[Federal Register Volume 69, Number 149 (Wednesday, August 4, 2004)]
[Notices]
[Pages 47192-47193]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-17772]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 50109; File No. SR-NYSE-2004-35]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by the New York Stock Exchange, 
Inc., Relating to a Specialist License Fee for Investment Company Units

July 28, 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 June 30, 2004, the New York Stock Exchange, Inc. 
(``NYSE'' 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 Commission is publishing this notice to solicit comments 
on the proposed rule change from interested persons.
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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 NYSE proposes to charge a Specialist License Fee to the 
specialist allocated an issue of investment company units (``ICUs'') 
for which the Exchange pays a license fee to a third party in 
connection with trading of such series on the Exchange pursuant to 
unlisted trading privileges.\3\ The text of the proposed rule change is 
provided below. Proposed new language is italicized.
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    \3\ The NYSE represents that currently it does not incur third-
party license fees for listed ICUs. Telephone conversation between 
Michael Cavalier, Assistant General Counsel, NYSE, and Frank N. 
Genco, Division of Market Regulation, Commission, on July 27, 2004.
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* * * * *

                               Price List
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------------------------------------------------------------------------
Specialist License Fee
  Specialist License Fee--payment by     As of July 1, 2004 through
   the specialist allocated an issue of   December 31, 2004, 100% of the
   Investment Company Units of any        amount payable by the
   license fee payable by the Exchange    Exchange, provided that the
   to a third party in connection with    amount billed to the
   trading on the Exchange of such        specialist for the third and
   issue pursuant to unlisted trading     fourth quarters of 2004 will
   privileges--billed quarterly.*.        not exceed the amount payable
                                          by the Exchange for the first
                                          and second quarters of 2004;
                                          as of January 1, 2005, 50% of
                                          the amount payable by the
                                          Exchange.
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\*\ A license fee applicable to multiple issues of Investment Company
  Units allocated to more than one specialist will be apportioned to
  such specialists based on the consolidated share volume represented by
  each issue subject to such license fee.

* * * * *

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 NYSE 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 NYSE 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 currently trades a number of issues of ICUs, also 
known as exchange-traded funds, for which the

[[Page 47193]]

Exchange pays a license fee to a third party in connection with 
Exchange trading. The Exchange proposes to impose a Specialist License 
Fee on each specialist allocated an ICU issue that trades on the 
Exchange pursuant to unlisted trading privileges (``UTP'') for which 
the Exchange pays a license fee. Between July 1, 2004, and December 31, 
2004, the Exchange proposes to bill each such specialist quarterly for 
100% of the applicable license fee payable by the Exchange, provided 
that the total amount billed to such specialist for the third and 
fourth quarters of 2004 will not exceed the amount of license fees 
payable by the Exchange for the first and second quarters of 2004. As 
of January 1, 2005, the Specialist License Fee will be billed to the 
specialist quarterly at 50% of the amount payable by the Exchange.
    A license fee applicable to multiple issues of ICUs allocated to 
more than one specialist will be apportioned among such specialists 
based on the consolidated share volume represented by each issue 
subject to such license fee.
    The Exchange believes it is appropriate to pass through to the 
specialist a portion of the ICU license fees payable by the Exchange in 
order to alleviate part of the financial obligation incurred by the 
Exchange in connection with trading ICUs for which third parties 
require licenses. The Specialist License Fee will operate on a partial 
cost recovery basis. The fee will apply to all ICUs currently traded on 
the Exchange pursuant to UTP for which the Exchange is required to pay 
a license fee, and to all such ICUs that may trade pursuant to UTP in 
the future.
    2. Statutory Basis
    The Exchange believes the proposed rule change is consistent with 
section 6(b)(4) of the Act,\4\ which requires that the rules of an 
exchange be designed to provide for the equitable allocation of 
reasonable dues, fees, and other charges among its members, issuers, 
and other persons using its facilitates.
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    \4\ 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 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 neither solicited nor received written comments on 
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 \5\ and subparagraph (f)(2) of Rule 
19b-4\6\ thereunder, because it establishes or changes a due, fee, or 
other charge.
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    \5\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \6\ 17 CFR 240.19b-4(f)(2).
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    At any time within 60 days of the filing of the 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 furtherance of the purposes of the Act.\7\
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    \7\ See 15 U.S.C. 78s(b)(3)(C).
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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-NYSE-2004-35 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-NYSE-2004-35. 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 Section, 450 Fifth 
Street, NW., Washington, DC 20549. Copies of such filing also will be 
available for inspection and copying at the principal office of the 
NYSE. 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-
NYSE-2004-35 and should be submitted on or before August 25, 2004. 

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\8\
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    \8\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 04-17772 Filed 8-3-04; 8:45 am]
BILLING CODE 8010-01-P