[Federal Register Volume 69, Number 105 (Tuesday, June 1, 2004)]
[Notices]
[Pages 30967-30969]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-12255]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-49763; File No. SR-Amex-2004-28]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change and Amendment Nos. 1 and 2 
Thereto by the American Stock Exchange LLC Relating to a Reduction in 
Options Transaction Fees

May 24, 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 April 29, 2004, 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 Exchange. The 
proposed rule change has been filed by the Amex as establishing or 
changing a due, fee or other charge under section 19(b)(3)(A)(ii) of 
the Act \3\ and Rule 19b-4(f)(2) thereunder,\4\ which renders the 
proposal effective upon filing. On May 13, 2004, the Amex filed 
Amendment No. 1 to the proposed rule change \5\ and on May 20, 2004, 
the Amex filed Amendment No. 2 to the proposed rule change.\6\ The 
Commission is publishing this notice to solicit comments on the 
proposed rule change, as amended, from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \4\ 17 CFR 240.19b-4(f)(2).
    \5\ See letter from Jeffrey Burns, Associate General Counsel, 
Amex, to Nancy Sanow, Assistant Director, Division of Market 
Regulation (``Division''), Commission, dated May 12, 2004 
(``Amendment No. 1''). In Amendment No. 1, the Exchange removed from 
the proposed rule change those portions of the fee change that 
applied to non-member broker-dealers.
    \6\ See letter from Jeffrey Burns, Associate General Counsel, 
Amex, to Nancy Sanow, Assistant Director, Division, Commission, 
dated May 19, 2004 (``Amendment No 2''). In Amendment No. 2, the 
Exchange corrected a typographical error in the text of the proposed 
rule change.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to reduce aggregate options transaction fees 
for specialists and registered options traders (``ROTs'') from $0.36 
per contract side to $.30 per contract side. The text of the proposed 
rule change, as amended, is available at the 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 Exchange 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.

[[Page 30968]]

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    Amex currently imposes transactions charges for transactions in 
equity options executed on the Exchange by specialists and ROTs. The 
current charges for specialist and ROTs in equity options are $0.36 per 
contract side, consisting of an options transaction fee of $0.26, an 
options comparison fee of $0.05 and an options floor brokerage fee of 
$0.05. The Exchange proposes to reduce the aggregate option transaction 
fee for specialists and ROTs from the current level of $0.36 per 
contract side to $0.30 per contract side effective May 1, 2004. The new 
aggregate equity option transaction fee for specialists and ROTs will 
consist of an options transaction fee of $0.20 per contract side, an 
options comparison fee of $0.05 per contract side and options floor 
brokerage fee of $0.05 per contract side.\7\
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    \7\ Options on S&P 100 iShares are charged the same options 
transaction fee as equity options, and thus are also subject to the 
fee changes set forth herein. Telephone conversation between Jeffrey 
Burns, Associate General Counsel, Amex, and Nathan Saunders, 
Attorney, Division, Commission (May 24, 2004).
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    In conjunction with the proposed reduction in the aggregate equity 
option transaction fee for specialists and ROTs, the current fee 
reductions in the Options Fee Schedule for cabinet trades (the 
``Cabinet Trades'') and reversals and conversions, dividend spreads, 
box spreads and butterfly spreads (the ``Spread Trades'') will also be 
reduced for specialists, ROTs and member broker-dealers.\8\ Effective 
May 1, 2004, the current fee reductions applicable to specialists, ROTs 
and member broker-dealers for equity options and QQQ options in 
connection with Cabinet Trades and Spread Trades will be reduced from 
$0.12 to $0.06 per contract side and from $0.18 to $0.12 per contract 
side, respectively.\9\ The $2,000 per trade fee cap for specialists, 
ROTs, member broker-dealers and non-member broker-dealers in connection 
with Cabinet Trades and Spread Trades will continue to apply. This fee 
cap was recently adopted by the Exchange and implemented in February 
2004.\10\ In addition, the transaction fee cap of $72,000 per month in 
any single options class, exclusive of the options licensing fee, for 
specialists and ROTs will also continue to apply.\11\
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    \8\ See Securities Exchange Act Release Nos. 46026 (June 4, 
2002), 67 FR 40034 (June 11, 2002) (File No. SR-Amex-2002-12) and 
48219 (July 23, 2003), 68 FR 44823 (July 30, 2003) (File No. SR-
Amex-2003-51). The Exchange in a separate rule filing will similarly 
reduce the fee reductions in connection with Cabinet Trades and 
Spread Trades for non-member broker-dealers.
    \9\ The lowering of the fee reductions for equity option 
transactions in connection with Cabinet Trades and Spread Trades 
will now result in fee reductions of the options transaction fee, 
options comparison fee and options floor brokerage fee of $0.03, 
$0.01 and $0.02 per contract side, respectively. With respect to QQQ 
option transactions only, the lowering of the fee reductions in 
connection with Cabinet Trades and Spread Trades will result in fee 
reductions of the options transaction fee, options comparison fee 
and options floor brokerage fee of $0.09, $0.01 and $0.02 per 
contract side, respectively.
    \10\ See Securities Exchange Act Release No. 49358 (March 3, 
2004), 69 FR 11469 (March 10, 2004) (File No. SR-Amex-2004-09).
    \11\ See Securities Exchange Act Release Nos. 49025 (January 6, 
2004), 69 FR 2018 (January 13, 2004) (File No. SR-Amex-2003-106) and 
49019 (January 5, 2004), 69 FR 2023 (January 13, 2004) (File No. SR-
Amex-2003-104).
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    The Market Share Incentive Program adopted by the Exchange and 
implemented in December 2003 will also be eliminated effective May 1, 
2004. The Market Share Incentive Program provided a slight reduction in 
the rate of options transaction fees based on the relative market share 
obtained by the specialist/ROT for the top 300 equity option 
classes.\12\
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    \12\ See Securities Exchange Act Release No. 49019 (January 5, 
2004), 69 FR 2023 (January 13, 2004) (File No. SR-Amex-2003-104). 
Under the Market Incentive Program, as long as a 20% market share or 
greater was maintained in a particular options class, the options 
transaction fee was reduced. With the across the board reduction in 
the options transaction fees proposed for equity options, the 
Exchange believes that the Market Share Incentive Program is now 
unnecessary.
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    The Exchange believes that the proposed reduction in options 
transaction fees will benefit the Exchange by providing greater 
incentive to specialists and ROTs to competitively quote their markets 
in comparison to the markets made by other options exchanges. In 
addition, we also believe that the reduction in fees will help to 
maintain the existing floor operations of member firms at the Amex.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act \13\ in general and furthers the 
objectives of 6(b)(4) of the Act \14\ in particular regarding the 
equitable allocation of reasonable dues, fees and other charges among 
Exchange members and other persons using Exchange facilities.
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    \13\ 15 U.S.C. 78f(b).
    \14\ 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 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

    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, as amended, has become 
effective pursuant to section 19(b)(3)(A)(ii) of the Act \15\ and Rule 
19b-4(f)(2) thereunder \16\ because it changes a due, fee or other 
charge imposed by the Exchange. 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.\17\
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    \15\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \16\ 17 CFR 240.19b-4(f)(2).
    \17\ See 15 U.S.C. 78(b)(3)(C). For the purposes of calculating 
the 60-day abrogation period, the Commission considers the proposed 
rule change to have been filed on May 20, 2004, the date the 
Exchange filed Amendment No. 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 proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:
    Electronic comments:
     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an e-mail to [email protected]. Please include 
File Number SR-Amex-2004-28 on the subject line.
    Paper comments:
     Send paper comments in triplicate to Jonathan G. Katz, 
Secretary, Securities and Exchange Commission, 450 Fifth Street, NW., 
Washington, DC 20549-0609. All submissions should refer to File Number 
SR-Amex-2004-28. 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, please use only one method. The Commission 
will post all comments on the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml).

[[Page 30969]]

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 also will be 
available for inspection and copying at the principal office of the 
Exchange. All comments received will be posted without change; the 
Commission does not edit personal identifying information from 
submissions. You should submit only information that you wish to make 
available publicly. All submissions should refer to File Number SR-
Amex-2004-28 and should be submitted on or before June 22, 2004.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\18\
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    \18\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 04-12255 Filed 5-28-04; 8:45 am]
BILLING CODE 8010-01-P