[Federal Register Volume 64, Number 144 (Wednesday, July 28, 1999)]
[Notices]
[Pages 40924-40925]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-19264]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-41625; File No. SR-CBOE-99-25]


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

July 19, 1999.
    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 June 17, 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 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 is proposing to make changes to its fee schedule pursuant 
to CBOE rule 2.40, Market-Maker Surcharge for Brokerage.\3\
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    \3\ See Securities Exchange Act Release No. 41121 (February 26, 
1999), 64 FR 11523 (March 9, 1999) (order approving CBOE Rule 2.40).
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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 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
    Pursuant to CBOE Rule 2.40, the Equity Floor Procedure Committee 
(``Committee'') approved the following fees for the following option 
classes:

------------------------------------------------------------------------
                                                 Market-     Order book
                                                  maker       official
                 Option class                   surcharge     brokerage
                                                   (per       rate (per
                                                contract)     contract)
-----------------------------------------------------------------\4\----
AboveNet Communications......................        $0.08         $0.00
Prodigy Communications Corp..................         0.03          0.00
------------------------------------------------------------------------

    The fees for AboveNet will be effective retroactive to May 10, 
1999, and the fees for Prodigy will be effective

[[Page 40925]]

retroactive to May 18, 1999.\5\ Both fees will remain in effect until 
such time as the Committee or the Board determines to change these fees 
and files the appropriate rule change with the Commission.
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    \4\ The surcharge will be used to reimburse the Exchange for the 
reduction in the Order Book Official brokerage rate from $0.20 in 
the relevant option classes. Any remaining funds will be paid to 
Stationary Floor Brokers as provided in Exchange Rule 2.40.
    \5\ At its May 20, 1999, meeting, the Committee approved these 
fees retroactive to the respective dates the fees began. Although 
the fees are planned to be calculated for activity that occurred as 
of the dates referred to above, the actual bills for payment will be 
sent in June.
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    These fees are being implemented mid-month because both of these 
fees are for new options classes, which have not traded before. As a 
result, changes had to be made to the billing program to account for 
these new classes in the middle of the month.\6\
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    \6\ Through miscommunication, certain Exchange Staff believed 
these fees could be instituted in mid-month and presented in a 
filing at the end of the month since the actual charges would not be 
invoiced until that point. However, CBOE has instituted procedures 
to ensure that a filing be done prior to the fees being implemented, 
regardless of whether the fees are being implemented mid-month or at 
the beginning of the next month. Telephone conversation between 
Michael Walinskas, Associate Director, Division of Market 
Regulation, Commission, and Timothy Thompson, Director, Regulatory 
Affairs, CBOE, on May 27, 1999.
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2. Statutory Basis
    The Exchange believes the proposed rule change is consistent with 
Section 6(b)(4) \7\ of the Act because it is designed to provide for 
the equitable allocation of reasonable dues, fees, and other charges 
among its members.
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    \7\ 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 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

    Written comments on the proposed rule change were neither solicited 
nor received.

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) \8\ and paragraph (f)(2) 
of Rule 19b-4 thereunder.\9\ 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.\10\
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    \8\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \9\ 17 CFR 240.19b-4(f)(2).
    \10\ In reviewing this proposal, the Commission has considered 
the proposal's impact on efficiency, competition, and capital 
formation. 15 U.S.C. 78c(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 proposed rule 
change 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 and copying at the 
Commission's Public Reference Room. Copies of such filing also will be 
available for inspection and copying at the principal office of the 
CBOE. All submissions should refer to File No. SR-CBOE-99-25 and should 
be submitted by August 18, 1999.

    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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Jonathan G. Katz,
Secretary.
[FR Doc. 99-19264 Filed 7-27-99; 8:45 am]
 BILLING CODE 8010-01-M