[Federal Register: June 24, 2005 (Volume 70, Number 121)]
[Notices]
[Page 36683-36685]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr24jn05-143]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-51872; File No. SR-NYSE-2005-42]
Self-Regulatory Organizations; New York Stock Exchange, Inc.;
Notice of Filing and Immediate Effectiveness of a Proposed Rule Change
Relating to a Specialist Marketing and Investor Education Fee for
Investment Company Units
June 17, 2005.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 19b-4 \2\ thereunder, notice is hereby given
that on June 13, 2005, the New York Stock Exchange, Inc. (``NYSE'' or
``Exchange'') filed with the Securities and Exchange Commission
(``Commission'') the proposed rule change as described in Items I and
II, below, which Items have been prepared by the Exchange. The proposed
rule change has been filed by the Exchange as establishing or changing
a due, fee, or other charge, pursuant to Section 19(b)(3)(A)(ii) of the
Act,\3\ and Rule 19b-4(f)(2)\4\ thereunder, which renders the proposal
effective upon filing with the Commission. 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.
\3\ 15 U.S.C. 78s(b)(3)(A)(ii).
\4\ 17 CFR 240.19b-4(f)(2).
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to charge a fee to specialists allocated
listed Investment Company Units (``ICUs'') in circumstances where the
Exchange undertakes to provide funds to a third party for marketing and
investor education in connection with the listing of those ICUs. Below
is the text of the
[[Page 36684]]
proposed rule change. Proposed new language is in italics.
* * * * *
2005 Price List
* * * * *
Facility and Equipment Fees
* * * * *
Specialist Marketing and Investor Education Fee--payment by the
specialist unit allocated an issue of Investment Company Units of any
amount payable by the Exchange to a third party for marketing and
investor education expenses in connection with trading on the
Exchange--billed quarterly.** Five-sixths (83.33%) of the amount
payable by the Exchange.
Notes:
* * * * *
**The amount paid by a specialist unit will be apportioned each
calendar quarter among the specialist units allocated ICUs subject
to an Exchange payment to a third party. Such amount will be
apportioned to a specialist unit based on the specialist unit's
share of the ``Notional NYSE ADV'' for the ICUs subject to the
payment. Notional NYSE ADV is defined as the average daily share
volume on the NYSE for the quarter for an ICU multiplied by the
average consolidated closing price for the quarter for such ICU.
The following hypothetical demonstrates how the apportionment will
operate. Assume three ICUs with a Notional NYSE ADV for the preceding
calendar quarter of 50,000, 100,000 and 150,000, respectively. The
three ICUs are allocated to Specialist Units A, B and C, respectively.
Specialist Units A, B and C would be billed 16.67%, 33.33% and 50% of
the amount apportioned to the specialist units for the quarter (i.e.,
in the aggregate, five-sixths of the amount payable by the Exchange).
Each calendar quarter, the Exchange will notify each specialist unit of
the amount payable for the preceding quarter.
* * * * *
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 anticipates that it may undertake in the future to
provide funds to third parties for marketing and investor education
with respect to certain listings of ICUs, also known as Exchange Traded
Funds. In such circumstances, the Exchange believes it is appropriate
for the specialists allocated those listed ICUs to participate in the
provision of such funds to the relevant third party. The Exchange
therefore proposes to implement a Specialist Marketing and Investor
Education Fee to be imposed in connection with payments made to third
parties in connection with the listing of any ICUs subject to such
third party payments. This fee would be separate from the current
Specialist License Fee.\5\ The Exchange believes that the fee would be
imposed in a fair and equitable manner on all specialists trading the
securities subject to a third party fee or payment.
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\5\ See Securities Exchange Act Release No. 50109 (July 28,
2004), 69 FR 47192 (August 4, 2004) (File No. SR-NYSE-2004-35)
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The amount paid by the specialists would be calculated and
apportioned following each calendar quarter among the specialist units
allocated ICUs that are subject to an Exchange payment to third
parties. This amount would represent five-sixths (83.33%) of the annual
amount payable by the Exchange, as apportioned for the quarter. Such
amount would be apportioned to specialist units for each ICU that is
subject to the fee, calculated based on the ``Notional NYSE ADV'' for
each relevant ICU. Notional NYSE ADV would be defined as the average
daily share volume on the NYSE for the calendar quarter for the
particular ICU multiplied by the average consolidated closing price for
the quarter for such ICU.
The following hypothetical demonstrates how the apportionment would
operate. Assume three ICUs with a Notional NYSE ADV for the preceding
calendar quarter of 50,000, 100,000, and 150,000, respectively. Also
assume that the three ICUs are allocated to Specialist Units A, B, and
C, respectively. Specialist Units A, B, and C would be billed 16.67%,
33.33% and 50% of the amount apportioned to the specialist units for
the quarter (i.e., in the aggregate, five-sixths of the amount payable
by the Exchange). Each calendar quarter, the Exchange would notify each
specialist unit of the amount payable, if any, under the Specialist
Marketing and Investor Education Fee for the preceding quarter.
The Exchange believes that the Notional NYSE ADV is an appropriate
mechanism for allocating the fee among the specialists as it takes into
account both trading volume and share price. Therefore, a relatively
high-priced ICU with a relatively low share volume might be subject to
a fee comparable to a relatively low-priced ICU with relatively high
share volume. According to the Exchange, the proposed manner of
apportioning the fee among specialist units attempts to equalize the
fee among ICUs with different trading characteristics, instead of
apportioning the fee based on a single characteristic (e.g., NYSE share
volume).
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with Section 6(b) of the Act,\6\ in general, and furthers the
objectives of 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 its members.
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\6\ 15 U.S.C. 78f(b).
\7\ 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
The Exchange has neither solicited nor received written comments on
the proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The foregoing proposed rule change has become effective pursuant to
Section 19(b)(3)(A)(ii) of the Act,\8\ and Rule 19b-4(f)(2)\9\
thereunder, because it establishes or changes a due, fee, or other
charge imposed by the Exchange. 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,
[[Page 36685]]
or otherwise in furtherance of the purposes of the Act.
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\8\ 15 U.S.C. 78s(b)(3)(A)(ii).
\7\ 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 rule-comments@sec.gov. Please include
File Number SR-NYSE-2005-42 on the subject line.
Paper Comments
Send paper comments in triplicate to Jonathan G. Katz,
Secretary, Securities and Exchange Commission, 100 F Street, NE.,
Washington, DC 20549-9303.
All submissions should refer to File Number SR-NYSE-2005-42. 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 Section, 100 F Street,
NE., Washington, DC 20549. Copies of such filing also will be available
for inspection and copying at the principal office 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-NYSE-2005-42 and should be
submitted on or before July 15, 2005.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\10\
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\10\ 17 CFR 200.30-3(a)(12).
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Jill M. Peterson,
Assistant Secretary.
[FR Doc. E5-3284 Filed 6-23-05; 8:45 am]
BILLING CODE 8010-01-P