[Federal Register Volume 69, Number 112 (Thursday, June 10, 2004)]
[Notices]
[Pages 32639-32640]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-13090]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-49800; File No. SR-Amex-2004-37]


Self-Regulatory Organizations; Notice of Filing of Proposed Rule 
Change and Amendment No. 1 Thereto by the American Stock Exchange LLC 
Relating to a Change in the Options Transaction Fee Reductions for Non-
Member Broker-Dealers in Connection With Cabinet and Spread Trades

June 3, 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 May 19, 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. On May 
28, 2004, the Exchange filed Amendment No. 1 to the proposed rule 
change.\3\ 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\ See letter from Jeffrey P. Burns, Associate General Counsel, 
Amex, to Nancy Sanow, Assistant Director, Division of Market 
Regulation, Commission, dated May 27, 2004 (``Amendment No. 1''). In 
Amendment No. 1, 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 lower the amount of the reductions of 
options transaction fees that are available to non-member broker-
dealers in connection with equity options and QQQ options contracts 
executed as part of an accommodation or cabinet trade (``Cabinet 
Trades'') and reversals and conversions, dividend spreads, box spreads 
and butterfly spreads (``Spread Trades'').
    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. 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
    Amex states that it currently imposes charges for transactions in 
equity and QQQ options executed on the Exchange by non-member broker-
dealers. Amex states that the current charges for non-member broker-
dealers in equity options are $0.26 per contract side, consisting of an 
options transaction fee of $0.19, an options comparison fee of $0.04 
and an options floor brokerage fee of $0.03.
    Amex represents that, in connection with the recent proposal to 
reduce options transaction fees for specialists and registered options 
traders (``ROTs''), it also proposed to lower the amount of the 
reductions of options transaction fees for specialists, ROTs and member 
broker-dealers (i.e., firms) in connection with Cabinet Trades and 
Spread Trades.\4\ Amex states that, for the purpose of uniformity, this 
proposed rule change seeks to similarly lower the amount of the 
reductions of options

[[Page 32640]]

transaction fees for equity and QQQ options contracts executed as part 
of Cabinet Trades or Spread Trades that are transacted by non-member 
broker-dealers. Amex states that this change will effectively increase 
transaction fees for non-member broker-dealers' executions of equity 
option and QQQ option contracts that are either Cabinet Trades or 
Spread Trades.
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    \4\ See Securities Exchange Act Release No. 49763 (May 24, 
2004), 69 FR 30967 (June 1, 2004) (File No. SR-Amex-2004-28).
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    Amex represents that the current fee reductions \5\ applicable to 
non-member broker-dealers for equity options and QQQ options 
transactions executed as either Cabinet Trades or 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.\6\ The $2,000 per trade fee cap 
currently in place 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.\7\
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    \5\ See Securities Exchange Act Release Nos. 46026 (June 4, 
2002), 67 FR 40034 (June 11, 2002) and 48219 (July 23, 2003), 68 FR 
44823 (July 30, 2003).
    \6\ The lowering of the fee reductions for equity options 
transactions in connection with Cabinet Trades and Spread Trades 
will now result in 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 
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.
    \7\ See Securities Exchange Act Release No. 49358 (March 3, 
2004), 69 FR 11469 (March 10, 2004).
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    Amex believes that this proposal to lower the amount of the 
reductions of options transaction fees for non-member broker-dealers in 
connection with Cabinet and Spread Trades will better reflect the 
actual cost of transactions on the Amex. In addition, Amex represents 
that the proposed fee change for non-member broker-dealers will provide 
the same options fee reductions for Cabinet Trades and Spread Trades 
that exist for specialists, ROTs and member broker-dealers.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with section 6(b) of the Act \8\ in general and furthers the objectives 
of 6(b)(4) of the Act \9\ 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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    \8\ 15 U.S.C. 78f(b).
    \9\ 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

    Within 35 days of the date of publication of this notice in the 
Federal Register or within such longer period (i) as the Commission may 
designate up to 90 days of such date if it finds such longer period to 
be appropriate and publishes its reasons for so finding or (ii) as to 
which the Exchange consents, the Commission will:
    (A) By order approve such proposed rule change, as amended, or
    (B) institute proceedings to determine whether the proposed rule 
change should be disapproved.

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-2004-37 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-2004-37. 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). 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-2004-37 and should be submitted on or before July 
1, 2004.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\10\
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    \10\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 04-13090 Filed 6-9-04; 8:45 am]
BILLING CODE 8010-01-P