[Federal Register Volume 64, Number 75 (Tuesday, April 20, 1999)]
[Notices]
[Pages 19395-19396]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-9816]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-41270; File No. SR-CBOE-99-08]
Self-Regulatory Organizations; Notice of Filing and Immediate
Effectiveness of Proposed Rule Change and Amendment No. 1 to the
Proposed Rule Change by the Chicago Board Options Exchange, Inc.
Relating to Exchange Fees
April 9, 1999.
Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934
\1\ (``Act''), and Rule 19b-4 thereunder,\2\ notice is hereby given
that on February 25, 1999, 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
Exchange. On March 26, 1999, the Exchange filed Amendment No. 1 to the
proposed rule change.\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\ Letter from Debora E. Barnes, Senior Attorney, CBOE, to
David Sieradzki, Special Counsel, Division of Market Regulation
(``Division''), Commission, dated March 25, 1999 (``Amendment No.
1''). Amendment No. 1 is a technical amendment to add the Exchange's
statement on burden on competition, which was inadvertently omitted.
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I. Self-Regulatory Organization's Statement of the Terms of
Substance of the Proposed Rule Change
The Exchange is proposing to amend certain fees,\4\ and to amend
its Prospective Fee Reduction Program and 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.
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\4\ The Exchange represents that, although some of the fees in
this filing are referred to as customer fees, they are charged to
members. As a result, the Commission notes that, as this filing
relates exclusively to member fees, this proposed rule change is
properly filed under section 19(b)(3)(A)(ii) of the Act. 15 U.S.C.
78s(b)(3)(A)(ii). Telephone conversation between Timothy Thompson,
Director, Regulatory Affairs, CBOE, and Joseph P. Morra, Attorney,
Division, Commission, on March 3, 1999.
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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, 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
The purpose of this proposed rule change is to make certain fee
changes and to amend the Exchange's Prospective Fee Reduction Program
and Customer ``Large'' Trade Discount Program. The foregoing fee
changes are being implemented by the Exchange pursuant to CBOE Rule
2.22 and took effect on March 1, 1999.
The Exchange is amending the following fees: (1) Equity Customer
Transaction Fees are reduced from $.15/.30 to a flat $.09 per contract
side,\5\ Trade Match and Floor Brokerage Fees will remain at $.05 and
$.03, respectively; (2) Marketable Equity Customer orders of thirty
contracts or less will not be billed the reduced customer transaction
fee noted above if those orders reach CBOE's trading posts through the
automated Order Routing System (``ORS''); (3) Equity Order Book
Official (``OBO'') Execution Fees are reduced from $.45 per contract
with free execution at the opening, to $.20 for all contracts,
regardless of when they are executed; (4) Equity Market Maker Fees are
increased to $.19 per contract side from $.05 per contract side; (5)
OEX Market Maker Fees are increased to $.15 per contract side from $.05
per contract side; (6) SPX Market Maker Fees are increased to $.15 per
contract side from $.07 per contract side; (7) Equity Member Firm
Proprietary Fees are increased from $.06 to $.19 per contract side to
match market maker rates; (8) OEX Member Firm Proprietary Fees are
increased from $.06 to $.15 per contract side to match Index market
maker rates; and (9) Member Firm Proprietary Fees for SPX, DJX and all
other Indexes are increased from $.10 to $.15 per contract side to
match Index market maker rates. Trade Match fees remain at $.05 per
contract side. Member Firm proprietary rates remain unchanged when the
firm is facilitating its own customer order. Index Customer Transaction
Fees are unchanged.
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\5\ A rate differential will no longer exist based on the dollar
amount of the premium paid.
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Previously, it has been CBOE's policy to assign the customer rate
to option orders from broker-dealers. Under the revised fee schedule,
broker-dealer marketable equity option orders of thirty contracts or
less that are routed through ORS will not be assessed any transaction
fee. However, non-marketable broker-dealer equity option orders for
more than thirty contracts will be charged the new higher market maker/
firm rate of $.19 instead of the new lower customer rate of $.09.
The Exchange's Prospective Fee Reduction Program for Trade Match
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 Trade Match Fees and
Member Dues will be reduced in the following fiscal quarter in
accordance with a fee reduction schedule. Effective March 1, 1999 the
Program proposed to be is suspended for the remainder of Fiscal Year
1999 (``FY99'').\6\
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\6\ CBOE's FY99 terminates on June 30, 1999.
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The Exchange's Customer ``Large'' Trade Discount Program currently
provides for discounts on the transaction fees that CBOE customers are
assessed with respect to public customer orders for 500 or more
contracts. Specifically, for any month during which 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 proposed to be suspended for equity
option orders only for the remainder of FY99, effective March 1, 1999.
[[Page 19396]]
The proposed amendments are the result of a recommendation made by
the Exchange's Financial Planning Committee to the Board of Directors.
The amendments are structured to fairly allocate the costs of operating
the Exchange in light of competitive concerns.
The proposed rule change is consistent with section 6(b) of the
Act,\7\ in general, and furthers the objectives of section 6(b)(4) of
the Act \8\ 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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\7\ 15 U.S.C. 78f(b).
\8\ 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
Because the foregoing rule change establishes or changes a due,
fee, or other charge imposed by the Exchange, it has become effective
\9\ pursuant to section 19(b)(3)(A) of the Act \10\ and subparagraph(f)
of Rule 19b-4 thereunder.\11\ 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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\9\ In reviewing this proposal, the Commission has considered
its impact on efficiency, competition, and capital formation. 15
U.S.C. 78c(f).
\10\ 15 U.S.C. 78s(b)(3)(A).
\11\ 17 CFR 240.19b-4(f).
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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 proposal is
consistent with the Act. Persons making written submissions should file
six copies thereof with the Secretary, Securities and Exchange
Commission, 450 Fifth Street, NW., Washington, DC 20549-0609. 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 an 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 CBOE. All
submissions should refer to file number SR-CBOE-99-08, and should be
submitted by May 11, 1999.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\12\
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\12\ 17 CFR 200.30-3(a)(12).
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Jonathan G. Katz,
Secretary.
[FR Doc. 99-9816 Filed 4-19-99; 8:45 am]
BILLING CODE 8010-01-M