[Federal Register Volume 67, Number 120 (Friday, June 21, 2002)]
[Notices]
[Pages 42306-42307]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-15711]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-46078; File No. SR-Amex-2002-45]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by the American Stock Exchange 
LLC Relating to the Discontinuation of the Exchange's Program of 
Revenue Sharing With Exchange Specialists

June 14, 2002.
    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 May 29, 2002, the American Stock Exchange LLC (``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 the Exchange. The Amex 
has designated this proposal as one establishing or changing a due, 
fee, or other charge imposed by the Exchange under Section 
19(b)(3)(A)(ii) of the Act,\3\ 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)(ii).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to discontinue the Exchange's program of 
revenue sharing with Exchange specialists. The revenue sharing program 
will be reduced by 50 percent as of July 1, 2002 and will be 
discontinued entirely effective January 1, 2003.\4\
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    \4\ The Exchange will issue a Memorandum to Amex specialist 
units describing the 50 percent reduction in revenue sharing as of 
July 1, 2002 and the elimination of the program, effective January 
1, 2003. Telephone conversation between Michael Cavalier, Associate 
General Counsel, Amex, and Cyndi Nguyen, Attorney, Division of 
Market Regulation (``Division''), Commission, on June 12, 2002.
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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 parts of such 
statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    In SR-Amex-99-44,\5\ the Exchange filed: (1) Certain changes to the 
Exchange's Equity Fee Schedule, including elimination of share or value 
charges for orders up to 2,099 shares entered into the Amex Order File 
(``System Orders''); (2) implementation of a policy to eliminate 
specialists'' commissions for System Orders up to 2,099 shares; and (3) 
a program of revenue sharing with Exchange specialists, to be made from 
the Exchange's general revenues. These fee and policy revisions were 
implemented as of November 1, 1999.\6\
    The applicable revenue sharing is calculated on the basis of 
average daily Amex (not consolidated) trading volume, excluding 
Portfolio Depositary Receipts (e.g., SPDRs[reg], Nasdaq 100 Index 
Tracking Stock\TM\), Index Fund Shares (e.g., iShares\TM\, VIPERs\TM\), 
and Trust Issued Receipts (e.g., HOLDRs\TM\) based on the following 
incremental rates per 100 shares:
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    \5\ See Securities Exchange Act Release No. 42067 (October 28, 
1999), 64 FR 60254 (November 4, 1999).
    \6\ Telephone conversation between Michael Cavalier, Associate 
General Counsel, Amex, and Cyndi Nguyen, Attorney, Division, 
Commission, on June 6, 2002.

[[Page 42307]]



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                                                               Rate per
               Average daily volume (millions)                100 shares
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Up to 40....................................................       $0.25
from 40 to 60...............................................         .23
from 60 to 80...............................................         .20
over 80.....................................................         .18
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    The applicable rate(s) is calculated monthly. Payments on qualified 
orders are made monthly in arrears to equity specialists at a rate 
calculated as a single weighted average rate based on volume for the 
month most recently ended. Qualifying orders are those delivered 
electronically from off the floor of the Exchange, but excluding all 
orders for Portfolio Depositary Receipts, Index Fund Shares, and Trust 
Issued Receipts.
    The Exchange has determined to reduce the revenue sharing 
arrangement by 50 percent as of July 1, 2002 and to discontinue the 
revenue sharing program entirely effective January 1, 2003, in view of 
revenue requirements of the Exchange under increasingly competitive 
market conditions. The rate per 100 shares applicable from July 1 to 
December 31, 2002 would be $.125, $.115, $.10, and $.09 for Average 
Daily Volume of up to 40 million, from 40 to 60 million, from 60 to 80 
million, and over 80 million shares, respectively.
    Because this program was implemented in conjunction with 
implementation of an Exchange policy to eliminate specialist 
commissions for System Orders up to 2,099 shares, the Exchange believes 
continued application of this policy to be inappropriate and 
unnecessary. Specialists, therefore, would be able to charge 
commissions for such orders if they choose.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act \7\ in general, and furthers the 
objectives of Section 6(b)(4) \8\ in particular, because it is designed 
to provide for the equitable allocation of reasonable dues, fees, and 
other charges among its members, issuers and other persons using its 
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

    Written comments on the proposed rule change were neither solicited 
nor received.

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 the Exchange. 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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    \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. 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 Section. 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-2002-45 and 
should be submitted by July 12, 2002.

    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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Jill M. Peterson,
Assistant Secretary.
[FR Doc. 02-15711 Filed 6-20-02; 8:45 am]
BILLING CODE 8010-01-U