[Federal Register: March 27, 2008 (Volume 73, Number 60)]
[Notices]
[Page 16399-16400]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr27mr08-88]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-57540; File No. SR-Amex-2008-23]
Self-Regulatory Organizations; American Stock Exchange LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change
Adding Designated Amex Remote Traders to Amex's Revenue Sharing Program
March 20, 2008.
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 13, 2008, the American Stock Exchange LLC (``Exchange'' or
``Amex'') 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. 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.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to add Designated Amex Remote Traders
(``DARTs'') to Amex's existing revenue sharing program for ETF
specialists and registered traders and to make related changes to its
Exchange Traded Funds and Trust Issued Receipts Fee Schedule. The text
of the proposed rule change is available on the Exchange's Web site at:
http://www.amex.com, at the Exchange'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 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
On June 28, 2007, the Exchange: (i) Amended its Exchange Traded
Funds and Trust Issued Receipts Fee Schedule to eliminate charges for
ETF transactions by ETF specialists and registered traders
(collectively, ``ETF market makers''); and (ii) implemented a revenue
sharing program whereby the Exchange would make certain payments, on a
per-share executed basis out of general Exchange revenues, to ETF
market makers which either buy or sell ETFs on the Exchange and provide
liquidity in such transactions (e.g., the specialist's quote is traded
against or the specialist offsets an order imbalance as part of an
opening or closing transaction).\3\ The Exchange enacted the revenue
sharing program to provide incentives to the ETF market makers to quote
aggressively in Amex-traded ETFs.
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\3\ See Securities Exchange Act Release No. 55983 (June 29,
2007), 72 FR 37059 (July 6, 2007) (SR-Amex-2007-68) (``RSP
Filing'').
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On January 31, 2008, the Commission approved the Exchange's DARTs
program, which established DARTs as a third category of ETF market
maker. Like ETF specialists and registered traders, DARTs provide
liquidity to the Exchange in the ETFs in which they are assigned.\4\
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\4\ See Securities Exchange Act Release No. 57241 (January 31,
2008), 73 FR 7335 (February 7, 2008) (SR-Amex-2007-138).
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Because DARTs operate similarly to ETF specialists and registered
traders--in that they will also exclusively be quoting in their
assigned ETFs--the Exchange proposes to fold DARTs into the existing
revenue sharing program described above to provide DARTs similar
incentives to provide liquidity on the Exchange. Amex proposes that a
DART will receive a revenue sharing payment of $0.0015 per share (or 15
cents per 100 shares) whenever the DART either buys or sells an ETF on
the Exchange and is a provider of liquidity in that transaction, which
places the DART rate between the specialist rate of $0.0020 per share
and the registered trader rate of $0.0010 per share.\5\ Further, like
specialists and registered traders, a DART:
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\5\ Revenue sharing payments for DARTs are set at a higher rate
than for registered traders to compensate for the fact that DARTs,
unlike registered traders, will not participate in any post-trade
allocations in connection with auction trades under Rule 128B--
AEMI(b). See e-mail from Daniel Mollin, Associate General Counsel,
Amex, to Nathan Saunders, Special Counsel, Division of Trading and
Markets, Commission, dated March 19, 2008.
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Will not be assessed any transaction fees for ``taking''
liquidity; \6\
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\6\ In the proposed rule change, the Exchange amended its
Exchange Traded Funds and Trust Issued Receipts Fee Schedule to
exclude DARTs from the customer transaction charges for transactions
in ETFs. Specialists and registered traders were previously excluded
from this fee pursuant to the terms of the revenue sharing program.
See RSP Filing, supra note 3.
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Will not receive revenue sharing payments when another ETF
market maker is a contra-party to the same transaction (i.e., a
specialist buying shares from a DART);
Will receive revenue sharing payments on transactions in
securities trading at less than $1.00, but only on the portion of a
transaction for which the Exchange collects revenue;
Will receive revenue sharing payments based only on the
first 43,478 shares it executes in any particular transaction, given
that customer transaction charges are capped at $100 per transaction
(which means the transaction charge of $0.0023 per share is assessed on
only the first 43,478 shares executed by a customer).
The revisions to the ETF Fee Schedule and the addition of DARTs to
the revenue sharing program for ETF specialists and registered traders
were implemented March 17, 2008, the date that DARTs were scheduled to
commence trading on the Exchange.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with section 6(b) of the Act \7\ in general and furthers the objectives
of section 6(b)(4) of the Act \8\ in particular in that it is intended
to assure the equitable allocation of reasonable dues, fees, and other
charges among its members and issuers and other persons using its
facilities. Specifically, the Exchange is proposing to adopt for the
DARTs, a new class of quoting participants in the Amex ETF marketplace,
a fee structure and revenue sharing program similar to the one already
in place for ETF specialists and registered traders, which are
similarly-situated quoting participants.
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\7\ 15 U.S.C. 78f(b).
\8\ 15 U.S.C. 78f(b)(4).
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B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange believes that the proposed rule change does not impose
[[Page 16400]]
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
Because the foregoing proposed rule change establishes or changes a
due, fee, or other charge imposed by the Exchange, it has become
effective upon filing pursuant to section 19(b)(3)(A) of the Act \9\
and Rule 19b-4(f)(2) thereunder.\10\ 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, or otherwise in furtherance of the purposes of
the Act.
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\9\ 15 U.S.C. 78s(b)(3)(A).
\10\ 17 CFR 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 No. SR-Amex-2008-23 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-2008-23. 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 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-2008-23 and should be
submitted on or before April 17, 2008.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\11\
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\11\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E8-6250 Filed 3-26-08; 8:45 am]
BILLING CODE 8011-01-P