[Federal Register Volume 69, Number 24 (Thursday, February 5, 2004)]
[Notices]
[Pages 5619-5620]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-2358]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-49145; File No. SR-Amex-2004-03]


Self-Regulatory Organizations; Notice of Filing and Order 
Granting Accelerated Approval of Proposed Rule Change by the American 
Stock Exchange LLC Relating to the Extension of a Linkage Fee Pilot 
Program

    January 29, 2004.
    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 January 14, 2004, 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 and 
II 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 and is approving the 
proposed rule change on an accelerated basis.
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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 extend for six (6) months, until July 31, 
2004, the current pilot program regarding transaction fees for trades 
executed through the intermarket options linkage (the ``Linkage'') on 
the Exchange.
    The proposed fee schedule is available at the Exchange 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 III 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 Amex is proposing to extend for six (6) months, until July 31, 
2004, the current pilot program establishing Exchange fees for 
Principal Orders (``P Orders'') and Principal Acting As Agent Orders 
(``P/A Orders'') executed through the Linkage. The fees in connection 
with the pilot program are scheduled to expire on January 31, 2004.\3\ 
The fees charged by the Amex under the pilot program consist of a $0.26 
per contract transaction fee, a $0.05 comparison fee, and a $0.05 floor 
brokerage fee. In addition to the previously approved fees, Amex is 
proposing to subject incoming P and P/A orders for certain licensed 
index products to a licensing fee \4\ as part of the pilot.\5\ These 
are the same fees charged to specialists and Registered Options Traders 
(``ROTs'') for transactions executed on the Exchange. Consistent with 
the Linkage Plan, the Amex does not charge for the execution of 
Satisfaction Orders sent through the Linkage.\6\
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    \3\ See Securities Exchange Act Release No. 47822 (May 9, 2003), 
68 FR 27115 (May 19, 2003) (SR-Amex-2003-14).
    \4\ For example, specialists and registered options traders on 
the Exchange are subject to a $.10 per contract fee for transactions 
in QQQ options.
    \5\ Telephone conversation between Jeffrey Burns, Associate 
General Counsel, Amex, and Jennifer Colihan, Special Counsel, 
Division of Market Regulation, Commission on January 23, 2004 
clarifying that the previous approval of fees for Linkage Orders 
(see note 3, supra) did not include the Options Licensing Fee.
    \6\ See Securities Exchange Act Release No. 47298 (January 31, 
2003), 68 FR 6524 (February 7, 2003) (File No. 4-429).
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    As was the case in its filing for the original pilot program, the 
Exchange believes that the existing fee amount for equity options that 
currently is charged to Exchange specialists and ROTs should apply to 
executions resulting from Linkage Orders. Market makers from other 
option exchanges accessing the liquidity of the Exchange by sending P 
or P/A Orders accordingly pay the same fees applicable to Amex 
specialists and ROTs for such executions.
    Based on the limited experience operating the Linkage, the Exchange 
believes that an extension of the pilot program for six (6) months 
until July 31, 2004 is appropriate. During this time, the Exchange 
intends to study the effect of Linkage fees and prepare to file a 
permanent Linkage fee proposal.
2. Statutory Basis
    The Amex believes the proposed rule change is consistent with 
Section 6(b)(4) of the Act \7\ regarding the equitable allocation of 
reasonable dues, fees and other charges among exchange members and 
other persons using exchange facilities.
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    \7\ 15 U.S.C. 78f(b)(4).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange believes that the proposed rule change will impose no 
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. 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. 
Comments may also be submitted electronically at the following e-mail 
address: [email protected]. All comment letters should refer to 
File No. SR-Amex-2004-03. This file number should be included on the 
subject line if e-mail is used. To help the Commission process and 
review your comments more efficiently, comments should be sent in 
hardcopy or by e-mail but not by both methods. Copies of the 
submission, all subsequent

[[Page 5620]]

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 Exchange. All 
submissions should be submitted by February 26, 2004.

IV. Commission's Findings and Order Granting Accelerated Approval of 
Proposed Rule Change

    After careful consideration, the Commission finds that the proposed 
rule change is consistent with the requirements of the Act and the 
rules and regulations thereunder, applicable to a national securities 
exchange,\8\ and, in particular, with the requirements of section 6(b) 
of the Act \9\ and the rules and regulations thereunder. The Commission 
finds that the proposed rule change is consistent with section 6(b)(4) 
of the Act,\10\ which requires that the rules of the Exchange provide 
for the equitable allocation of reasonable dues, fees, and other 
charges among its members and other persons using its facilities. The 
Commission believes that the extension of the Exchange's Linkage fee 
pilot program until July 31, 2004 will give the Exchange and the 
Commission further opportunity to evaluate whether such fees are 
appropriate.
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    \8\ In approving this rule, the Commission notes that it has 
considered its impact on efficiency, competition, and capital 
formation. 15 U.S.C. 78c(f).
    \9\ 15 U.S.C. 78f(b).
    \10\ 15 U.S.C. 78f(b)(4).
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    The Commission finds good cause, pursuant to section 19(b)(2) of 
the Act,\11\ for approving the proposed rule change prior to the 
thirtieth day after the date of publication of the notice of the filing 
thereof in the Federal Register. The Commission believes that granting 
accelerated approval will preserve the Exchange's existing pilot 
program for Linkage fees without interruption as the Amex and the 
Commission further consider the appropriateness of Linkage fees.
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    \11\ 15 U.S.C. 78s(b)(2).
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V. Conclusion

    It is therefore ordered, pursuant to section 19(b)(2) of the 
Act,\12\ that the proposed rule change (SR-Amex-2004-03) is hereby 
approved on an accelerated basis for a pilot period to expire on July 
31, 2004.
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    \12\ Id.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\13\
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    \13\ 17 CFR 200.30-3(a)(12).
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Jill M. Peterson,
Assistant Secretary.
[FR Doc. 04-2358 Filed 2-4-04; 8:45 am]
BILLING CODE 8010-01-P