[Federal Register Volume 68, Number 12 (Friday, January 17, 2003)]
[Notices]
[Pages 2595-2596]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-1107]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-47170; File No. SR-CBOE-2002-72]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by the Chicago Board Options 
Exchange, Incorporated Relating to Exchange Fees for options on the 
Russell 2000[reg] Index

January 13, 2003.
    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 December 26, 2002, the Chicago Board Options Exchange, Incorporated 
(``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 Exchange. CBOE has designated this proposal as one establishing 
or changing a due, fee, or other charge imposed by the Exchange under 
section 19(b)(3)(A)(ii) of the Act,\3\ which renders the proposal 
effective upon filing with the Commission. 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.
    \3\ 15 U.S.C. 78s(b)(3)(A)(ii).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to make a change to its fee schedule related 
to options on the Russell 2000[reg] Index (``RUT''). 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 Exchange included statements 
concerning the purpose of and basis for its proposal and discussed any 
comments it received regarding the proposal. 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
    The purpose of the proposed rule change is to impose a new per 
contract fee on the Designated Primary Market-Maker (``DPM'') for RUT 
options. Specifically, the Exchange proposes to impose an additional 
fee of $0.16 per contract to be charged to the DPM for options on the 
RUT for all RUT option transactions in which the DPM trades for its 
proprietary account. Currently, all DPMs are charged $0.19 per contract 
for transactions for their proprietary accounts. The charge to the DPM 
for the options on the RUT, therefore, now will be $0.35 per contract 
when the new $0.16 fee is combined with the $0.19 fee which is 
currently in effect for all DPMs. This fee will be used to assist the 
Exchange in offsetting a new per contract license fee that is being 
paid to Russell by CBOE.
    The Exchange believes this fee is reasonable and justified because 
the DPM for the RUT has been awarded special status for the product 
(i.e. the DPM status) and thus, stands to gain the most from continued 
CBOE listing of the product, which is dependent upon payment of the per 
contract license fee. In addition, the current DPM for the RUT applied 
for the DPM status with full knowledge that the Exchange intended to 
impose a per contract license fee on the DPM to recoup some,

[[Page 2596]]

but not all, of the per contract license fees that the Exchange pays in 
order to receive permission to trade the RUT at the CBOE. The DPM has 
indicated its willingness to pay this fee. In addition, the Exchange 
represents that the total amounts collected through this per contract 
fee shall not exceed the total per contract license fees paid to 
Russell. Finally, the Exchange believes that this proposed rule change 
is substantially identical to a previous CBOE rule filing, SR-CBOE-00-
33, which the Exchange filed with the Commission on July 31, 2000.\4\
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    \4\ Securities Exchange Act Release No. 43226 (August 29, 2000), 
65 FR 54332 (September 7, 2000).
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2. Statutory Basis
    The Exchange believes that the proposal 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 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

    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

    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) 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.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposal 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 CBOE. All submissions 
should refer to file number SR-CBOE-2002-72 and should be submitted by 
February 7, 2003.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\7\
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    \7\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 03-1107 Filed 1-16-03; 8:45 am]
BILLING CODE 8010-01-P