Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”)  and Rule 19b-4 thereunder, notice is hereby given that on May 29, 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 Amex has designated this proposal as one establishing or changing a due, fee, or other charge imposed by the Exchange under Section 19(b)(3)(A)(ii) of the Act, which renders the proposal effective upon filing with the Commission. 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 discontinue the Exchange's program of revenue sharing with Exchange specialists. The revenue sharing program will be reduced by 50 percent as of July 1, 2002 and will be discontinued entirely effective January 1, 2003.
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
In SR-Amex-99-44, the Exchange filed: (1) Certain changes to the Exchange's Equity Fee Schedule, including elimination of share or value charges for orders up to 2,099 shares entered into the Amex Order File (“System Orders”); (2) implementation of a policy to eliminate specialists” commissions for System Orders up to 2,099 shares; and (3) a program of revenue sharing with Exchange specialists, to be made from the Exchange's general revenues. These fee and policy revisions were implemented as of November 1, 1999.
The applicable revenue sharing is calculated on the basis of average daily Amex (not consolidated) trading volume, excluding Portfolio Depositary Receipts (e.g., SPDRs®, Nasdaq 100 Index Tracking StockTM), Index Fund Shares (e.g., iSharesTM, VIPERsTM), and Trust Issued Receipts (e.g., HOLDRsTM) based on the following incremental rates per 100 shares:Start Printed Page 42307
|Average daily volume (millions)||Rate per 100 shares|
|Up to 40||$0.25|
|from 40 to 60||.23|
|from 60 to 80||.20|
The applicable rate(s) is calculated monthly. Payments on qualified orders are made monthly in arrears to equity specialists at a rate calculated as a single weighted average rate based on volume for the month most recently ended. Qualifying orders are those delivered electronically from off the floor of the Exchange, but excluding all orders for Portfolio Depositary Receipts, Index Fund Shares, and Trust Issued Receipts.
The Exchange has determined to reduce the revenue sharing arrangement by 50 percent as of July 1, 2002 and to discontinue the revenue sharing program entirely effective January 1, 2003, in view of revenue requirements of the Exchange under increasingly competitive market conditions. The rate per 100 shares applicable from July 1 to December 31, 2002 would be $.125, $.115, $.10, and $.09 for Average Daily Volume of up to 40 million, from 40 to 60 million, from 60 to 80 million, and over 80 million shares, respectively.
Because this program was implemented in conjunction with implementation of an Exchange policy to eliminate specialist commissions for System Orders up to 2,099 shares, the Exchange believes continued application of this policy to be inappropriate and unnecessary. Specialists, therefore, would be able to charge commissions for such orders if they choose.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent with Section 6(b) of the Act  in general, and furthers the objectives of Section 6(b)(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 any 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  and subparagraph (f)(2) of Rule 19b-4 thereunder  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-2002-45 and should be submitted by July 12, 2002.Start Signature
For the Commission, by the Division of Market Regulation, pursuant to delegated authority.
Jill M. Peterson,
4. The Exchange will issue a Memorandum to Amex specialist units describing the 50 percent reduction in revenue sharing as of July 1, 2002 and the elimination of the program, effective January 1, 2003. Telephone conversation between Michael Cavalier, Associate General Counsel, Amex, and Cyndi Nguyen, Attorney, Division of Market Regulation (“Division”), Commission, on June 12, 2002.Back to Citation
5. See Securities Exchange Act Release No. 42067 (October 28, 1999), 64 FR 60254 (November 4, 1999).Back to Citation
6. Telephone conversation between Michael Cavalier, Associate General Counsel, Amex, and Cyndi Nguyen, Attorney, Division, Commission, on June 6, 2002.Back to Citation
[FR Doc. 02-15711 Filed 6-20-02; 8:45 am]
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