Self-Regulatory Organizations; American Stock Exchange LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change and Amendment No. 1 Thereto Relating to an Extension of a Pilot Program for the Fee Cap Program for Certain Options Spread Trades, 45081-45083 [E6-12839]

Download as PDF jlentini on PROD1PC65 with NOTICES Federal Register / Vol. 71, No. 152 / Tuesday, August 8, 2006 / Notices Subcommittee of the Trade Policy Staff Committee (TPSC) as soon as possible, but not later than 5 p.m., September 7, 2006. In order to facilitate prompt consideration of submissions, USTR strongly prefers electronic e-mail submissions in response to this notice. Hand-delivered submissions will not be accepted. E-mail submissions should be single-copy transmissions in English with the total submission, including attachments, not to exceed 30 singlespaced standard letter-size pages using 12-point type. The e-mail transmission should use the following subject line: ‘‘Romania GSP Eligibility Review’’. Documents must be submitted as MSWord (‘‘.doc’’), WordPerfect (‘‘.wpd’’), or text (‘‘.txt’’) files. Documents submitted as electronic image files or containing imbedded images (for example, ‘‘.jpg’’, ‘‘.pdf’’, ‘‘.bmp’’, ‘‘.tif’’, or ‘‘.gif’’) will not be accepted. Spreadsheets submitted as supporting documentation are acceptable as Excel files, pre-formatted for printing only on 8 1⁄2 x 11 inch paper. To the extent possible, any data attachments to the submission should be included in the same file as the submission itself, and not as separate files. Submissions in response to this notice will be subject to public inspection by appointment with the staff of the USTR Public Reading Room except for information granted ‘‘business confidential’’ status pursuant to 15 CFR 2003.6. If the submission contains business confidential information, a nonconfidential version of the submission must also be submitted that indicates where confidential information was redacted by inserting asterisks where material was deleted. In addition, the confidential version must be clearly marked ‘‘BUSINESS CONFIDENTIAL’’ at the top and bottom of each page of the document. The non-confidential version must be clearly marked ‘‘PUBLIC’’ or ‘‘NON–CONFIDENTIAL’’ at the top and bottom of each page. Documents that are submitted without any marking might not be accepted or will be considered public documents. For any document containing business confidential information submitted as an electronic attached file to an e-mail transmission, the file name of the business confidential version should begin with the characters ‘‘BC-’’, and the file name of the public version should begin with the character ‘‘P-’’. The ‘‘BC-’’ or ‘‘P-’’ should be followed by the name of the party (government, company, union, association, etc.) which is submitting the comments. VerDate Aug<31>2005 20:06 Aug 07, 2006 Jkt 208001 45081 E-mail submissions should not include separate cover letters or messages in the message area of the email; information that might appear in any cover letter should be included directly in the attached file containing the submission itself, including the sender’s identifying information with telephone number, fax number, and email address. The e-mail address for these submissions is FR0618@ustr.eop.gov. Documents not submitted in accordance with these instructions might not be considered in this review. If unable to provide submissions by e-mail, please contact the GSP Subcommittee to arrange for an alternative method of transmission. Public versions of all documents relating to this review will be available for public review approximately three weeks after the due date by appointment in the USTR Public Reading Room, 1724 F Street, NW, Washington, DC. Availability of documents may be ascertained, and appointments may be made from 9:30 a.m. to noon and 1 p.m. to 4 p.m., Monday through Friday, by calling 202–395–6186. fee, or other charge, pursuant to Section 19(b)(3)(A)(ii) of the Act 3 and Rule 19b– 4(f)(2) thereunder,4 which renders the proposal effective upon filing with the Commission. On July 28, 2006, the Exchange filed Amendment No. 1 to the proposed rule change.5 The Commission is publishing this notice to solicit comments on the proposed rule change, as amended, from interested persons. Marideth J. Sandler, Executive Director for the GSP Program, Chairman, GSP Subcommittee of the Trade Policy Staff Committee. [FR Doc. E6–12833 Filed 8–7–06; 8:45 am] In its filing with the Commission, the Exchange included statements concerning the purpose of, and basis for, the proposed rule change, as amended, and discussed any comments it received on the proposal. 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. BILLING CODE 3190–W6–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–54261; File No. SR–Amex2006–69)] Self-Regulatory Organizations; American Stock Exchange LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change and Amendment No. 1 Thereto Relating to an Extension of a Pilot Program for the Fee Cap Program for Certain Options Spread Trades August 1, 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 July 20, 2006, 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 substantially prepared by Amex. Amex has designated the proposed rule change as one establishing or changing a due, 1 15 2 17 PO 00000 U.S.C. 78s(b)(1). CFR 240.19b–4. Frm 00088 Fmt 4703 Sfmt 4703 I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to extend its fee cap program for dividend spreads, merger spreads and short stock interest spreads (the ‘‘Pilot Program’’) for an additional six months through February 1, 2007. The text of the proposed rule change is available on Amex’s Web site at https://www.amex.com, at the Office of the Secretary at Amex, and at the Commission’s Public Reference Room. II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The Pilot Program was established in February 2006.6 The Exchange believes that the Pilot Program has operated, as designed, to allow the Exchange to become more competitive with fee cap programs in place at other options exchanges. Accordingly, the Exchange believes that a six-month extension is reasonable and consistent with the intent of the Pilot Program. The Pilot Program amended the Exchange’s fee cap program that limits per trade the transaction, comparison 3 15 U.S.C. 78s(b)(3)(A)(ii). CFR 240.19b–4(f)(2). 5 In Amendment No. 1, Amex modified the statutory basis of the proposal from being Section 6(b)(5) of the Act to be Section 6(b)(4) of the Act. 6 See Securities Exchange Act Release No. 53415 (March 3, 2006), 71 FR 12745 (March 13, 2006). 4 17 E:\FR\FM\08AUN1.SGM 08AUN1 45082 Federal Register / Vol. 71, No. 152 / Tuesday, August 8, 2006 / Notices jlentini on PROD1PC65 with NOTICES and floor brokerage fees (hereinafter referred to collectively as ‘‘transactionbased fees’’) charged to specialists, registered options traders, non-member market makers, member firms, broker dealers and non-member broker dealers (referred to hereinafter as ‘‘noncustomer market participants’’) for accommodation and spread trades.7 The Pilot Program was put in place specifically for option transactions that are part of dividend spreads,8 merger spreads,9 and short stock interest spreads 10 and it amended the fee cap for such option transactions in the following manner: First, the Exchange proposed to convert the cap on transaction-based fees from a per trade cap to a cap on all transactions executed as part of these spreads on the same trading day in the same option class and to reduce the amount of fees charged before the cap is applied to $1,000 per day. Secondly, the Exchange proposed to add a monthly fee cap of $50,000 on transaction-based fees per initiating firm for transactions in dividend spreads, merger spreads and short stock interest spreads. The Exchange proposed to make these revisions to its fee cap program to match similar fee cap programs at other exchanges.11 The Exchange implemented these two changes for option transactions that are part of dividend spreads, merger spreads, and short stock interest spreads on a pilot basis until August 1, 2006. To date, the Exchange believes that the Pilot Program has been beneficial to the Exchange because it has brought more business to the Exchange. In this manner, non-customer market participants are encouraged to bring 7 Accommodation trades (also known as cabinet trades) are transactions to close out positions in worthless or nearly worthless out-of-the-money option contracts. Spread trades include: (i) Reversals and conversions, (ii) dividend spreads, (iii) box spreads, (iv) butterfly spreads, (v) merger spreads, and (vi) short sock interest spreads. 8 A dividend spread transaction is defined as any trade done to achieve a dividend arbitrage between any two deep-in-the-money options. 9 A merger spread transaction is defined as a transaction executed pursuant to a merger spread strategy involving the simultaneous purchase and sale of options of the same option class and expiration date, but different strike prices followed by the exercise of the resulting long option position. Merger spreads are executed prior to the date that shareholders of record in a stock subject to a merger are required to elect their respective form of consideration (i.e., cash or stock). 10 A short stock interest spread is defined as a spread that uses two deep in-the-money put options followed by the exercise of the resulting long position of the same class in order to establish a short stock interest arbitrage position. This strategy is used to capture short stock interest. 11 See PCX Options Fee Schedule and Securities Exchange Act Release No. 53171 (January 24, 2006), 71 FR 5090 (January 31, 2006) (SR–CBOE 2005– 117). VerDate Aug<31>2005 20:06 Aug 07, 2006 Jkt 208001 more order flow to the Exchange increasing competition among all option exchanges. Accordingly, the Exchange believes that an extension of the Pilot Program for six months through February 1, 2007 is warranted. 2. Statutory Basis The Exchange believes that the proposed rule change, as amended, is consistent with Section 6(b) of the Act,12 in general, and furthers the objectives of Section 6(b)(4),13 in particular, in that it is 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 is proposing to implement revisions to a fee cap program that is competitive with similar programs at other options exchanges. B. Self-Regulatory Organization’s Statement on Burden on Competition The Exchange believes that proposed rule change will not 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 rule change, as amended, has become effective pursuant to Section 19(b)(3)(A)(ii) of the Act 14 and subparagraph (f)(2) of Rule 19b–4 thereunder 15 because it establishes or changes a due, fee, or other charge. 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.16 12 15 U.S.C. 78f(b). U.S.C. 78f(b)(4). 14 15 U.S.C. 78s(b)(3)(A)(ii). 15 17 CFR 240.19b–4(f)(2). 16 The effective date of the original proposed rule change is July 20, 2006, the date of the original filing, and the effective date of Amendment No.1 is July 28, 2006, the filing date of the amendment. For purposes of calculating the 60-day abrogation period within which the Commission may summarily abrogate the proposed rule change, as amended, under Section 19(b)(3)(C) of the Act, the Commission considers the period to commence on 13 15 PO 00000 Frm 00089 Fmt 4703 Sfmt 4703 IV. Solicitation of Comments 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: Electronic Comments • Use the Commission’s Internet comment form (https://www.sec.gov/ rules/sro.shtml); or • Send an e-mail to rulecomments@sec.gov. Please include File Number SR–Amex-2006–69 on the subject line. 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-2006–69. 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 (https://www.sec.gov/ 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 Room. Copies of such filing also will be available for inspection and copying at the principal office of 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-2006–69 and should be submitted on or before August 29, 2006. July 28, 2006, the date on which the Exchange submitted Amendment No. 1. See 15 U.S.C. 78s(b)(3)(C). E:\FR\FM\08AUN1.SGM 08AUN1 Federal Register / Vol. 71, No. 152 / Tuesday, August 8, 2006 / Notices For the Commission, by the Division of Market Regulation, pursuant to delegated authority.17 Nancy M. Morris, Secretary. [FR Doc. E6–12839 Filed 8–7–06; 8:45 am] concerning the purpose of, and basis for, the proposed rule change, as amended, and discussed any comments it received on the proposal. The text of these statements may be examined at the places specified in Item IV below, and is set forth in Sections A, B, and C below. Amex has prepared summaries, set forth in Sections A, B, and C below, of the most significant aspects of such statements. BILLING CODE 8010–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–54262; File No. SR–Amex– 2006–64] Self-Regulatory Organizations; American Stock Exchange LLC; Notice of Filing of Proposed Rule Change and Amendment No. 1 Thereto Relating to a Retroactive Suspension of Transaction Charges for Specialist Orders in the Nasdaq-100 Tracking Stock (QQQQ) August 1, 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 July 7, 2006, the American Stock Exchange LLC (‘‘Amex’’ or ‘‘Exchange’’) submitted to 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 Amex. On July 27, 2006, the Exchange submitted Amendment No. 1 to the proposed rule change.3 The Commission is publishing this notice to solicit comments on the proposed rule change, as amended, from interested persons. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to retroactively apply a suspension of transaction charges for specialist orders in connection with the trading of the Nasdaq-100 Index Tracking Stock (Symbol: QQQQ) from July 1, 2006 through July 12, 2006. The text of the proposed rule change is available on Amex’s Web site (https:// www.amex.com), at Amex’s principal office, and at the Commission’s Public Reference Room. jlentini on PROD1PC65 with NOTICES 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 17 17 CFR 200.30–3(a)(12). U.S.C 78s(b)(1). 2 17 CFR 240.19b–4. 3 Amendment No. 1 replaced and superseded the original filing in its entirety. 1 15 VerDate Aug<31>2005 20:06 Aug 07, 2006 Jkt 208001 A. Self-Regulatory Organization’s Statement of the Purpose of, and the Statutory Basis for, the Proposed Rule Change 1. Purpose The Exchange proposes to retroactively apply a suspension of transaction charges for specialist orders in the QQQQ from July 1, 2006 through July 12, 2006. The Exchange previously extended the suspension of the QQQQ from March 1, 2006 through June 30, 2006.4 The Exchange, in a companion filing, also proposed the adoption of a suspension of transaction charges for specialist orders in the Nasdaq-100 Tracking Stock (QQQQ) from July 13, 2006 through August 31, 2006.5 In order to waive transaction fees for specialist orders in the QQQQ from July 1, 2006 through August 31, 2006, the Exchange has proposed to retroactively suspend transaction fees for specialist transactions from July 1, 2006 through July 12, 2006. Specialist orders currently are charged $0.0034 ($0.34 per 100 shares), capped at $300 per trade (88,235 shares). Effective December 1, 2004, the Nasdaq-100 Index Tracking Stock  (formerly ‘‘QQQ’’) transferred its listing from Amex to The Nasdaq Stock Market, Inc (‘‘Nasdaq’’). It now trades on Nasdaq under the symbol QQQQ. After the transfer, Amex began trading QQQQ on an unlisted trading privileges basis. The Exchange believes that the retroactive suspension of transaction charges for specialist transactions in the QQQQ from July 1, 2006 through July 12, 2006 is consistent with the adoption of the proposal to suspend transaction charges for specialist orders generally in the QQQQ through August 31, 2006. 4 See, e.g., Securities Exchange Act Release Nos. 53871 (May 25, 2006), 71 FR 31236 (June 1, 2006) and 54094 (July 3, 2006), 71 FR 39135 (July 11, 2006) (SR–Amex–2006–42) (retroactively applying a suspension of transaction charges for specialist orders in connection with the trading of the QQQQ from March 1, 2006, through April 5, 2006). See also Securities Exchange Act Release No. 53701 (April 21, 2006), 71 FR 25253 (April 28, 2006) (SR– Amex–2006–30) (suspending specialist transaction charges in connection with the QQQQ from April 6, 2006, through June 30, 2006). 5 See Securities Exchange Act Release No. 54227 (July 27, 2006). PO 00000 Frm 00090 Fmt 4703 Sfmt 4703 45083 The Exchange further believes that a retroactive suspension of transaction fees on specialist orders in the QQQQ is appropriate to enhance the competitiveness of executions on Amex. The Exchange proposes to amend the Amex Fee Schedule to indicate that transaction charges for specialist orders in the QQQQ have been suspended from July 1, 2006 through August 31, 2006. As provided in the companion filing, the Exchange submits that a suspension of transaction fees for specialist orders in connection with the QQQQ is consistent with Section 6(b)(4) of the Act.6 Specifically, the Exchange believes that suspending transaction charges for QQQQ specialist orders is an equitable allocation of reasonable fees among Exchange members. The Exchange believes that the fact that specialists have greater obligations than other members and are also subject to other Exchange fees, in addition to transaction fees, supports this proposal to retroactively apply the fee suspension. The Exchange notes that specialists are subject to a variety of Exchange fees other than transaction charges, such as a floor clerk fee, a floor facility fee, a post fee, and a registration fee.7 In addition, specialists and other floor members of the Exchange are subject to technology and membership fees.8 Certain market participants, such as customers, non-member broker-dealers and market-makers, and member brokerdealers, are not subject to the majority of these fees. In addition, a specialist unit, in order to adequately ‘‘make a market’’ in assigned securities, must be sufficiently staffed 9 and have adequate technology resources to handle the volume of orders (especially in the QQQQ) that are sent to the Exchange. The Exchange believes that these operational costs borne by specialists further support the proposal to temporarily suspend QQQQ transaction fees on specialist orders. 6 Section 6(b)(4) states that the rules of a national securities exchange must provide for an equitable allocation of reasonable dues, fees, and other charges among its members and issuers and other persons using its facilities. 15 U.S.C. 78f(b)(4). 7 The floor clerk, floor facility, post, and registration fees, on an annual basis, are $900, $2,400, $1,000, and $800, respectively. 8 A technology fee of $6,000 per year is assessed on all specialists and other floor participants at the Exchange. Annual membership dues of $1,500 must be paid by all members while annual membership fees are payable depending on the type of membership and circumstances. Non-members are not subject to these fees. 9 See Securities Exchange Act Release No. 53386 (February 28, 2006), 71 FR 11250 (March 6, 2006) (requiring specialists to employ an adequate number of clerks). E:\FR\FM\08AUN1.SGM 08AUN1

Agencies

SECURITIES AND EXCHANGE COMMISSION

[Federal Register Volume 71, Number 152 (Tuesday, August 8, 2006)]
[Notices]
[Pages 45081-45083]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E6-12839]


=======================================================================
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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-54261; File No. SR-Amex-2006-69)]


Self-Regulatory Organizations; American Stock Exchange LLC; 
Notice of Filing and Immediate Effectiveness of a Proposed Rule Change 
and Amendment No. 1 Thereto Relating to an Extension of a Pilot Program 
for the Fee Cap Program for Certain Options Spread Trades

August 1, 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 July 20, 2006, 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 substantially prepared by Amex. Amex 
has designated the proposed rule change as one establishing or changing 
a due, fee, or other charge, pursuant to Section 19(b)(3)(A)(ii) of the 
Act \3\ and Rule 19b-4(f)(2) thereunder,\4\ which renders the proposal 
effective upon filing with the Commission. On July 28, 2006, the 
Exchange filed Amendment No. 1 to the proposed rule change.\5\ The 
Commission is publishing this notice to solicit comments on the 
proposed rule change, as amended, from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \4\ 17 CFR 240.19b-4(f)(2).
    \5\ In Amendment No. 1, Amex modified the statutory basis of the 
proposal from being Section 6(b)(5) of the Act to be Section 6(b)(4) 
of the Act.
---------------------------------------------------------------------------

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

    The Exchange proposes to extend its fee cap program for dividend 
spreads, merger spreads and short stock interest spreads (the ``Pilot 
Program'') for an additional six months through February 1, 2007.
    The text of the proposed rule change is available on Amex's Web 
site at https://www.amex.com, at the Office of the Secretary at Amex, 
and at the Commission's Public Reference Room.

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, as 
amended, and discussed any comments it received on the proposal. 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
    The Pilot Program was established in February 2006.\6\ The Exchange 
believes that the Pilot Program has operated, as designed, to allow the 
Exchange to become more competitive with fee cap programs in place at 
other options exchanges. Accordingly, the Exchange believes that a six-
month extension is reasonable and consistent with the intent of the 
Pilot Program.
---------------------------------------------------------------------------

    \6\ See Securities Exchange Act Release No. 53415 (March 3, 
2006), 71 FR 12745 (March 13, 2006).
---------------------------------------------------------------------------

    The Pilot Program amended the Exchange's fee cap program that 
limits per trade the transaction, comparison

[[Page 45082]]

and floor brokerage fees (hereinafter referred to collectively as 
``transaction-based fees'') charged to specialists, registered options 
traders, non-member market makers, member firms, broker dealers and 
non-member broker dealers (referred to hereinafter as ``non-customer 
market participants'') for accommodation and spread trades.\7\ The 
Pilot Program was put in place specifically for option transactions 
that are part of dividend spreads,\8\ merger spreads,\9\ and short 
stock interest spreads \10\ and it amended the fee cap for such option 
transactions in the following manner: First, the Exchange proposed to 
convert the cap on transaction-based fees from a per trade cap to a cap 
on all transactions executed as part of these spreads on the same 
trading day in the same option class and to reduce the amount of fees 
charged before the cap is applied to $1,000 per day. Secondly, the 
Exchange proposed to add a monthly fee cap of $50,000 on transaction-
based fees per initiating firm for transactions in dividend spreads, 
merger spreads and short stock interest spreads. The Exchange proposed 
to make these revisions to its fee cap program to match similar fee cap 
programs at other exchanges.\11\ The Exchange implemented these two 
changes for option transactions that are part of dividend spreads, 
merger spreads, and short stock interest spreads on a pilot basis until 
August 1, 2006.
---------------------------------------------------------------------------

    \7\ Accommodation trades (also known as cabinet trades) are 
transactions to close out positions in worthless or nearly worthless 
out-of-the-money option contracts. Spread trades include: (i) 
Reversals and conversions, (ii) dividend spreads, (iii) box spreads, 
(iv) butterfly spreads, (v) merger spreads, and (vi) short sock 
interest spreads.
    \8\ A dividend spread transaction is defined as any trade done 
to achieve a dividend arbitrage between any two deep-in-the-money 
options.
    \9\ A merger spread transaction is defined as a transaction 
executed pursuant to a merger spread strategy involving the 
simultaneous purchase and sale of options of the same option class 
and expiration date, but different strike prices followed by the 
exercise of the resulting long option position. Merger spreads are 
executed prior to the date that shareholders of record in a stock 
subject to a merger are required to elect their respective form of 
consideration (i.e., cash or stock).
    \10\ A short stock interest spread is defined as a spread that 
uses two deep in-the-money put options followed by the exercise of 
the resulting long position of the same class in order to establish 
a short stock interest arbitrage position. This strategy is used to 
capture short stock interest.
    \11\ See PCX Options Fee Schedule and Securities Exchange Act 
Release No. 53171 (January 24, 2006), 71 FR 5090 (January 31, 2006) 
(SR-CBOE 2005-117).
---------------------------------------------------------------------------

    To date, the Exchange believes that the Pilot Program has been 
beneficial to the Exchange because it has brought more business to the 
Exchange. In this manner, non-customer market participants are 
encouraged to bring more order flow to the Exchange increasing 
competition among all option exchanges. Accordingly, the Exchange 
believes that an extension of the Pilot Program for six months through 
February 1, 2007 is warranted.
2. Statutory Basis
    The Exchange believes that the proposed rule change, as amended, is 
consistent with Section 6(b) of the Act,\12\ in general, and furthers 
the objectives of Section 6(b)(4),\13\ in particular, in that it is 
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 is proposing to 
implement revisions to a fee cap program that is competitive with 
similar programs at other options exchanges.
---------------------------------------------------------------------------

    \12\ 15 U.S.C. 78f(b).
    \13\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------

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

    The Exchange believes that proposed rule change will not 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 rule change, as amended, has become effective 
pursuant to Section 19(b)(3)(A)(ii) of the Act \14\ and subparagraph 
(f)(2) of Rule 19b-4 thereunder \15\ because it establishes or changes 
a due, fee, or other charge. 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.\16\
---------------------------------------------------------------------------

    \14\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \15\ 17 CFR 240.19b-4(f)(2).
    \16\ The effective date of the original proposed rule change is 
July 20, 2006, the date of the original filing, and the effective 
date of Amendment No.1 is July 28, 2006, the filing date of the 
amendment. For purposes of calculating the 60-day abrogation period 
within which the Commission may summarily abrogate the proposed rule 
change, as amended, under Section 19(b)(3)(C) of the Act, the 
Commission considers the period to commence on July 28, 2006, the 
date on which the Exchange submitted Amendment No. 1. See 15 U.S.C. 
78s(b)(3)(C).
---------------------------------------------------------------------------

IV. Solicitation of Comments

    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:

Electronic Comments

     Use the Commission's Internet comment form (https://
www.sec.gov/rules/sro.shtml); or
     Send an e-mail to rule-comments@sec.gov. Please include 
File Number SR-Amex-2006-69 on the subject line.

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-2006-69. 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 (https://www.sec.gov/
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 Room. Copies of such 
filing also will be available for inspection and copying at the 
principal office of 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-2006-69 and should be submitted on or before August 29, 2006.


[[Page 45083]]


    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\17\
---------------------------------------------------------------------------

    \17\ 17 CFR 200.30-3(a)(12).
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Nancy M. Morris,
Secretary.
 [FR Doc. E6-12839 Filed 8-7-06; 8:45 am]
BILLING CODE 8010-01-P

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