[Federal Register Volume 73, Number 111 (Monday, June 9, 2008)]
[Notices]
[Pages 32617-32619]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-12803]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-57902; File No. SR-Amex-2008-45]


Self-Regulatory Organizations; American Stock Exchange LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change 
Relating to Exchange-Traded Note Transaction Fees

June 2, 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 May 23, 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

[[Page 32618]]

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 apply the Exchange-Traded Fund and Trust-
Issued Receipts Fee Schedule (``ETF Fee Schedule'') to transactions in 
exchange-traded notes (``ETNs'').
    The text of the proposed rule change is available on Amex'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
    The Exchange proposes to apply the ETF Fee Schedule to transactions 
in ETNs beginning June 1, 2008.
    ETNs are securities listed under Sections 107D (Index-Linked 
Securities), 107E (Commodity-Linked Securities), 107F (Currency-Linked 
Securities), 107G (Fixed Income-Linked Securities), 107H (Futures-
Linked Securities), or 107I (Combination-Linked Securities) of the Amex 
Company Guide that offer redemption at least weekly to holders of such 
securities. In February 2008, the Commission approved an Exchange 
proposal to permit ETNs to be subject to the AEMI trading rules 
specific to exchange-traded funds (``ETFs'').\3\ Currently, ETNs are 
subject to the transaction charges for equities traded on the Exchange. 
The instant proposal would provide that ETNs be subject to the 
identical fees that currently apply to ETFs traded on the Exchange.
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    \3\ See Securities Exchange Act Release No. 57400 (February 29, 
2008), 73 FR 12234 (March 6, 2008) (SR-Amex-2007-109).
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    Currently, ETF transaction charges differ from equity transaction 
charges relating to customer accounts \4\ and are $0.0023 per share (or 
$0.23 per 100 shares), subject to a $100 per transaction cap, resulting 
in transaction charges being assessed only on the first 43,478 shares. 
ETF and equity transaction charges both include: (i) A $0.0004 per 
share (or $0.04 per 100 shares) clearing charge for orders routed to 
and executed at another market center; (ii) a $0.0030 per share (or 
$0.30 per 100 shares) charge for orders routed to and executed at 
another market; and (iii) 0.3% of the total dollar value for 
transactions in a security with a share price of less than $1.00 (for 
ETFs the per transaction maximum fee of $100 applies). Transactions in 
both ETFs and equities also are subject to an order cancellation 
fee.\5\
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    \4\ Customer accounts are defined for purposes of the fee 
schedule to include accounts for all market participants except 
specialists, Registered Traders, and Designated Amex Remote Traders 
(DARTs). Therefore, customer accounts (and the fees charged to them) 
include members' off-floor proprietary accounts, competing market 
makers on other exchanges, and other member and non-member broker-
dealers.
    \5\ The ETF and equity order cancellation fee provides that the 
executing clearing member is charged $0.25 for every additional 
equities and ETF order sent for a mnemonic and cancelled through 
Amex systems in a given month when the total number of equities and 
ETF orders cancelled for that mnemonic is more than 50 times the 
equities and ETF orders executed through Amex systems for that 
mnemonic in that same month. Cancellations resulting from 
``Immediate or Cancel'' or ``Fill or Kill'' orders and cancellations 
entered to cancel at the opening orders not executed at the opening 
will not be counted towards the number of cancellations used to 
determine whether the fee should be applied to a mnemonic and will 
not be counted when determining the amount of the cancellation fee 
charged to an executing clearing member. Executions of ``Immediate 
or Cancel'' and ``Fill or Kill'' orders will however be counted 
towards the number of executions. The Equities Order Cancellation 
Fee and ETF Order Cancellation Fee set forth in the Equity Fee 
Schedule and ETF Fee Schedule, respectively, would be revised under 
this proposal to clarify that ETN orders be included as part of the 
calculation to determine whether the order cancellation fee applies 
to a particular executing clearing member.
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    Consistent with the Exchange's current ETF revenue sharing program, 
the Exchange proposes to distribute revenue to the specialists, 
Registered Traders, and DARTs as outlined below. This is identical to 
the revenue sharing program that exists in connection with ETFs.
    ETN specialists may receive an aggregate revenue sharing program 
payment (calculated monthly) of as much as $0.0024 per share (or $0.24 
per 100 shares) whenever the specialist either buys or sells its 
specialty ETN on the Exchange and is a provider of liquidity in that 
transaction (e.g. , whose quote is traded against or who offsets an 
order imbalance as part of an opening or closing transaction). The 
revenue sharing program payment is comprised of $0.0004 per share (or 
$0.04 per 100 shares) for all shares executed on the Exchange in its 
specialty ETN (irrespective of whether the specialist is the provider 
of liquidity), plus another $0.0020 (or $0.20 per 100 shares) if the 
specialist is the provider of liquidity in the transaction. If the 
specialist is not the liquidity provider, then the revenue sharing 
program payment is limited to $0.0004 per share executed on the 
Exchange in its specialty ETN.\6\
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    \6\ See e-mail from Jeffrey Burns, Vice President and Associate 
General Counsel, Amex, to Nathan Saunders, Special Counsel, and 
Linda Jeng-Braun, Attorney, Division of Trading and Markets, 
Commission, dated May 29, 2008.
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    A Registered Trader in ETNs will receive a revenue sharing payment 
of $0.0010 per share (or $0.10 per 100 shares) whenever the Registered 
Trader either buys or sells an ETN on the Exchange and is a provider of 
liquidity in that transaction. A DART in ETNs will receive a revenue 
sharing payment of $0.0015 per share (or $0.15 per 100 shares) whenever 
the DART either buys or sells an ETN on the Exchange and is a provider 
of liquidity in that transaction.\7\ Neither the specialist, Registered 
Trader, nor DART will receive a payment when it is a contra-party to 
the same transaction. It should be noted that revenue sharing will also 
be paid on transactions in securities trading at less than $1.00 equal 
to the amount collected by the Exchange. However, the revenue sharing 
payment will be paid only on the portion of a transaction for which the 
Exchange collects revenue.
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    \7\ DARTs were recently added to the revenue sharing program for 
ETFs. See Securities Exchange Act Release No. 57540 (March 20, 
2008), 73 FR 16399 (March 27, 2008) (SR-Amex-2008-23).
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2. Statutory Basis
    The proposed rule change is consistent with Section 6(b) of the Act 
\8\ in general and furthers the objectives of Section 6(b)(4) of the 
Act \9\ 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 believes that the proposal provides for an 
equitable allocation of reasonable fees among Exchange members through 
the application of existing ETF transaction charges to ETNs.
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    \8\ 15 U.S.C. 78f(b).
    \9\ 15 U.S.C. 78f(b)(4).

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[[Page 32619]]

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

    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 \10\ 
and Rule 19b-4(f)(2) thereunder.\11\ 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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    \10\ 15 U.S.C. 78s(b)(3)(A).
    \11\ 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-2008-45 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-Amex-2008-45. 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 Commissions 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 No. SR-Amex-2008-45 and should be submitted on or 
before June 30, 2008.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\12\
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    \12\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Acting Secretary.
 [FR Doc. E8-12803 Filed 6-6-08; 8:45 am]
BILLING CODE 8010-01-P