[Federal Register Volume 70, Number 222 (Friday, November 18, 2005)]
[Notices]
[Pages 69998-69999]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E5-6376]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-52754; File No. SR-Amex-2005-113]


Self-Regulatory Organizations; American Stock Exchange LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change 
Relating to the Elimination of the Equity Option Transaction Fee 
Discount for Member Firms Facilitating Customer Orders

November 9, 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 November 1, 2005, 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 Amex 
filed the proposed rule change pursuant to 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 with the Commission. 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.
    \3\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \4\ 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 Amex proposes to eliminate the equity option transaction fee 
discount for member firms facilitating customer orders.\5\ The text of 
the proposed rule change is available on the Amex's Web site (http://www.amex.com), at the Amex's Office of the Secretary, and atthe 
Commission's Public Reference Room.
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    \5\ The Exchange clarified that the option transaction fee 
discount applies only to equity options. Telephone conversation 
between Claire P. McGrath, Senior Vice President and General 
Counsel, Amex, and Jennifer Dodd, Special Counsel, and Ted Venuti, 
Attorney, Division of Market Regulation, Commission, November 7, 
2005 (``November 7, 2005 Telephone Conversation'').
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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.

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

1. Purpose
    In April 2000, the Exchange eliminated its transaction, clearance, 
and floor brokerage fees for customer equity options transactions.\6\ 
To offset this fee elimination, the Exchange increased certain fees 
charged for equity options transactions of members. Specifically, the 
transaction fee for member firm proprietary orders was increased from 
$0.07 to $0.19 per contract side. However, the Exchange determined at 
that time to keep the transaction fee at $0.07 for those member firm 
proprietary orders that facilitated a customer equity options order.\7\ 
A facilitation occurs when a member firm crosses an order for its own 
account by buying from or selling to an order from its customer. The 
Exchange chose to keep the fee for these types of transactions lower in 
order to encourage member firms to continue to send these types of 
orders to the Exchange.
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    \6\ See Securities Exchange Act Release No. 42675 (April 13, 
2000), 65 FR 21223 (April 20, 2000) (Notice of Filing and Immediate 
Effectiveness of File No. SR-Amex-00-15).
    \7\ The Exchange clarified that this $.07 transaction fee 
applies only to equity options. See November 7, 2005 Telephone 
Conversation, supra note 5.

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[[Page 69999]]

    Subsequently, in 2004, the Exchange adopted a monthly cap on fees 
charged for all equity and index options transactions by member firms 
including transactions resulting from customer facilitations.\8\ 
Pursuant to the monthly cap, the transaction, comparison, and floor 
brokerage fees charged to member firms are capped at $75,000 per month 
per member firm.\9\ The purpose of this monthly cap was to provide an 
incentive for member firms to transact more volume on the floor of the 
Exchange, which provides more trading opportunities for floor members 
thus increasing revenue potential for specialists and registered 
options traders.
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    \8\ See Securities Exchange Act Release No. 49217 (February 10, 
2004), 69 FR 7828 (February 19, 2004) (Notice of Filing and 
Immediate Effectiveness of File No. SR-Amex-2004-10). The Exchange 
clarified that the monthly cap on fees applies to all equity and 
index options transactions. See November 7, 2005 Telephone 
Conversation, supra note 5.
    \9\ The Exchange clarified that the monthly cap applies to 
transaction, comparison, and floor brokerage fees. See November 7, 
2005 Telephone Conversation, supra note 5.
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    Based on the implementation of the monthly fee cap described above, 
management now proposes to eliminate the equity option transaction fee 
discount for member firms facilitating customer orders.\10\ Given that 
member firm fees are currently capped at $75,000 per month, an 
additional incentive in the form of a discount for these facilitation 
transactions is no longer necessary. The elimination of the fee 
discount also will allow the Exchange to charge the same fee for all 
types of transactions thereby simplifying the fee schedule and 
eliminating the need to identify transactions resulting from the member 
firm facilitation of customer orders.
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    \10\ The Exchange clarified that the option transaction fee 
discount applies only to equity options. See November 7, 2005 
Telephone Conversation, supra note 5.
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2. Statutory Basis
    The Amex believes the proposed rule change is consistent with 
section 6(b) of the Act,\11\ in general, and furthers the objectives of 
section 6(b)(4) of the Act,\12\ in particular, in that it is designed 
to provide for the equitable allocation of reasonable dues, fees, and 
other charges among its members and issuers and other persons using its 
facilities. In addition, the Amex believes that eliminating the 
discount for transactions resulting from the member firm facilitation 
of customer orders in equity options allows for a more consistent 
application of options transaction fees to all types of orders.
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    \11\ 15 U.S.C. 78f(b).
    \12\ 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.

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 establishes or changes a due, fee, or 
other charge applicable only to a member imposed by the Exchange,\13\ 
and, therefore, has become effective pursuant to section 
19(b)(3)(A)(ii) of the Act \14\ and subparagraph (f)(2) of Rule 19b-4 
thereunder.\15\ 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.
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    \13\ The Exchange clarified that the proposed rule change would 
change a fee applicable only to a member. See November 7, 2005 
Telephone Conversation, supra note 5.
    \14\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \15\ 17 CFR 240.19b-4(f)(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 No. SR-Amex-2005-113 on the subject line.

Paper Comments

     Send paper comments in triplicate to Jonathan G. Katz, 
Secretary, Securities and Exchange Commission, Station Place, 100 F 
Street, NE., Washington, DC 20549-9303.

All submissions should refer to File No. SR-Amex-2005-113. 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 will also be available for inspection and copying at the 
principal office of the 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 No. SR-Amex-2005-113 and should be submitted on or before December 
9, 2005.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\16\
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    \16\ 17 CFR 200.30-3(a)(12).
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Jonathan G. Katz,
Secretary.
[FR Doc. E5-6376 Filed 11-17-05; 8:45 am]
BILLING CODE 8010-01-P