[Federal Register Volume 69, Number 64 (Friday, April 2, 2004)]
[Notices]
[Pages 17463-17465]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-7499]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-49488; File No. SR-AMEX-2004-18]


Self-Regulatory Organizations; American Stock Exchange LLC; 
Notice of Filing and Order Granting Accelerated Approval to the 
Proposed Rule Change Relating to an Extension of the Marketing Fee 
Voting Procedures Pilot Program

March 26, 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 March 11, 2004, the American Stock Exchange LLC (``Amex'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission'') a proposed rule change relating to the marketing fee 
voting procedures pilot program. The proposed rule change is described 
in Items I and II below, which the Amex has prepared. The Commission is 
publishing this notice to solicit comments from interested persons on 
the proposed rule change. The Commission is also approving the proposal 
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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[[Page 17464]]

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The American Stock Exchange LLC (the ``Amex'' or the ``Exchange'') 
proposes to extend, for an additional six (6) months, the Exchange's 
marketing fee voting procedures pilot program (the ``Pilot Program'').

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 had 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
    In June 2003, the Amex reinstated an equity option marketing fee on 
the transactions of specialists and registered options traders 
(``ROTs'') involving customer orders from firms that accept payment for 
directing their orders to the Exchange.\3\ On September 30, 2003, the 
Exchange adopted new voting procedures, operative on a six-month pilot 
basis, in connection with its reinstatement of the marketing fee 
program.\4\ The Pilot Program's voting procedures are set forth in 
Commentary .11 to Amex Rule 958. These procedures establish the voting 
eligibility requirements for ROTs and the manner in which ROTs may 
determine to discontinue their participation in the marketing fee 
program.
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    \3\ See Securities Exchange Act Release No. 48053 (June 17, 
2003), 68 FR 37880 (June 25, 2003) (SR-Amex-2003-50).
    \4\ See Securities Exchange Act Release No. 48577 (September 30, 
2003), 68 FR 57943 (October 7, 2003) (SR-Amex-2003-80).
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    Subsequently, in December 2003, the Exchange proposed to expand the 
number of eligible registered options traders entitled to vote in 
connection with the marketing fee program. In January 2004, the 
Commission approved the amended ROT voter eligibility requirements as 
part of the Pilot Program.\5\ Based on the Exchange's limited 
experience with the revised voting procedures, the Exchange proposes 
that the Commission extend the Pilot Program for an additional six (6) 
months until September 30, 2004. During this time, the Exchange 
represents that it would have gained additional experience operating 
the Pilot Program and would be in a better position to request 
permanent approval.
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    \5\ See Securities Exchange Act Release No. 49115 (January 22, 
2004), 69 FR 4332 (January 29, 2004) (SR-Amex-2003-114). The 
Exchange's proposal was intended to increase participation in the 
voting process for those ROTs that significantly concentrate their 
trading activity to particular option classes adjacent to each other 
that may have more than one (1) individual specialist. The criteria 
set forth in Commentary .11 to Amex Rule 958 provides that: (1) The 
option classes must be located in adjacent trading locations on the 
trading floor; and (2) the ROT must be continuously signed onto 
Auto-Ex and/or Quick Trade in those particular options classes. In 
order to vote, a ROT will still be required to meet the 80% contract 
volume and transaction requirement; however, the 80% requirement 
will be calculated based on the total trading activity of the ROT in 
multiple option classes.
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2. Statutory Basis
    The Amex believes that the rule change is consistent with section 6 
of the Act,\6\ particularly section 6(b)(5) of the Act.\7\ The Exchange 
believes that the proposed rule change is intended to remove 
impediments to and perfect the mechanism for a free and open market and 
a national market system, and, in general, to protect investors and the 
public interest.
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    \6\ 15 U.S.C. 78f.
    \7\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Amex does not believe that the proposed rule change would 
impose any burden on competition that is 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

    The Exchange has not solicited, and does not intend to solicit, 
comments on this proposed rule change. The Exchange has not received 
any unsolicited written comments from members or other interested 
parties.

III. 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. Comments 
may also be submitted electronically at the following e-mail address: 
[email protected]. All comment letters should refer to File No. SR-
Amex-2004-18, and 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 may 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 the Amex. All 
submissions should refer to File No. SR-Amex-2004-18 and should be 
submitted by April 23, 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, and, in particular, with the requirements of section 6(b)(5) 
of the Act.\8\ The Commission believes that the proposed extension of 
the Pilot Program would continue to allow ROTs to have a voice 
regarding whether to discontinue the marketing fee program in those 
option classes in which they act as market makers.
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    \8\ 15 U.S.C. 78f(b)(5). Section 6(b)(5) of the Act requires 
that the rules of a national securities exchange be ``designed to 
prevent fraudulent and manipulative acts and practices, to promote 
just and equitable principles of trade, to foster cooperation and 
coordination with persons engaged in regulating, clearing, settling, 
processing information with respect to, and facilitating 
transactions in securities, to remove impediments to and perfect the 
mechanisms of a free and open market and a national market system, 
and in general, to protect investors and the public interest; and 
are not designed to permit unfair discrimination between customers, 
issuers, brokers, or dealers.''
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    The Amex has requested accelerated approval of its proposal to 
extend the Pilot Program until September 30, 2004. According to the 
Amex, the proposal raises no novel issues and would merely extend the 
current Pilot Program for an additional six months until September 30, 
2004. Based upon the Amex's

[[Page 17465]]

representations, the Commission finds good cause, consistent with 
section 19(b)(2) of the Act,\9\ to approve the proposed rule change to 
extend the Pilot Program, prior to the thirtieth day after the date of 
publication of notice thereof in the Federal Register. The Commission 
believes that the extension of the Pilot Program will permit the 
Exchange to gain additional experience with its operation. Further, the 
Commission notes that no changes are being made to the Pilot Program 
other than its extension until September 30, 2004. Accordingly, the 
Commission is approving, on an accelerated basis, the proposed 
extension of the Pilot Program until September 30, 2004.\10\
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    \9\ 15 U.S.C. 78s(b)(2).
    \10\ In approving the proposed rule change, the Commission notes 
that it has considered the proposed rule's impact on efficiency, 
competition, and capital formation. 15 U.S.C. 78c(f).
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V. Conclusion

    It is therefore ordered, pursuant to section 19(b)(2) of the 
Act,\11\ that the six-month extension of the Pilot Program until 
September 30, 2004, as set forth in SR-Amex-2004-18, is hereby approved 
on an accelerated basis.
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    \11\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\12\
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    \12\ 17 CFR 200.30-3(a)(12).
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Jill M. Peterson,
Assistant Secretary.
[FR Doc. 04-7499 Filed 4-1-04; 8:45 am]
BILLING CODE 8010-01-P