Self-regulatory organizations; proposed rule changes: American Stock Exchange LLC,
[Federal Register: March 4, 2005 (Volume 70, Number 42)]
[Notices]
[Page 10706-10707]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr04mr05-135]
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-51269; File No. SR-Amex-2005-025]
Self-Regulatory Organizations; Notice of Filing and Immediate Effectiveness of Proposed Rule Change by the American Stock Exchange LLC Relating to Fees for Transactions in Options on the Nasdaq 100 Index (NDX) and Mini-Nasdaq 100 Index (MNX)
February 28, 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 February 23, 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 Exchange filed the proposed rule change pursuant to Section 19(b)(3)(A) of the Act \3\ and Rule 19b-4(f)(2) thereunder,\4\ which renders it effective upon filing with the Commission. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons.
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ 15 U.S.C. 78s(b)(3)(A).
\4\ 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 increasing the per-contract license fee in connection with transactions by specialists and registered options traders (``ROTs'') in options on the Nasdaq 100 Index (``NDX'') and the reduced-value Nasdaq 100 Index (``MNX''). The text of the proposed rule change is available on Amex's Web site (http://www.amex.com), at the Amex's principal office, 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, 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.
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Self-Regulatory Organization's Statement of the Purpose of, and the Statutory Basis for, the Proposed Rule Change
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Purpose
The Exchange has entered into numerous agreements with index providers for the purpose of trading index options. The requirement to pay an index license fee to such third parties is a condition to the listing and trading of these index 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 or ROT is a party. The licensing fees currently imposed on specialists and ROTs are set forth in the Exchange's Options Fee Schedule.
The current license fee charged to specialists and ROTs trading NDX and MNX options is $0.10 per contract side. As a result of a recent change to the licensing agreement for NDX and MNX, the Exchange is now being charged a higher license fee. Accordingly, the Exchange now proposes to charge $0.15 per contract side for NDX and MNX options.
The purpose of the proposed fee is for the Exchange to recoup its costs in connection with the index license fee for the trading of NDX and MNX options. The proposed license fee will be collected on every transaction in NDX or MNX options in which a specialist or ROT is a party. Accordingly, the Exchange believes that requiring the payment of a per-contract licensing fee by those specialists and ROTs that are the beneficiaries of the Exchange's index license agreements is justified and is consistent with the rules of the Exchange. The Exchange believes that passing the license fee (on a per-contract basis) along to the specialists allocated to NDX and MNX and the ROTs trading such products is efficient and 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 recently increased a number of member fees to better align Exchange fees with the actual cost of delivering services and
[[Page 10707]]
reduce Exchange subsidies of such services.\5\ Implementation of this proposal is consistent with the reduction and/or elimination of these subsidies.
\5\ See Securities Exchange Act Release Nos. 51070 (January 21, 2005), 70 FR 4900 (January 31, 2005) (relating to options transaction fees in connection with the Standard & Poor's Depository Receipts); 45360 (January 29, 2002), 67 FR 5626 (February 6, 2002) (order approving a 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).
The Exchange submits that the proposed license fee will provide the Exchange with additional revenue and allow the Exchange to recoup its costs associated with the trading of NDX and MNX options. Furthermore, the Amex believes that this fee will help to allocate to those specialists and ROTs transacting in NDX and MNX options a fair share of the related costs of offering such options. Accordingly, the Exchange believes that the proposed fee is reasonable. 2. Statutory Basis
The Exchange believes that the proposed fee change is consistent with Section 6(b) of the Act,\6\ in general, and Section 6(b)(4) of the Act,\7\ 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.
\6\ 15 U.S.C. 78f(b).
\7\ 15 U.S.C. 78f(b)(4).
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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.
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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 by the Exchange with respect to the proposed rule change.
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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 \8\ and Rule 19b-4(f)(2) thereunder,\9\ 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 or appropriate in the public interest, for the protection of investors, or otherwise in the furtherance of the purposes of the Act.
\8\ 15 U.S.C. 78s(b)(3)(A)(ii).
\9\ 17 CFR 240.19b-4(f)(2).
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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 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-2005-025 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-2005-025. 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 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-2005-025 and should be submitted on or before March 25, 2005.
For the Commission, by the Division of Market Regulation, pursuant to delegated authority.\10\
\10\ 17 CFR 200.30-3(A)(12).
Margaret H. McFarland, Deputy Secretary.
[FR Doc. E5-877 Filed 3-3-05; 8:45 am]
BILLING CODE 8010-01-P
