[Federal Register Volume 66, Number 216 (Wednesday, November 7, 2001)]
[Notices]
[Pages 56365-56366]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-27888]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-45009; File No. SR-CBOE-2001-55]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by the Chicago Board Options 
Exchange, Incorporated To Establish Connectivity Fees for Use of Its 
New Screen-Based Trading System

October 31, 2001.
    Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice hereby is given that 
on October 12, 2001, the Chicago Board Options Exchange, Incorporated 
(``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 October 29, 2001, CBOE submitted 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.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Letter from Angelo Evangelou, CBOE, to Michael Gaw, 
Division of Market Regulation, Commission, dated October 25, 2001 
(``Amendment No. 1''). The original filing set forth proposed fees 
for connectivity charges and excessive requests for quote 
(``RFQs''). In Amendment No. 1, CBOE withdrew the portion of the 
filing relating to RFQ fees and stated its intention to resubmit 
this portion in a separate filing.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of 
Substance of the Proposed Rule Change

    CBOE is proposing to establish connectivity fees in connection with 
the establishment of the Exchange's screen-based trading system, known 
as CBOEdirect. The text of the proposed rule change is available at the 
principal office of the Exchange and at the Commission's Public 
Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with Commission, CBOE included statements concerning 
the purpose of and basis for the proposed rule change and discussed any 
comments it received regarding the proposed rule change. The text of 
these statements may be examined at the places specified in Item IV 
below. 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
    CBOE is proposing to establish connectivity fees applicable to the 
Exchange's new screen-based trading system, CBOEdirect.\4\ These 
charges relate to the hardware, software, and network costs associated 
with connecting to the new screen-based trading platform and would be 
applicable only to members desiring certain types of connectivity to 
CBOEdirect. Order-sending firms would be able to route orders to 
CBOEdirect via the new connectivity or via existing connections to 
CBOE's Order Routing System (which serves orders routed to the floor of 
the Exchange). Members, such as liquidity providers, desiring to 
connect to CBOEdirect via the new connectivity would incur set-up 
charges based on the nature of the connection and the hardware 
selected. Such members would first choose from two available 
Application Programming Interfaces (``APIs''): (1) A ``CMI'' API, or 
(2) a ``FIX'' API. For members that desire a CMI API, additional 
hardware would be required. There would be three different hardware 
options available to these users involving different CBOE software and 
server combinations. Prices for each type are detailed in CBOE's fee 
schedule. A FIX API connection would involve a $500 charge if the user 
does not already have appropriate FIX connectivity. All of these set-up 
charges would be one-time charges.
---------------------------------------------------------------------------

    \4\ The Exchange anticipates that, initially, trading on 
CBOEdirect will occur only during extended trading hours for a 
limited range of products. Separately, CBOE has filed a proposed 
rule change to adopt certain rules governing trading on CBOEdirect. 
See File No. SR-CBOE-00-55.
---------------------------------------------------------------------------

    Connectivity charges also would involve a monthly circuit charge. 
For members using a CBOE managed network, charges would be based on the 
bandwidth selected by the user as well as the user's distance from a 
network POP server. For a member using its own network, a lesser 
monthly charge would be applicable based on API/hardware configuration.
2. Statutory Basis
    CBOE believes that the proposed rule change is consistent with 
section 6(b) of the Act \5\ in general and section 6(b)(4) \6\ in 
particular, in that it is designed to provide for the equitable 
allocation of reasonable dues, fees, and other charges among CBOE 
members.
---------------------------------------------------------------------------

    \5\ 15 U.S.C. 78f(b).
    \6\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------

B. Self-Regulatory Organization's Statement on Burden on Competition

    CBOE does not believe that the proposed rule change would impose 
any burden on competition not necessary or appropriate in furtherance 
of purposes 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 solicited or received with respect to the 
proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing 
for Commission Action

    CBOE represents that the proposed rule change establishes or 
changes a due, fee, or other charge imposed by the Exchange and, 
therefore, has become

[[Page 56366]]

effective pursuant to section 19(B)(3)(A)(ii) of the Act \7\ and 
subparagraph (f)(2) of Rule 19b-4 \8\ thereunder. At any time within 60 
days of the filing of such proposed rule change, the Commission may 
summarily abrogate such rule change if it appears to the Commission 
that such action is necessary in the public interest, for the 
protection of investors, or otherwise in furtherance of the purposes of 
the Act.
---------------------------------------------------------------------------

    \7\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \8\ 17 CFR 240.19b-4(f)(2).
---------------------------------------------------------------------------

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, NE., 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 will also be 
available for inspection and copying at the principal office of the 
Exchange. All submission should refer to File No. SR-CBOE-2001-55 and 
should be submitted by November 28, 2001.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\9\
---------------------------------------------------------------------------

    \9\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 01-27888 Filed 11-6-01; 8:45 am]
BILLING CODE 8010-01-M