[Federal Register Volume 63, Number 92 (Wednesday, May 13, 1998)]
[Notices]
[Pages 26657-26658]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-12707]



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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-39963; File No. SR-CBOE-98-16]


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

May 6, 1998.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act'') \1\ and Rule 19b-4 \2\ thereunder, notice is hereby given 
that on April 22, 1998, the Chicago Board Options Exchange, Inc. 
(``CBOE'' or ``Exchange'') filed with the Securities and Exchange 
Commission (``SEC'' or ``Commission'') the proposed rule change as 
described in Items I, II, and III below, which Items have been prepared 
by the CBOE.\3\ 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.
    \3\ The proposed rule change required a technical amendment to 
clarify the fee schedule. Telephone conversation between Timothy 
Thompson, Senior Attorney, CBOE, and Karl Varner, Staff Attorney, 
SEC, on April 29, 1998.
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I. Self-Regulatory Organization's Statement of the Terms of 
Substance of the Proposed Rule Change

    The CBOE is proposing to change its Order Book Official (``book'') 
rate schedule for index options. 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 the proposed rule change is to change the book fee 
schedule applicable to index options. The Exchange recently changed the 
book fees for equity options.\4\ The book fees are billed at the end of 
each month and so this change will be reflected in the bills for all 
May transactions. These fees changes are being implemented by the 
Exchange pursuant to CBOE Rule 2.22. Under the new schedule, index 
option book execution services will be capped at a rate of $1.25 per 
contract. The current rate schedule for index options assess various 
charges for book executions depending on the premium and the order 
size. The current schedule for index options is as follows:
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    \4\ Securities Exchange Act Release No. 39618 (February 4, 
1998), 63 FR 7019 (February 11, 1998) [File No. SR-CBOE-98-01] 
(changing the book fee rate for equity options to $0.45 per 
contract).
    \5\ Premium equals the option price in dollars, calculated on a 
per-share basis for equity option contracts, and calculated on a 
per-unit basis for index option contracts. The ranges set forth 
include their lower bounds.
    Accommodation liquidations and cabinet trades are off-market 
trades at a price of $1 per option contract.
    The definitions were clarified during a telephone conversation 
between Timothy Thompson, Senior Attorney, CBOE, and Karl Varner, 
Staff Attorney, SEC, on May 5, 1998.

------------------------------------------------------------------------
                                                First ten    Eleven and 
                 Premium \5\                    contracts       above   
------------------------------------------------------------------------
Accommodation Liquidations..................        $0.10         $0.10 
Cabinet trades..............................         0.10          0.10 
Under $0.50.................................         0.35          0.28 
$0.50-1.....................................         0.525         0.455
1-2.........................................         0.63          0.525
2-4.........................................         0.77          0.63 
4-8.........................................         1.05          0.91 
8-14........................................         1.40          1.05 
14-20.......................................         1.75          1.295
20 and above................................         2.10          1.61 
------------------------------------------------------------------------

    The new schedule will be as follows:

------------------------------------------------------------------------
                                                First ten    Eleven and 
                   Premium                      contracts       above   
------------------------------------------------------------------------
Accommodation Liquidations..................        $0.10         $0.10 
Cabinet trades..............................         0.10          0.10 
Under $0.50.................................         0.35          0.28 
$0.50-1.....................................         0.525         0.455
1-2.........................................         0.63          0.525
2-4.........................................         0.77          0.63 
4-8.........................................         1.05          0.91 
8-14........................................         1.25          1.05 
14 and above................................         1.25          1.25 
------------------------------------------------------------------------

      

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* * * * *
    As with the previous schedule, cabinet trades/accommodation 
liquidations, as described in CBOE Rules 6.54 and 21.15, will continue 
to be charged $0.10 per contract. In addition, as in the previous 
schedule, no execution fee will be assessed for market orders for any 
index option sent to the book prior to the opening and executed during 
opening rotation. Also, as before, no execution fee will be assessed 
for limit orders in options on the Standard & Poor's 100 Index sent to 
the book prior to the opening and executed during opening rotation. The 
new fee schedule should reduce the overall Order Book Official book 
fees paid by all Exchange members. The Exchange believes that the 
reduction in the book fees will allow the Exchange to compete more 
effectively for business in these types of products.
    The proposed rule change is consistent with Section 6(b) of the 
Act,\6\ in general, and furthers the objectives of Section 6(b)(4) of 
the Act \7\ in particular, in that it is designed to provide for the 
equitable allocation of reasonable dues, fees, and other charges among 
CBOE members.
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    \6\ 15 U.S.C. 78f(b).
    \7\ 15 U.S.C. 78f(b)(4).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange believes that the proposed rule change will not result 
in any burden on competition that is not necessary or appropriate in 
furtherance of the purposes of the Act.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    Comments were neither solicited nor received.

III. Date of Effectiveness of the Proposed Rule Change and Timing 
for Commission Action

    The proposed rule change establishes or changes a due, fee, or 
other charge imposed by the Exchange and, therefore, has become 
effective immediately upon filing with the Commission, pursuant to 
Section 19(b)(3)(A)(ii) of the Act \8\ and subparagraph (e)(2) of Rule 
19b-4 \9\ 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, or 
otherwise in furtherance of the purposes of the Act.
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    \8\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \9\ 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, including whether the proposed rule 
change is consistent with the Act.\10\ 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 U.S.C. Sec. 552, will be available for inspection and 
copying in the Commission's Public Reference Room. Copies of such 
filing will also be available for inspection and copying at the 
principal office of the Exchange. All submissions should refer to File 
No. SR-CBOE-98-16 and should be submitted by June 3, 1998.

    \10\ In reviewing this proposal, the Commission has considered 
the proposed rule change's impact on efficiency, competition, and 
capital formation. 15 U.S.C. 78c(f).
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    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\11\
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    \11\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 98-12707 Filed 5-12-98; 8:45 am]
BILLING CODE 8010-01-M