[Federal Register Volume 62, Number 225 (Friday, November 21, 1997)]
[Notices]
[Pages 62383-62384]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-30625]



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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-39324; File No. SR-CBOE-97-53]


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

November 13, 1997.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (``Act''), notice is hereby given that on October 3, 1997, the 
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, II, and III below, which 
Items have been prepared by the Exchange. 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).
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I. Self-Regulatory Organization's Statement of the Terms of 
Substance of the Proposed Rule Change

    The Exchange seeks to establish various fees and discounts relating 
to options based on Dow Jones & Company (``Dow Jones'') indexes, and 
the use of the Exchange's new cellular phone and pager systems. The 
Exchange also seeks to indefinitely suspend its Prospective Fee 
Reduction Program for Market-Maker Transaction Fees, Floor Broker Fees, 
and Member Dues.
    The text of the proposed rule change is available at the Office of 
the Secretary, the Exchange 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 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 proposed rule change: is (i) To establish fees 
relating to options based on Dow Jones indexes, three of which began 
trading on October 6, 1997; \2\ (ii) to indefinitely suspend, effective 
October 1, 1997, the Exchange's Prospective Fee Reduction Program for 
Market-Maker Transaction Fees, Floor Broker Fees, and Member Dues; \3\ 
(iii) to establish user fees relating to the Exchange's new trading-
floor cellular phone system; and (iv) to impose fees for the repair of 
abusive damage to pagers. The Exchange is implementing these fee 
changes pursuant to Exchange Rule 2.22.
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    \2\ On October 6, 1997, the Exchange commenced trading options 
on the following Dow Jones indexes: the Dow Jones Industrial Index 
(``DJX''), the Dow Jones Utilities Index (``DUX''), and the Dow 
Jones Transportation Index (``DTX'').
    \3\ The Exchange filed its proposed rule change with the 
Commission on October 3, 1997. However, the proposed rule change 
indefinitely suspends the Exchange's Prospective Fee Reduction 
Program for Market-Maker Transaction Fees, Floor Broker Fees, and 
Member Dues, as of October 1, 1997. The Commission notes that a 
proposed rule change made pursuant to Section 19(b)(3)(A) of the 
Act, such as SR-CBOE-97-53, is not effective until filed with the 
Commission.
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    The Exchange proposes to establish a transaction fee schedule for 
all options based on Dow Jones indexes that is identical to the current 
OEX transaction fee schedule. The fees would be as follows: (1) Forty 
cents per contract for customer transactions that have a premium 
greater than or equal to one dollar; (2) twenty cents per contract for 
customer transactions that have a premium less than one dollar; (3) ten 
cents per contract for member firm proprietary transactions; and (4) 
six cents per contract for market maker transactions.
    In addition, the Exchange proposes to apply a Large Trade Discount 
Program to Dow Jones indexes, through which customer orders in excess 
of one thousand contracts would receive a discount. While the first one 
thousand contracts of a customer order will be assessed regular 
transaction fee rates, all contracts in excess of one thousand would 
receive a fifty percent discount. It should be noted that the discount 
program relating to Dow Jones products will be separate and distinct 
from the Large Trade Discount Program currently applicable to all other 
Exchange products. The Exchange proposes to cap Retail Automated 
Execution System (``RAES'') fees for Dow Jones indexes, so that the fee 
of twenty five cents per contract only applies to the first twenty five 
contracts of any RAES order.
    The Exchange also proposes, effective October 1, 1997, to 
indefinitely suspend its Prospective Fed Reduction Program for Market-
Maker Transaction Fees, Floor Broker Fees, and Member Dues. As a result 
of the large expenditure of resources devoted to the commencement of 
options trading in the Dow Jones indexes, the Exchange finds it 
necessary to indefinitely suspend its Prospective Fee Reduction Program 
to recoup working capital.
    The Exchange further proposes to establish fees for its new 
trading-floor cellular phone system. A lease fee of one hundred dollars 
per month is proposed to be charged for each cellular phone. 
Additionally, a lost, stolen, or damaged phone fee will be assessed at 
the current replacement or repair cost.
    Finally, the Exchange proposes to impose a fee for abusive damage 
to pagers. The fee will be assessed at the current repair cost.
2. Statutory Basis
    The Exchange represents that the proposed rule change is consistent 
with Section 6(b) \4\ of the Act, in general, and furthers the 
objectives of Section 6(b)(4) \5\ of the Act, in particular, in that it 
is designed to provide for the equitable allocation of reasonable dues, 
fees, and other charges among Exchange members.
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    \4\ 15 U.S.C. 78f(b).
    \5\ 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 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

    The Exchange did not solicit or receive written comments 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) \6\ of the Act and 
subparagraph (e) of Rule 19b-4 \7\ thereunder. At any time within 60 
days of the filing of the proposed rule change, the Commission may 
summarily

[[Page 62384]]

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).
    \7\ 17 CFR 240.19b-4(e).
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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, NW., Washington, DC 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, NW., 
Washington, DC 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-97-53 and should be 
submitted by December 12, 1997.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\8\
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    \8\ 17 CFR 200.30(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 97-30625 Filed 11-20-97; 8:45 am]
BILLING CODE 8010-01-M