[Federal Register Volume 69, Number 37 (Wednesday, February 25, 2004)]
[Notices]
[Pages 8711-8713]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-4123]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-49273; File No. SR-Amex-2003-113]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change and Amendment No. 1 Thereto by 
the American Stock Exchange LLC Relating to Adoption of a Per Contract 
Licensing Fee for Transactions in Options on iShares Lehman U.S. 
Treasury Inflation Protected Securities Fund (TIP)

February 18, 2004.
    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 December 29, 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. On February 9, 
2004, Amex filed Amendment No. 1 to the proposed rule change.\3\ The 
Commission is publishing this notice to solicit comments on the 
proposed rule change from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See letter from Jeffrey P. Burns, Associate General Counsel, 
Amex, to Kelly Riley, Senior Special Counsel, Division of Market 
Regulation, Commission, dated February 6, 2004 (``Amendment No. 
1''). In Amendment No. 1, Amex amended the proposed rule text to 
reflect the addition of TIP options and to conform footnote 1 to the 
Options Fee Schedule to changes made in File No. SR-Amex-2003-112. 
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 February 9, 2004, the date Amex filed Amendment No. 1 
to the proposed rule change. See 15 U.S.C. 78s(b)(3)(C).
---------------------------------------------------------------------------

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 for specialist and registered

[[Page 8712]]

options trader (``ROTs'') transactions in options on iShares Lehman 
U.S. Treasury Inflation Protected Securities Fund (TIP).
    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) $0.15 per contract side for options on the Fidelity 
Nasdaq Composite Index Tracking Stock (ONEQ);\4\ (2) $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), iShares 
Lehman 20+ Year Treasury Bond Fund (TLT), and iShares Lehman U.S. 
Aggregate Bond Fund (AGG); (3) $0.09 per contract side for options on 
the iShares Cohen & Steers Realty Majors Index Fund (ICF); and (4) 
$0.05 per contract side for options on the S&P 100 iShares (OEF).\5\
    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. Treasury Inflation Protected 
Securities Fund. The proposed licensing fee will be collected on every 
option transaction of the iShares Lehman U.S. Treasury Inflation 
Protected Securities 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. Treasury Inflation Protected Securities Fund.
---------------------------------------------------------------------------

    \4\ See File No. SR-Amex-2003-112.
    \5\ 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); 47956 (May 30, 2003), 68 FR 34687 (June 10, 2003); and 
48665 (October 20, 2003) 68 FR 62121 (October 31, 2003); and File 
No. SR-Amex-2003-112.
---------------------------------------------------------------------------

    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. Treasury Inflation Protected Securities 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.\6\ Amex 
believes that implementation of this proposal is consistent with the 
reduction and/or elimination of these subsidies.
---------------------------------------------------------------------------

    \6\ 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).
---------------------------------------------------------------------------

    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. Treasury 
Inflation Protected Securities Fund. In addition, Amex believes that 
this fee will help to allocate to those specialists and ROTs 
transacting in options on the iShares Lehman U.S. Treasury Inflation 
Protected Securities 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,\7\ in general, and with Section 6(b)(4) of the 
Act,\8\ in particular, in that it is designed to provide for the 
equitable allocation of reasonable dues, fees, and other charges among 
its members.
---------------------------------------------------------------------------

    \7\ 15 U.S.C. 78f.
    \8\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------

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 \9\ and subparagraph (f)(2) of Rule 
19b-4\10\ thereunder, because it establishes or changes a due, fee, or 
other charge.
---------------------------------------------------------------------------

    \9\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \10\ 17 CFR 240.19b-4(f)(2).
---------------------------------------------------------------------------

    At any time within 60 days of the filing of the proposed rule 
change,\11\ 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.\12\
---------------------------------------------------------------------------

    \11\ See note 3 supra.
    \12\ See 15 U.S.C. 78s(b)(3)(C).
---------------------------------------------------------------------------

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. 
Comments should be submitted electronically at the following e-mail 
address: [email protected]. All comment letters should refer to 
File No. SR-Amex-2003-113. This file number should be included on the 
subject line

[[Page 8713]]

if e-mail is used. To help the Commission process and review comments 
more efficiently, comments should be sent in hard copy or by e-mail but 
not by both methods. 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 be submitted by March 17, 2004.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\13\
---------------------------------------------------------------------------

    \13\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 04-4123 Filed 2-24-04; 8:45 am]
BILLING CODE 8010-01-P