[Federal Register: September 5, 2007 (Volume 72, Number 171)]
[Notices]
[Page 50994-50996]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr05se07-81]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-56330; File No. SR-Amex-2007-92]
Self-Regulatory Organizations; American Stock Exchange LLC;
Notice of Filing and Immediate Effectiveness of a Proposed Rule Change
Amending the Payment for Order Flow Plan To Apply the Current Marketing
Fee to Orders Sent to Directed Order Participants
August 28, 2007.
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 August 20, 2007, 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 substantially prepared by the
Exchange. Amex has designated this proposal as one establishing or
changing a due, fee, or other charge imposed by Amex under section
19(b)(3)(A)(ii) of the Act \3\ and Rule 19b-4(f)(2) thereunder,\4\
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 amend its Payment for Order Flow Plan to
apply the current marketing fee to orders sent to Directed Order
Participants.\5\ The text of the proposed rule change is available at
the Exchange, the Commission's Public Reference Room, and http://www.amex.com
.
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\5\ The Exchange's Directed Order Program (the ``Program'') was
recently approved by the Commission. See Securities Exchange Act
Release No. 56269 (August 15, 2007), 72 FR 47086 (August 22, 2007)
(Notice of Filing and Order Granting Accelerated Approval of SR-Amex
2007-75). A Directed Order Participant, as defined in proposed Rule
996-ANTE is any specialist, Registered Options Trader (``ROT''),
Supplemental Registered Options Trader (``SROT''), and Remote
Registered Options Trader (``RROT'') that enters into arrangements
with an Order Flow Provider, whereby they could receive directed
orders upon meeting certain eligibility requirements.
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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. Amex has substantially 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 amend the current fee schedule to apply
the marketing fee charged to equity options (the ``Payment for Order
Flow Plan'') to orders sent to Directed Order Participants.\6\
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\6\ Under the current plan, the Exchange charges an equity
options marketing fee of $0.75, $0.35, or $0.40 per contract solely
to customer orders that are from payment accepting firms with whom a
specialist or SROT has negotiated a payment for order flow
arrangement. SPDR Options are currently subject to a $1.00 or $.40
per contract fee. The $0.75 and $0.35 fee solely applies to those
orders that are executed electronically through the Exchange's ANTE
system, while the $0.40 fee applies to those series of equity
options, exchange traded fund share options (including SPY options),
Trust Issued Receipt Options, NDX, and RUT options that are manually
executed customer orders of 1,000 contracts or greater.
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A Directed Order Participant may choose to opt in or opt out of the
Payment for Order Flow Plan.\7\ If the Directed Order Participant
chooses to opt into the Payment for Order Flow Plan, the Exchange will
collect the applicable marketing fee per contract from the
participating specialists, ROTs, RROTs, and SROTs, for all electronic
customer orders directed to that Directed Order Participant. The pool
of funds collected would be used to fund
[[Page 50995]]
Payment for Order Flow arrangements with payment accepting firms.
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\7\ Once a Directed Order Participant opts into the Payment for
Order Flow Plan, no notice to the Exchange is required in a
subsequent month unless there is a change in the participation
status.
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A Directed Order Participant who chooses to opt into the Payment
for Order Flow Plan must notify the Exchange of the election to
participate in the Payment for Order Flow Plan no later than two
business days prior to the date on which the marketing fee would be
assessed. Directed Order Participants may only opt into or out of the
Exchange's Payment for Order Flow Plan one time in any given month. If
at any time during a month a Directed Order Participant opts into the
Payment for Order Flow Plan, the marketing fee would be assessed for
that remaining portion of the month commencing on the third business
day following notice to the Exchange.
Directed Order Participants who enter into a Payment for Order Flow
arrangement with an Order Flow Provider will be given instructions as
to how to submit their payment directions. The Exchange will not be
involved in negotiating the terms governing the orders that qualify for
payment or the amount of any payment. The Exchange will, however, pay
the requested amount to the Order Flow Provider on behalf of the
Directed Order Participant. The requested amount is limited to the
amount billed and collected for that month, plus any excess funds that
were carried over from previous months (funds collected but not
requested by a Directed Order Participant).
The Exchange will further provide administrative support for the
program in such matters as maintaining the funds, keeping track of the
number of qualified orders each Directed Order Participant directs to
the Exchange, and making payments to the Order Flow Providers on behalf
of, and at the direction of, the Directed Order Participants.
Separate pools of funds will be available to each Directed Order
Participant solely for those trades where the marketing fee was
assessed, at the post it was collected. This pool of funds will be used
by each Directed Order Participant to attract customer orders to the
Exchange from Order Flow Providers.\8\ The Exchange notes that Directed
Order Participants are limited to spending any funds collected from
SROTs only in those options classes in which the SROT is able to trade.
Directed Order Participants participating in the Exchange's current
Payment for Order Flow Plan will be rebated any unused funds at the end
of a quarter on a pro rata basis.\9\
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\8\ The Exchange notes that if a specialist acts as a Directed
Order recipient and specialist, there shall be two separate pools of
funds collected for each.
\9\ Specialists, SROTs, RROTs, or ROTs participating in the
Exchange's current marketing fee program are rebated any unused
funds at the end of a quarter on a pro rata basis.
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Finally, the Exchange proposes to amend Footnote 11 in the Options
Fee Schedule, to clarify that that the $.40 options marketing fee,
which only applies to manually executed orders, shall not be applicable
to Directed Orders, since they are solely electronically executed
orders.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with section 6(b) of the Act \10\ in general, and section 6(b)(4) of
the Act \11\ in particular, in that it is designed to provide for an
equitable allocation of reasonable dues, fees, and other charges among
exchange members and other persons using exchange facilities.
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\10\ 15 U.S.C. 78f(b).
\11\ 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 with respect to the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The foregoing proposed rule change has been designated as a fee
change pursuant to section 19(b)(3)(A)(ii) of the Act \12\ and Rule
19b-4(f)(2) \13\ thereunder, because it establishes or changes a due,
fee, or other charge imposed by the Exchange. Accordingly, the proposal
will take effect upon filing with the Commission. 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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\12\ 15 U.S.C. 78s(b)(3)(A)(ii).
\13\ 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-Amex-2007-92 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-2007-92. 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, 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 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-2007-92 and should be
submitted on or before September 26, 2007.
[[Page 50996]]
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\14\
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\14\ 17 CFR 200.30-3(a)(12).
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Nancy M. Morris,
Secretary.
[FR Doc. E7-17478 Filed 9-4-07; 8:45 am]
BILLING CODE 8010-01-P