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Notice

Self-Regulatory Organizations; Notice of Filing and Immediate Effectiveness of Proposed Rule Change by American Stock Exchange LLC Relating to an Increase in the Fees for Associate Members and Off-floor Traders

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Start Preamble September 11, 2000.

Pursuant to section 19(b)(1) of the Securities Exchange of 1934 (“Exchange Act” or “Act”) [1] notice is hereby given that on August 11, 2000, the American Stock Exchange LLC (“Amex” or “Exchange”) filed with the Securities and Exchange Commission (“SEC” or “Commission”) the proposed rule change as described in Items I, II, and III below, which Items have been prepared by the Exchange. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons.

I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change

Pursuant to the provisions of section 19(b)(1) under the Exchange Act,[2] the Exchange is herewith filing a proposed rule change to amend Article IV, sections 1(d) and (f) and Article VII, Section (3) of the Exchange Constitution to increase the fees for Associate Members and off-floor traders. Below is the text of the proposed rule change. Additions are italicized; deletions are in brackets.

American Stock Exchange Constitution

Article IV

Sec. 1(a)-(c) No change.

(d) Associate membership—The number of associate members shall be such as may be determined by the Board of Governors from time to time. Any person not less than the minimum age of majority required to be responsible for his contracts in each jurisdiction in which he conducts business either as a partner of a firm or as a director or executive officer of a corporation may make application for associate membership.

An application for associate membership shall be in writing and shall be in such form, and contain such information, as the Exchange may from time to time prescribe. No person may be admitted to associate membership unless his application is approved by the Exchange, in accordance with the provisions of Section 1(g) of this Article IV. Any person admitted to associate membership in the American Stock Exchange LLC [Inc.] prior to September 4, 1962, as an individual or as a partner of a firm shall remain an associated member only so long as he is actively engaged in the business of buying and selling securities as broker or dealer. Any person admitted to associate membership in the Exchange or in the American Stock Exchange LLC [Inc.] after September 4, 1962, as a partner of a firm shall remain as associate member only so long as he remains a partner of such firm or of another firm continuing the business of the first firm or a director or executive officer of a corporation continuing the business of the first firm. Any person admitted to associate membership in the Exchange or in the American Stock Exchange LLC [Inc.], whether before of after September 4, 1962, as a director or executive officer of a corporation shall remain an associate member only so long as he remains a director or executive officer of such corporation or of another corporation continuing the business of the first corporation.

An associate member and the member firm or member corporation of which he is a partner or a director or executive officer shall have such rights and privileges, as may, from time to time, be prescribed by the Board of Governors. Where an associate member and partner or director or executive officer of a member firm or corporation ceases to be such a partner, director or officer of such firm or corporation such firm or corporation may, within thirty days following such death, retirement and resignation or termination of office or within such further time as the Exchange may authorize, nominate for associate membership a general partner in such form or a director or executive officer, the Exchange may authorize the firm in which he as a partner or the corporation in which he was a director or executive officer to have the status of a temporary associate member firm or a temporary associate member corporation, as the case may be, for a period of thirty days from the date of such death or for such further time as the Exchange shall determine, and upon such conditions as the Exchange may fix, and the exchange may at any time during such period withdraw such authorization in which event such status shall terminate.

[Each] A[a]ssociate member s for whom the Exchange is the Designated Examining Authority shall be required to pay [who has paid] an annual membership fee as set forth in Article VII, Section 1 herein[,] and, upon payment of the optional annual electronic access fee shall be entitled, [during the period for which such fee has been paid and] while such member remains in good standing, to maintain electronic access to (i) the PER/AMOS system of the Exchange, and (ii) such other automated systems of the Exchange as the Board may from time to time determine. Effective August 7, 2000, all new associate members shall be required to pay the annual electronic access fee as well as the monthly and/or annual fees.

An associate member may, if accompanied by a regular member, visit the Floor of the Exchange but shall not have the privilege of transacting business thereon.

(e) No change.

(f) No person shall be approved for regular, options principal or associate membership or admitted to the privileges thereof until the Start Printed Page 56607Exchange shall have received the initiation fee, and, in the case of associate members , [who have elected to maintain] the fee for electronic access to Exchange systems as provided in Article IV, Section 1(d)[,] and the monthly and/or annual membership fees, required by Article VII[.], Section 1(e).

(g)-(j) No change.

* * * * *

Article VII

Sec. 1(a)-(d) No change.

(e) Associate members—The initiation fee for associate membership shall be a sum equal to 5% of the latest price at which a regular membership shall have been sold and transferred to an applicant for regular membership, otherwise than for a nominal consideration or through a private sale prior to the date when such initiation fee is due, provided, however, that the initiation fee for an associate member who is approved as the nominee of an associate member firm or corporation pursuant to Article IV, Section 1(d) shall be $100. The annual membership fee for associate membership shall be $4,000 per month for associate member firms and $3,000 per year for individual associate members and off-floor traders. Associate members shall be permitted to waive these fees by demonstrating to the Exchange's Financial Regulatory Services Department that ten percent (10%) of the associate member's and/or individual off-floor trader's volume is transacted on the Floor of the Exchange. The annual membership fee for associated membership access to the Exchange electronic systems as provided in Article IV, Section 1(d) shall be fixed by the Board once a year, and shall be a sum equal to 10% of the average price at which regular memberships shall have been sold and transferred to applicants for regular membership, otherwise than for nominal consideration or through private sale, during the preceding twelve months. Effective August 7, 2000, all new associate members shall be required to pay the annual electronic access fee as well as the monthly and/or annual fees. Such initiation , [and/or] monthly and/or annual and electronic access fees shall be paid prior to the approval by the Exchange of an applicant for associate membership, and prior to renewal of such membership at the end of the period for which such fee s ha ve[s] been paid.

(f) No change.

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

Recently, other exchanges [3] have increased the fees and dues charged to off-floor traders to deter applicants who apply for exchange membership merely to satisfy the SEC's exchange membership requirement, while most of the trading is done away from the exchange. The Exchange has been subject to significantly increased costs in the areas of admissions, examinations and enforcement because it is the Designated Examining Authority (“DEA”) for a number of joint back-office and day-trading operations which bring little, if any, business to the Exchange, but represent a serious regulatory concern.

To cover increased administrative and examination costs, the Exchange proposes to charge Associate Members, where the Exchange is the DEA, a fee of $4,000 per month for Associate Member Firms and $3,000 per year for individual off-floor trader.[4] Associate Members will be permitted to waive these fees by demonstrating to the Exchange's Financial Regulatory Services Department that ten percent (10%) of the Associate Member's and/or individual off-floor trader's volume is transacted on the Floor of the Exchange. Effective August 7, 2000, all new Associate Members and individual off-floor traders will be required to pay the annual electronic access fee as well as the monthly and/or annual fees.

2. Statutory Basis

The Exchange believes that the proposed rule change is consistent with the provisions of section 6(b) of the Act [5] in general and furthers the objectives of section 6(b)(4) of the Act [6] in particular in that it is designed to provide for the equitable allocation of reasonable dues, fees, and other charges among its members and issuers and other persons using its facilities.

(B) Self-Regulatory Organization's Statement on Burden on Competition

The Exchange does not believe that the proposed rule change will result in any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act, as amended.

(C) Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received from Members, Participants or Others

Written comments were neither solicited nor received.

III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action

The foregoing rule change has become effective pursuant to section 19(b)(3)(A) of the Exchange Act [7] and subparagraph (f) of Rule 19b-4 [8] under the Act in that it is establishing or changing a due, fee, or other charge. 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. Persons making written submissions should file six copies thereof with the Secretary, Securities and Exchange Commission, 450 Fifth Street, NW., Washington, DC 20549-0609. 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 will also be available for inspection and copying at the principal office of the Amex. All submissions should refer to the File No. SR-Amex-00-44 and should be submitted by October 10, 2000.Start Printed Page 56608

For the Commission by the Division of Market Regulation, pursuant to delegated authority.[9]

Start Signature

Margaret H. McFarland,

Deputy Secretary.

End Signature End Preamble

Footnotes

3.  See Securities Exchange Act Release No. 42497 (Mar. 6, 2000), 65 FR 14005 (Mar. 15, 2000) [File No. SR-PHLX-00-09] and Securities Exchange Act Release No. 43074 (July 26, 2000), 65 FR 47529 (Aug. 2, 2000) [File No. SR-CHX-00-23] relating to registrations and annual fees for off-floor traders; but see Securities Exchange Act Release No. 43257 (Sept. 6, 2000) [File No. SR-PHLX-00-73].

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4.  This increase in fees will be effective November 1, 2000. Telephone conversation between Florence Harmon, Senior Special Counsel, SEC, and Robert Kline Jr., Managing Director, Membership Services, AMEX (Sept. 8, 2000).

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[FR Doc. 00-24011 Filed 9-18-00; 8:45 am]

BILLING CODE 8010-01-M