Self-Regulatory Organizations; American Stock Exchange LLC; Notice of Filing of Proposed Rule Change, as Modified by Amendment No. 3 Thereto, Relating to Section 31 Related Fees, 20724-20726 [E8-8152]
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jlentini on PROD1PC65 with NOTICES
20724
Federal Register / Vol. 73, No. 74 / Wednesday, April 16, 2008 / Notices
Commission under Rule 17a–5 (17 CFR
17a–5). Rule 17a–13 exempts brokerdealers that limit their business to the
sale and redemption of securities of
registered investment companies and
interests or participation in an
insurance company separate account
and those who solicit accounts for
federally insured savings and loan
associations, provided that such persons
promptly transmit all funds and
securities and hold no customer funds
and securities. The Rule also does not
apply to certain broker-dealers required
to register only because they effect
transactions in securities futures
products.
The information obtained from Rule
17a–13 is used as an inventory control
device to monitor a broker-dealer’s
ability to account for all securities held,
in transfer, in transit, pledged, loaned,
borrowed, deposited, or otherwise
subject to the firm’s control or direction.
Discrepancies between the securities
counts and the broker-dealer’s records
alert the Commission and the Self
Regulatory Organizations (‘‘SROs’’) to
those firms having problems in their
back offices.
Currently, there are approximately
5,700 broker-dealers registered with the
Commission. However, given the
variability in their businesses, it is
difficult to quantify how many hours
per year each broker-dealer spends
complying with the Rule. As noted, the
Rule requires a broker-dealer to account
for all securities in its possession. Many
broker-dealers hold few, if any,
securities; while others hold large
quantities. Therefore, the time burden of
complying with the Rule will depend on
respondent-specific factors, including
size, number of customers, and
proprietary trading activity. The staff
estimates that the average time spent per
respondent on the Rule is 100 hours per
year. This estimate takes into account
the fact that more than half the 5,700
respondents—according to financial
reports filed with the Commission—may
spend little or no time in complying
with the Rule, given that they do not do
a public securities business or do not
hold inventories of securities. For these
reasons, the staff estimates that the total
compliance burden per year is 570,000
hours (5,700 respondents × 100 hours/
respondent).
The records required to be made by
Rule 17a–13 are available only to
Commission examination staff, state
securities authorities, and the SROs.
Subject to the provisions of the Freedom
of Information Act (5 U.S.C. 522), and
the Commission’s rules thereunder (17
CFR 200.80(b)(4)(iii)), the Commission
does not generally publish or make
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available information contained in any
reports, summaries, analyses, letters, or
memoranda arising out of, in
anticipation of, or in connection with an
examination or inspection of the books
and records of any person or any other
investigation.
An agency may not conduct or
sponsor, and a person is not required to
respond to, a collection of information
unless it displays a currently valid
control number.
Comments should be directed to (i)
Desk Officer for the Securities and
Exchange Commission, Office of
Information and Regulatory Affairs,
Office of Management and Budget,
Room 10102, New Executive Office
Building, Washington, DC 20503 or by
sending an e-mail to:
Alexander_T._Hunt@omb.eop.gov; and
(ii) R. Corey Booth, Director/Chief
Information Officer, Securities and
Exchange Commission, c/o Shirley
Martinson, 6432 General Green Way,
Alexandria, VA 22312 or send an e-mail
to: PRA_Mailbox@sec.gov. Comments
must be submitted within 30 days of
this notice.
Dated: April 9, 2008.
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E8–8153 Filed 4–15–08; 8:45 am]
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–57641; File No. SR–Amex–
2007–107]
Self-Regulatory Organizations;
American Stock Exchange LLC; Notice
of Filing of Proposed Rule Change, as
Modified by Amendment No. 3 Thereto,
Relating to Section 31 Related Fees
April 9, 2008.
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 October
2, 2007, 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
Amex. The Amex filed Amendment No.
2 to the proposed rule change on March
19, 2008.3 The Amex filed Amendment
No. 3 to the proposed rule change on
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 The Amex previously filed and withdrew
Amendment No. 1 to the proposed rule change.
2 17
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Fmt 4703
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April 7, 2008.4 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 adopt new
Commentary to Rule 393 to allow
member firms to voluntarily submit,
during a six-month period after the
effective date of this rule proposal,
funds previously accumulated by the
member firms pursuant to Rule 393. In
addition, the proposed rule change
would allow the Exchange to use
accumulated funds to pay its current
Section 31 fees or, to the extent of any
surplus, offset other Exchange
regulatory costs.
The text of the proposed rule change
is available at the Amex’s principal
office, from the Commission’s Public
Reference Room, and on the Amex’s
Web site at https://www.amex.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
Amex included statements concerning
the purpose of, and basis for, the
proposed rule change and discussed any
comments it received on the proposed
rule change. The text of these statements
may be examined at the places specified
in Item III 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
Pursuant to Section 31 of the Act 5
and Rule 31 thereunder,6 national
securities exchanges and associations
(collectively ‘‘SROs’’) are required to
pay a transaction fee to the Commission
that is designed to recover the costs
related to the government’s supervision
and regulation of the securities markets
and securities professionals. To offset
this obligation, the Amex assesses its
clearing and self-clearing members a
regulatory fee in accordance with Rule
393, which mirrors Section 31 in both
4 Amendment No. 3 replaces all previous
amendments in their entirety. Amendment No. 3
added new effective dates of the proposed rule
change and would eliminate non-substantive and
extraneous text from proposed Commentary .01 to
Rule 393.
5 15 U.S.C. 78ee.
6 17 CFR 240.31.
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Federal Register / Vol. 73, No. 74 / Wednesday, April 16, 2008 / Notices
jlentini on PROD1PC65 with NOTICES
scope and amount. Clearing members
may in turn seek to charge a fee to their
customers or correspondent firms. Any
allocation of the fee between a clearing
member and its correspondent firm or
customer is the responsibility of the
clearing member.
Reconciling the amounts reported to
the Amex and the amounts collected
from the customers historically had
been difficult for member firms, causing
surpluses to accumulate at some
member firms (referred to as
‘‘accumulated funds’’). These
accumulated funds were not remitted to
the Amex by certain members, despite
the fact that these charges may have
been previously identified as ‘‘Section
31 Fees’’ or ‘‘SEC Fees’’ by the firms.7
In addition, since the Amex uses a ‘‘selfreporting’’ methodology for its members
to report and remit amounts payable
pursuant to Rule 393, the Amex has and
continues to accumulate amounts in
excess of the amounts paid by the Amex
to the Commission pursuant to Section
31 and Rule 31 (‘‘Exchange accumulated
funds’’).
In November 2004, the Amex and the
other SROs received a letter from the
Commission’s Division of Market
Regulation requesting, among other
things, that each SRO conduct an
analysis to ascertain the amount of
accumulated funds and present a plan
for broker-dealers to dispose of or
otherwise resolve title to such
accumulated funds.8 The NASD was
asked by the Commission to take the
lead in coordinating this effort with the
other SROs. To ascertain the amount of
accumulated funds, the NASD surveyed
240 clearing and self-clearing member
firms to review their practices regarding
7 The Commission stated in its release adopting
new Rule 31 and Rule 31T that ‘‘it is misleading
to suggest that a customer or [SRO] member incurs
an obligation to the Commission under Section 31.’’
Securities Exchange Act Release No. 49928 (June
28, 2004), 69 FR 41060, 41072 (July 7, 2004). In
response to this statement, the Exchange issued a
notice to members regarding its Rule 393 Fee and
the Commission’s ‘‘Section 31 Fee,’’ and provided
guidance for members and member organizations
that choose to charge their customers fees. See
Amex Notice REG 2004–42 Finance (October 29,
2004).
8 In its response to the Division of Market
Regulation’s letter, the Amex advised that it is in
possession of accumulated funds collected from its
members as Section 31 fees. Previous to the
adoption of Rules 31 and 31T, all monies received
by the Amex pursuant to Rule 393 were forwarded
to the Commission. However, with the recalculation
of Section 31 fees for the whole of the
Commission’s fiscal year 2004, the Amex found that
its members reported and submitted fees exceeding
the amount billed by the Commission for fiscal year
2004. See Letter to Robert L.D. Colby, Deputy
Director, Division of Market Regulation,
Commission, from Claire P. McGrath, Senior Vice
President and Deputy General Counsel, Amex,
dated January 11, 2005.
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the collection of such fees from
customers. After compiling and
analyzing the data provided by these
firms, the NASD staff found that fewer
than half the firms surveyed had an
accumulated fund balance. The NASD
worked with the other SROs to
recommend a potential solution to allow
the clearing and self-clearing firms to
resolve title to the accumulated funds.
It was determined, based upon
information provided in connection
with the NASD’s survey, that it would
be virtually impossible to return
customer-related accumulated funds to
the customers that had paid these funds
to the firms.9
The proposed rule change is aimed at
enabling those fees that may have been
collected for purposes of paying an
‘‘SEC Fee’’ or ‘‘Section 31 Fee’’ to be
used to pay such fees. The Exchange is
proposing a new Commentary to Rule
393 that will allow firms, on a one-timeonly basis, voluntarily to remit
historically accumulated funds to the
Exchange. These funds then would be
used to pay the Exchange’s current
Section 31 fees in conformity with prior
representations made by member firms.
In addition, a member or member
organization may designate all or part of
the Exchange-accumulated excess held
by the Exchange and allocated to such
member be used by the Exchange in
accordance with the new Commentary
to Rule 393. Finally, to the extent the
payment of these historically
accumulated funds or Exchange
accumulated funds is in excess of the
Section 31 fees due the Commission
from the Amex, such surplus shall be
used by the Exchange to offset
regulatory costs.
The Amex proposes that the effective
date of the proposed rule change would
be the date the Commission Order
approving the proposed rule filing is
published in the Federal Register and
the effectiveness of Commentary .01 to
Rule 393, once approved, would be for
a period of six months.
2. Statutory Basis
The Exchange believes that the
proposed rule change is consistent with
Section 6(b) of the Act,10 in general, and
furthers the objectives of Section 6(b)(5)
9 The NASD had asked all surveyed firms
whether they could ‘‘identify and relate the funds
to specific customers on a transaction by
transaction basis.’’ The surveyed firms universally
stated that tracking fractions of a penny to
individual customers would be impossible and any
over-collections could not be passed back at the
customer level. See Securities Exchange Act Release
No. 55886 (June 8, 2007), 72 FR 32935 (June 14,
2007) (Order approving SR–NASD–2007–027).
10 15 U.S.C. 78f(b).
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20725
of the Act,11 in particular, in that it is
designed to prevent fraudulent and
manipulative acts and practices, to
promote just and equitable principles of
trade, to foster cooperation and
coordination with persons engaged in
facilitating transactions in securities, to
remove impediments to and perfect the
mechanism of a free and open market
and a national market system, and, in
general, to protect investors and the
public interest. The Exchange believes
that the proposed rule change will
provide a transparent way of addressing
the issue of accumulated funds held by
member firms and by the Exchange.
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. 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 rulecomments@sec.gov. Please include File
Number SR–Amex–2007–107 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–2007–107. 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
11 15
E:\FR\FM\16APN1.SGM
U.S.C. 78f(b)(5).
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Federal Register / Vol. 73, No. 74 / Wednesday, April 16, 2008 / Notices
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 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 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-Amex2007–107 and should be submitted on
or before May 7, 2008
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.12
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E8–8152 Filed 4–15–08; 8:45 am]
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–57646; File No. SR–CBOE–
2008–37]
Self-Regulatory Organizations;
Chicago Board Options Exchange,
Incorporated; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change To Amend Rule 6.20A To
Permit Sponsored Users Access to the
CBOE Stock Exchange Facility
jlentini on PROD1PC65 with NOTICES
April 10, 2008.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (the
‘‘Act’’) 1 and Rule 19b–4 thereunder,2
notice is hereby given that on March 28,
2008, 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 and II below, which Items have
been prepared substantially by CBOE.
CBOE filed the proposed rule change as
a ‘‘non-controversial’’ proposed rule
change pursuant to Section 19(b)(3)(A)
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
of the Act 3 and Rule 19b–4(f)(6)
thereunder,4 which renders it effective
upon filing with the Commission. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
CBOE proposes to amend CBOE Rule
6.20A to permit Sponsored User access
to the CBOE Stock Exchange (‘‘CBSX’’)
facility. The text of the proposed rule
change is available at CBOE, the
Commission’s Public Reference Room,
and https://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,
CBOE included statements concerning
the purpose of, and basis for, the
proposed rule change. The text of these
statements may be examined at the
places specified in Item IV below. CBOE
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 6.20A (Sponsored Users) which
governs electronic access for the entry
and execution of orders by Sponsored
Users with authorized access and the
applicable requirements that Sponsored
Users and Sponsoring Members must
satisfy in order to engage in a
Sponsoring Member/Sponsored User
relationship. Under the current Rule,
the Sponsored User program is only
applicable to CBOE’s FLEX Hybrid
Trading System (‘‘FLEX’’). Accordingly,
a ‘‘Sponsored User’’ is defined as a
person or entity that has entered into a
sponsorship arrangement with a
Sponsoring Member for purposes of
receiving electronic access to FLEX.
CBOE is proposing to expand the rule to
permit electronic access for the entry
and execution of orders by Sponsored
Users with authorized access to the
CBSX facility.
Under the proposal, Rule 6.20A will
apply to Sponsored Users with
authorized access to CBSX in the same
manner as it applies to Sponsored Users
with authorized access to FLEX.
Sponsored User access to CBSX will
12 17
1 15
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3 15
4 17
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PO 00000
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(6).
Frm 00119
Fmt 4703
Sfmt 4703
also be conditioned on the same
requirements that currently apply to
Sponsored Users on FLEX.
2. Statutory Basis
The proposed rule change is
consistent with the provisions of
Section 6 of the Act,5 in general, and
with Section 6(b)(5) of the Act,6 in
particular, in that the proposal is
designed to remove impediments to and
perfect the mechanisms of a free and
open market and a national market
system, and, in general, protect
investors and the public interest.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
CBOE does not believe that the
proposed rule change will impose any
burden on competition that is not
necessary or appropriate in furtherance
of the purposes of the Act.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants or Others
No written comments were solicited
or received with respect to the proposed
rule change.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Because the foregoing proposed rule
change does not: (i) Significantly affect
the protection of investors or the public
interest; (ii) impose any significant
burden on competition; and (iii) become
operative for 30 days from the date on
which it was filed, or such shorter time
as the Commission may designate, it has
become effective pursuant to Section
19(b)(3)(A) of the Act 7 and Rule
19b–4(f)(6) thereunder.8
A proposed rule change filed under
19b–4(f)(6) normally may not become
operative prior to 30 days after the date
of filing.9 However, Rule
19b–4(f)(6)(iii) 10 permits the
Commission to designate a shorter time
if such action is consistent with the
protection of investors and the public
interest. The Exchange has requested
that the Commission waive the 30-day
operative delay. The Commission
5 15
U.S.C. 78f.
U.S.C. 78f(b)(5).
7 15 U.S.C. 78s(b)(3)(A).
8 17 CFR 240.19b–4(f)(6).
9 17 CFR 240.19b–4(f)(6). In addition, Rule
19b–4(f)(6)(iii) requires a self-regulatory
organization to give the Commission written notice
of its intent to file the proposed rule change at least
five business days prior to the date of filing of the
proposed rule change, or such shorter time as
designated by the Commission. CBOE has complied
with this requirement.
10 Id.
6 15
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]]>Agencies
[Federal Register Volume 73, Number 74 (Wednesday, April 16, 2008)]
[Notices]
[Pages 20724-20726]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E8-8152]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-57641; File No. SR-Amex-2007-107]
Self-Regulatory Organizations; American Stock Exchange LLC;
Notice of Filing of Proposed Rule Change, as Modified by Amendment No.
3 Thereto, Relating to Section 31 Related Fees
April 9, 2008.
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 October 2, 2007, 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
Amex. The Amex filed Amendment No. 2 to the proposed rule change on
March 19, 2008.\3\ The Amex filed Amendment No. 3 to the proposed rule
change on April 7, 2008.\4\ 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\ The Amex previously filed and withdrew Amendment No. 1 to
the proposed rule change.
\4\ Amendment No. 3 replaces all previous amendments in their
entirety. Amendment No. 3 added new effective dates of the proposed
rule change and would eliminate non-substantive and extraneous text
from proposed Commentary .01 to Rule 393.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to adopt new Commentary to Rule 393 to allow
member firms to voluntarily submit, during a six-month period after the
effective date of this rule proposal, funds previously accumulated by
the member firms pursuant to Rule 393. In addition, the proposed rule
change would allow the Exchange to use accumulated funds to pay its
current Section 31 fees or, to the extent of any surplus, offset other
Exchange regulatory costs.
The text of the proposed rule change is available at the Amex's
principal office, from the Commission's Public Reference Room, and on
the Amex's Web site at https://www.amex.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 Amex included statements
concerning the purpose of, and basis for, the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item III 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
Pursuant to Section 31 of the Act \5\ and Rule 31 thereunder,\6\
national securities exchanges and associations (collectively ``SROs'')
are required to pay a transaction fee to the Commission that is
designed to recover the costs related to the government's supervision
and regulation of the securities markets and securities professionals.
To offset this obligation, the Amex assesses its clearing and self-
clearing members a regulatory fee in accordance with Rule 393, which
mirrors Section 31 in both
[[Page 20725]]
scope and amount. Clearing members may in turn seek to charge a fee to
their customers or correspondent firms. Any allocation of the fee
between a clearing member and its correspondent firm or customer is the
responsibility of the clearing member.
---------------------------------------------------------------------------
\5\ 15 U.S.C. 78ee.
\6\ 17 CFR 240.31.
---------------------------------------------------------------------------
Reconciling the amounts reported to the Amex and the amounts
collected from the customers historically had been difficult for member
firms, causing surpluses to accumulate at some member firms (referred
to as ``accumulated funds''). These accumulated funds were not remitted
to the Amex by certain members, despite the fact that these charges may
have been previously identified as ``Section 31 Fees'' or ``SEC Fees''
by the firms.\7\ In addition, since the Amex uses a ``self-reporting''
methodology for its members to report and remit amounts payable
pursuant to Rule 393, the Amex has and continues to accumulate amounts
in excess of the amounts paid by the Amex to the Commission pursuant to
Section 31 and Rule 31 (``Exchange accumulated funds'').
---------------------------------------------------------------------------
\7\ The Commission stated in its release adopting new Rule 31
and Rule 31T that ``it is misleading to suggest that a customer or
[SRO] member incurs an obligation to the Commission under Section
31.'' Securities Exchange Act Release No. 49928 (June 28, 2004), 69
FR 41060, 41072 (July 7, 2004). In response to this statement, the
Exchange issued a notice to members regarding its Rule 393 Fee and
the Commission's ``Section 31 Fee,'' and provided guidance for
members and member organizations that choose to charge their
customers fees. See Amex Notice REG 2004-42 Finance (October 29,
2004).
---------------------------------------------------------------------------
In November 2004, the Amex and the other SROs received a letter
from the Commission's Division of Market Regulation requesting, among
other things, that each SRO conduct an analysis to ascertain the amount
of accumulated funds and present a plan for broker-dealers to dispose
of or otherwise resolve title to such accumulated funds.\8\ The NASD
was asked by the Commission to take the lead in coordinating this
effort with the other SROs. To ascertain the amount of accumulated
funds, the NASD surveyed 240 clearing and self-clearing member firms to
review their practices regarding the collection of such fees from
customers. After compiling and analyzing the data provided by these
firms, the NASD staff found that fewer than half the firms surveyed had
an accumulated fund balance. The NASD worked with the other SROs to
recommend a potential solution to allow the clearing and self-clearing
firms to resolve title to the accumulated funds. It was determined,
based upon information provided in connection with the NASD's survey,
that it would be virtually impossible to return customer-related
accumulated funds to the customers that had paid these funds to the
firms.\9\
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\8\ In its response to the Division of Market Regulation's
letter, the Amex advised that it is in possession of accumulated
funds collected from its members as Section 31 fees. Previous to the
adoption of Rules 31 and 31T, all monies received by the Amex
pursuant to Rule 393 were forwarded to the Commission. However, with
the recalculation of Section 31 fees for the whole of the
Commission's fiscal year 2004, the Amex found that its members
reported and submitted fees exceeding the amount billed by the
Commission for fiscal year 2004. See Letter to Robert L.D. Colby,
Deputy Director, Division of Market Regulation, Commission, from
Claire P. McGrath, Senior Vice President and Deputy General Counsel,
Amex, dated January 11, 2005.
\9\ The NASD had asked all surveyed firms whether they could
``identify and relate the funds to specific customers on a
transaction by transaction basis.'' The surveyed firms universally
stated that tracking fractions of a penny to individual customers
would be impossible and any over-collections could not be passed
back at the customer level. See Securities Exchange Act Release No.
55886 (June 8, 2007), 72 FR 32935 (June 14, 2007) (Order approving
SR-NASD-2007-027).
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The proposed rule change is aimed at enabling those fees that may
have been collected for purposes of paying an ``SEC Fee'' or ``Section
31 Fee'' to be used to pay such fees. The Exchange is proposing a new
Commentary to Rule 393 that will allow firms, on a one-time-only basis,
voluntarily to remit historically accumulated funds to the Exchange.
These funds then would be used to pay the Exchange's current Section 31
fees in conformity with prior representations made by member firms. In
addition, a member or member organization may designate all or part of
the Exchange-accumulated excess held by the Exchange and allocated to
such member be used by the Exchange in accordance with the new
Commentary to Rule 393. Finally, to the extent the payment of these
historically accumulated funds or Exchange accumulated funds is in
excess of the Section 31 fees due the Commission from the Amex, such
surplus shall be used by the Exchange to offset regulatory costs.
The Amex proposes that the effective date of the proposed rule
change would be the date the Commission Order approving the proposed
rule filing is published in the Federal Register and the effectiveness
of Commentary .01 to Rule 393, once approved, would be for a period of
six months.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with Section 6(b) of the Act,\10\ in general, and furthers the
objectives of Section 6(b)(5) of the Act,\11\ in particular, in that it
is designed to prevent fraudulent and manipulative acts and practices,
to promote just and equitable principles of trade, to foster
cooperation and coordination with persons engaged in facilitating
transactions in securities, to remove impediments to and perfect the
mechanism of a free and open market and a national market system, and,
in general, to protect investors and the public interest. The Exchange
believes that the proposed rule change will provide a transparent way
of addressing the issue of accumulated funds held by member firms and
by the Exchange.
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\10\ 15 U.S.C. 78f(b).
\11\ 15 U.S.C. 78f(b)(5).
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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. 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 Number SR-Amex-2007-107 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-2007-107. 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
[[Page 20726]]
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 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 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-2007-107 and should be
submitted on or before May 7, 2008
For the Commission, by the Division of Trading and Markets,
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. E8-8152 Filed 4-15-08; 8:45 am]
BILLING CODE 8010-01-P
