[Federal Register Volume 66, Number 130 (Friday, July 6, 2001)]
[Notices]
[Page 35683]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-16882]



[[Page 35683]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-44489; File No. SR-CBOE-2001-31]


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

June 28, 2001.
    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 11, 2001, the Chicago Board Options Exchange, Incorporated 
(``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. 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 proposes to establish a new fee on clearing firms for each 
contract the firm sends to the Exchange's Public Automated Routing 
(``PAR'') system in a given month, if the total number of contracts 
cancelled by the firm on PAR that month exceeds 40% of the total number 
of contracts that the firm sent to PAR in that same month. The fee does 
not apply to any clearing firm that sends fewer than 4,000 contracts to 
PAR in a given month. 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

1. Purpose
    The Exchange is proposing to establish a fee to deal with various 
operational problems and costs resulting from the practice of 
immediately following orders routed through the Exchange's PAR system 
with a cancel request. Since these orders frequently come in large 
bunches, the PAR system can quickly become backlogged, which increases 
Exchange costs and adversely impacts public customers, their clearing 
firms, and Exchange DPMs by making the execution of customer orders 
less timely, and requiring the Exchange to spend increased amounts on 
systems and other hardware to process increased order traffic flow.
    Under the proposed fee, a clearing firm would be charged 30 cents 
per contract for every option contract that it sends to the PAR system 
in any month where the total contracts canceled by the firm through PAR 
exceeded 40% of the total contracts that the firm sent to PAR in that 
same month. This fee will not apply to firms that send fewer than 4,000 
contracts to PAR in a given month. Firms may avoid this fee, if they 
wish, by choosing not to route certain of their orders through PAR. In 
this way, the Exchange believes that the fee will help ease backlogs on 
PAR, and fairly allocate the related costs.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act in general, and furthers the objectives of 
Section 6(b)(4) of the Act in particular, in that it is designed to 
provide for the equitable allocation of reasonable dues, fees, and 
other changes among CBOE members.

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 that is not necessary in 
furtherance of the purpose of the Act.

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 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 
pursuant to Section 19(b)(3)A) of the Act and subparagraph (f)(2) of 
Rule 19b-4 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.\3\
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    \3\ 15 U.S.C. 78s(b)(3)(C).
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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 File No. SR-CBOE-2001-31 and 
should be submitted by July 27, 2001.
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    \4\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\4\
Jonathan G. Katz,
Secretary.
[FR Doc. 01-16882 Filed 7-5-01; 8:45 am]
BILLING CODE 8010-01-M