Self-Regulatory Organizations; American Stock Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change and Amendment No. 1 Thereto Relating to Transaction Charges for Equities and ETFs, 5469-5472 [E7-1830]
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Federal Register / Vol. 72, No. 24 / Tuesday, February 6, 2007 / Notices
futures contracts, forward contracts on
oil and other over-the-counter
derivatives based on the price of oil,
other petroleum-based fuels, the futures
contracts described above, and the
indexes based on any of the foregoing.
The Oil Fund’s portfolio is managed by
Victoria Bay Asset Management LLC
with the aim of tracking the West Texas
Intermediate light, sweet crude oil
futures contract listed and traded on the
New York Mercantile Exchange.
The Amex believes that it is
reasonable to expect other types of
Commodity Pool ETFs to be introduced
for trading in the near future. The
Exchange states that the proposed
amendment to the Exchange’s listing
criteria for options on Commodity TIRs
and Partnership Units is necessary to
ensure that the Exchange will be able to
list options on Commodity Pool ETFs
that have been recently launched as
well as any other similar Commodity
Pool ETFs that may be listed and traded
in the future.
2. Statutory Basis
The Exchange believes that the
proposed rule change is consistent with
the requirements of Section 6(b) of the
Act 8 in general, and furthers the
objectives of Section 6(b)(5),9 of the Act
in particular, in that it would remove
impediments to and perfect the
mechanism of a free and open market in
a manner consistent with the protection
of investors and the public interest.
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.
sroberts on PROD1PC70 with NOTICES
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received from
Members, Participants or Others
The Exchange states that 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
Within 35 days of the date of
publication of this notice in the Federal
Register or within such longer period (i)
as the Commission may designate up to
90 days of such date if it finds such
longer period to be appropriate and
publishes its reasons for so finding or
8 15
9 15
U.S.C. 78f(b).
U.S.C. 78f(b)(5).
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(ii) as to which the self-regulatory
organization consents, the Commission
will:
(A) by order approve such proposed
rule change or
(B) institute proceedings to determine
whether the proposed rule change
should be disapproved.
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 Exchange
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–2006–110 on the
subject line.
5469
For the Commission, by the Division of
Market Regulation, pursuant to delegated
authority.10
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7–1827 Filed 3–5–07; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–55195; File No. SR–Amex–
2006–117]
Self-Regulatory Organizations;
American Stock Exchange LLC; Notice
of Filing and Immediate Effectiveness
of Proposed Rule Change and
Amendment No. 1 Thereto Relating to
Transaction Charges for Equities and
ETFs
January 30, 2007.
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
Paper Comments
20, 2006, the American Stock Exchange
• Send paper comments in triplicate
LLC (‘‘Amex’’ or ‘‘Exchange’’) filed with
to Nancy M. Morris, Secretary,
the Securities and Exchange
Securities and Exchange Commission,
Commission (‘‘Commission’’) the
100 F Street, NE., Washington, DC
proposed rule change as described in
20549–1090.
Items I, II, and III below, which Items
All submissions should refer to File
have been substantially prepared by the
Number SR–Amex–2006–110. This file
Exchange. Amex has designated this
number should be included on the
proposal as one establishing or changing
subject line if e-mail is used. To help the a due, fee, or other charge imposed by
Commission process and review your
a self-regulatory organization pursuant
comments more efficiently, please use
to Section 19(b)(3)(A)(ii) of the Act 3 and
only one method. The Commission will Rule 19b–4(f)(2) thereunder,4 which
post all comments on the Commission’s renders the proposal effective upon
Internet Web site (https://www.sec.gov/
filing with the Commission. On January
rules/sro.shtml). Copies of the
26, 2007, the Exchange submitted
submission, all subsequent
Amendment No. 1 to the proposed rule
amendments, all written statements
change.5 The Commission is publishing
with respect to the proposed rule
this notice to solicit comments on the
change that are filed with the
proposed rule change, as amended, from
Commission, and all written
interested persons.
communications relating to the
I. Self-Regulatory Organization’s
proposed rule change between the
Statement of the Terms of Substance of
Commission and any person, other than
the Proposed Rule Change
those that may be withheld from the
The Exchange proposes to revise the
public in accordance with the
equities and Exchange Traded Fund
provisions of 5 U.S.C. 552, will be
Shares (‘‘ETFs’’) Fee Schedules to
available for inspection and copying in
establish new transaction charges and
the Commission’s Public Reference
revise the cancellation fee charged for
Room. Copies of the filing also will be
cancellations of orders in equities and
available for inspection and copying at
ETFs.
the principal office of the Amex. All
The text of the proposed rule change
comments received will be posted
is available on the Exchange’s Web site
without change; the Commission does
(https://www.amex.com/atamex/
not edit personal identifying
information from submissions. You
10 17 CFR 200.30–3(a)(12).
should submit only information that
1 15 U.S.C. 78s(b)(1).
you wish to make available publicly. All
2 17 CFR 240.19b–4.
submissions should refer to File
3 15 U.S.C. 78s(b)(3)(A)(ii).
Number SR–Amex–2006–110 and
4 17 CFR 240.19b–4(f)(2).
should be submitted on or before
5 In Amendment No. 1, the Exchange made cleanup changes to its proposed rule text.
February 27, 2007.
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Federal Register / Vol. 72, No. 24 / Tuesday, February 6, 2007 / Notices
ruleFilings/2006/
SR_Amex_2006_117_initial.pdf), at the
Exchange’s principal office, 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 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
The implementation of the new
hybrid market trading platform (known
as ‘‘AEMI’’), the adoption and
implementation of Regulation NMS by
the Commission, and changes in the
competitive landscape have resulted in
a review by the Exchange of the fee
schedule for equities and ETFs. The full
costs of execution are a major factor in
determining where order flow providers
direct their orders. The Exchange will
impose the new transaction charges on
its members and member organizations
effective January 2, 2007. The Exchange
is currently in the process of moving its
equities and ETFs on to the AEMI
trading system. The new fees will apply
to all equities and ETFs regardless of
whether they have been moved on to
AEMI. It is expected that by January 2,
2007, approximately one-quarter of the
Exchange’s equities and ETFs will be
trading on AEMI.
sroberts on PROD1PC70 with NOTICES
Transaction Charges for Equities and
ETFs
Currently, Amex transaction charges
for equities and ETFs are assessed for all
market participants monthly on a pershare basis with the application of
various caps and discounts. The
Exchange proposes to revise the manner
in which transaction charges are applied
in order to encourage market
participants to send order flow to the
Exchange and provide liquidity (i.e.,
quotes and limit orders) at and around
the National Best Bid and Offer
(‘‘NBBO’’). The Amex Fee Schedule
currently has separate schedules for
equities and ETFs, and although the
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proposed new fees will be the same for
both product lines, the Exchange has
decided to continue to maintain two
separate Fee Schedules. Each Fee
Schedule will be separated into two
schedules one with the transaction
charges for customers and the other
with transaction charges for Specialists
and Registered Traders.
Transaction Charges for Customers
Transaction charges for customers 6
for executions in equities and ETFs will
be divided into two tiers based on the
average daily volume of each security as
reported by the appropriate NMS Plan
in the security industry-wide. As
described below, the transaction charges
will vary within each tier depending on
the type of orders submitted for the
customer account and the types of
quotes and orders submitted for
Specialist and Registered Trader
accounts.
Tier One Pricing for Customers
Tier One pricing will be applied to all
Amex-listed securities (equities and
ETFs) whose industry-wide average
daily trading volume is 500,000 shares
or greater during the previous rolling
quarter. In addition, Tier One pricing
will apply to all securities traded on the
Exchange pursuant to unlisted trading
privileges (‘‘UTP’’) regardless of the
their average daily trading volume. All
new listings including IPOs, transfers,
and dual listings will initially be
categorized as Tier One securities until
the next quarterly recalculation. Based
on third quarter average daily trading
volumes, 55 Amex listed equities, 84
ETFs, and over 100 UTP securities
would have been eligible for Tier One
pricing. These Tier One securities
currently represent approximately 60%
of Amex daily volume. Determining
whether a security receives Tier One
pricing will be based on 12 weeks of
trading data. Two weeks prior to the
start of a calendar quarter the Exchange
will announce which securities will be
eligible for Tier One pricing during the
next quarter beginning with the first
trading day of the calendar quarter. For
example, Tier One securities (except
UTP securities) for the second quarter of
2007 will be determined based on
average daily trading volume for the
period beginning December 13, 2006
and ending March 14, 2007. An
announcement will be made on March
6 Customers will be defined for purposes of the
proposed new fee schedule to include all market
participants except Specialists and Registered
Traders. Therefore, customers (and the fees charged
to them) will include members, off-floor proprietary
accounts, competing market makers, and other
member and non-member broker-dealers.
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15, 2007 setting forth the securities
eligible for Tier One pricing effective
April 1, 2007. The list of Tier One
eligible securities will also be available
on the Amex Web site.
Transaction charges for executions by
customers of Tier One securities will
vary depending on the type of order
submitted to Amex. There will be no
transaction charges for the execution of
cross orders 7 occurring within the
AEMI trading system (‘‘electronic
crosses’’). The lowest fees will be
charged for the execution of limit
orders 8 which are not immediately
executable when submitted to the
Exchange and whose limit is near, at, or
improves the prevailing national best
bid (for buy orders) or the national best
offer (for sell orders) (collectively, the
NBBO) at the time of order entry. As set
forth in the revised Fee Schedule,
transaction charges for the execution of
limit orders (1) at the current NBBO or
that betters the current NBBO will be
$0.03 per 100 shares; (2) within three
minimum price variations or ‘‘ticks’’ of
the NBBO will be $0.05 per 100 shares;
and (3) all other limit orders at prices
outside three ticks from the NBBO will
be $0.10 per 100 shares. Orders that are
submitted prior to the opening of
trading at 9:30 a.m. when NBBO data is
not available will be charged as follows:
the execution of market orders will be
charged $0.25 per 100 shares, and the
execution of all limit orders will be
charged $0.03 per 100 shares (regardless
of limit price). Transaction charges for
negotiated 9 and open-outcry cross
transactions 10 will be $0.15 per 100
shares. Transaction charges for the
execution of market,11 marketable limit
orders, and any other orders that take
liquidity out of the market will be $0.25
per 100 shares. Similarly, transaction
charges for at the opening-only orders
7 A cross order is defined in Amex Rule 131–
AEMI(r) as ‘‘* * *an order submitted by a member
or member organization to AEMI with buy and sell
interest specified in a single order.’’
8 A limit order is defined in Amex Rules 131(b)
and 131–AEMI(b) as ‘‘* * *an order to buy or sell
a stated amount of a security at a specified price,
or at a better price if obtainable after the order is
represented in the Trading Crowd or is received in
the AEMI Book.’’
9 Negotiated Trades are one-to-one trades between
two crowd members.
10 Open Outcry Cross Transactions are discussed
in Amex Rule 151–AEMI and occur when a member
executes a customer order to buy against a customer
order to sell outside the AEMI system or in open
outcry.
11 A market order is defined in Amex Rules 131(a)
and 131–AEMI(a) as ‘‘* * *an order to buy or sell
a stated amount of a security at the most
advantageous price obtainable after the order is
presented in the trading crowd or is received in the
AEMI Book.’’
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Federal Register / Vol. 72, No. 24 / Tuesday, February 6, 2007 / Notices
(OPG) 12 and at-the-close orders (MCC,
MOC, and LOC) 13 will be $0.25 per 100
shares.
The Exchange proposes to revise its
traditional way of assessing transaction
charges in order to provide incentives
for liquidity providers to send limit
orders in the most active securities to
the Exchange at and around the NBBO.
The Exchange believes that liquidity
takers, market participants who send in
market orders or marketable limit orders
for immediate execution at the NBBO or
better, should pay for the service of
accessing liquidity at the best possible
price.
executions, including executions against
a Specialist or Registered Trader quote
that is within three or more ticks of the
NBBO, executions of hit-or-take
orders,14 executions in which the
Specialist and/or Registered Trader has
participated in a percentage order,15
intraday pair-offs, and the pair-offs of atthe-opening or at-the-close orders.
Transaction charges for Specialists and
Registered Traders are at lower rates in
order to encourage them to quote more
competitively and make more liquid
markets.
Tier Two Pricing for Customers
Tier Two pricing will be applied to all
Amex-listed securities (equities and
ETFs) whose industry-wide average
daily trading volume is less than
500,000 shares during the previous
rolling quarter. Transaction charges for
executions by customers of Tier Two
securities will be $0.30 per 100 shares
for limit orders, market orders, and atthe-opening and at-the-close orders, and
$0.25 per 100 shares for electronic
crosses, open-outcry cross transactions,
and negotiated transactions.
Currently, the executing clearing
member is charged $0.25 for every
equities and ETF order sent for a
mnemonic and cancelled through Amex
systems in a given month when the total
number of equities and ETF orders
executed for that mnemonic is less than
or equal to 10% of the equities and ETF
orders cancelled through Amex systems
for that mnemonic in that same month.
The fee does not apply to mnemonics
for which fewer than 100,000 orders
were cancelled through Amex systems
and does not apply to the first 100,000
cancellations submitted for a
mnemonic. To align the Exchange’s
cancellation fee with others in the
industry, the proposed cancellation fee
for orders and cancellations sent to
Amex in equities and ETFs will be
revised to apply to each clearing
member mnemonic whose ratio of
cancellations to executions is greater
than 50-to-one. However, the Exchange
also proposes to eliminate the 100,000
cancellation threshold, and the charge
of $0.25 per cancellation will apply to
all cancellations beyond the 50-to-one
ratio for that mnemonic. Thus, the
proposed cancellation fee will apply to
fewer clearing member mnemonics
since the ratio of cancellations to
executions is higher than the current
ratio and the proposed cancellation fees
are applicable on a marginal basis. For
example, if a clearing member executes
two orders and cancels 120 orders in a
mnemonic, the clearing member will be
assessed a cancellation fee only on 20
cancellations.
sroberts on PROD1PC70 with NOTICES
Transaction Charges for Specialists and
Registered Traders
Transaction charges for executions by
Specialists and Registered Traders of all
equities and ETFs will vary depending
on the type of order or quote submitted
to Amex. The lowest fee of $0.03 per
100 shares will be charged for an
execution against a Specialist or
Registered Trader quote that had been
entered at the NBBO and for negotiated
trades. A transaction charge of $0.05 per
100 shares will be charged for all other
Specialist and Registered Trader
12 An at the opening order is defined in Amex
Rules 131(f) and 131–AEMI(e) as ‘‘* * *a market or
limited price order which is to be executed on the
opening in the stock on the Exchange or not at all,
and any such order or portion thereof not so
executed is to be treated as cancelled.’’
13 At-the-close orders are defined in Amex Rules
131(e), 131, Commentary .03, 131–AEMI(d) and
131–AEMI, Commentary 03. There are three types
of at the close orders, market-at-the-close, limit-atthe-close, and market-at-4:00-p.m. cash-close. A
market-at-the-close (MOC) order is an order to buy
or sell a stated amount of a security at the
Exchange’s closing price. If the MOC order cannot
be executed in its entirety at the Exchange closing
price it will be cancelled. A limit-at-the-close (LOC)
order is an order to buy or sell a stated amount of
a security at the Exchange’s closing price if that
closing price is at the order’s limit price, or better.
If the LOC order cannot be so executed, in whole
or in part, the amount of the order not so executed
is to be cancelled. A market-at-4:00-p.m. cash-close
(MCC) order is an order in an ETF that trades to
4:15, which is to be executed at or as close as
practicable to the close of the regular equity trading
session on the Exchange (normally 4 p.m. Eastern
Time.)
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Revisions to Cancellation Fees
14 Hit-or-take orders are defined in Amex Rule
131–AEMI(t) and are available only for securities
trading on the AEMI system. A hit-or-take order is
a type of order that is available to any member to
trade against the Amex Published Quote (‘‘APQ’’).
It is an order that expires if not immediately
executed but that is capable of generating away
market obligations to clear better away markets.
15 A percentage order is defined in Rules 131(n)
and 131–AEMI(m) as ‘‘* * *a limited price order
to buy (or sell) 50% of the volume of a specified
stock after its entry.’’
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5471
2. Statutory Basis
The proposed rule change is
consistent with Section 6(b) of the
Act,16 in general, and furthers the
objectives of Section 6(b)(4),17 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 facilities.
Specifically, the Exchange is proposing
to establish new transaction charges for
equities and ETFs and revise its
cancellation fees.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The proposed rule change does 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 proposed rule change
has become effective pursuant to
Section 19(b)(3)(A)(ii) of the Act 18 and
Rule 19b–4(f)(2) thereunder 19 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.20
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:
16 15
U.S.C. 78f(b).
U.S.C. 78f(b)(4).
18 15 U.S.C. 78s(b)(3)(A)(ii).
19 17 CFR 19b–4(f)(2).
20 For purposes of calculating the 60-day period
within which the Commission may summarily
abrogate the proposed rule change, the Commission
considers the period to commence on January 26,
2007, the date on which the Exchange filed
Amendment No. 1.
17 15
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Federal Register / Vol. 72, No. 24 / Tuesday, February 6, 2007 / Notices
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
No. SR–Amex–2006–117 on the subject
line.
Paper Comments
• Send paper comments in triplicate
to Nancy M. Morris, Secretary,
Securities and Exchange Commission,
Station Place, 100 F Street, NE.,
Washington, DC 20549–1090.
All submissions should refer to File
Number SR–Amex–2006–117. 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 Commissions
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 the 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–2006–117 and
should be submitted on or before
February 27, 2007.
For the Commission, by the Division of
Market Regulation, pursuant to delegated
authority.21
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7–1830 Filed 2–2–07; 8:45 am]
sroberts on PROD1PC70 with NOTICES
BILLING CODE 8011–01–P
21 17
CFR 200.30–3(a)(12).
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SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–55190; File No. SR–CBOE–
2006–106]
Self-Regulatory Organizations;
Chicago Board Options Exchange,
Incorporated; Notice of Filing of
Proposed Rule Change, and
Amendment No. 1 Thereto, Relating to
an Interpretation of Paragraph (b) of
Article Fifth of Its Certificate of
Incorporation
January 29, 2007.
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
12, 2006, the Chicago Board Options
Exchange, Incorporated (‘‘CBOE’’ 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 CBOE. On January 17,
2007, the Exchange filed 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
This filing presents an interpretation
of the rules of CBOE made necessary by
the proposed acquisition of the Board of
Trade of the City of Chicago, Inc.
(‘‘CBOT’’) by Chicago Mercantile
Exchange Holdings Inc. (‘‘CME
Holdings’’). The acquisition is proposed
to be accomplished by the merger of
CBOT Holdings, Inc. (‘‘CBOT
Holdings’’), of which CBOT is currently
a subsidiary, with and into CME
Holdings, with CME Holdings
continuing as the surviving corporation
and as the parent company of CBOT as
well as of its existing wholly-owned
subsidiary, Chicago Mercantile
Exchange Inc. (‘‘CME’’). This
interpretation is that upon the
consummation of the acquisition of
CBOT by CME Holdings, the right of
members of CBOT to become and
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 The text of Amendment No. 1 is available at
CBOE, the Commission’s Public Reference Room
and https://www.cboe.org/publish/RuleFilingsSEC/
SR–CBOE–2006–106.al.pdf. In Amendment No. 1,
the Exchange added a paragraph to the Purpose
Section discussing membership rights as reflected
in CBOT Holding’s S–4 filing on December 21,
2006, and attached several documents as Exhibits
to Amendment No. 1, including a legal opinion
letter dated January 16, 2007.
2 17
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remain members of CBOE without
having to purchase a CBOE membership
will be terminated, in that there no
longer will be individuals who qualify
as a member of CBOT within the
meaning of the rule that creates that
right. This right (sometimes referred to
as the ‘‘exercise right’’) is granted to
CBOT full members under paragraph (b)
of Article Fifth of the CBOE Certificate
of Incorporation (‘‘Article Fifth(b)’’), as
previously interpreted in accordance
with agreements between CBOE and
CBOT dated September 1, 1992 (the
‘‘1992 Agreement’’), August 7, 2001 as
amended by letter agreements dated
October 7, 2004, and February 14, 2005
(the ‘‘2001 Agreement’’), and December
17, 2003 (the ‘‘2003 Agreement’’).4
Persons who are members of CBOE
pursuant to the exercise right are
sometimes referred to as ‘‘exercise
members’’ of CBOE.
The proposed rule interpretation also
describes how CBOE proposes to avoid
disruption to its marketplace as a result
of the termination of the exercise right
on account of the acquisition of CBOT
by CME Holdings. This will be
accomplished by permitting certain
‘‘grandfathered’’ exercise members of
CBOE to continue to have members’
trading rights on CBOE for a limited
period of time commencing with the
effectiveness of the acquisition and
continuing until such time as there is no
longer any risk of market disruption by
reason of the termination of the exercise
right.
No textual changes to CBOE’s rule
provisions are proposed by this filing.
The text of the proposed rule change is
available at CBOE, the Commission’s
Public Reference Room, and
www.cboe.com.
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
CBOE included statements concerning
4 The interpretations of Article Fifth(b) embodied
in the 1992, 2001, and 2003 Agreements were the
subject of proposed rule changes that were
approved by the Commission under Section 19(b)(2)
of the Act in Release Nos. 32430, 51733, and 51252,
respectively. See Securities Exchange Act Release
Nos. 32430 (June 8, 1993), 58 FR 32969 (June 14,
1993) (SR–CBOE–92–42); 51733 (May 24, 2005), 70
FR 30981 (May 31, 2005) (SR–CBOE–2005–19); and
51252 (February 25, 2005), 70 FR 10442 (March 3,
2005) (SR–CBOE–2004–16). CBOE also interpreted
Article Fifth (b) in 2002 in other respects that are
not directly pertinent to the proposed rule
interpretation. See Securities Exchange Act Release
No. 46719 (October 25, 2002), 67 FR 66689
(November 1, 2002) (SR–CBOE–2002–41). The
Commission notes that although it approved the
proposed rule changes referenced above, it has
never approved the agreements discussed herein.
E:\FR\FM\06FEN1.SGM
06FEN1
]]>Agencies
[Federal Register Volume 72, Number 24 (Tuesday, February 6, 2007)]
[Notices]
[Pages 5469-5472]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E7-1830]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-55195; File No. SR-Amex-2006-117]
Self-Regulatory Organizations; American Stock Exchange LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change
and Amendment No. 1 Thereto Relating to Transaction Charges for
Equities and ETFs
January 30, 2007.
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 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, II,
and III below, which Items have been substantially prepared by the
Exchange. Amex has designated this proposal as one establishing or
changing a due, fee, or other charge imposed by a self-regulatory
organization 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 January 26, 2007, the Exchange
submitted 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.
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\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, the Exchange made clean-up changes to
its proposed rule text.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to revise the equities and Exchange Traded
Fund Shares (``ETFs'') Fee Schedules to establish new transaction
charges and revise the cancellation fee charged for cancellations of
orders in equities and ETFs.
The text of the proposed rule change is available on the Exchange's
Web site (https://www.amex.com/atamex/
[[Page 5470]]
ruleFilings/2006/SR--Amex-- 2006--117--initial.pdf), at the Exchange's
principal office, 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 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
The implementation of the new hybrid market trading platform (known
as ``AEMI''), the adoption and implementation of Regulation NMS by the
Commission, and changes in the competitive landscape have resulted in a
review by the Exchange of the fee schedule for equities and ETFs. The
full costs of execution are a major factor in determining where order
flow providers direct their orders. The Exchange will impose the new
transaction charges on its members and member organizations effective
January 2, 2007. The Exchange is currently in the process of moving its
equities and ETFs on to the AEMI trading system. The new fees will
apply to all equities and ETFs regardless of whether they have been
moved on to AEMI. It is expected that by January 2, 2007, approximately
one-quarter of the Exchange's equities and ETFs will be trading on
AEMI.
Transaction Charges for Equities and ETFs
Currently, Amex transaction charges for equities and ETFs are
assessed for all market participants monthly on a per-share basis with
the application of various caps and discounts. The Exchange proposes to
revise the manner in which transaction charges are applied in order to
encourage market participants to send order flow to the Exchange and
provide liquidity (i.e., quotes and limit orders) at and around the
National Best Bid and Offer (``NBBO''). The Amex Fee Schedule currently
has separate schedules for equities and ETFs, and although the proposed
new fees will be the same for both product lines, the Exchange has
decided to continue to maintain two separate Fee Schedules. Each Fee
Schedule will be separated into two schedules one with the transaction
charges for customers and the other with transaction charges for
Specialists and Registered Traders.
Transaction Charges for Customers
Transaction charges for customers \6\ for executions in equities
and ETFs will be divided into two tiers based on the average daily
volume of each security as reported by the appropriate NMS Plan in the
security industry-wide. As described below, the transaction charges
will vary within each tier depending on the type of orders submitted
for the customer account and the types of quotes and orders submitted
for Specialist and Registered Trader accounts.
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\6\ Customers will be defined for purposes of the proposed new
fee schedule to include all market participants except Specialists
and Registered Traders. Therefore, customers (and the fees charged
to them) will include members, off-floor proprietary accounts,
competing market makers, and other member and non-member broker-
dealers.
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Tier One Pricing for Customers
Tier One pricing will be applied to all Amex-listed securities
(equities and ETFs) whose industry-wide average daily trading volume is
500,000 shares or greater during the previous rolling quarter. In
addition, Tier One pricing will apply to all securities traded on the
Exchange pursuant to unlisted trading privileges (``UTP'') regardless
of the their average daily trading volume. All new listings including
IPOs, transfers, and dual listings will initially be categorized as
Tier One securities until the next quarterly recalculation. Based on
third quarter average daily trading volumes, 55 Amex listed equities,
84 ETFs, and over 100 UTP securities would have been eligible for Tier
One pricing. These Tier One securities currently represent
approximately 60% of Amex daily volume. Determining whether a security
receives Tier One pricing will be based on 12 weeks of trading data.
Two weeks prior to the start of a calendar quarter the Exchange will
announce which securities will be eligible for Tier One pricing during
the next quarter beginning with the first trading day of the calendar
quarter. For example, Tier One securities (except UTP securities) for
the second quarter of 2007 will be determined based on average daily
trading volume for the period beginning December 13, 2006 and ending
March 14, 2007. An announcement will be made on March 15, 2007 setting
forth the securities eligible for Tier One pricing effective April 1,
2007. The list of Tier One eligible securities will also be available
on the Amex Web site.
Transaction charges for executions by customers of Tier One
securities will vary depending on the type of order submitted to Amex.
There will be no transaction charges for the execution of cross orders
\7\ occurring within the AEMI trading system (``electronic crosses'').
The lowest fees will be charged for the execution of limit orders \8\
which are not immediately executable when submitted to the Exchange and
whose limit is near, at, or improves the prevailing national best bid
(for buy orders) or the national best offer (for sell orders)
(collectively, the NBBO) at the time of order entry. As set forth in
the revised Fee Schedule, transaction charges for the execution of
limit orders (1) at the current NBBO or that betters the current NBBO
will be $0.03 per 100 shares; (2) within three minimum price variations
or ``ticks'' of the NBBO will be $0.05 per 100 shares; and (3) all
other limit orders at prices outside three ticks from the NBBO will be
$0.10 per 100 shares. Orders that are submitted prior to the opening of
trading at 9:30 a.m. when NBBO data is not available will be charged as
follows: the execution of market orders will be charged $0.25 per 100
shares, and the execution of all limit orders will be charged $0.03 per
100 shares (regardless of limit price). Transaction charges for
negotiated \9\ and open-outcry cross transactions \10\ will be $0.15
per 100 shares. Transaction charges for the execution of market,\11\
marketable limit orders, and any other orders that take liquidity out
of the market will be $0.25 per 100 shares. Similarly, transaction
charges for at the opening-only orders
[[Page 5471]]
(OPG) \12\ and at-the-close orders (MCC, MOC, and LOC) \13\ will be
$0.25 per 100 shares.
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\7\ A cross order is defined in Amex Rule 131-AEMI(r) as ``* *
*an order submitted by a member or member organization to AEMI with
buy and sell interest specified in a single order.''
\8\ A limit order is defined in Amex Rules 131(b) and 131-
AEMI(b) as ``* * *an order to buy or sell a stated amount of a
security at a specified price, or at a better price if obtainable
after the order is represented in the Trading Crowd or is received
in the AEMI Book.''
\9\ Negotiated Trades are one-to-one trades between two crowd
members.
\10\ Open Outcry Cross Transactions are discussed in Amex Rule
151-AEMI and occur when a member executes a customer order to buy
against a customer order to sell outside the AEMI system or in open
outcry.
\11\ A market order is defined in Amex Rules 131(a) and 131-
AEMI(a) as ``* * *an order to buy or sell a stated amount of a
security at the most advantageous price obtainable after the order
is presented in the trading crowd or is received in the AEMI Book.''
\12\ An at the opening order is defined in Amex Rules 131(f) and
131-AEMI(e) as ``* * *a market or limited price order which is to be
executed on the opening in the stock on the Exchange or not at all,
and any such order or portion thereof not so executed is to be
treated as cancelled.''
\13\ At-the-close orders are defined in Amex Rules 131(e), 131,
Commentary .03, 131-AEMI(d) and 131-AEMI, Commentary 03. There are
three types of at the close orders, market-at-the-close, limit-at-
the-close, and market-at-4:00-p.m. cash-close. A market-at-the-close
(MOC) order is an order to buy or sell a stated amount of a security
at the Exchange's closing price. If the MOC order cannot be executed
in its entirety at the Exchange closing price it will be cancelled.
A limit-at-the-close (LOC) order is an order to buy or sell a stated
amount of a security at the Exchange's closing price if that closing
price is at the order's limit price, or better. If the LOC order
cannot be so executed, in whole or in part, the amount of the order
not so executed is to be cancelled. A market-at-4:00-p.m. cash-close
(MCC) order is an order in an ETF that trades to 4:15, which is to
be executed at or as close as practicable to the close of the
regular equity trading session on the Exchange (normally 4 p.m.
Eastern Time.)
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The Exchange proposes to revise its traditional way of assessing
transaction charges in order to provide incentives for liquidity
providers to send limit orders in the most active securities to the
Exchange at and around the NBBO. The Exchange believes that liquidity
takers, market participants who send in market orders or marketable
limit orders for immediate execution at the NBBO or better, should pay
for the service of accessing liquidity at the best possible price.
Tier Two Pricing for Customers
Tier Two pricing will be applied to all Amex-listed securities
(equities and ETFs) whose industry-wide average daily trading volume is
less than 500,000 shares during the previous rolling quarter.
Transaction charges for executions by customers of Tier Two securities
will be $0.30 per 100 shares for limit orders, market orders, and at-
the-opening and at-the-close orders, and $0.25 per 100 shares for
electronic crosses, open-outcry cross transactions, and negotiated
transactions.
Transaction Charges for Specialists and Registered Traders
Transaction charges for executions by Specialists and Registered
Traders of all equities and ETFs will vary depending on the type of
order or quote submitted to Amex. The lowest fee of $0.03 per 100
shares will be charged for an execution against a Specialist or
Registered Trader quote that had been entered at the NBBO and for
negotiated trades. A transaction charge of $0.05 per 100 shares will be
charged for all other Specialist and Registered Trader executions,
including executions against a Specialist or Registered Trader quote
that is within three or more ticks of the NBBO, executions of hit-or-
take orders,\14\ executions in which the Specialist and/or Registered
Trader has participated in a percentage order,\15\ intraday pair-offs,
and the pair-offs of at-the-opening or at-the-close orders. Transaction
charges for Specialists and Registered Traders are at lower rates in
order to encourage them to quote more competitively and make more
liquid markets.
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\14\ Hit-or-take orders are defined in Amex Rule 131-AEMI(t) and
are available only for securities trading on the AEMI system. A hit-
or-take order is a type of order that is available to any member to
trade against the Amex Published Quote (``APQ''). It is an order
that expires if not immediately executed but that is capable of
generating away market obligations to clear better away markets.
\15\ A percentage order is defined in Rules 131(n) and 131-
AEMI(m) as ``* * *a limited price order to buy (or sell) 50% of the
volume of a specified stock after its entry.''
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Revisions to Cancellation Fees
Currently, the executing clearing member is charged $0.25 for every
equities and ETF order sent for a mnemonic and cancelled through Amex
systems in a given month when the total number of equities and ETF
orders executed for that mnemonic is less than or equal to 10% of the
equities and ETF orders cancelled through Amex systems for that
mnemonic in that same month. The fee does not apply to mnemonics for
which fewer than 100,000 orders were cancelled through Amex systems and
does not apply to the first 100,000 cancellations submitted for a
mnemonic. To align the Exchange's cancellation fee with others in the
industry, the proposed cancellation fee for orders and cancellations
sent to Amex in equities and ETFs will be revised to apply to each
clearing member mnemonic whose ratio of cancellations to executions is
greater than 50-to-one. However, the Exchange also proposes to
eliminate the 100,000 cancellation threshold, and the charge of $0.25
per cancellation will apply to all cancellations beyond the 50-to-one
ratio for that mnemonic. Thus, the proposed cancellation fee will apply
to fewer clearing member mnemonics since the ratio of cancellations to
executions is higher than the current ratio and the proposed
cancellation fees are applicable on a marginal basis. For example, if a
clearing member executes two orders and cancels 120 orders in a
mnemonic, the clearing member will be assessed a cancellation fee only
on 20 cancellations.
2. Statutory Basis
The proposed rule change is consistent with Section 6(b) of the
Act,\16\ in general, and furthers the objectives of Section
6(b)(4),\17\ 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 facilities.
Specifically, the Exchange is proposing to establish new transaction
charges for equities and ETFs and revise its cancellation fees.
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\16\ 15 U.S.C. 78f(b).
\17\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------
B. Self-Regulatory Organization's Statement on Burden on Competition
The proposed rule change does 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 proposed rule change has become effective pursuant to
Section 19(b)(3)(A)(ii) of the Act \18\ and Rule 19b-4(f)(2) thereunder
\19\ 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.\20\
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\18\ 15 U.S.C. 78s(b)(3)(A)(ii).
\19\ 17 CFR 19b-4(f)(2).
\20\ For purposes of calculating the 60-day period within which
the Commission may summarily abrogate the proposed rule change, the
Commission considers the period to commence on January 26, 2007, the
date on which the Exchange filed Amendment No. 1.
---------------------------------------------------------------------------
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:
[[Page 5472]]
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 No. SR-Amex-2006-117 on the subject line.
Paper Comments
Send paper comments in triplicate to Nancy M. Morris,
Secretary, Securities and Exchange Commission, Station Place, 100 F
Street, NE., Washington, DC 20549-1090.
All submissions should refer to File Number SR-Amex-2006-117. 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 Commissions 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 the
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-2006-117 and should be submitted on or before February 27,
2007.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\21\
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\21\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7-1830 Filed 2-2-07; 8:45 am]
BILLING CODE 8011-01-P
