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Notice

Self-Regulatory Organizations; Notice of Filing and Immediate Effectiveness of Proposed Rule Change by the American Stock Exchange LLC Relating to the Implementation of a Start-Up Fee for Specialist Participants in the Exchange's Program To Trade Nasdaq Securities on an Unlisted Basis

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Start Preamble April 9, 2002.

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 3, 2002, the American Stock Exchange LLC (“Amex” or “Exchange”) 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 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

The Exchange proposes to charge a one-time start-up fee to specialist participants in the Exchange's program to trade Nasdaq securities on an unlisted basis. The text of the proposed rule change is available at the Amex and at the Commission.

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 parts of such statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change

1. Purpose

The Exchange is implementing a program to trade Nasdaq securities on an unlisted basis, which, according to the Exchange, involves significant technology enhancements, Trading Floor renovations, marketing expenses and other start-up costs. To defray the Exchange's costs of establishing the Nasdaq Unlisted Trading Privileges (“UTP”) program, the Exchange proposes to assess a start-up fee on the specialist firms participating in the program.

The Exchange plans to list approximately 100 Nasdaq securities, and it anticipates that these securities will be equally allocated among five participating specialist firms so that each firm has a critical mass of securities (approximately 20 apiece) to dedicate sufficient resources to the program to make it a success. The Exchange, consequently, would divide the approximately $5 million cost of the program equally among the participating specialists.

In the event that there are fewer than five specialist firms in the UTP program, the Exchange still would admit approximately 100 securities to dealings and would allocate more than 20 stocks to one or more specialists. The Exchange, in this circumstance, would raise the $5 million needed to fund the program by dividing the cost of the program among the participating specialist firms in proportion to the number of securities that they are allocated, provided, however, that the start-up fee would be at least $1 million per specialist firm.

In the event that there are six qualified specialists that participate in the program or if the Exchange so decides, the Exchange would admit approximately 120 Nasdaq securities to dealings. The cost of the program would increase to approximately $6 million as a result of this expansion to include more securities. If the Exchange expands the program to approximately 120 securities, the Exchange anticipates that these securities would be allocated so that each specialist firm has at least the critical mass of securities to dedicate sufficient resources to make the program a success (approximately 20 securities apiece). In addition, it is possible that one or more firms might be allocated more than 20 securities if the Exchange determines to admit approximately 120 securities to dealings. The Exchange would divide the $6 million cost of the expanded program among the participating specialists in proportion to the number of securities that they are allocated, provided, however, that the start-up fee would be at least $1 million per specialist firm.

2. Statutory Basis

The Exchange believes that the proposed rule change is consistent with section 6(b) of the Act [3] in general, and furthers the objectives of section 6(b)(4) [4] in particular, because it is designed to provide for the equitable allocation of reasonable dues, fees, and other charges among its members, 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 impose Start Printed Page 18661any burden on competition 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

Written comments on the proposed rule change were neither solicited nor received.

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

The proposed rule change has become effective pursuant to section 19(b)(3)(A)(ii) of the Act [5] and subparagraph (f)(2) of Rule 19b-4 thereunder [6] because it establishes or changes a due, fee, or other charge imposed by the Exchange. 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 is consistent with the Act. 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 Section. Copies of such filing will also be available for inspection and copying at the principal office of the Amex. All submissions should refer to File No. SR-Amex-2002-28 and should be submitted by May 7, 2002.

Start Signature

For the Commission, by the Division of Market Regulation, pursuant to delegated authority. [7]

Margaret H. McFarland,

Deputy Secretary.

End Signature End Preamble

Footnotes

[FR Doc. 02-9191 Filed 4-15-02; 8:45 am]

BILLING CODE 8010-01-P