[Federal Register: May 17, 2006 (Volume 71, Number 95)]
[Notices]
[Page 28717-28718]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr17my06-89]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-53786; File No. SR-Amex-2006-39]
Self-Regulatory Organizations; American Stock Exchange LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change
and Amendment Nos. 1 and 2 Thereto Relating to the Adoption of a
Licensing Fee for Options on the Vanguard Dividend Appreciation VIPERs
May 11, 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 April 26, 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 May 9, 2006,
the Exchange submitted Amendment No. 1 to the proposed rule change,
withdrew Amendment No. 1 to the proposed rule change and submitted
Amendment No. 2 to the proposed rule change.\3\ Amex has designated
this proposal as one establishing or changing a due, fee, or other
charge imposed by the self-regulatory organization under Section
19(b)(3)(A)(ii) of the Act \4\ and Rule 19b-4(f)(2) thereunder,\5\
which renders it effective upon filing with the Commission. The
Commission is publishing this notice to solicit comments on the
proposed rule change, as amended, from interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ See Partial Amendment No. 2.
\4\ 15 U.S.C. 78s(b)(3)(A)(ii).
\5\ 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 licensing fee for the orders of specialists,
registered options traders (``ROTs''), firms, non-member market makers,
and broker-dealers in connection with options transactions on the
shares of the Vanguard Dividend Appreciation VIPERs (symbol: VIG).
The text of the proposed rule change, as amended, is available on
the Amex's Web site at http://www.amex.com, at the principal office of
the 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
VIG. This fee change will be assessed on members commencing April 27,
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 VIG. 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 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.\6\
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\6\ See, e.g., Securities Exchange Act Release No. 52493
(September 22, 2005), 70 FR 56941 (September 29, 2005).
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The purpose of this proposal is to charge an options licensing fee
in connection with options on VIG. Specifically, Amex seeks to charge
an options licensing fee of $0.10 per contract side for the VIG 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 VIG 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 the
VIG 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 the Amex, in recent years, has revised a
number of fees to better align Exchange fees with the actual cost of
delivering services and reduce Exchange subsidies of such services.\7\
Amex believes that the implementation of this proposal is consistent
with the reduction and/or elimination of these subsidies. Amex believes
that these fees will help to allocate to those market participants
engaging in transactions in VIG options a fair share of the related
costs of offering such options.
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\7\ See, e.g., Securities Exchange Act Release Nos. 45360
(January 29, 2002), 67 FR 5626 (February 6, 2002); and 44286 (May 9,
2001), 66 FR 27187 (May 16, 2001).
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The Exchange asserts that the proposal is equitable as required by
Section 6(b)(4) of the Act.\8\ In
[[Page 28718]]
connection with the adoption of an options licensing fee for VIG
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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\8\ Section 6(b)(4) of the Act requires that the rules of a
national securities exchange provide for the equitable allocation of
reasonable dues, fees, and other charges among its members and
issuers and other persons using its facilities.
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2. Statutory Basis
Amex believes that the proposed rule change, as amended, is
consistent with Section 6(b)(4) of the Act \9\ regarding the equitable
allocation of reasonable dues, fees and other charges among exchange
members and other persons using exchange facilities.
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\9\ 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, as amended, 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, as amended.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The foregoing rule change was filed pursuant to Section
19(b)(3)(A)(ii) of the Act \10\ and Rule 19b-4(f)(2) thereunder,\11\
because it establishes or changes a due, fee, or other charge imposed
by the self-regulatory organization.
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\10\ 15 U.S.C. 78s(b)(3)(A)(ii).
\11\ 17 CFR 240.19b-4(f)(2).
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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.
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-2006-39 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-2006-39. 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 the 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-2006-39 and should be submitted on or before June
7, 2006.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\12\
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\12\ 17 CFR 200.30-3(a)(12).
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Jill M. Peterson,
Assistant Secretary.
[FR Doc. E6-7461 Filed 5-16-06; 8:45 am]
BILLING CODE 8010-01-P