[Federal Register Volume 68, Number 211 (Friday, October 31, 2003)]
[Notices]
[Pages 62121-62122]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-27462]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-48665; File No. SR-Amex-2003-85]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by the American Stock Exchange 
LLC Relating to Adoption of a per Contract Licensing Fee for 
Transactions in Options on iShares Lehman U.S. Aggregate Bond Fund 
(AGG)

October 20, 2003.
    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 1, 2003, the American Stock Exchange LLC (``Exchange'' 
or ``Amex'') 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 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

    Amex proposes to amend its options fee schedule by adopting a per 
contract license fee in connection with specialist and registered 
options traders (``ROTs'') transactions in options on iShares Lehman 
U.S. Aggregate Bond Fund (AGG).\3\
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    \3\ The Commission notes that Amex is also deleting reference in 
its Options Fee Schedule to an expired three-month pilot program 
that reduced specialist and ROT transaction fees for equity and QQQ 
options. See Securities Exchange Act Release No. 48111 (June 30, 
2003), 68 FR 40726 (July 8, 2003).
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    The text of the proposed rule change is available at 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, 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. 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 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange has entered into numerous agreements with issuers and 
owners of indexes for the purpose of trading options on certain 
exchange-traded funds (``ETFs''). Many agreements require the Exchange 
to pay a significant licensing fee to issuers or index owners as a 
condition to the listing and trading of these ETF options that may not 
be reimbursed. In an effort to recoup the costs associated with index 
licenses, the Exchange has previously established a per contract 
licensing fee for specialists and ROTs that is collected on every 
transaction in designated products in which a specialist or a ROT is a 
party. The licensing fee currently imposed on specialists and ROTs is 
as follows: (1) $0.10 per contract side for options on the Nasdaq-100 
Index Tracking Stock (QQQ), the Nasdaq-100 Index (NDX), the Mini-NDX 
(MNX), the iShares Goldman Sachs Corporate Bond Fund (LQD), the iShares 
Lehman 1-3 Year Treasury Bond Fund (SHY), iShares Lehman 7-10 Year 
Treasury Bond Fund (IEF), and iShares Lehman 20+ Year Treasury Bond 
Fund (TLT); (2) $0.09 per contract side for options on the iShares 
Cohen & Steers Realty Majors Index Fund (ICF); and (3) $0.05 per 
contract side for options on the S&P 100 iShares (OEF).\4\
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    \4\ See Securities Exchange Act Release Nos. 45163 (December 18, 
2001), 66 FR 66958 (December 27, 2001), 47432 (March 3, 2003), 68 FR 
11420 (March 10, 2003), 47431 (March 3, 2003), 68 FR 11882 (March 
12, 2003), and 47956 (May 30, 2003), 68 FR 34687 (June 10, 2003).
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    The purpose of the proposed fee is for the Exchange to recoup its 
costs in connection with the index license fee for the trading of 
options on the iShares Lehman U.S. Aggregate Bond Fund. The proposed 
licensing fee will be collected on every option transaction of the 
iShares Lehman U.S. Aggregate Bond Fund in which the specialist or ROT 
is a party. The Exchange proposes to charge $0.10 per contract side for 
options on the iShares Lehman U.S. Aggregate Bond Fund. Accordingly, 
the Exchange believes that requiring the payment of a per contract 
licensing fee by those specialists units and ROTs that are the 
beneficiaries of the Exchange's index license agreements is justified 
and consistent with the rules of the Exchange and the Act. In addition, 
the Exchange believes that passing the license fee (on a per contract 
basis) along to the specialist(s) allocated to options on the iShares 
Lehman U.S. Aggregate Bond Fund and the ROTs trading such product, is 
efficient and consistent with the intent of the Exchange to pass on its 
non-reimbursed costs to those market participants that are the 
beneficiaries.
    Amex notes that in recent years it has increased a number of member 
fees to better align Exchange fees with the actual cost of delivering 
services and reduce Exchange subsidies of such services.\5\ Amex 
believes that implementation of this proposal is consistent with the 
reduction and/or elimination of these subsidies.
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    \5\ See Securities Exchange Act Release Nos. 45360 (January 29, 
2002), 67 FR 5626 (February 6, 2002), and 44286 (May 9, 2001), 66 FR 
27187 (May 16, 2001).
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    The Exchange asserts that the proposed license fee will provide 
additional revenue for the purpose of recouping Amex's costs associated 
with the trading of options on the iShares Lehman U.S. Aggregate Bond 
Fund. In addition, Amex believes that this fee

[[Page 62122]]

will help to allocate to those specialists and ROTs transacting in 
options on the iShares Lehman U.S. Aggregate Bond Fund, a fair share of 
the related costs of offering such options. Accordingly, the Exchange 
believes that the proposed fee is reasonable.
2. Basis
    The Exchange believes the proposed rule change is consistent with 
Section 6 of the Act,\6\ in general, and with Section 6(b)(4) of the 
Act,\7\ in particular, in that it is designed to provide for the 
equitable allocation of reasonable dues, fees, and other charges among 
its members.
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    \6\ 15 U.S.C. 78f.
    \7\ 15 U.S.C. 78f(b)(4).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    Amex 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 foregoing proposed rule change has become effective pursuant to 
Section 19(b)(3)(A)(ii) of the Act \8\ and subparagraph (f)(2) of Rule 
19b-4\9\ thereunder, because it establishes or changes a due, fee, or 
other charge.
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    \8\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \9\ 17 CFR 240.19b-4(f)(2).
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    At any time within 60 days of October 1, 2003, 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.\10\
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    \10\ See 15 U.S.C. 78s(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 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 Amex. 
All submissions should refer to File No. SR-Amex-2003-85 and should be 
submitted by November 21, 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. 03-27462 Filed 10-30-03; 8:45 am]
BILLING CODE 8010-01-P