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Notice

Self-Regulatory Organizations; Notice of Filing and Order Granting Accelerated Approval of Proposed Rule Change and Amendment No. 1 Thereto by the American Stock Exchange LLC Relating to the Retroactive Application of a Monthly Options Transaction Fee Cap for Specialists and Registered Options Traders

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Start Preamble January 6, 2004.

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 December Start Printed Page 20191, 2003, 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 and II below, which Items have been prepared by the Amex. On January 2, 2004, the Exchange amended the proposal.[3] The Commission is publishing this notice to solicit comments on the proposed rule change, as amended, from interested persons, and is granting accelerated approval to the proposed rule change.

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

The Exchange proposes to retroactively apply a fee cap of $72,000 per month in any single options class for specialists and registered options traders (“ROTs”) subject to options transaction fees from July 1, 2003 to November 30, 2003. 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 Amex 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 III below. The Amex 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 the Statutory Basis for, the Proposed Rule Change

1. Purpose

The Amex proposed, in a companion filing (SR-Amex-2003-104),[4] to adopt a fee cap of $72,000 per month in any single option class, exclusive of license fees, for specialists and ROTs subject to transaction fees.[5] With the instant proposed rule change, Amex proposes that this fee cap be effective as of July 1, 2003 so that the Amex will retroactively apply the fee cap from July 1, 2003 to November 30, 2003. Accordingly, the Exchange will rebate to those specialists and ROTs transaction fees (exclusive of the options licensing fee) that have been paid in excess of the $72,000 fee cap in any single option class in any one month from July 1, 2003 through November 30, 2003.

The Exchange believes that specialists and ROTs who bring in substantial order flow to the Exchange should be rewarded through the proposed fee reduction. As proposed, specialists and ROTs in any single option class will be required to trade 200,000 contracts for equity options and 232,258 contracts in index options to reach the fee cap (based on the current rate of $0.36 per contract side). However, as indicated in SR-Amex-2003-104,[6] the number of contracts required to reach the fee cap in the top 300 equity options may increase as a result of the proposed market share fee program. Although the Exchange submits that only a small number of firms will likely reach these limits, the proposal is intended to provide incentives to firms to continue to attract order flow.

2. Statutory Basis

The Exchange believes that the proposed fee change is consistent with Section 6(b)(4) of the Act [7] regarding the equitable allocation of reasonable dues, fees and other charges among exchange members and other persons using exchange facilities.

B. Self-Regulatory Organization's Statement on Burden on Competition

The Amex believes the proposed rule change will impose no burden on competition.

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. Solicitation of Comments

Interested persons are invited to submit written data, views and arguments concerning the foregoing, including whether the proposal 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. Comments may also be submitted electronically at the following e-mail address: rule-comments@sec.gov. All comment letters should refer to File No. SR-Amex-2003-106. 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, comments should be sent in hardcopy or by e-mail but not by both methods. 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 File No. SR-Amex-2003-106 and should be submitted by February 3, 2004.

IV. Commission's Findings and Order Granting Accelerated Approval of Proposed Rule Change

The Amex has asked the Commission to approve the proposed rule change, as amended, on an accelerated basis, so that the fee reduction can be allocated in 2003 and the Amex and its member firms may close its books for the year 2003.

The Commission finds that the proposed rule change, as amended, is consistent with the requirements of the Act and the rules and regulations thereunder applicable to a national securities exchange, and in particular, the requirements of Section 6(b)(4) of the Act.[8] Specifically, the Commission believes that the proposal is consistent with Section 6(b)(5) of the Act,[9] which requires, among other things, that the rules of a national securities exchange be designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, to remove impediments to and perfect the mechanism of a free and open market and a national market system, and, in general, to protect investors and the public interest.[10] The Start Printed Page 2020Commission believes that the proposal may increase order flow to the Exchange, which should enhance liquidity on the Amex.

The Commission finds good cause for approving the proposed rule change, as amended, prior to the thirtieth day after the date of publication of the notice of filing thereof in the Federal Register. Specifically, the Commission notes that accelerated approval will allow the Amex and its member firms to close its books for the year 2003 without unnecessary delay. Accordingly, the Commission believes that there is good cause, consistent with Sections 6(b)(4)[11] and 19(b)(2) of the Act,[12] to approve the proposal, as amended, on an accelerated basis.

V. Conclusion

It is therefore ordered, pursuant to Section 19(b)(2) of the Act,[13] that the proposed rule change (SR-Amex-2003-106), as amended, is hereby approved on an accelerated basis.

Start Signature

For the Commission, by the Division of Market Regulation, pursuant to delegated authority.[14]

Jill M. Peterson,

Assistant Secretary.

End Signature End Preamble

Footnotes

3.  See letter from Jeffrey P. Burns, Associate General Counsel, Amex, to Joseph P. Morra, Special Counsel, Division of Market Regulation, Commission, dated December 31, 2003 (“Amendment No. 1 ”). In Amendment No. 1, Amex explained that it requested accelerated approval of the filing so that the rebated monies could be allocated in 2003 for the purpose of closing the books for the year.

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4.  See Securities Exchange Act Release No. 49019 (January 5, 2004) (File No. SR-Amex-2003-104). This proposal was filed pursuant to section 19(b)(3)(A) of the Act and was effective upon filing.

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5.  For this purpose, transaction fees applicable to specialists and ROTs include the options transaction fee, the options comparison fee, and the options floor brokerage fee.

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6.  See supra note 4.

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10.  In approving this proposal, 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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11.  See supra note 8.

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[FR Doc. 04-613 Filed 1-12-04; 8:45 am]

BILLING CODE 8010-01-U