[Federal Register Volume 62, Number 133 (Friday, July 11, 1997)]
[Notices]
[Pages 37323-37325]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-18226]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-38817; File No. SR-CBOE-97-29]


Self-Regulatory Organizations; The Chicago Board Options 
Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a 
Proposed Rule Change Relating to the Fee Reduction Program for Market-
Maker Transaction Fees, Floor Broke Fees, and Member Dues; and the 
Customer ``Large'' Trade Discount Program

July 7, 1997.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 934 
(``Act''),\1\ notice is hereby given that on June 30, 1997, the Chicago 
Board Options Exchange (``CBOE'' or ``Exchange'') filed with the 
Securities and Exchange

[[Page 37324]]

Commission (``Commission'') the proposed rule change as described in 
Items I, II, and III below, which items have been prepared by CBOE. 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) (1988).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    CBOE 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.\2\
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    \2\ The text of the proposed rule change is attached as Exhibit 
A to File No. SR-CBOE-97-29, and is available for review in the 
principal office of CBOE and in the Commission's Public Reference 
Room.
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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 and 
discussed any comments that it received on 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

    The purpose of the 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, Other Fees or Charges, and 
will take effect on July 1, 1997.\3\
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    \3\ CBOE notified its membership of these changes in notice to 
members 97-31, dated July 1, 1997. Telephone conversation with 
Stephanie Mullins, Attorney, CBOE, and Peggy Blake, Division of 
Market Regulation, Commission (July 3, 1997).
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    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, 
1997 at the end of the Exchange's 1997 fiscal year. The Program is 
proposed to be amended to provide that the Program will continue in 
effect during the Exchange's 1998 fiscal year and will terminate on 
June 30, 1998. The program also is proposed to be amended to increase 
the volume thresholds at which the discount commences. Specifically, 
the threshold volume at which the $.01 market-maker transaction fee 
reduction applies will be increased from 675,000 contracts to 700,000 
contracts. Also, the threshold volume at which the floor broker fee 
reduction of $.005 applies will be increased from 700,000 contracts to 
725,000 contracts. Finally, the member dues fee reduction, which 
currently ranges from 25% to 75% for volumes ranging from 650,000 to 
750,000 contracts, as amended, will increase the volume thresholds, 
with the 25% discount commencing at 675,000 contracts, the 50% discount 
commencing at 750,000 contracts, and the 75% discount commencing at 
775,000 contracts.
    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, 1997 at the end of the Exchange's 
1997 fiscal year. The Program is proposed to be amended to provide that 
the Program will continue in effect during the Exchange's 1998 fiscal 
year and will terminate on June 30, 1998. In addition to renewing the 
current fee discount percentages under the Program, the Program is also 
proposed to be amended to increase by 25,000 contracts all the 
threshold levels to which the discount rates apply, increasing the 
minimum threshold level from 575,000 to 600,000 contracts at which the 
30% discount rate applies. In all other respects the Program remains 
unchanged.
    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 1998 fiscal year, the Exchange intends to 
evaluate these Programs prior to the beginning of the 1999 fiscal year 
and may renew these Programs in the same or modified form for the 1999 
fiscal year.
    The proposed rule change is consistent with Section 6 of the 
Act,\4\ in general, and furthers the objectives of Section 6(b)(4) of 
the Act \5\ in particular, in that it is designed to provide for the 
equitable allocation of reasonable dues, fees, and other changes among 
CBOE members.
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    \4\ 15 U.S.C. 78f.
    \5\ 15 U.S.C. 78f(b)(4).
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(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.

(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 establishes or changes a due, fee, or 
other charge imposed by the Exchange and therefore, has become 
effective pursuant to Section 19(b)(3)(A)(ii) \6\ of the Act and Rule 
19b-4(e)(2) \7\ thereunder. At any time within sixty days of the filing 
of such 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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    \6\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \7\ 17 CFR 240.19b-4(e)(2).
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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.,

[[Page 37325]]

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 Room, 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 Exchange. All submissions should refer to the 
File No. SR-CBOE-97-29 and should be submitted by August 1, 1997.

    For the Commission by the Division of Market Regulation, 
pursuant to delegated authority.\8\
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    \8\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 97-18226 Filed 7-10-97; 8:45 am]
BILLING CODE 8010-01-M