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Self-Regulatory Organizations; American Stock Exchange LLC; Order Approving a Proposed Rule Change and Amendment No. 1 Thereto To Retroactively Apply Amended Options Trading Fees

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Start Preamble June 4, 2002.

On March 1, 2002, the American Stock Exchange LLC (“Amex” or “Exchange”) filed with the Securities and Exchange Commission (“Commission”), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”) [1] and Rule 19b-4 thereunder,[2] a proposed rule change to retroactively apply options trading fees that were amended in SR-Amex-2002-11.[3] Specifically, the Exchange proposes to impose the fee change as of December 1, 2001. The Amex filed Amendment No. 1 to the proposed rule change on April 16, 2002.[4]

The proposed rule change, as amended, was published for comment in the Federal Register on April 26, 2002.[5] The Commission received no comments on the proposal. This order approves the proposed rule change, as amended.

The Commission finds that the proposed rule change, as amended, is consistent with the requirements of Section 6 of the Act [6] and the rules and regulations thereunder applicable to a national securities exchange.[7] The Commission finds specifically that the proposed rule change, as amended, is consistent with Section 6(b)(4) of the Start Printed Page 40035Act [8] , which requires, among other things, that the rules of a national securities exchange be 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. Specifically, the Exchange proposes not to apply the prior fee increases to accommodation transactions in order to encourage specialists and registered options traders, by keeping fees low, to provide liquidity as an accommodation to investors seeking to close out worthless option positions. The Exchange further proposes not to apply the fee increases to reversals, conversions, dividend spreads and box spreads in order to encourage specialists and registered options traders, by keeping fees low, to provide liquidity for these types of financing strategies. The Exchange has stated that it wants to keep fees for accommodation transactions and spread strategies comparable with the fees charged by other options exchanges for these types of transactions, and given that the Exchange has increased a number of fees to its membership in recent months, it believes that the implementation of any type of reduction in fees should be put in place as of December 1, 2001.

It is therefore ordered, pursuant to section 19(b)(2) of the Act [9] , that the proposed rule change (File No. SR-Amex-2002-12), as amended, is approved.

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For the Commission, by the Division of Market Regulation, pursuant to delegated authority.[10]

Margaret H. McFarland,

Deputy Secretary.

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3.  See Securities Exchange Act Release No. 45783 (April 18, 2002), 67 FR 20851 (April 26, 2002) for a description of these fees changes. These fee amendments were filed pursuant to Section 19(b)(3)(A)(ii) of the Act and were effective upon filing on April 16, 2002.

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4.  See letter from Claire P. McGrath, Vice President and Deputy General Counsel, Amex, to Nancy Sanow, Assistant Director, Division of Market Regulation, Commission, dated April 12, 2002 (“Amendment No. 1”). In Amendment No. 1, the Amex amended the proposal to incorporate the Exchange's reasons for not charging specialists and registered options traders the recent increase in transaction, comparison and floor brokerage fees for accommodation trades or trades executed pursuant to reversals and conversions, dividend spreads, and box spreads. Amex also provided an explanation of the December 1, 2001 implementation date for the elimination of the fee cap.

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5.  See Securities Exchange Act Release No. 45784 (April 18, 2002), 67 FR 20847.

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7.  In approving this proposed rule change, the Commission has considered the proposed rule's impact on efficiency, competition, and capital formation. 15 U.S.C. 78c(f).

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[FR Doc. 02-14571 Filed 6-10-02; 8:45 am]