[Federal Register Volume 66, Number 233 (Tuesday, December 4, 2001)]
[Notices]
[Pages 63080-63081]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-29986]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-45110; File No. SR-Amex-2001-90]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change and Amendment No. 1 Thereto by 
the American Stock Exchange LLC Establishing New Exchange Fees Based on 
the Number of Order Cancellations Routed Through the Amex Order File

November 27, 2001.
    Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act'') \1\ and Rule 19b-4 \2\ thereunder, notice is hereby given 
that on October 23, 2001, 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 November 21, 2001, the Amex submitted Amendment No. 1 to 
the proposed rule change.\3\ The Commission is publishing this notice 
to solicit comments on the proposed rule change, as amended, from 
interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See letter from Claire P. McGrath, Vice President & Deputy 
General Counsel, Amex, to Nancy Sanow, Assistant Director, Division 
of Market Regulation (``Division''), Commission, dated November 20, 
2001 (``Amendment No. 1''). In Amendment No. 1, the Amex amended 
note 5 to Section VI, Options Order Cancellation Fee of the Amex Fee 
Schedule, to clarify that the fee will be assessed when the total 
number of orders an executing clearing member cancels through the 
Amex Order File (``AOF'') in a particular month exceeds the total 
number of orders that the member executes through the AOF in that 
same month. For purposes of calculating the 60-day period within 
which the Commission may summarily abrogate the proposed rule change 
under Section 19(b)(3)(C) of the Act, the Commission considers that 
period to commence on November 20, 2001, the date the Amex filed 
Amendment No. 1. See 15 U.S.C. 78s(b)(3)(C).
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I. Self-Regulatory Organization's Statement of the Terms of 
Substance of the Proposed Rule Change

    The Amex proposes to establish a new fee based upon the number of 
order

[[Page 63081]]

cancellations that are routed through the AOF.
    The text of the proposed rule change, as amended, is available at 
the Office of the Secretary, Amex 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 Amex included statements 
concerning the purpose of and basis for the proposed rule change, as 
amended, 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
    The Exchange proposed to establish a fee on the cancellation of 
orders. The Exchange represents that the fee is necessary given the 
often disproportionate number of order cancellations received relative 
to order executions and the increased costs associated with the 
practice of immediately following an order routed through exchange 
systems with a cancel request for that order. The Exchange asserts that 
these order cancellations utilize system capacity and may require 
manual processing by specialist unit personnel, which may unnecessarily 
distract specialist staff from other responsibilities. The Exchange 
represents that cancellations often come in large numbers, which create 
backlogs in the AOF, increase Exchange costs, adversely impact public 
customers, their clearing firms, and specialists, and result in less-
than-timely executions of customer orders. The Exchange asserts that 
the large volume of order cancellations requires an increase in 
Exchange spending on systems and related hardware used to process 
increased message traffic.
    Pursuant to the proposed fee, the executing Clearing Member would 
be charged $1.00 for every order that it cancels through the AOF in any 
month when the total number of orders cancelled through the AOF exceeds 
the total number of orders that same firm executed through AOF in that 
same month.\4\ This fee will not apply to executing Clearing Members 
that cancel fewer than 500 orders through AOF in a given month. The 
Exchange will begin billing the cancellation fee after November 1, 
2001.
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    \4\ Telephone conversation between Claire P. McGrath, Vice 
President & Deputy General Counsel, Amex, and Frank N. Genco, 
Attorney Advisor, Division, Commission, on November 16, 2001.
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2. Statutory Basis
    The Exchange believes that the proposal is consistent with section 
6(b) of the Act,\5\ in general, and 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 changes 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, as 
amended, 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 nor received.

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

    The foregoing proposed rule change, as amended, has become 
effective pursuant to section 19(b)(3)(A)(ii) of the Act \7\ and 
subparagraph (f)(2) of Rule 19b-4 \8\ thereunder, because it 
establishes or changes a due, fee, or other charge.\9\ At any time 
within 60 days of November 21, 2001, the Commission may summarily 
abrogate such proposed rule change, as amended, 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.\10\
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    \7\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \8\ 17 CFR 240.19b-4(f)(2).
    \9\ The Exchange's proposed rule change is similar to a fee 
instituted by the Chicago Board Options Exchange, Inc., which became 
immediately effective on July 27, 2001. See Securities Exchange Act 
Release No. 44607 (July 27, 2001), 66 FR 40757 (August 3, 2001).
    \10\ See 15 U.S.C. 78(b)(3)(C).
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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, as amended, is consistent with the Act. 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, as 
amended, that are filed with the Commission, and all written 
communications relating to the proposed rule change, as amended, 
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 File No. SR-Amex-2001-90 and should 
be submitted by December 26, 2001.

    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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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 01-29986 Filed 12-3-01; 8:45 am]
BILLING CODE 8010-01-M