[Federal Register Volume 69, Number 84 (Friday, April 30, 2004)]
[Notices]
[Pages 23836-23837]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-9792]



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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-49601; File No. SR-CBOE-2004-19]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change and Amendment No. 1 Thereto by 
the Chicago Board Options Exchange, Inc., Relating to a DPM and Market 
Maker Transaction Fee

April 22, 2004.
    Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act'')\1\ and Rule 19b-4 \2\ thereunder, notice is hereby given that 
on March 29, 2004, the Chicago Board Options Exchange, Inc. (``CBOE'') 
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 CBOE. On April 15, 2004, the CBOE filed 
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.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See letter from Christopher Hill, Attorney, CBOE, to Nancy 
J. Sanow, Assistant Director, Division of Market Regulation, 
Commission, dated April 15, 2004 (``Amendment No. 1''). In Amendment 
No. 1, the CBOE made a technical correction to the rule text.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The CBOE proposes to make a change to its Fee Schedule to establish 
a $.40 per contract license fee on all Designated Primary Market Maker 
(``DPM'') and Market Maker transactions in the Russell 2000 (RUT) 
option class. The text of the proposed rule change, as amended, may be 
examined at the places specified in Item IV, below.

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 CBOE proposes to establish a $.40 per contract license fee on 
all DPM and Market Maker transactions in the RUT option class. In 
January, 2003, the CBOE amended its Fee Schedule to require DPMs to pay 
period license fees in their appointed option classes.\4\ This 
provision was initially applied to the RUT option class. The CBOE also 
established a separate $.16 per contract fee upon all DPM contracts 
traded in the RUT.\5\ The $.16 per contract fee was eliminated later in 
2003.\6\
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    \4\ See Securities Exchange Act Release No. 47169 (January 13, 
2003), 68 FR 2596 (January 17, 2003) (SR-CBOE-2003-73).
    \5\ See Securities Exchange Act Release No. 47170 (January 13, 
2003), 68 FR 2595 (January 17, 2003) (SR-CBOE-2002-72).
    \6\ See Securities Exchange Act Release No. 48223 (July 24, 
2003) (SR-CBOE-2003-26).
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    Recently, the RUT DPM agreed to trade RUT via the CBOE's Hybrid 
Trading System. In light of RUT's move to Hybrid Trading, the CBOE 
proposes to recoup the periodic RUT license fee with a $.40 per 
contract license fee on RUT transactions by the DPM as well as by the 
other Market Makers in RUT. The RUT DPM will remain responsible for 
making up any shortfall between the proceeds the CBOE receives from the 
new $.40 per contract license transaction fee and the CBOE's RUT 
license fee obligations to the Russell company. The CBOE believes that 
this proposal will maintain an equitable allocation of the RUT license 
fee obligation in RUT's new Hybrid Trading environment, while 
maintaining the DPM's obligation, in recognition of its special status 
as the RUT DPM,\7\ to ensure satisfaction of the overall license fee 
obligation.
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    \7\ Cf. Securities Exchange Act Release Nos. 47169 (January 13, 
2003), 68 FR 2596 (January 17, 2003) (SR-CBOE-2002-73); 43226 
(August 29, 2000), 65 FR 54332 (September 7, 2000) (SR-CBOE-00-33) 
(each noting the special status afforded to a DPM in connection with 
the equitable allocation of license fee obligations).
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2. Statutory Basis

    The CBOE believes that the proposal is consistent with section 6(b) 
of the Act,\8\ in general, and section 6(b)(4) of the Act,\9\ in 
particular, in that it provides for the equitable allocation of 
reasonable dues, fees and other charges among its members.
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    \8\ 15 U.S.C. 78f(b).
    \9\ 15 U.S.C. 78f(b)(4).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The CBOE 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

    Written comments on the proposed rule change were neither solicited 
nor received.

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

    The foregoing rule change, as amended, has become effective 
pursuant to section 19(b)(3)(A)(ii) of the Act \10\ and subparagraph 
(f)(2) of Rule 19b-4 \11\ thereunder because it changes a fee imposed 
by the CBOE. 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 purposes of the Act.\12\
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    \10\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \11\ 17 CFR 240.19b-4(f)(2).
    \12\ See 15 U.S.C. 78(b)(3)(C). For the purposes of calculating 
the 60-day abrogation period, the Commission considers the proposed 
rule change to have been filed on April 15, 2004, the date the CBOE 
filed Amendment No. 1.
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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. Comments may be submitted by any of 
the following methods:
    Electronic Comments
     Use the Commission's Internet comment form 
(http://www.sec.gov/rules/sro.shtml); or
     Send an E-mail to [email protected]. Please 
include File Number SR-CBOE-2004-19 on the subject line.

Paper Comments

     Send paper comments in triplicate to Jonathan G. 
Katz, Secretary, Securities and Exchange Commission, 450 Fifth Street, 
NW., Washington, DC 20549-0609.
    All submissions should refer to File Number SR-CBOE-2004-19. This 
file number should be included on the subject line if e-mail is used. 
To help the

[[Page 23837]]

Commission process and review your comments more efficiently, please 
use only one method. The Commission will post all comments on the 
Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). 
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, 450 Fifth Street, NW., 
Washington, DC 20549. Copies of such filing also will be available for 
inspection and copying at the principal office of the CBOE. All 
comments received will be posted without change; the Commission does 
not edit personal identifying information from submissions. You should 
submit only information that you wish to make available publicly. All 
submissions should refer to File Number SR-CBOE-2004-19 and should be 
submitted on or before May 21, 2004.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\13\
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    \13\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 04-9792 Filed 4-29-04; 8:45 am]
BILLING CODE 8010-01-P