulation, pursuant 
to delegated authority.\9\
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    \9\ 17 CFR 200.30-3(a)(12).

Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 00-24011 Filed 9-18-00; 8:45 am]
BILLING CODE 8010-01-M