[Federal Register: August 8, 2006 (Volume 71, Number 152)]
[Notices]
[Page 45083-45084]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr08au06-93]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-54262; File No. SR-Amex-2006-64]
Self-Regulatory Organizations; American Stock Exchange LLC;
Notice of Filing of Proposed Rule Change and Amendment No. 1 Thereto
Relating to a Retroactive Suspension of Transaction Charges for
Specialist Orders in the Nasdaq-100 Tracking Stock[supreg] (QQQQ)
August 1, 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 July 7, 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 July 27,
2006, the Exchange submitted Amendment No. 1 to the proposed rule
change.\3\ 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\3\ Amendment No. 1 replaced and superseded the original filing
in its entirety.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to retroactively apply a suspension of
transaction charges for specialist orders in connection with the
trading of the Nasdaq-100 Index Tracking Stock[supreg] (Symbol: QQQQ)
from July 1, 2006 through July 12, 2006.
The text of the proposed rule change is available on Amex's Web
site (http://www.amex.com), at Amex's principal office, 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, as
amended, and discussed any comments it received on the proposal. The
text of these statements may be examined at the places specified in
Item IV below, and is set forth in Sections A, B, and C below. Amex 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 proposes to retroactively apply a suspension of
transaction charges for specialist orders in the QQQQ from July 1, 2006
through July 12, 2006. The Exchange previously extended the suspension
of the QQQQ from March 1, 2006 through June 30, 2006.\4\ The Exchange,
in a companion filing, also proposed the adoption of a suspension of
transaction charges for specialist orders in the Nasdaq-100 Tracking
Stock (QQQQ) from July 13, 2006 through August 31, 2006.\5\ In order to
waive transaction fees for specialist orders in the QQQQ from July 1,
2006 through August 31, 2006, the Exchange has proposed to
retroactively suspend transaction fees for specialist transactions from
July 1, 2006 through July 12, 2006.
---------------------------------------------------------------------------
\4\ See, e.g., Securities Exchange Act Release Nos. 53871 (May
25, 2006), 71 FR 31236 (June 1, 2006) and 54094 (July 3, 2006), 71
FR 39135 (July 11, 2006) (SR-Amex-2006-42) (retroactively applying a
suspension of transaction charges for specialist orders in
connection with the trading of the QQQQ from March 1, 2006, through
April 5, 2006). See also Securities Exchange Act Release No. 53701
(April 21, 2006), 71 FR 25253 (April 28, 2006) (SR-Amex-2006-30)
(suspending specialist transaction charges in connection with the
QQQQ from April 6, 2006, through June 30, 2006).
\5\ See Securities Exchange Act Release No. 54227 (July 27,
2006).
---------------------------------------------------------------------------
Specialist orders currently are charged $0.0034 ($0.34 per 100
shares), capped at $300 per trade (88,235 shares). Effective December
1, 2004, the Nasdaq-100 Index Tracking Stock [supreg] (formerly
``QQQ'') transferred its listing from Amex to The Nasdaq Stock Market,
Inc (``Nasdaq''). It now trades on Nasdaq under the symbol QQQQ. After
the transfer, Amex began trading QQQQ on an unlisted trading privileges
basis.
The Exchange believes that the retroactive suspension of
transaction charges for specialist transactions in the QQQQ from July
1, 2006 through July 12, 2006 is consistent with the adoption of the
proposal to suspend transaction charges for specialist orders generally
in the QQQQ through August 31, 2006. The Exchange further believes that
a retroactive suspension of transaction fees on specialist orders in
the QQQQ is appropriate to enhance the competitiveness of executions on
Amex. The Exchange proposes to amend the Amex Fee Schedule to indicate
that transaction charges for specialist orders in the QQQQ have been
suspended from July 1, 2006 through August 31, 2006.
As provided in the companion filing, the Exchange submits that a
suspension of transaction fees for specialist orders in connection with
the QQQQ is consistent with Section 6(b)(4) of the Act.\6\
Specifically, the Exchange believes that suspending transaction charges
for QQQQ specialist orders is an equitable allocation of reasonable
fees among Exchange members. The Exchange believes that the fact that
specialists have greater obligations than other members and are also
subject to other Exchange fees, in addition to transaction fees,
supports this proposal to retroactively apply the fee suspension.
---------------------------------------------------------------------------
\6\ Section 6(b)(4) states that the rules of a national
securities exchange must provide for an equitable allocation of
reasonable dues, fees, and other charges among its members and
issuers and other persons using its facilities. 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------
The Exchange notes that specialists are subject to a variety of
Exchange fees other than transaction charges, such as a floor clerk
fee, a floor facility fee, a post fee, and a registration fee.\7\ In
addition, specialists and other floor members of the Exchange are
subject to technology and membership fees.\8\ Certain market
participants, such as customers, non-member broker-dealers and market-
makers, and member broker-dealers, are not subject to the majority of
these fees. In addition, a specialist unit, in order to adequately
``make a market'' in assigned securities, must be sufficiently staffed
\9\ and have adequate technology resources to handle the volume of
orders (especially in the QQQQ) that are sent to the Exchange. The
Exchange believes that these operational costs borne by specialists
further support the proposal to temporarily suspend QQQQ transaction
fees on specialist orders.
---------------------------------------------------------------------------
\7\ The floor clerk, floor facility, post, and registration
fees, on an annual basis, are $900, $2,400, $1,000, and $800,
respectively.
\8\ A technology fee of $6,000 per year is assessed on all
specialists and other floor participants at the Exchange. Annual
membership dues of $1,500 must be paid by all members while annual
membership fees are payable depending on the type of membership and
circumstances. Non-members are not subject to these fees.
\9\ See Securities Exchange Act Release No. 53386 (February 28,
2006), 71 FR 11250 (March 6, 2006) (requiring specialists to employ
an adequate number of clerks).
---------------------------------------------------------------------------
[[Page 45084]]
Specialists have certain obligations under Exchange rules, as well
as the Act, that do not exist for other market participants. For
example, pursuant to Amex Rule 170, a specialist is required to
maintain a fair and orderly market in his or her assigned securities.
Other members of the Exchange, as well as non-member market
participants, do not have this obligation. As a result, the Exchange
believes that the proposed retroactive suspension of transaction
charges for specialist orders in the QQQQ is reasonable and equitable,
given the obligations that specialists must adhere to in making
markets. The Exchange further submits that the fee suspension will
provide greater incentive to specialists to continue to provide market
liquidity, rendering the Exchange an attractive venue for market
participants to execute orders.
2. Statutory Basis
The Exchange believes that the proposed rule change, as amended, is
consistent with Section 6(b) of the Act,\10\ in general, and furthers
the objectives of Section 6(b)(4) of the Act,\11\ in particular, and is
an equitable allocation of reasonable dues, fees, and other charges
among its members and issuers and other persons using its facilities.
---------------------------------------------------------------------------
\10\ 15 U.S.C. 78f(b).
\11\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange believes that the proposed rule change does not impose
any burden on competition that is not necessary or appropriate in
furtherance of the purposes of the 1934 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
Within 35 days of the date of publication of this notice in the
Federal Register or within such longer period (i) as the Commission may
designate up to 90 days of such date if it finds such longer period to
be appropriate and publishes its reasons for so finding or (ii) as to
which the Exchange consents, the Commission will:
(A) By order approve such proposed rule change, as amended, or
(B) institute proceedings to determine whether the proposed rule
change should be disapproved.
IV. 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-2006-64 on the subject line.
Paper Comments
Send paper comments in triplicate to Nancy M. Morris,
Secretary, Securities and Exchange Commission, Station Place, 100 F
Street, NE., Washington, DC 20549-1090.
All submissions should refer to File Number SR-Amex-2006-64. 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 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-2006-64 and should be submitted on or before August 29, 2006.
---------------------------------------------------------------------------
\12\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\12\
Nancy M. Morris,
Secretary.
[FR Doc. E6-12842 Filed 8-7-06; 8:45 am]
BILLING CODE 8010-01-P