

[Federal Register: March 14, 2006 (Volume 71, Number 49)]
[Notices]               
[Page 13193-13194]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr14mr06-121]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-53451; File No. SR-Amex-2006-23]

 
Self-Regulatory Organizations; American Stock Exchange LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Adopt an Options Licensing Fee for Options on Certain Rydex Exchange-
Traded Funds

March 8, 2006.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on March 6, 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 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. The Commission is publishing this notice to solicit 
comments on the proposed rule change 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).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    Amex proposes to modify its Options Fee Schedule by adopting a per-
contract license fee for the orders of specialists, registered options 
traders, firms, non-member market makers, and broker-dealers 
(collectively, ``Market Participants'') in connection with options 
transactions in six (6) new Rydex exchange-traded funds (``ETFs'').
    The text of the proposed rule change is available on the Exchange's 
Internet Web site (http://www.amex.com), 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 purpose of the proposal is to adopt a per-contract options 
licensing fee in connection with options on the following six (6) ETFs: 
(1) Rydex S&P 500 Pure Growth ETF (symbol: RPG); (2) Rydex S&P Pure 
Value ETF (symbol: RPV); (3) Rydex S&P MidCap 400 Pure Growth ETF 
(symbol: RFG); (4) Rydex S&P MidCap 400 Pure Value ETF (symbol: RFV); 
(5) Rydex S&P Small Cap 600 Pure Growth ETF (symbol: RZG); and (6) 
Rydex S&P Small Cap 600 Pure Value ETF (symbol: RZV) (collectively, 
``Rydex ETFs''). Amex represents that it plans to assess the proposed 
options licensing fee on members commencing March 7, 2006.
    The Exchange has entered into numerous agreements with various 
index providers for the purpose of trading options on certain ETFs. As 
a result, the Exchange is required to pay index license fees to third 
parties as a condition to the listing and trading of these ETF options. 
In many cases, the Exchange is required to pay a significant licensing 
fee to the index provider that may not be reimbursed. In an effort to 
recoup the costs associated with certain index licenses, the Exchange 
has recently established per-contract licensing fees for orders of 
Market Participants that are collected on each option transaction in 
certain designated products in which such Market Participant is a 
party.\5\
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    \5\ See Securities Exchange Act Release No. 52493 (September 22, 
2005), 70 FR 56941 (September 29, 2005).
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    The purpose of the proposal, therefore, is to charge an options 
licensing fee in connection with options on the Rydex ETFs. 
Specifically, Amex seeks to charge an options licensing fee of $0.09 
per contract side for each

[[Page 13194]]

Rydex ETF option for Market Participant orders executed on the 
Exchange. In all cases, the fee would be charged only to the Exchange 
member through whom such order is placed.
    Amex represents that the proposed options licensing fees would 
allow the Exchange to recoup its costs in connection with the index 
license fees for the trading of the Rydex ETF options. The fees would 
be collected on every Market Participant order executed on the 
Exchange. The Exchange believes that requiring the payment of a per-
contract licensing fee in connection with the Rydex ETF options by 
those Market Participants that benefit from the index license 
agreements is justified and consistent with the rules of the Exchange.
    The Exchange notes that, in recent years, it has revised a number 
of its fees to better align Amex fees with the actual cost of 
delivering services and reduce Amex's subsidization of such 
services.\6\ The Exchange represents that the implementation of this 
proposal is consistent with the reduction and/or elimination of these 
subsidies. Amex believes that these fees will help to allocate to those 
Market Participants engaging in transactions in Rydex ETF options a 
fair share of the related costs of offering such options for trading.
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    \6\ See, e.g., Securities Exchange Act Release No. 45360 
(January 29, 2002), 67 FR 5626 (February 6, 2002); Securities 
Exchange Act Release No. 44286 (May 9, 2001), 66 FR 27187 (May 16, 
2001).
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    The Exchange asserts that the proposal provides for an equitable 
allocation of fees as required by Section 6(b)(4) of the Act.\7\ In 
connection with the adoption of options licensing fees for the Rydex 
ETF options, the Exchange notes that charging the options licensing 
fees, where applicable, to all Market Participant orders, except for 
customer orders, is reasonable given the competitive pressures in the 
industry. Accordingly, the Exchange seeks, through this proposal, to 
better align its transaction charges with the cost of providing trading 
products.
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    \7\ Section 6(b)(4) of the Act states that the rules of a 
national securities exchange must ``provide for the equitable 
allocation of reasonable dues, fees, and other charges among its 
members and issuers and other persons using its facilities.'' 15 
U.S.C. 78f(b)(4).
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2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b)(4) of the Act \8\ in that it provides for the 
equitable allocation of reasonable dues, fees, and other charges among 
its members and other persons using its facilities.
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    \8\ 15 U.S.C. 78f(b)(4).
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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.

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 \9\ and Rule 19b-4(f)(2) \10\ 
thereunder 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.
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    \9\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \10\ 17 CFR 19b-4(f)(2).
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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 (http://www.sec.gov/rules/sro.shtml.
); or     Send an e-mail to rule-comments@sec.gov. Please include 

File No. SR-Amex-2006-23 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-2006-23. 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 (http://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-2006-23 
and should be submitted on or before April 4, 2006.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\11\
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    \11\ 17 CFR 200.30-3(a)(12).
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Nancy M. Morris,
Secretary.
[FR Doc. E6-3572 Filed 3-13-06; 8:45 am]

BILLING CODE 8010-01-P
