[Federal Register Volume 64, Number 173 (Wednesday, September 8, 1999)]
[Notices]
[Pages 48888-48889]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-23238]



[[Page 48888]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-41811; File No. SR-CBOE-99-46]


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

August 30, 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 August 23, 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. On August 
23, 1999, the CBOE filed with the Commission Amendment No. 1 to the 
proposed rule change.\3\ The Commission is publishing this notice to 
solicit comments on the proposed rule change, as amended, from 
interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ In Amendment No. 1, the Exchange eliminated a proposed 
surcharge in an options class that is no longer eligible for the 
surcharge program. See letter from Stephanie C. Mullins, Attorney, 
CBO, to Kenneth Rosen, Attorney, Division of market Regulation, 
Commission, dated August 23, 1999 (``Amendment No. 1'').
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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.\4\
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    \4\ 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, on August 20, 1999, the Equity Floor 
Procedure Committee approved the following fees for the following 
option classes:

------------------------------------------------------------------------
                                                            Order book
                                           Market-maker      official
              Option class                surcharge (per  brokerage rate
                                             contract)    (per contract)
                                                                \5\
------------------------------------------------------------------------
Coca-Cola (KO)..........................           $0.03           $0.00
Johnson and Johnson (JNJ)...............            0.07            0.00
------------------------------------------------------------------------

    These fees will be assessed on Monday, August 23, 1999. Exchange 
Rules provide that an option be listed for trading on another exchange 
before a surcharge fee can be assessed. Thus, since these classes have 
been certified by the Options Clearing Corporation to be listed on the 
Philadelphia Stock Exchange, and are proposed to be listed for trading 
on Monday August 23, 1999, the CBOE will assess these three surcharges 
on that date. The Exchange interprets its rules to allow the Equity 
Floor Procedure Committee to vote on market-maker surcharges before the 
class has been listed for trading on another exchange. However, the 
Rule provides that the surcharge may not actually be assessed until the 
class has been listed for trading on another exchange. These fees will 
remain in effect until such time as the Equity Floor Procedure 
Committee or the Board determines to change these fees and files the 
appropriate rule change with the Commission.
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    \5\ 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.
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2. Statutory Basis
    The proposed rule change is consistent with Section 6(b) of the 
Act, in general, and furthers the objectives of Section 6(b)(4) \6\ of 
the Act 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)(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.

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

    Not 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)(ii) \7\ of the Act and 
subparagraph (f)(2) of Rule 18b-4 thereunder.\8\ At any time within 60 
days of the date of 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.\9\
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    \7\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \8\ 17 CFR 240.19b-4(f)(2).
    \9\ 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

[[Page 48889]]

Commission, 450 Fifth Street, N.W., Washington, D.C. 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-99-46 and should 
be submitted by September 29, 1999.
    For the Commission, by the Division of market Regulation, pursuant 
to delegated authority.\10\
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    \10\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 99-23238 Filed 9-7-99; 8:45 am]
BILLING CODE 8010-01-M