[Federal Register Volume 61, Number 144 (Thursday, July 25, 1996)]
[Notices]
[Pages 38791-38793]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-18855]


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[[Page 38792]]

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-37454; File No. SR-CBOE-96-42]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by the Chicago Board Options 
Exchange, Incorporated Relating to Exchange Fees

July 18, 1996.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''), 15 U.S.C. 78s(b)(1), notice is hereby given that on June 28, 
1996, the Chicago Board Options Exchange, Incorporated (``CBOE'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission'' or ``SEC'') the proposed rule change as described in 
Items I, II, and III below, which Items have been prepared by the CBOE. 
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 is proposing to renew and amend (i) its Fee Reduction 
Program for Market-Maker Transaction Fees, Floor Broker Fees, and 
Member Dues; and (ii) its Customer ``Large'' Trade Discount Program.
    The text of the proposed rule change is available at the Office of 
the Secretary, CBOE and at the Commission.

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 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 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

    The purpose of this proposed rule change is to renew and amend (i) 
the Exchange's Fee Reduction Program for Market-Maker Transaction Fees, 
Floor Broker Fees, and Member Dues; and (ii) its Customer ``Large'' 
Trade Discount Program. The foregoing fee changes are being implemented 
by the Exchange pursuant to CBOE Rule 2.22 and will take effect on July 
1, 1996.
    The Exchange's Fee Reduction Program for Market-Maker Transaction 
Fees, Floor Broker Fees, and Member Dues currently provides that if at 
the end of any quarter of the Exchange's fiscal year the Exchange's 
average contract volume per day on a fiscal year-to-date basis exceeds 
one of certain predetermined volume thresholds, the Exchange's market-
maker transaction fees, floor broker fees, and member dues will be 
reduced in the following fiscal quarter in accordance with a fee 
reduction schedule. The Program is scheduled to terminate on June 30, 
1996 at the end of the Exchange's 1996 fiscal year. The Program is 
proposed to be amended to provide that the Program will continue in 
effect during the Exchange's 1997 fiscal year and will terminate on 
June 30, 1997. The Program is also proposed to be amended to increase 
the volume thresholds and decrease the fee reduction amounts which 
currently apply under the Program. Specifically, the market-maker 
transaction fee reduction, which currently ranges from $.01 to $.03 for 
volumes of 625,000 to 750,000, as amended will be decreased to $.01 for 
all volumes commencing at 675,000 contracts. Also, the floor broker fee 
reduction, which currently ranges from $.005 to $.01 for volumes 
ranging from 650,000 to 750,000 contracts, as amended will be decreased 
to $.005 for all volumes commencing at 700,000 contracts. Finally, the 
member dues fee reduction, which currently ranges from 25% to 100% for 
volumes ranging from 625,000 to 750,000, as amended will increase the 
volume thresholds and cap the fee reduction rate at 75%.
    The Exchange's Customer ``Large'' Trade Discount Program currently 
provides for discounts on the transaction fees that CBOE members pay 
with respect to public customer orders for 500 or more contracts. 
Specifically, for any month the Exchange's average contract volume per 
day exceeds one of certain predetermined volume thresholds, the 
transaction fees that are assessed by the Exchange in that month with 
respect to public customer orders for 500 or more contracts are subject 
to a discount in accordance with a discount schedule. The Program is 
scheduled to terminate on June 30, 1996 at the end of the Exchange's 
1996 fiscal year. The Program is proposed to be amended to provide that 
the Program will continue in effect during the Exchange's 1997 fiscal 
year and will terminate on June 30, 1997. In addition to renewing the 
current fee discount percentages under the Program, the Program is also 
proposed to amended to increase the threshold monthly average contract 
volume per day from 550,000 contacts to 575,000 contacts to which a 30% 
discount rate applies.\1\ In all other respects the Program remains 
unchanged.
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    \1\ Pursuant to this Program, if for any month the Exchange's 
average contract volume per day is between 0 and 575,000 contracts, 
then the customer large trade discount is 25%.
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    The proposed amendments are the product of the Exchange's annual 
budget review. The amendments are structured to fairly allocate the 
costs of operating the Exchange in the event that the Exchange 
experiences higher volume. In addition, although the proposed rule 
change provides that the Exchange's Fee Reduction Program for Market-
Maker Transaction Fees, Floor Broker Fees, and Member Dues and the 
Exchange's Customer ``Large'' Trade Discount Program will terminate at 
the end of the Exchange's 1997 fiscal year, the Exchange intends to 
evaluate these Programs prior to the beginning of the 1998 fiscal year 
and may renew these Programs in the same or modified form for the 1998 
fiscal year.
    The proposed rule change is consistent with section 6(b) of the 
Act, in general, and furthers the objectives of Section 6(b)(4) of the 
Act in particular, in that it is designed to provide for the equitable 
allocation of reasonable dues, fees, and other changes among CBOE 
members.

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

    The Exchange does not believe that the proposed rule change will 
impose any inappropriate burden on competition.

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 rule change establishes or changes a due, 
fee, or other charge imposed by the Exchange, it has become effective 
pursuant to Section 19(b)(3)(A) of the Act and Rule 19b-4 thereunder. 
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,

[[Page 38793]]

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. Persons making written submissions 
should file six copies thereof with the Secretary, Securities and 
Exchange Commission, 450 Fifth Street, N.W., Washington, D.C. 20549. 
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 Section, 450 Fifth Street, N.W., 
Washington, D.C. 20549. Copies of such filing will also be available 
for inspection and copying at the principal office of the CBOE. All 
submissions should refer to the File No. SR-CBOE-96-42 and should be 
submitted by August 15, 1996.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\2\
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    \2\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 96-18855 Filed 7-24-96; 8:45 am]
BILLING CODE 8010-01-M