[Federal Register Volume 65, Number 174 (Thursday, September 7, 2000)]
[Notices]
[Pages 54332-54333]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-22863]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-43226; File No. SR-CBOE-00-33]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of a Proposed Rule Change by the Chicago Board Options 
Exchange, Inc. Amending the Exchange's Fee Schedule To Impose a Fee on 
the Designated Primary Market-Maker for Transacting in Options on the 
CBOE Mini-NDX Index for Its Proprietary Account

August 29, 2000.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ notice is hereby given that on July 31, 2000, the Chicago 
Board Options Exchange, Inc. (``CBOE'' or ``Exchange'') filed with the 
Securities and Exchange Commission (``Commission'' or ``SEC'') 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).
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I. Self-Regulatory Organization's Statement of the Terms of 
Substance of the Proposed Rule Change

    The Exchange proposes to amend its fee schedule to require the 
Designated Primary Market-Maker (``DPM''), who transacts options on the 
reduced-value of the Nasdaq-100 Index (``MNS\SM\'') for its proprietary 
account, to pay a new exchange fee of $0.25 per contract.\2\ The text 
of the proposed rule change may be examined at the places specified in 
Item IV below.
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    \2\ The CBOE started trading the MNX product on August 14, 2000. 
The reduced-value of the Nasdaq-100 index is equal to one-tenth of 
the current value of the Nasdaq-100 index. See Securities Exchange 
Act Release No. 43000 (June 30, 2000), 65 FR 42409 (July 10, 2000) 
(SR-CBOE-00-15).
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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. 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

1. Purpose
    On July 10, 2000, the Commission approved the listing and trading 
by the CBOE of the MNX product.\3\ The purpose of the proposed rule 
change is to require the DPM, who trade the MNX product for its 
proprietary account, to pay a new exchange fee of $0.25 per contract.
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    \3\ Id.
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    Currently, all DPMs are charged $0.19 per contract for transactions 
for their proprietary accounts. The Exchange proposes that the DPM 
trading the MNX product be charged an additional fee of $0.25 per 
contract, totaling $0.44 per contract. This new fee would be used to 
assist the Exchange in offsetting some of the royalty fees that the 
Exchange must pay to the Nasdaq Stock market (``Nasdaq'') for 
permission to trade the MNX product.
    The Exchange believes that this new fee is reasonable and justified 
because the DPM for the MNX product has been awarded special status for 
the product (i.e., the DPM status) and thus, stands to

[[Page 54333]]

gain the most by the CBOE listing the product. In addition, all DPM 
applicants for the MNX product submitted their applications with full 
knowledge that the Exchange intended to impose a fee on the DPM who is 
selected to trade this product for its proprietary account.\4\
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    \4\ The Exchange informed the membership of the anticipated DPM 
fee in an Information Circular, IC00-63 (June 28, 2000), which 
solicited DPM applicants for trading the MNX product. Telephone 
conversation between Jaime Galvin, Counsel, CBOE, and Hong-anh Tran, 
Attorney, Division of Market Regulation (``Division''), Commission 
(August 4, 2000).
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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 charges 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 any inappropriate 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 either solicited or 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 upon filing pursuant to Section 19(b)(3)(A) of the Act \7\ 
and Rule 19b-4(f)(2) thereunder.\8\ 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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    \7\ 15 U.S.C. 78s(b)(3)(A).
    \8\ 17 CFR 240.19b-4(f)(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. 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 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 the File No. SR-CBOE-00-33 and 
should be submitted by September 28, 2000.

    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. 00-22863 Filed 9-6-00; 8:45 am]
BILLING CODE 8010-01-M