[Federal Register Volume 62, Number 242 (Wednesday, December 17, 1997)]
[Notices]
[Pages 66156-66157]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-32918]



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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-39433; File No. SR-CBOE-97-62]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by the Chicago Board Options 
Exchange, Inc. Relating to Transaction Fees for Options on the Three 
Dow Jones Averages

December 11, 1997.
    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 December 3, 1997, the Chicago Board Options Exchange, Inc. (``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 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).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of 
Substance of the Proposed Rule Change

    The CBOE proposes to modify the Exchange transaction fees 
applicable to transactions in options based on Dow Jones & Company 
indexes (``Dow Jones'').

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

1. Purpose
    The purpose of the proposed rule change is to modify the large 
trade discount program applicable to transactions in options based on 
Dow Jones indexes, three of which began trading on October 6, 1997.\3\ 
The fee changes, implemented by the Exchange pursuant to CBOE Rule 
2.22, will be made retroactive to the launch of these products on 
October 6, 1997.
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    \3\ On September 3, 1997, the Commission approved CBOE's request 
to trade 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''). See Securities 
Exchange Act Release Nos. 39011, 62 FR 47841 (September 11, 1997) 
(order approving File No. SR-CBOE-97-26); 39013, 62 FR 47845 
(September 11, 1997) (order approving File No. SR-CBOE-97-28); and 
39012, 62 FR 47850 (September 11, 1997) (order approving File No. 
SR-CBOE-97-27).
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    The Exchange believes that because of the relatively small size of 
the option contracts on the Dow Jones indexes, the current transaction 
fees have been somewhat of a disincentive for institutional trading. 
Consequently, the Exchange has decided to reduce the fees applicable to 
large trade (i.e. those trades of over 1000 contracts) for all market 
participants. Under the current Dow Jones large trade discount program, 
customer orders in excess of one thousand contracts have received a 
fifty percent discount on all contracts in excess of one thousand. As 
before, the Dow Jones program will be separate and distinct from the 
Large Trade Discount Program currently applicable to all other CBOE 
products.
    Retroactive to the launch date of October 6, 1997,\4\ the large 
trade discount program for the Dow Jones products will be:
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    \4\ The Exchange will recalculate October discounts with the 
intent of including credits in November billing statements sent to 
clearing firms. If programming changes are not completed by the end 
of November, the Exchange will endeavor to send checks to clearing 
firms in early December for October discounts.
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Customer Orders

     First 1,000 contracts of an order are assessed regular 
transaction fees (same as current program):
     $0.40 per contract when the premium is $1 or more;
     $0.20 per contract when the premium is under $1.
     Contracts 1,001 and above of an order will receive a 100% 
discount. (The current program provides a 50% discount.)

Member Firm Proprietary Orders

     First 1,000 contracts are assessed regular transaction 
fees of $0.10 (same as current program).
     Contracts 1,001 and above will receive a 100% discount. 
(The current program does not provide a discount.)

Market-Makers on the Other Side of Large Orders

     All market-maker contracts on the other side of a Dow 
Jones customer or member firm proprietary order of more than 1,000 
contracts will receive a 100% discount on transaction fees. The waiver 
of the transaction fee is applicable to all market-makers on the other 
side of the trade and is applicable to the entire order, not just the 
portion over 1,000 contracts.
    Trade match fees of $0.04 per contracts and floor brokerage fees of 
$0.03 per contracts under the original program will not be changed. 
Large trade discounts will be calculated after each month end. 
Discounts will be credited to clearing firms in the following month's 
Exchange billing statements.
2. Statutory Basis
    The proposed rule change is consistent with Section 6(b) of the 
Act,\5\ in general, and furthers the objectives of Section 6(b)(4) of 
the Act \6\ 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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    \5\ 15 U.S.C. 78f(b).
    \6\ 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 a 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) of the Act \7\ and subparagraph (e) of 
Rule 19b-4 thereunder.\8\ At any time within 60 days of the filing of 
such 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,

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or otherwise in furtherance of the purposes of the Act.
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    \7\ 15 U.S.C. 78s(b)(3)(A).
    \8\ 17 CFR 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 submission 
should file six copies thereof with the Secretary, Securities and 
Exchange Commission, 450 Fifth Street, NW., Washington, DC 20549. 
Copies of the submissions, 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, NW., Washington, 
DC. Copies of such filing also will be available for inspection and 
copying at the CBOE. All submissions should refer to File No. SR-CBOE-
97-62 and should be submitted by January 7, 1998.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\9\
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    \9\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 97-32918 Filed 12-16-97; 8:45 am]
BILLING CODE 8010-01-M