[Federal Register Volume 70, Number 162 (Tuesday, August 23, 2005)]
[Notices]
[Pages 49336-49338]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E5-4582]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-52268; File No. SR-Amex-2005-077]


Self-Regulatory Organizations; American Stock Exchange LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change 
and Amendments No. 1 and 2 Thereto Relating to a Temporary Suspension 
of Specialist Transaction Charges for the Nasdaq-100 Tracking 
Stock[supreg] (QQQQ)

August 15, 2005.
    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 July 15, 2005, the American Stock Exchange LLC (``Amex'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``SEC'' or the ``Commission'') the proposed rule change as described 
in Items I, II, and III below, which items have been prepared by Amex. 
On July 20, 2005, the Exchange filed Amendment No. 1 to the 
proposal.\3\ On August 11, 2005, the Exchange filed Amendment No. 2 to 
the proposal.\4\ Amex has designated the proposed rule change, as 
amended, as establishing or changing a due, fee, or other charge 
imposed by the Exchange pursuant to Section 19(b)(3)(A)(ii) of the Act 
\5\ and Rule 19b-4(f)(2) thereunder,\6\ which renders the proposal 
effective upon filing with the Commission. 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\ In Amendment No. 1, Amex added language to the purpose 
section to explain that the proposal is deleting certain provisions 
from its fee schedules because such provisions, by their terms, have 
already expired.
    \4\ In Amendment No. 2, Amex made minor technical changes to the 
proposed rule text and provided furhter discussion on how the 
proposal is consistent with the requirement under Section 6(b)(4) of 
the Act to provide for the equitable allocation of reasonable dues, 
fees, and other charges among its members and issuers and other 
persons its members and issuers and other persons using its 
facilities. See 15 U.S.C. 78f(b)(4).
    \5\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \6\ 17 CFR 240.19b-4(f)(2).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend the Amex Equity and Exchange Traded 
Funds and Trust Issued Receipts Fee Schedules to suspend specialist 
transaction charges for the trading of Nasdaq-100 Index Tracking 
Stock([reg]) (Symbol: QQQQ) from July 18, 2005 through July 31, 2005. 
The text of the proposed rule change is available on Amex's Web site 
(http://www.amex.com), at Amex's principal office, and from the 
Commission's Public Reference Room.

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, as 
amended, 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 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
    The Exchange is proposing to suspend transaction charges for 
specialist orders in the Nasdaq-100 Index Tracking Stock([reg]) (QQQQ) 
from July 18, 2005 through July 31, 2005. This proposed rule change 
also deletes the references in the Amex Fee Schedules regarding the 
suspension of transaction charges for customer/broker-dealer, 
specialist and registered trader orders in QQQQ through February 28, 
2005 because those provisions are no longer effective due to their 
expiration. Similarly, the references in the Amex Fee Schedules 
regarding the suspension of transaction charges for specialist, 
registered trader, and broker-dealer orders in IAU from January 28, 
2005 through February 28, 2005 will also be deleted because these 
provisions are also no longer effective due to their expiration.
    Specialists orders for transactions in the Nasdaq-100 Index 
Tracking Stock([reg]) currently are charged $0.0037 ($0.37 per 100 
shares), capped at $300 per trade. Effective December 1, 2004, the 
Nasdaq-100 Index Tracking Stock([reg]) (formerly ``QQQ'') transferred 
its listing from Amex to the Nasdaq Stock Market, Inc. It now trades on 
Nasdaq under the symbol QQQQ. After the transfer, Amex began trading 
QQQQ on an unlisted trading privileges basis. Amex previously suspended 
the transaction charges of specialist and registered trader orders in 
connection with QQQQ from December 1, 2004 through

[[Page 49337]]

February 28, 2005.\7\ The Exchange did not extend these fee waivers 
after February 28, 2005. In connection with the transfer of QQQQ to 
Nasdaq, the Amex Fee Schedules were amended to provide for transaction 
charges of $0.0015 per share ($0.15 per 100 shares) for customer 
orders, capped at $100 per trade in connection with QQQQ 
transactions.\8\ Amex previously suspended those transaction charges 
for customer orders in connection with QQQQ from December 1, 2004 
through February 28, 2005.\9\ The Exchange did not extend this fee 
waiver after February 28, 2005.
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    \7\ See Securities Exchange Act Release Nos. 50811 (December 7, 
2004), 69 FR 74547 (December 14, 2005); 50970 (January 6, 2005), 70 
FR 2193 (January 12, 2005); and 51150 (February 8, 2005), 70 FR 7780 
(February 15, 2005).
    \8\ See Securities Exchange Act Release No. 50894 (December 20, 
2004), 69 FR 77788 (December 28, 2004).
    \9\ See Securities Exchange Act Release Nos. 50894 (December 20, 
2004), 69 FR 77788 (December 28, 2004); 50969 (January 6, 2005), 70 
FR 2191 (January 12, 2005); and 51152 (February 8, 2005), 70 FR 7781 
(February 15, 2005).
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    The Exchange asserts that the proposed suspension of transaction 
fees for specialist orders in connection with QQQQ is consistent with 
Section 6(b)(4) of the Act.\10\ Specifically, the Exchange believes 
that the proposal provides for an equitable allocation of reasonable 
fees among Exchange members largely based on the fact that a specialist 
has greater obligations than other members and they are also subject to 
Exchange fees in addition to transaction fees.
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    \10\ Section 6(b)(4) of the Act states that the rules of a 
national securities exchange must provide for ``the equitable 
allocation of reasonable dues, fees, and other charges among its 
members and issuers and other persons using its facilities.''
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    In connection with the proposal to suspend or waive transaction 
fees for specialist orders in QQQQ, the Exchange notes that specialists 
are subject to a variety of Exchange fees other than transaction 
charges. For example, the Exchange imposes floor fees solely on 
specialists such as a floor clerk fee, a floor facility fee, a post 
fee, and a registration fee.\11\ In addition, for those members on the 
floor of the Exchange, a technology fee and membership fees are also 
charged by the Exchange.\12\ Certain market participants--such as 
customers, non-member broker-dealers, market-makers, and member broker-
dealers--are not subject to the majority of these fees. In addition, a 
specialist unit, in order to adequately ``make a market'' in assigned 
securities, must be sufficiently staffed and have adequate technology 
resources to handle the volume of orders (especially in QQQQ) that are 
sent to the Exchange. These operational costs borne by a specialist 
further support the Exchange proposal to temporarily suspend QQQQ 
transaction fees on specialist orders.
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    \11\ The floor clerk, floor facility, post, and registration 
fees on an annual basis are $900, $2,400, $1,000, and $800, 
respectively.
    \12\ A technology fee of $3,000 per year is assessed on all 
specialists and other floor participants at the Exchange. Annual 
membership dues of $1,500 must be paid by all members, while annual 
membership fees are payble depending on the type of membership and 
circumstances. Non-members are not subject to these fees.
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    Specialists also have certain obligations under Exchange rules, as 
well as the Act, that do not exist for other market participants. For 
example, a specialist is required to maintain a fair and orderly market 
in his or her assigned securities pursuant to Amex Rule 170. This 
affirmative obligation requires the specialist to maintain the price 
continuity of the security with reasonable depth, while also minimizing 
the effect of any temporary disparities between supply and demand. As a 
result, the Exchange believes that the proposed suspension of 
transaction charges for specialist orders in QQQQ is reasonable and 
equitable given the numerous obligations that specialists must adhere 
to in making markets.
    As detailed above, the Exchange believes a suspension of 
transaction fees for specialist orders in connection with QQQQ is 
equitable and appropriate for the purpose of enhancing our 
competitiveness in trading this security. The Exchange further submits 
that the fee suspension will provide greater incentive to the 
specialist to continue to provide market liquidity, rendering the 
Exchange an attractive venue for market participants to execute orders.
2. Statutory Basis
    Amex believes that the proposed rule change consistent with Section 
6(b) of the Act \13\ in general and furthers the objectives of Section 
6(b)(4) of the Act \14\ in particular in that it is intended to assure 
the equitable allocation of reasonable dues, fees, and other charges 
among its members and issuers and other persons using its 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

    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

    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 rule change, as amended, has become effective 
pursuant to Section 19(b)(3)(A)(ii) of the Act \15\ and subparagraph 
(f)(2) of Rule 19b-4 thereunder \16\ because it establishes or changes 
a due, fee, or other charge imposed by the Exchange. 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.\17\
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    \15\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \16\ 17 CFR 240.19b-4(f)(2).
    \17\ The effective date of the original proposed rule change is 
July 20, 2005 and the effective date of the amendment is August 11, 
2005. For purposes of calculating the 60-day period within which the 
Commission may summarily abrogate the proposed rule change, as 
amended, under Section 19(b)(3)(C) of the Act, the Commission 
considers the period to commence on August 11, 2005, the date on 
which the Exchange submitted Amendment No. 1. 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, as amended, 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-2005-077 on the subject line.

Paper Comments

     Send paper comments in triplicate to Jonathan G. Katz, 
Secretary, Securities and Exchange Commission, 100 F Street, NE., 
Washington, DC 20549-9303. All submissions should refer to File Number 
SR-Amex-2005-077. 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.

[[Page 49338]]

 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 Amex. 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-2005-077 and should be 
submitted on or before September 13, 2005.

    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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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. E5-4582 Filed 8-22-05; 8:45 am]
BILLING CODE 8010-01-P