[Federal Register Volume 73, Number 60 (Thursday, March 27, 2008)]
[Notices]
[Pages 16399-16400]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-6250]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-57540; File No. SR-Amex-2008-23]


Self-Regulatory Organizations; American Stock Exchange LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change 
Adding Designated Amex Remote Traders to Amex's Revenue Sharing Program

March 20, 2008.
    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 March 13, 2008, the American Stock Exchange LLC (``Exchange'' or 
``Amex'') 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 substantially 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 Exchange proposes to add Designated Amex Remote Traders 
(``DARTs'') to Amex's existing revenue sharing program for ETF 
specialists and registered traders and to make related changes to its 
Exchange Traded Funds and Trust Issued Receipts Fee Schedule. The text 
of the proposed rule change is available on the Exchange's Web site at: 
http://www.amex.com, at the Exchange's principal office, 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, 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 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
    On June 28, 2007, the Exchange: (i) Amended its Exchange Traded 
Funds and Trust Issued Receipts Fee Schedule to eliminate charges for 
ETF transactions by ETF specialists and registered traders 
(collectively, ``ETF market makers''); and (ii) implemented a revenue 
sharing program whereby the Exchange would make certain payments, on a 
per-share executed basis out of general Exchange revenues, to ETF 
market makers which either buy or sell ETFs on the Exchange and provide 
liquidity in such transactions (e.g., the specialist's quote is traded 
against or the specialist offsets an order imbalance as part of an 
opening or closing transaction).\3\ The Exchange enacted the revenue 
sharing program to provide incentives to the ETF market makers to quote 
aggressively in Amex-traded ETFs.
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    \3\ See Securities Exchange Act Release No. 55983 (June 29, 
2007), 72 FR 37059 (July 6, 2007) (SR-Amex-2007-68) (``RSP 
Filing'').
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    On January 31, 2008, the Commission approved the Exchange's DARTs 
program, which established DARTs as a third category of ETF market 
maker. Like ETF specialists and registered traders, DARTs provide 
liquidity to the Exchange in the ETFs in which they are assigned.\4\
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    \4\ See Securities Exchange Act Release No. 57241 (January 31, 
2008), 73 FR 7335 (February 7, 2008) (SR-Amex-2007-138).
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    Because DARTs operate similarly to ETF specialists and registered 
traders--in that they will also exclusively be quoting in their 
assigned ETFs--the Exchange proposes to fold DARTs into the existing 
revenue sharing program described above to provide DARTs similar 
incentives to provide liquidity on the Exchange. Amex proposes that a 
DART will receive a revenue sharing payment of $0.0015 per share (or 15 
cents per 100 shares) whenever the DART either buys or sells an ETF on 
the Exchange and is a provider of liquidity in that transaction, which 
places the DART rate between the specialist rate of $0.0020 per share 
and the registered trader rate of $0.0010 per share.\5\ Further, like 
specialists and registered traders, a DART:
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    \5\ Revenue sharing payments for DARTs are set at a higher rate 
than for registered traders to compensate for the fact that DARTs, 
unlike registered traders, will not participate in any post-trade 
allocations in connection with auction trades under Rule 128B--
AEMI(b). See e-mail from Daniel Mollin, Associate General Counsel, 
Amex, to Nathan Saunders, Special Counsel, Division of Trading and 
Markets, Commission, dated March 19, 2008.
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     Will not be assessed any transaction fees for ``taking'' 
liquidity; \6\
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    \6\ In the proposed rule change, the Exchange amended its 
Exchange Traded Funds and Trust Issued Receipts Fee Schedule to 
exclude DARTs from the customer transaction charges for transactions 
in ETFs. Specialists and registered traders were previously excluded 
from this fee pursuant to the terms of the revenue sharing program. 
See RSP Filing, supra note 3.
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     Will not receive revenue sharing payments when another ETF 
market maker is a contra-party to the same transaction (i.e., a 
specialist buying shares from a DART);
     Will receive revenue sharing payments on transactions in 
securities trading at less than $1.00, but only on the portion of a 
transaction for which the Exchange collects revenue;
     Will receive revenue sharing payments based only on the 
first 43,478 shares it executes in any particular transaction, given 
that customer transaction charges are capped at $100 per transaction 
(which means the transaction charge of $0.0023 per share is assessed on 
only the first 43,478 shares executed by a customer).
    The revisions to the ETF Fee Schedule and the addition of DARTs to 
the revenue sharing program for ETF specialists and registered traders 
were implemented March 17, 2008, the date that DARTs were scheduled to 
commence trading on the Exchange.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with section 6(b) of the Act \7\ in general and furthers the objectives 
of section 6(b)(4) of the Act \8\ 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. Specifically, the Exchange is proposing to adopt for the 
DARTs, a new class of quoting participants in the Amex ETF marketplace, 
a fee structure and revenue sharing program similar to the one already 
in place for ETF specialists and registered traders, which are 
similarly-situated quoting participants.
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    \7\ 15 U.S.C. 78f(b).
    \8\ 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

[[Page 16400]]

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

    Because the foregoing proposed rule change establishes or changes a 
due, fee, or other charge imposed by the Exchange, it has become 
effective upon filing pursuant to section 19(b)(3)(A) of the Act \9\ 
and Rule 19b-4(f)(2) thereunder.\10\ 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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    \9\ 15 U.S.C. 78s(b)(3)(A).
    \10\ 17 CFR 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-2008-23 on the subject line.

Paper Comments

     Send paper comments in triplicate to Nancy M. Morris, 
Secretary, Securities and Exchange Commission, 100 F Street, NE., 
Washington, DC 20549-1090.

    All submissions should refer to File Number SR-Amex-2008-23. 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, 100 F Street, 
NE., Washington, DC 20549, on official business days between the hours 
of 10 a.m. and 3 p.m. Copies of such filing also will 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 Number SR-Amex-2008-23 and should be 
submitted on or before April 17, 2008.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\11\
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    \11\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
 [FR Doc. E8-6250 Filed 3-26-08; 8:45 am]
BILLING CODE 8011-01-P