[Federal Register Volume 70, Number 19 (Monday, January 31, 2005)]
[Notices]
[Pages 4900-4902]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E5-352]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-51070; File No. SR-Amex-2005-008]
Self-Regulatory Organizations; Notice of Filing and Immediate
Effectiveness of Proposed Rule Change by the American Stock Exchange
LLC Relating to Options Transaction Fees in Connection With the
Standard & Poor's Depositary Receipts
January 21, 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 January 13, 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
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 modify its Options Fee Schedule by
adopting a per contract license fee in connection with specialist and
registered options traders (``ROTs'') transactions in options on
Standard & Poor's Depositary Receipts (``SPDRs'') and by updating the
symbol for the NASDAQ-100 Index Tracking Stock. The text of the
proposed rule change is available on Amex's Web site at http://www.amex.com, at the Amex's
[[Page 4901]]
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, 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 the
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange has entered into numerous agreements with issuers and
owners of indexes for the purpose of trading options on certain
exchange-traded funds (``ETFs''). The requirement to pay an index
license fee to third parties is a condition to the listing and trading
of these ETF options. In many cases, the Exchange is required to pay a
significant licensing fee to issuers or index owners that may not be
reimbursed. In an effort to recoup the costs associated with index
licenses, the Exchange has previously established a per contract
licensing fee for specialists and ROTs that is collected on every
transaction in designated products in which a specialist and ROT is a
party. The licensing fees currently imposed on specialists and ROTs are
set forth in the Exchange's Options Fee Schedule.
The purpose of the proposed fee is for the Exchange to recoup its
costs in connection with the index license fee for the trading SPDR
(SPY) options. The proposed licensing fee will be collected on every
option transaction of the SPDR in which the specialist or ROT is a
party. The Exchange proposes to charge $0.10 per contract side for
options on the SPDR. Accordingly, the Exchange believes that requiring
the payment of a per contract licensing fee by those specialists units
and ROTs that are the beneficiaries of the Exchange's index license
agreements is justified and is consistent with the rules of the
Exchange. In addition, the Exchange believes that passing the license
fee (on a per contract basis) along to the specialist(s) allocated to
options on the SPDR and the ROTs trading such product is efficient and
is consistent with the intent of the Exchange to pass on its non-
reimbursed costs to those market participants that are the
beneficiaries of such license agreements.
The Exchange notes that it has increased recently a number of
member fees to better align Exchange fees with the actual cost of
delivering services and reduce Exchange subsidies of such services.\3\
Implementation of this proposal is consistent with the reduction and/or
elimination of these subsidies.
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\3\ See Securities Exchange Act Release Nos. 45360 (Jan. 29,
2002), 67 FR 5626 (Feb. 6, 2002) (order approving a proposed rule
change relating to a retroactive increase in floor, membership and
options trading fees, including licensing fees); and 44286 (May 9,
2001), 66 FR 27187 (May 16, 2001) (relating to fees imposed on
members and member organizations, including member fees, floor fees,
booth rental fees, and membership registration fees).
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The Exchange submits that the proposed license fee will provide the
Exchange with additional revenue and will allow the Exchange to recoup
its costs associated with the trading of options on the SPDR. In
addition, the Amex believes that this fee will help to allocate to
those specialists and ROTs transacting in options on the SPDR a fair
share of the related costs of offering such options. Accordingly, the
Exchange believes that the proposed fee is reasonable.
In addition, the Exchange proposes to update its Options Fee
Schedule, including the list of products in Section V (Options
Licensing Fee) and the text in footnote 1, to reflect the symbol
change, from QQQ to QQQQ, that accompanied the transfer of the listing
of the NASDAQ-100 Index Tracking Stock to The Nasdaq Stock Market,
Inc., which took place on December 1, 2004.\4\
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\4\ Telephone conversation between Jeffrey Burns, Associate
General Counsel, Amex, and Richard Holley III, Attorney, Division of
Market Regulation, Commission, on January 21, 2005.
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2. Statutory Basis
The Exchange believes that the proposed fee change is consistent
with Section 6(b) of the Act,\5\ in general, and Section 6(b)(4) of the
Act,\6\ in particular, in that it provides for the equitable allocation
of reasonable dues, fees and other charges among exchange members and
other persons using exchange facilities.
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\5\ 15 U.S.C. 78f(b).
\6\ 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 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 by the Exchange 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 has become effective immediately pursuant
to Section 19(b)(3)(A)(ii) of the Act \7\ and Rule 19b-4(f)(2) \8\
thereunder, in that 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 of appropriate in the public interest, for the
protection of investors, or otherwise in the furtherance of the
purposes of the Act.
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\7\ 15 U.S.C. 78s(b)(3)(A)(ii).
\8\ 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 Number SR-Amex-2005-008 on the subject line.
Paper Comments
Send paper comments in triplicate to Jonathan G. Katz,
Secretary, Securities and Exchange Commission, 450 Fifth Street, NW.,
Washington, DC 20549-0609.
All submissions should refer to File Number SR-Amex-2005-008. 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
[[Page 4902]]
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 offices of the Exchange. 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-2005-008 and should be
submitted on or before February 22, 2005.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\9\
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\9\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. E5-352 Filed 1-28-05; 8:45 am]
BILLING CODE 8010-01-P