Amex FRSD Notice 02-05
September 19, 2002
Associate Member and Off-Floor Trader Fees
Article VII, Sec. 1(e) of the Amex Constitution imposes certain fees on Associate Members and their off-floor traders. Specifically, this provision provides for Associate Members to pay a membership fee of $4,000 per month for Associate Member firms and $3,000 per year for individual Associate Members and off-floor traders. The Exchange will waive these fees where the Associate Member can demonstrate to the Exchange's Financial Regulatory Services Department (FRSD) that ten percent of the Associate Member's and/or individual off-floor trader's volume is transacted on the Floor of the Exchange.
This notice provides general guidance for FRSD's approach to questions about the above-mentioned fees.
The term "volume" means share volume and therefore is not related to the number of transactions a firm undertakes. When computing volume for options the number of contracts should be multiplied by 100 except where the member can document a different share equivalent for an option contract.
Demonstration Required by the Member
It is up to the member to sufficiently demonstrate1 to the staff that it qualifies for the waiver for each billing period.2 With respect to the monthly payment to be made on account of the Associate Member, the information presented by the member should allow FRSD to state that "Member ABC broker/dealer or ABC conducted at least ten percent (10%) of its business on the floor of the Exchange during the applicable month[s]." With respect to the annual payment to be made on account of an off floor trader, the information presented by the member should allow FRSD to state to Finance that "Off floor trader X conducted at least ten percent (10%) of his or her business on the floor of the Exchange during the applicable twelve month period".
1Simply providing clearing statements or clearing firm daily or monthly summaries may not be sufficient. The staff should be able to see the bottom line figure and sample a number of days or periods unless the clearing statements provide that level of detail already. Members that have already requested this waiver have prepared spreadsheets that reflect this information from statements.
2 Article VII, Sec. 1(e) of the Constitution calls for the applicable fees to be paid "prior to the approval by the Exchange of an applicant…and prior to renewal of such membership at the end of the period for which such fees have been paid". Since the payments that are to be waived are made on a going forward basis and therefore before it can be determined whether a waiver is appropriate, in essence, a member requesting this waiver will be seeking a rebate or credit to his account.
Carryover Not Allowed
No carryover from one period to another of excess volume percentage is allowed. In other words, if a member conducted 85% of its business on the Amex floor in January but only 8% in February it would not qualify for the waiver in the February billing period. Nor can excess volume conducted by another broker/dealer be used to meet this threshold. Similarly, excess volume conducted by one trader cannot be used to increase the volume of another trader during the same or different periods.
Trade Date/Settlement Date
The member should be consistent in its demonstration for each period. The member may use either trade date or settlement date transactions in seeking to demonstrate to the staff that it qualifies for the fee waiver but any decision to deviate from the approach used in prior demonstration periods should be explained.
Timing of Requests
Requests for waivers will be considered only if received within six months following the last day in the billing period.
Any questions on this topic can be addressed to Robert Devine, Director of FRSD at firstname.lastname@example.org or (212) 306-1588 or Glen Barrentine, Vice President of Enforcement and Examinations at email@example.com or (212) 306-1560.