[Federal Register Volume 68, Number 60 (Friday, March 28, 2003)]
[Notices]
[Pages 15252-15253]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-7398]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-47559; File No. SR-CBOE-2003-10]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by the Chicago Board Options 
Exchange, Inc. To Suspend on a Pilot Basis an Access Fee for Non-
Customer Orders in Equity Options Classes Executed Through the Retail 
Automatic Execution System

March 21, 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 March 10, 2003, 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 Exchange. 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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[[Page 15253]]

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

    The Exchange proposes a pilot program to suspend an Access Fee for 
non-customer orders in equity option classes executed through its 
Retail Automatic Execution System (``RAES''). The text of the proposed 
rule change appears below.\3\ New text is in italics.
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    \3\ The text reflects minor, technical corrections to the text 
that the Exchange submitted with the proposed rule. Telephone 
conversation between Christopher Hill, Attorney, CBOE, and T.R. 
Lazo, Senior Special Counsel, Division of Market Regulation, 
Commission, on March 20, 2003.
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Fee Schedule
March 11, 2003
4. RAES (Retail Automatic Execution System) (1)(4): Per Contract
* * * * *
    Non-Customer Transactions (origin code other than ``C'')(8)--$.30 
(Fee suspended through 6/30/03 in equity option classes only).
* * * * *
    (1) Per contract side, including FLEX options. Transaction and 
Trade Match Fees are applicable to the CBOEdirect system.
* * * * *
    (4) Transaction, trade match and RAES fees are charged to the CBOE 
executing firm on the input record.

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 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 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
    The CBOE previously established a $.30 per contract Access Fee to 
all non-customer transactions (defined as all transactions with origin 
codes other than ``C'') \4\ in option classes that are executed by 
means of the CBOE's RAES.\5\
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    \4\ Every order entering the CBOE Order Routing System is 
assigned an origin code to reflect the category (though not the 
specific identity) of the source of each order: ``C'' for public 
customers, ``B'' for Broker-Dealers, ``F'' for proprietary accounts 
of member firms of the Options Clearing Corporation, ``M'' for CBOE 
market-makers, ``N'' for non-CBOE market-makers, and ``Y'' for 
specialists in an underlying security. The CBOE adopted a related 
order identification rule for market maker and specialist orders. 
See Securities Exchange Release Act No. 34-46102 (June 21, 2002), 67 
FR 43692 (June 28, 2002) (Notice of Filing and Immediate 
Effectiveness of SR-CBOE-2002-33).
    \5\ See Securities Exchange Act Release Nos. 46455 (September 3, 
2002), 67 FR 57468 (September 10, 2002) (Notice of Filing and 
Immediate Effectiveness of SR-CBOE-2002-42, which established the 
$.30 per contract Access Fee for non-customer RAES orders in options 
on the Nasdaq 100[reg] Index Tracking Stock (``QQQ''), Nasdaq-
100[reg] Index Options (NDX), CBOE Mini-NDX Index Options (``MNX 
SM''), and European style S&P 100[reg] Index options 
(``XEO[reg]'') classes); and 47032 (December 18, 2002), 67 FR 79196 
(December 27, 2002) (Notice of Filing and Immediate Effectiveness of 
SR-CBOE-2002-68, which extended the $.30 per contract access fee to 
non-customer RAES transactions in equity options, as well as other 
option classes when non-customer orders in those classes become 
eligible for execution via RAES.)
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    The CBOE now proposes a pilot program to suspend this Access Fee in 
all equity option classes, in conjunction with other steps the CBOE is 
taking to open up equity option classes to more automatic execution of 
non-customer orders.\6\ The CBOE believes that suspending the Access 
Fee will encourage more non-customer RAES orders to be sent to the 
CBOE. The suspension will last through the end of the CBOE's fiscal 
year on June 30, 2003. Prior to that date, the CBOE will examine the 
effects of suspending the fee and advise the Commission whether CBOE 
intends to continue or modify the suspension.
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    \6\ See, e.g., Securities Exchange Act Release No. 47492 (March 
13, 2003), 68 FR 13350 (March 19, 2003) (Notice of Filing and 
Immediate Effectiveness of SR-CBOE-2003-09 which proposed to expand 
the order-types eligible for the Exchange's Large Order Utility).
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(2) Statutory Basis
    The CBOE believes that the proposed rule change is consistent with 
section 6(b) of the Act,\7\ in general, and furthers the objectives of 
section 6(b)(4) of the Act,\8\ 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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    \7\ 15 U.S.C. 78f(b).
    \8\ 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 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

    The foregoing rule change establishes or changes a due, fee, or 
charge imposed by the Exchange and, therefore, has become effective 
upon filing pursuant to section 19(b)(3)(A)(ii) of the Act \9\ and Rule 
19b-4(f)(2) hereunder.\10\ 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 or appropriate in the public interest, for the protection of 
investors, or otherwise in furtherance of the purpose of the Act.
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    \9\ 15 U.S.C. 78(s)(b)(3)(A)(ii).
    \10\ 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 
Exchange. All submissions should refer to File No. SR-CBOE-2003-10 and 
should be submitted by April 17, 2003.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\11\
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    \11\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 03-7398 Filed 3-27-03; 8:45 am]
BILLING CODE 8010-01-P