[Federal Register Volume 71, Number 149 (Thursday, August 3, 2006)]
[Notices]
[Pages 44055-44056]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E6-12524]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-54227; File No. SR-Amex-2006-65]
Self-Regulatory Organizations; American Stock Exchange LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change
and Amendment No. 1 Thereto Relating to the Suspension of Transaction
Charges for Specialist Orders in the Nasdaq-100 Tracking Stock[supreg]
(QQQQ)
July 27, 2006.
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 13, 2006, the American Stock Exchange LLC (``Amex'' or
``Exchange'') submitted to the Securities and Exchange Commission
(``Commission'') the proposed rule change as described in Items I and
II below, which Items have been prepared by Amex. On July 25, 2006, the
Exchange submitted Amendment No. 1 to the proposed rule change.\3\ Amex
has designated the proposal as one establishing or changing a due, fee,
or other charge imposed by the Exchange pursuant to Section
19(b)(3)(A)(iii) of the Act \4\ and Rule 19b-4(f)(2) thereunder,\5\
which renders it 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, the Exchange altered the proposed rule
text to reflect that the transaction charges have been suspended in
the Nasdaq-100 Index Tracking Stock (QQQQ) from July 13, 2006
(rather than July 10, 2006), through August 31, 2006, for specialist
orders. The Exchange made corresponding changes to the Purpose
section. The Exchange also changed a reference to the annual
technology fee in the Purpose section.
\4\ 15 U.S.C. 78s(b)(3)(A)(iii).
\5\ 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 Exchange Traded Funds and
Trust Issued Receipts Fee Schedule (the ``ETF Fee Schedule'') to
suspend transaction charges for specialist orders in connection with
the trading of the Nasdaq-100 Index Tracking Stock[supreg] (Symbol:
QQQQ) from July 13, 2006 through August 31, 2006. The text of the
proposed rule change is available on Amex's Web site (http://www.amex.com), at Amex's Office of the Secretary, and at 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, Amex included statements
concerning the purpose of, and basis for, the proposed rule change, as
amended, and discussed any comments it received on the proposal. 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 proposes to suspend transaction charges for specialist
orders in the QQQQ from July 13, 2006 through August 31, 2006. The
previous suspension of specialist transaction charges in the QQQQ
terminated on June 30, 2006.
Specialist orders currently are charged $0.0034 ($0.34 per 100
shares), capped at $300 per trade (88,235 shares). Effective December
1, 2004, the Nasdaq-100 Index Tracking Stock[supreg] 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 orders in
connection with the QQQQ through June 30, 2006.\6\
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\6\ See, e.g., Securities Exchange Act Release No. 53701 (April
21, 2006), 71 FR 25253 (April 28, 2006).
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The Exchange asserts that the proposed suspension of transaction
fees for specialist orders in connection with the QQQQ is consistent
with Section 6(b)(4) of the Act.\7\ 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 are also subject to
other Exchange fees, in addition to transaction fees.
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\7\ Section 6(b)(4) 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. 15 U.S.C. 78f(b)(4).
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In connection with the proposal to suspend or waive transaction
fees for specialist orders in the 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.\8\ In addition, for those members
on the floor of the Exchange, a technology fee and membership fees are
also charged by the Exchange.\9\ Certain market participants, such as
customers, non-member broker-dealers and 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 \10\ and have
adequate technology resources to handle the volume of orders
(especially in the QQQQ) that are sent to the Exchange. The Exchange
believes that these operational costs borne by a specialist further
support the Exchange's proposal to temporarily suspend QQQQ transaction
fees on specialist orders.
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\8\ The floor clerk, floor facility, post, and registration
fees, on an annual basis, are $900, $2,400, $1,000 and $800,
respectively.
\9\ A technology fee of $6,000 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 payable depending on the type of membership and
circumstances. Non-members are not subject to these fees.
\10\ See Securities Exchange Act Release No. 53386 (February 28,
2006), 71 FR 11250 (March 6, 2006) (requiring specialists to employ
an adequate number of clerks).
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Specialists have certain obligations required by Exchange rules, as
well as
[[Page 44056]]
the Act, that do not exist for other market participants. For example,
pursuant to Amex Rule 170, a specialist is required to maintain a fair
and orderly market in his or her assigned securities. Other members of
the Exchange, as well as non-member market participants, do not have
this obligation. As a result, the Exchange believes that the proposed
suspension of transaction charges for specialist orders in the QQQQ is
reasonable and equitable, given the obligations that specialists must
adhere to in making markets. 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
The Exchange believes that the proposed rule change, as amended, is
consistent 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 an equitable allocation of reasonable dues, fees, and other charges
among its members and issuers and other persons using its facilities.
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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 believes that the proposed rule change does not 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)(iii) of the Act \13\ and subparagraph
(f)(2) of Rule 19b-4 \14\ thereunder 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 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 furtherance of the
purposes of the Act.\15\
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\13\ 15 U.S.C. 78s(b)(3)(A)(iii).
\14\ 17 CFR 240.19b-4(f)(2).
\15\ The effective date of the original proposed rule change is
July 13, 2006, and the effective date of Amendment No. 1 is July 25,
2006. 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 July 25, 2006, 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-2006-65 on the subject line.
Paper Comments
Send paper comments in triplicate to Nancy M. Morris,
Secretary, Securities and Exchange Commission, Station Place, 100 F
Street, NE., Washington, DC 20549-1090.
All submissions should refer to File Number SR-Amex-2006-65. 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 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-2006-65 and should be submitted on or before August 24, 2006.
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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J. Lynn Taylor,
Assistant Secretary.
[FR Doc. E6-12524 Filed 8-2-06; 8:45 am]
BILLING CODE 8010-01-P