Self-regulatory organizations; proposed rule changes: American Stock Exchange LLC,
[Federal Register: May 17, 2006 (Volume 71, Number 95)]
[Notices]
[Page 28717-28718]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr17my06-89]
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-53786; File No. SR-Amex-2006-39]
Self-Regulatory Organizations; American Stock Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change and Amendment Nos. 1 and 2 Thereto Relating to the Adoption of a Licensing Fee for Options on the Vanguard Dividend Appreciation VIPERs
May 11, 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 April 26, 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, II, and III below, which Items have been prepared by Amex. On May 9, 2006, the Exchange submitted Amendment No. 1 to the proposed rule change, withdrew Amendment No. 1 to the proposed rule change and submitted Amendment No. 2 to the proposed rule change.\3\ Amex has designated this proposal as one establishing or changing a due, fee, or other charge imposed by the self-regulatory organization under Section 19(b)(3)(A)(ii) 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.
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ See Partial Amendment No. 2.
\4\ 15 U.S.C. 78s(b)(3)(A)(ii).
\5\ 17 CFR 240.19b-4(f)(2).
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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 licensing fee for the orders of specialists, registered options traders (``ROTs''), firms, non-member market makers, and broker-dealers in connection with options transactions on the shares of the Vanguard Dividend Appreciation VIPERs (symbol: VIG).
The text of the proposed rule change, as amended, is available on the Amex's Web site at http://www.amex.com, at the principal office of
the Amex, and at the Commission's Public Reference Room.
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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 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. Amex has prepared summaries, set forth in Sections A, B, and C below, of the most significant aspects of such statements.
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Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change
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Purpose
Amex proposes to adopt a per contract licensing fee for options on VIG. This fee change will be assessed on members commencing April 27, 2006.
The Exchange has entered into numerous agreements with various index providers for the purpose of trading options on certain exchange traded funds (``ETFs''), such as VIG. This requirement to pay an index license fee to a third party 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 the index provider that may not be reimbursed. In an effort to recoup the costs associated with certain index licenses, the Exchange has established a per contract licensing fee for the orders of specialists, ROTs, firms, non-member market makers and broker-dealers, which is collected on every option transaction in designated products in which such market participant is a party.\6\
\6\ See, e.g., Securities Exchange Act Release No. 52493 (September 22, 2005), 70 FR 56941 (September 29, 2005).
The purpose of this proposal is to charge an options licensing fee in connection with options on VIG. Specifically, Amex seeks to charge an options licensing fee of $0.10 per contract side for the VIG options for specialist, ROT, firm, non-member market maker and broker-dealer orders executed on the Exchange. In all cases, the fees will be charged only to the Exchange members through whom the orders are placed.
The proposed options licensing fee will allow the Exchange to recoup its costs in connection with the index license fee for the trading of the VIG options. The fees will be collected on every order of a specialist, ROT, firm, non-member market maker, and broker-dealer executed on the Exchange. The Exchange believes that the proposal to require payment of a per contract licensing fee in connection with the VIG options by those market participants that are the beneficiaries of Exchange index license agreements is justified and consistent with the rules of the Exchange.
The Exchange notes that the Amex, in recent years, has revised a number of fees to better align Exchange fees with the actual cost of delivering services and reduce Exchange subsidies of such services.\7\ Amex believes that the implementation of this proposal is consistent with the reduction and/or elimination of these subsidies. Amex believes that these fees will help to allocate to those market participants engaging in transactions in VIG options a fair share of the related costs of offering such options.
\7\ See, e.g., Securities Exchange Act Release Nos. 45360 (January 29, 2002), 67 FR 5626 (February 6, 2002); and 44286 (May 9, 2001), 66 FR 27187 (May 16, 2001).
The Exchange asserts that the proposal is equitable as required by Section 6(b)(4) of the Act.\8\ In
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connection with the adoption of an options licensing fee for VIG options, the Exchange believes that charging an options licensing fee, where applicable, to all market participant orders except for customer orders is reasonable, given the competitive pressures in the industry. Accordingly, the Exchange seeks, through this proposal, to better align its transaction charges with the cost of providing products.
\8\ Section 6(b)(4) of the Act requires that the rules of a national securities exchange provide for the equitable allocation of reasonable dues, fees, and other charges among its members and issuers and other persons using its facilities.
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Statutory Basis
Amex believes that the proposed rule change, as amended, is consistent with Section 6(b)(4) of the Act \9\ regarding the equitable allocation of reasonable dues, fees and other charges among exchange members and other persons using exchange facilities.
\9\ 15 U.S.C. 78f(b)(4).
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Self-Regulatory Organization's Statement on Burden on Competition
Amex believes that the proposed rule change, as amended, does not impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act.
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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, as amended.
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Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action
The foregoing rule change was filed pursuant to Section 19(b)(3)(A)(ii) of the Act \10\ and Rule 19b-4(f)(2) thereunder,\11\ because it establishes or changes a due, fee, or other charge imposed by the self-regulatory organization.
\10\ 15 U.S.C. 78s(b)(3)(A)(ii).
\11\ 17 CFR 240.19b-4(f)(2).
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.
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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 rule-comments@sec.gov. Please include
File Number SR-Amex-2006-39 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-2006-39. 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 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-2006-39 and should be submitted on or before June 7, 2006.
For the Commission, by the Division of Market Regulation, pursuant to delegated authority.\12\
\12\ 17 CFR 200.30-3(a)(12).
Jill M. Peterson, Assistant Secretary.
[FR Doc. E6-7461 Filed 5-16-06; 8:45 am]
BILLING CODE 8010-01-P
