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Self-Regulatory Organizations; American Stock Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Establish a Technology Assessment Fee for the Use of Legacy Options Trading Systems

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Start Preamble February 15, 2006.

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 February 6, 2006, the American Stock Exchange LLC (“Exchange” or “Amex”) 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. Amex has designated this proposal as one establishing or changing a due, fee, or other charge imposed by Amex under section 19(b)(3)(A)(ii) of the Act [3] and Rule 19b-4(f)(2) thereunder,[4] which renders the proposed rule change 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 adopt a Technology Assessment Fee to be assessed on its members for the continued use of legacy options trading systems. The text of the proposed rule change is available on Amex's Web site (, at Amex's principal office, and at the Commission's Public Reference Room. Start Printed Page 9393

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

On May 20, 2004, the Commission approved the Amex's proposal to implement a new options trading platform known as the Amex New Trading Environment (the “ANTE System” or “ANTE”).[5] ANTE is intended to replace the following legacy options trading systems: the Amex Options Display Book (AODB), Amex's theoretical price calculator (XTOPS), and Auto-Ex. On May 25, 2004, the Amex began rolling out the ANTE System on its trading floor on a specialist's post-by-specialist's post basis. At that time it was anticipated the roll-out would be completed by the end of the second quarter of 2005. The implementation date for the full roll-out of the ANTE System was subsequently extended to June 30, 2006.[6] Amex has rolled out the ANTE System to all its option classes except one—the Nasdaq 100 Index options (“NDX”). NDX has the largest notional value of any option class, with average premiums of $40. The specialist for this product is concerned that the theoretical price calculator provided by the ANTE System may not accurately price the options on this index. The specialist has installed its own theoretical index price calculator, which currently calculates prices for the firm's other options products, including the Mini Nasdaq Index (MNX), an index valued at one-tenth the value of NDX.

The specialist firm continues to resist moving NDX off the legacy options trading systems and onto the ANTE System as it seeks to gain experience using its proprietary price calculator. The NDX specialist is concerned about the magnitude of errors that could occur using a theoretical price calculator with NDX, given its large notional value and the size of the underlying index.

Although the Exchange is mindful of the specialist's concerns, maintaining two platforms for the trading of options—the legacy options trading systems and ANTE—is costly for the Exchange. Therefore, the Exchange is proposing to assess the specialist firm a fee to cover the Exchange's costs for maintaining its legacy options trading systems at the Securities Industry Automation Corporation (“SIAC”). The Exchange currently pays a monthly maintenance fee to SIAC of $12,000. The proposal will require the specialist firm to reimburse the Exchange for these maintenance costs until it transitions all of its options classes to the ANTE System.[7]

2. Statutory Basis

The Exchange believes that the proposed rule change is consistent with section 6(b) of the Act [8] in general and furthers the objectives of section 6(b)(4) [9] in particular in that it is intended 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 is proposing to assess the one member organization continuing to use its legacy options trading systems in order to recover its costs for maintaining these systems.

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 that is 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

No written comments were solicited or received with respect to the proposed rule change.

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

The foregoing proposed rule change has become effective pursuant to section 19(b)(3)(A) of the Act [10] and Rule 19b-4(f)(2) [11] 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 the 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. Comments may be submitted by any of the following methods:

Electronic Comments

Paper Comments

  • Send paper comments in triplicate to Nancy M. Morris, Secretary, Securities and Exchange Commission, 100 F Street, NE., Washington, DC 20549-1090.

All submissions should refer to File Number SR-Amex-2006-12. 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, please use only one method. The Commission will post all comments on the Commission's Internet Web site (​rules/​sro.shtml). 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 Start Printed Page 9394Room. Copies of such filing also will be available for inspection and copying at the principal office of the Amex. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR-Amex-2006-12 and should be submitted on or before March 16, 2006.

Start Signature

For the Commission, by the Division of Market Regulation, pursuant to delegated authority.[12]

J. Lynn Taylor,

Assistant Secretary.

End Signature End Preamble


3.  15 U.S.C. 78s(b)(3)(A)(ii).

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5.  See Securities Exchange Act Release No. 49747, 69 FR 30344 (May 27, 2004) (File No. SR-Amex-2003-89).

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6.  In a separate filing submitted February 6, 2006, for immediate effectiveness pursuant to Section 19(b)(3)(A)(iii) of the Act, 15 U.S.C. 78s(b)(3)(A)(iii), the Exchange proposed to extend the deadline for implementation of ANTE System for all option classes from December 31, 2005, to June 30, 2006. See File No. SR-Amex-2006-13, notice of which the Commission is separately publishing for comment today (Securities Exchange Act Release No. 53319).

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7.  The Exchange expects that the NDX specialist will move NDX onto the ANTE System by June 30, 2006, the new deadline for implementation of the ANTE System. See supra note 6.

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11.  17 CFR 19b-4(f)(2).

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[FR Doc. E6-2521 Filed 2-22-06; 8:45 am]