[Federal Register: March 23, 2006 (Volume 71, Number 56)]
[Notices]
[Page 14755-14756]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr23mr06-79]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-53510; File No. SR-Amex-2006-24]
Self-Regulatory Organizations; American Stock Exchange LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change
Relating to the Adoption of a Licensing Fee for Options on the First
Trust Morningstar Dividend Leaders Index Fund Shares
March 17, 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 March 14, 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 the Exchange. Amex
filed the proposed rule change pursuant to 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 modify its Options Fee Schedule by
adopting a per contract license fee for the orders of specialists,
registered options traders (``ROTs''), firms, non-member market makers,
and broker-dealers in connection with options transactions in the First
Trust Morningstar Dividend Leaders Index Fund (symbol: FDL). The text
of the proposed rule change is available on Amex's Web site at http://www.amex.com
, at the principal office of Amex, 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, 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.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
Amex proposes to adopt a per contract licensing fee for options on
FDL. This fee change will be assessed on members commencing March 15,
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 FDL. 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
[[Page 14756]]
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.\5\
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\5\ See, e.g., Securities Exchange Act Release No. 52493
(September 22, 2005), 70 FR 56941 (September 29, 2005) (SR-Amex-
2005-087).
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The purpose of this proposal is to charge an options licensing fee
in connection with options on FDL. Specifically, Amex seeks to charge
an options licensing fee of $0.10 per contract side for FDL 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 FDL 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 FDL
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 it has, in recent years, revised a number
of fees to better align Exchange fees with the actual cost of
delivering services and reduce Exchange subsidies of such services.
Amex believes that the implementation of this proposal is consistent
with the reduction and/or elimination of these subsidies. Amex also
believes that these fees will help to allocate to those market
participants engaging in transactions in FDL options a fair share of
the related costs of offering such options.
The Exchange asserts that the proposal is equitable as required by
Section 6(b)(4) of the Act.\6\ In connection with the adoption of an
options licensing fee for FDL 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.
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\6\ Section 6(b)(4) of the Act requires that the rules of an
exchange provide for the equitable allocation of reasonable dues,
fees, and other charges among its members and issuers and other
persons using its facilities. See 15 U.S.C. 78f(b)(4).
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2. Statutory Basis
Amex believes that the proposed fee change is consistent with
Section 6(b)(4) of the Act \7\ regarding the equitable allocation of
reasonable dues, fees and other charges among exchange members and
other persons using exchange facilities.
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\7\ 15 U.S.C. 78f(b)(4).
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B. Self-Regulatory Organization's Statement on Burden on Competition
Amex 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 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 rule change establishes or changes a due, fee, or
other charge applicable only to a member imposed by the Exchange, and,
therefore, has become effective pursuant to Section 19(b)(3)(A)(ii) of
the Act \8\ and subparagraph (f)(2) of Rule 19b-4 thereunder.\9\ 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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\8\ 15 U.S.C. 78s(b)(3)(A)(ii).
\9\ 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-2006-24 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-2006-24. 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-2006-24 and should be submitted on or before April 13, 2006.
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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Nancy M. Morris,
Secretary.
[FR Doc. E6-4181 Filed 3-22-06; 8:45 am]
BILLING CODE 8010-01-P