[Federal Register Volume 68, Number 229 (Friday, November 28, 2003)]
[Notices]
[Page 66908]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-29660]


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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-48815; File No. SR-CBOE-2003-33]


Self-Regulatory Organizations; Notice of Filing of Proposed Rule 
Change and Amendment No. 1 Thereto by the Chicago Board Options 
Exchange, Inc., Relating to Non-Member Market Maker Transaction Fees

November 20, 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 July 30, 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 CBOE. On November 13, 
2003, CBOE filed Amendment No. 1 by facsimile.\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 Christopher R. Hill, Assistant General 
Counsel, CBOE to Leah Mesfin, Attorney, Division of Market 
Regulation, Commission, dated November 13, 2003 (``Amendment No. 
1''). In Amendment No. 1, CBOE modified its argument in support of 
the proposal.
---------------------------------------------------------------------------

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

    CBOE proposes to change its Fee Schedule to increase transaction 
fees for orders originating from non-member market makers by $.02 per 
contract. 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, 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. 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, Proposed Rule Change

1. Purpose
    Currently, the Exchange charges transaction fees for orders 
executed on behalf of non-member market makers (i.e., those designated 
with an ``N'' origin code) that are equal to member market maker and 
member firm rates in the equities and QQQ options ($.19 per contract) 
and equal to customer rates in index products ($.15 to $.40). CBOE 
represents that Exchange members have complained that such equivalence 
of fees is unfair to Exchange members, who pay a variety of additional 
fees through their membership in the Exchange to help offset the 
Exchange's expenses. In order to more fairly assess Exchange costs 
among the individuals and organizations who avail themselves of the 
Exchange's trading opportunities, the Exchange proposes to increase 
transaction fees for N orders by $.02 per contract.
    In connection with the $.02 increase, the Exchange notes two 
points. First, the Exchange notes that since it does not permit non-
members to enter orders on the Exchange, the Exchange will not be 
directly assessing any such fees upon non-members. Second, the Exchange 
notes that the $.02 increase will not apply to linkage orders.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with section 6(b) of the Act \4\ in general, and furthers the 
objectives of Section 6(b)(4) of the Act \5\ in particular, in that it 
is designed to provide for the equitable allocation of reasonable dues, 
fees, and other charges among Exchange members and issuers and other 
persons using its facilities.
---------------------------------------------------------------------------

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

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 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

    Within 35 days of the date of publication of this notice in the 
Federal Register or within such longer period (i) as the Commission may 
designate up to 90 days of such date if it finds such longer period to 
be appropriate and publishes its reasons for so finding or (ii) as to 
which the self-regulatory organization consents, the Commission will:
    (A) by order approve such proposed rule change, or
    (B) institute proceedings to determine whether the proposed rule 
change should be disapproved.

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 Section. Copies of such filing will also 
be available for inspection and copying at the principal office of 
CBOE. All submissions should refer to File No. SR-CBOE-2003-33 and 
should be submitted by December 19, 2003.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\6\
---------------------------------------------------------------------------

    \6\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 03-29660 Filed 11-26-03; 8:45 am]
BILLING CODE 8010-01-P