[Federal Register Volume 68, Number 130 (Tuesday, July 8, 2003)]
[Notices]
[Pages 40726-40727]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-17144]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-48111; File No. SR-Amex-2003-52]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by the American Stock Exchange 
LLC Reducing to Option Transaction Fees

June 30, 2003.
    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, 2003, 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 Amex. 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.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to establish, on a three month pilot basis, a 
fee reduction for Exchange specialists and registered options traders 
(``ROTs'') in connection with equity option and QQQ option transactions 
where the other side of the trade is a market maker, i.e. specialist, 
ROT or away market maker. The reduction of these fees will be $0.08 per 
contract side for equity options and $0.18 per contract side for QQQ 
options. The text of the proposed rule change 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 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 Amex 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 the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Amex charges fees for transactions in options executed on the 
Exchange by Exchange specialists and ROTs. Current charges for 
specialist and ROT transactions in equity options is $0.36 per contract 
side which includes a $0.26 transaction charge, a $0.05 comparison fee 
and a $0.05 brokerage fee. In addition, for transactions in QQQ 
options, the fee for ROTs and specialists amounts to $0.46 per contract 
side consisting of a $0.26 transaction fee, a $0.10 licensing fee, a 
$0.05 comparison fee and a $0.05 brokerage fee.\3\
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    \3\ Customers are not charged a transaction fee, licensing fee, 
comparison fee, or brokerage fee.
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    For the purpose of attracting increased options volume to the floor 
of the Exchange, the Amex believes that certain transaction fees in 
connection with equity option and QQQ option transactions of 
specialists and ROTs should be reduced.\4\ This proposal

[[Page 40727]]

seeks, on a three month pilot basis, to reduce these charges by $0.08 
for equity options and $0.18 for QQQ options. In order for a specialist 
or ROT to qualify for the fee reduction, the option trades must be 
between market makers,\5\ i.e. the other side of the trade must be a 
specialist, ROT or away market maker.\6\ The Exchange believes that a 
three month pilot program for this fee reduction program is appropriate 
so that it is able to monitor and evaluate the effectiveness of the fee 
reduction.
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    \4\ The Amex believes that reducing these fees should encourage 
specialists and ROTS to attract additional order flow to the 
Exchange. Telephone call between Jeffrey P. Burns, Associate General 
Counsel, Amex, and Sonia Trocchio, Special Counsel, Division of 
Market Regulation (``Division''), Commission (June 26, 2003).
    \5\ Section 3(a)(38) of the Act defines ``market maker'' as any 
specialist permitted to act as a dealer, any dealer acting in the 
capacity of block positioner, and any dealer who, with respect to a 
security, holds himself out (by entering quotations in an inter-
dealer communications system or otherwise) as being willing to buy 
and sell such security for his own account on a regular or 
continuous basis.
    \6\ An ``away market maker'' is a member of another national 
securities exchange registered as a market maker in an options 
class(es). An ``away market maker'' is considered to be a ``broker-
dealer'' for purposes of the Exchange's fee schedule. Thus, ``away 
market makers'' would pay a $0.19 transaction fee for equity 
options, including the QQQ options; a $0.04 comparison fee; and a 
$0.03 floor brokerage fee. Telephone Call between Jeffrey P. Burns, 
Associate General Counsel, Amex, Kelly Riley, Senior Special 
Counsel, Division, Commission, and Sonia Trocchio, Special Counsel, 
Division, Commission (June 16, 2003).
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    This proposed change is expected to reduce the overall option 
transaction fee for specialists and ROTs to $0.28 for both equity and 
QQQ options in connection with market maker to market maker trades. In 
the case of equity option market maker to market maker trades, the new 
fee breakdown after the fee reduction will consist of a $0.18 
transaction fee, a $0.05 comparison fee and a $0.05 brokerage fee. For 
QQQ option market maker to market maker trades, the new fee breakdown 
after the fee reduction will consist of a $0.08 transaction fee, a 
$0.10 licensing fee, a $0.05 comparison fee and a $0.05 brokerage fee. 
The Amex believes that the proposed fee reduction of transaction costs 
for market maker to market maker trades is reasonable and will help to 
make the Exchange's fees more attractive and competitive with the other 
options exchanges.
2. Basis
    The Exchange believes the proposed rule change is consistent with 
section 6(b) of the Act,\7\ in general, and with section 6(b)(4)\8\ in 
particular, in that it provides for the equitable allocation of 
reasonable dues, fees, and other charges among its members.
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    \7\ 15 U.S.C. 78f.
    \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.

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

    The proposed rule change has been designated as a fee change 
pursuant to section 19(b)(3)(A)(ii) of the Act \9\ and Rule 19b-
4(f)(2)\10\ thereunder. 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 the 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 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, 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 File No. SR-Amex-2003-52 and should be 
submitted by July 29, 2003.

    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. 03-17144 Filed 7-7-03; 8:45 am]
BILLING CODE 8010-01-P