Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”)
The Exchange proposes to modify its Options Fee Schedule by adopting a per contract licensing fee for the orders of specialists, registered options traders (“ROTs”), firms, non-member market makers, and broker-dealers in connection with options transactions on the shares of the Vanguard Dividend Appreciation VIPERs (symbol: VIG).
The text of the proposed rule change, as amended, is available on the Amex's Web site at
In its filing with the Commission, 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 IV below. Amex has prepared summaries, set forth in Sections A, B, and C below, of the most significant aspects of such statements.
Amex proposes to adopt a per contract licensing fee for options on VIG. This fee change will be assessed on members commencing April 27, 2006.
The Exchange has entered into numerous agreements with various index providers for the purpose of trading options on certain exchange traded funds (“ETFs”), such as VIG. This requirement to pay an index license fee to a third party is a condition to the listing and trading of these ETF options. In many cases, the Exchange is required to pay a significant licensing fee to the index provider that may not be reimbursed. In an effort to recoup the costs associated with certain index licenses, the Exchange has established a per contract licensing fee for the orders of specialists, ROTs, firms, non-member market makers and broker-dealers, which is collected on every option transaction in designated products in which such market participant is a party.
The purpose of this proposal is to charge an options licensing fee in connection with options on VIG. Specifically, Amex seeks to charge an options licensing fee of $0.10 per contract side for the VIG options for specialist, ROT, firm, non-member market maker and broker-dealer orders executed on the Exchange. In all cases, the fees will be charged only to the Exchange members through whom the orders are placed.
The proposed options licensing fee will allow the Exchange to recoup its costs in connection with the index license fee for the trading of the VIG options. The fees will be collected on every order of a specialist, ROT, firm, non-member market maker, and broker-dealer executed on the Exchange. The Exchange believes that the proposal to require payment of a per contract licensing fee in connection with the VIG options by those market participants that are the beneficiaries of Exchange index license agreements is justified and consistent with the rules of the Exchange.
The Exchange notes that the Amex, in recent years, has revised a number of fees to better align Exchange fees with the actual cost of delivering services and reduce Exchange subsidies of such services.
The Exchange asserts that the proposal is equitable as required by Section 6(b)(4) of the Act.
Amex believes that the proposed rule change, as amended, is consistent with Section 6(b)(4) of the Act
Amex believes that the proposed rule change, as amended, does not impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act.
No written comments were solicited or received with respect to the proposed rule change, as amended.
The foregoing rule change was filed pursuant to Section 19(b)(3)(A)(ii) of the Act
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.
Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change, as amended, is consistent with the Act. Comments may be submitted by any of the following methods:
• Use the Commission's Internet comment form (
• Send an e-mail to
• 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–2006–39. 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 (
For the Commission, by the Division of Market Regulation, pursuant to delegated authority.