Self-Regulatory Organizations; American Stock Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Prohibit Specialists in Exchange-Traded Funds From Charging Commissions on Transactions in Their Specialty Securities, 36743-36744 [E7-13013]

Download as PDF Federal Register / Vol. 72, No. 128 / Thursday, July 5, 2007 / Notices SECURITIES AND EXCHANGE COMMISSION [Release No. 34–55981; File No. SR–Amex– 2007–67] Self-Regulatory Organizations; American Stock Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Prohibit Specialists in Exchange-Traded Funds From Charging Commissions on Transactions in Their Specialty Securities June 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 June 28, 2007, 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 and II below, which Items have been substantially prepared by the Exchange. 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 amend Rule 154-AEMI(k) to prohibit specialists in exchange-traded funds (‘‘ETFs’’) from charging commissions on transactions in their specialty securities. The text of the proposed rule change is available on Amex’s Web site at https://www.amex.com, at the Exchange’s Office of the Secretary, and at the Commission’s Public Reference Room. sroberts on PROD1PC70 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 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. 1 15 2 17 U.S.C. 78s(b)(1). CFR 240.19b–4. VerDate Aug<31>2005 18:43 Jul 03, 2007 Jkt 211001 A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The Exchange proposes to amend Rule 154-AEMI(k) 3 to prohibit specialists in ETFs from charging commissions on transactions in their specialty securities. Previously, the Exchange has sought to place various limitations on specialist commissions in equities and ETFs. The instant proposal seeks to eliminate the ability of specialists in ETFs to charge commissions on transactions in their entirety. In addition, in connection with this proposal to eliminate specialist commissions, the Exchange is proposing in a separate filing (the ‘‘Fee Filing’’) 4 to: (i) eliminate Exchange transaction charges for specialists in ETFs; (ii) adopt a revenue sharing program for specialists and registered traders in ETFs; and (iii) revise various fees, caps, and discounts for transactions in ETFs. The Exchange is requesting that the Commission make this filing operative on July 1, 2007, the same day the changes contained in the Fee Filing become operative. The Exchange now proposes to amend subparagraph (k) to Rule 154-AEMI to prohibit specialists from charging commissions on any ETF orders. The Exchange believes that this prohibition on specialist commissions will offset the increases in transaction charges that may be experienced by customers as the result of the revisions to or elimination of the various caps and discounts currently available. The Exchange is proposing the prohibition on ETF specialist commissions to provide consistency and clarity to all members and the public that orders sent to Amex will not be subject to excessive or arbitrary costs, and to preserve the cost competitiveness of the Exchange. The Exchange believes that its comprehensive program of providing incentives to ETF specialists and registered traders to provide more liquid and competitive markets, in 3 The Exchange received approval on June 15, 2007, of its proposal to add subparagraph (k) to Rule 154-AEMI. See Securities Exchange Act Release No. 55913 (June 15, 2007); 72 FR 34323 (June 21, 2007) (File No. SR–Amex–2007–13). Rule 154-AEMI(k), which applies to both equities and ETFs: (1) Extends the application of the limitations on specialist commissions to ETFs and equities trading on the AEMI System; (2) expands the prohibition on specialist commissions to market-atthe-close orders and limit-at-the-close orders; and (3) specifies that specialist commissions can be charged only on orders that are executed and not on orders that are cancelled or expire unexecuted. 4 See File No. SR–Amex–2007–68, submitted June 28, 2007. PO 00000 Frm 00097 Fmt 4703 Sfmt 4703 36743 combination with the prohibition on the charging of specialist commissions on transactions in ETFs, will result in making the Exchange’s pricing structure more competitive, more equitable, more transparent, and easier to understand. The Exchange consequently believes that the proposed rule would benefit investors if implemented and would strengthen the Exchange’s competitive position. 2. Statutory Basis The Exchange believes that the proposed rule change is consistent with the Act and the rules and regulations thereunder applicable to a national securities exchange and, in particular, the requirements of Section 6(b) of the Act.5 Specifically, the Exchange believes the proposed rule change is consistent with Section 6(b)(5) of the Act,6 which requires that the rules of an exchange be designed to promote just and equitable principles of trade, to prevent fraudulent and manipulative acts and practices, and, in general, to protect investors and the public interest. In addition, the Exchange believes that the proposed rule change is consistent with the provisions of Section 6(b)(4) of the Act,7 which requires that the rules of an exchange provide for the equitable allocation of reasonable dues, fees, and other charges among its members and issuers and other persons using its facilities. B. Self-Regulatory Organization’s Statement on Burden on Competition The Exchange believes that 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 rule change has become effective immediately pursuant to Section 19(b)(3)(A)(ii) of the Act 8 and Rule 19b–4(f)(6) 9 thereunder because the Exchange has designated the proposed rule change as one that does not: (i) Significantly affect the 5 15 U.S.C. 78f(b). U.S.C. 78f(b)(5). 7 15 U.S.C. 78f(b)(4). 8 15 U.S.C. 78s(b)(3)(A)(ii). 9 17 CFR 240.19b–4(f)(6). 6 15 E:\FR\FM\05JYN1.SGM 05JYN1 36744 Federal Register / Vol. 72, No. 128 / Thursday, July 5, 2007 / Notices sroberts on PROD1PC70 with NOTICES protection of investors or the public interest; (ii) impose any significant burden on competition; or (iii) become operative for 30 days from the date on which it was filed, or such shorter time as the Commission may designate. The Exchange has provided the Commission written notice of its intention to file the proposed rule change at least five business days prior to filing. The Exchange requests that the Commission waive the 30-day operative delay specified in Rule 19b–4(f)(6)(iii) 10 with respect to the proposed rule change and that the proposed rule change be made operative on July 1, 2007, the same day the fee changes proposed in the Fee Filing take effect. The Exchange has represented that all the ETF specialist firms affected by the proposal have agreed to the elimination of commissions, contingent on the Exchange’s implementation of the proposed revenue sharing program included in the Fee Filing. The proposal herein, together with the revisions to the Exchange’s transaction charges and the revenue sharing program, is part of an integrated plan in which: (i) The revenues generated from the revised fees will partially offset the cost to the Exchange of the payments the Exchange will make to the specialists and registered traders under the revenue sharing program; and (ii) the cost to customers of the increased transaction charges will be offset partially by the elimination of commissions. Amex believes it is essential that the proposal in this filing become operative at the same time as the proposal set forth in the Fee Filing. The Commission has determined to waive the 30-day delay and allow the proposed rule change to become operative on July 1, 2007.11 The Commission believes that waiving the 30-day operative delay is consistent with the protection of investors and the public interest because doing so will enable all aspects of Amex’s new fee structure to become operative as of the same date. The Commission has relied on Amex’s representation that all affected Amex specialists have agreed to the new fee structure. 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, 10 17 CFR 240.19b–4(f)(6)(iii). purposes only of waiving the operative delay of this proposal, the Commission notes that it has considered the proposed rule’s impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). 11 For VerDate Aug<31>2005 18:43 Jul 03, 2007 Jkt 211001 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: For the Commission, by the Division of Market Regulation, pursuant to delegated authority.12 Florence E. Harmon, Deputy Secretary. [FR Doc. E7–13013 Filed 7–3–07; 8:45 am] BILLING CODE 8010–01–P SECURITIES AND EXCHANGE COMMISSION Electronic Comments [Release No. 34–55971; File No. SR–CBOE– 2007–66] • 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–2007–67 on the subject line. Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Regarding Its Open Outcry Allocation Rules June 28, 2007. Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 (the • Send paper comments in triplicate ‘‘Act’’),1 and Rule 19b–4 thereunder,2 to Nancy M. Morris, Secretary, notice is hereby given that on June 18, Securities and Exchange Commission, 2007, the Chicago Board Options 100 F Street, NE., Washington, DC Exchange, Incorporated (‘‘CBOE’’ or 20549–1090. ‘‘Exchange’’) filed with the Securities and Exchange Commission (the All submissions should refer to File ‘‘Commission’’) the proposed rule Number SR–Amex–2007–67. This file change as described in Items I, II and III number should be included on the subject line if e-mail is used. To help the below, which Items have been substantially prepared by CBOE. The Commission process and review your Exchange filed the proposal as a ‘‘noncomments more efficiently, please use only one method. The Commission will controversial’’ proposed rule change pursuant to section 19(b)(3)(A)(iii) of the post all comments on the Commissions Act 3 and Rule 19b–4(f)(6) thereunder,4 Internet Web site (https://www.sec.gov/ which renders it effective upon filing rules/sro.shtml). Copies of the with the Commission. The Commission submission, all subsequent is publishing this notice to solicit amendments, all written statements comments on the proposed rule change with respect to the proposed rule from interested persons. change that are filed with the I. Self-Regulatory Organization’s Commission, and all written Statement of the Terms of Substance of communications relating to the the Proposed Rule Change proposed rule change between the Commission and any person, other than CBOE proposes to amend its open those that may be withheld from the outcry allocation rules for classes public in accordance with the trading on the Hybrid Trading System provisions of 5 U.S.C. 552, will be (‘‘Hybrid’’). The text of the proposed available for inspection and copying in rule change is available at CBOE, the the Commission’s Public Reference Commission’s Public Reference Room, Room, 100 F Street, NE., Washington, and (https://www.cboe.org/Legal). DC 20549, on official business days II. Self-Regulatory Organization’s between the hours of 10 a.m. and 3 p.m. Statement of the Purpose of, and Copies of such filing also will be Statutory Basis for, the Proposed Rule available for inspection and copying at Change the principal office of the Exchange. All In its filing with the Commission, the comments received will be posted CBOE included statements concerning without change; the Commission does the purpose of, and basis for, the not edit personal identifying proposed rule change and discussed any information from submissions. You should submit only information that 12 17 CFR 200.30–3(a)(12). you wish to make available publicly. All 1 15 U.S.C. 78s(b)(1). submissions should refer to File 2 17 CFR 240.19b–4. Number SR–Amex–2007–67 and should 3 15 U.S.C. 78s(b)(3)(A)(iii). be submitted on or before July 26, 2007. 4 17 CFR 240.19b–4(f)(6). Paper Comments PO 00000 Frm 00098 Fmt 4703 Sfmt 4703 E:\FR\FM\05JYN1.SGM 05JYN1

Agencies

SECURITIES AND EXCHANGE COMMISSION

[Federal Register Volume 72, Number 128 (Thursday, July 5, 2007)]
[Notices]
[Pages 36743-36744]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E7-13013]



[[Page 36743]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-55981; File No. SR-Amex-2007-67]


Self-Regulatory Organizations; American Stock Exchange LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Prohibit Specialists in Exchange-Traded Funds From Charging Commissions 
on Transactions in Their Specialty Securities

June 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 June 28, 2007, 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 and 
II below, which Items have been substantially prepared by the Exchange. 
The Commission is publishing this notice to solicit comments on the 
proposed rule change from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend Rule 154-AEMI(k) to prohibit 
specialists in exchange-traded funds (``ETFs'') from charging 
commissions on transactions in their specialty securities. The text of 
the proposed rule change is available on Amex's Web site at https://
www.amex.com, at the Exchange's Office of the Secretary, 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 Exchange proposes to amend Rule 154-AEMI(k) \3\ to prohibit 
specialists in ETFs from charging commissions on transactions in their 
specialty securities. Previously, the Exchange has sought to place 
various limitations on specialist commissions in equities and ETFs. The 
instant proposal seeks to eliminate the ability of specialists in ETFs 
to charge commissions on transactions in their entirety. In addition, 
in connection with this proposal to eliminate specialist commissions, 
the Exchange is proposing in a separate filing (the ``Fee Filing'') \4\ 
to: (i) eliminate Exchange transaction charges for specialists in ETFs; 
(ii) adopt a revenue sharing program for specialists and registered 
traders in ETFs; and (iii) revise various fees, caps, and discounts for 
transactions in ETFs. The Exchange is requesting that the Commission 
make this filing operative on July 1, 2007, the same day the changes 
contained in the Fee Filing become operative.
---------------------------------------------------------------------------

    \3\ The Exchange received approval on June 15, 2007, of its 
proposal to add subparagraph (k) to Rule 154-AEMI. See Securities 
Exchange Act Release No. 55913 (June 15, 2007); 72 FR 34323 (June 
21, 2007) (File No. SR-Amex-2007-13). Rule 154-AEMI(k), which 
applies to both equities and ETFs: (1) Extends the application of 
the limitations on specialist commissions to ETFs and equities 
trading on the AEMI System; (2) expands the prohibition on 
specialist commissions to market-at-the-close orders and limit-at-
the-close orders; and (3) specifies that specialist commissions can 
be charged only on orders that are executed and not on orders that 
are cancelled or expire unexecuted.
    \4\ See File No. SR-Amex-2007-68, submitted June 28, 2007.
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    The Exchange now proposes to amend subparagraph (k) to Rule 154-
AEMI to prohibit specialists from charging commissions on any ETF 
orders. The Exchange believes that this prohibition on specialist 
commissions will offset the increases in transaction charges that may 
be experienced by customers as the result of the revisions to or 
elimination of the various caps and discounts currently available.
    The Exchange is proposing the prohibition on ETF specialist 
commissions to provide consistency and clarity to all members and the 
public that orders sent to Amex will not be subject to excessive or 
arbitrary costs, and to preserve the cost competitiveness of the 
Exchange. The Exchange believes that its comprehensive program of 
providing incentives to ETF specialists and registered traders to 
provide more liquid and competitive markets, in combination with the 
prohibition on the charging of specialist commissions on transactions 
in ETFs, will result in making the Exchange's pricing structure more 
competitive, more equitable, more transparent, and easier to 
understand. The Exchange consequently believes that the proposed rule 
would benefit investors if implemented and would strengthen the 
Exchange's competitive position.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the Act and the rules and regulations thereunder applicable to a 
national securities exchange and, in particular, the requirements of 
Section 6(b) of the Act.\5\ Specifically, the Exchange believes the 
proposed rule change is consistent with Section 6(b)(5) of the Act,\6\ 
which requires that the rules of an exchange be designed to promote 
just and equitable principles of trade, to prevent fraudulent and 
manipulative acts and practices, and, in general, to protect investors 
and the public interest. In addition, the Exchange believes that the 
proposed rule change is consistent with the provisions of Section 
6(b)(4) of the Act,\7\ which requires that the rules of an exchange 
provide for the equitable allocation of reasonable dues, fees, and 
other charges among its members and issuers and other persons using its 
facilities.
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    \5\ 15 U.S.C. 78f(b).
    \6\ 15 U.S.C. 78f(b)(5).
    \7\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------

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

    The Exchange believes that 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 rule change has become effective immediately pursuant 
to Section 19(b)(3)(A)(ii) of the Act \8\ and Rule 19b-4(f)(6) \9\ 
thereunder because the Exchange has designated the proposed rule change 
as one that does not: (i) Significantly affect the

[[Page 36744]]

protection of investors or the public interest; (ii) impose any 
significant burden on competition; or (iii) become operative for 30 
days from the date on which it was filed, or such shorter time as the 
Commission may designate. The Exchange has provided the Commission 
written notice of its intention to file the proposed rule change at 
least five business days prior to filing.
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    \8\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \9\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------

    The Exchange requests that the Commission waive the 30-day 
operative delay specified in Rule 19b-4(f)(6)(iii) \10\ with respect to 
the proposed rule change and that the proposed rule change be made 
operative on July 1, 2007, the same day the fee changes proposed in the 
Fee Filing take effect. The Exchange has represented that all the ETF 
specialist firms affected by the proposal have agreed to the 
elimination of commissions, contingent on the Exchange's implementation 
of the proposed revenue sharing program included in the Fee Filing. The 
proposal herein, together with the revisions to the Exchange's 
transaction charges and the revenue sharing program, is part of an 
integrated plan in which: (i) The revenues generated from the revised 
fees will partially offset the cost to the Exchange of the payments the 
Exchange will make to the specialists and registered traders under the 
revenue sharing program; and (ii) the cost to customers of the 
increased transaction charges will be offset partially by the 
elimination of commissions. Amex believes it is essential that the 
proposal in this filing become operative at the same time as the 
proposal set forth in the Fee Filing.
---------------------------------------------------------------------------

    \10\ 17 CFR 240.19b-4(f)(6)(iii).
---------------------------------------------------------------------------

    The Commission has determined to waive the 30-day delay and allow 
the proposed rule change to become operative on July 1, 2007.\11\ The 
Commission believes that waiving the 30-day operative delay is 
consistent with the protection of investors and the public interest 
because doing so will enable all aspects of Amex's new fee structure to 
become operative as of the same date. The Commission has relied on 
Amex's representation that all affected Amex specialists have agreed to 
the new fee structure.
---------------------------------------------------------------------------

    \11\ For purposes only of waiving the operative delay of this 
proposal, the Commission notes that it has considered the proposed 
rule's impact on efficiency, competition, and capital formation. See 
15 U.S.C. 78c(f).
---------------------------------------------------------------------------

    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

     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-2007-67 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-2007-67. 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, 100 F Street, 
NE., Washington, DC 20549, on official business days between the hours 
of 10 a.m. and 3 p.m. Copies of such filing also will be available for 
inspection and copying at the principal office of the Exchange. 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-2007-67 and should be 
submitted on or before July 26, 2007.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\12\
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    \12\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7-13013 Filed 7-3-07; 8:45 am]
BILLING CODE 8010-01-P

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