[Federal Register Volume 69, Number 192 (Tuesday, October 5, 2004)]
[Notices]
[Pages 59628-59630]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E4-2491]


=======================================================================
-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-50469; File No. SR-CBOE-2004-61]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by the Chicago Board Options 
Exchange, Incorporated Relating to Reduction of Customer Transaction 
Fees for Options on Exchange-Traded Funds and Holding Company 
Depositary Receipts

September 29, 2004.
    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 September 23, 2004, 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 CBOE. 
On September 28, 2004, 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 Jamie Galvin, Attorney II, Legal Division, 
CBOE, to Ira Brandriss, Assistant Director, Division of Market 
Regulation, Commission, dated September 27, 2004 (``Amendment No. 
1''). In Amendment No. 1, the CBOE converted the original proposed 
rule change from a proposal filed pursuant to Section 
19(b)(3)(A)(ii) of th eAct and Rule 19b-4(f)(2) thereunder to a 
``non-controversial'' proposal filed pursuant to Section 19(b)(3)(A) 
of the Act and Rule 19b-4(f)(6) thereunder, and requested waiver of 
the 30-day pre-operative period and pre-filing notice requirement 
for ``non-controversial'' proposals.
---------------------------------------------------------------------------

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

    The CBOE proposes to amend its Fee Schedule to reduce the fees 
charged to public customers for transactions in options on exchange-
traded funds

[[Page 59629]]

(``ETFs'') and Holding Company Depositary Receipts (``HOLDRs''). 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 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
    CBOE currently assesses public customer transactions in options on 
ETFs and HOLDRs the customer transaction fees that apply to index 
options.\4\ Specifically, public customer transactions in these 
products are assessed transaction fees of $.45 if the premium is 
greater than or equal to $1 and $.25 if the premium is less than $1. 
The Exchange proposes to reduce the transaction fees charged to public 
customers for transactions in all options on ETFs and HOLDRs to $.15, 
regardless of premium, except for options on Dow Jones DIAMONDS 
(DIA).\5\ Options on Dow Jones DIAMONDS will continue to be assessed at 
current index option customer transaction rates.
---------------------------------------------------------------------------

    \4\ Except for options on the Nasdaq-100 Index Tracking Stock 
(QQQ) which are assessed no customer transaction fees.
    \5\ A $.04 floor brokerage fee will continue to be charged to 
executing brokers if a broker executes a customer order in these 
products.
---------------------------------------------------------------------------

    The Exchange believes this fee reduction will help the Exchange to 
compete more effectively for order flow in these products. The Exchange 
intends to begin assessing the reduced fees on October 1, 2004. The 
Exchange will reassess the fee reduction as appropriate, and will file 
any modification to these transaction fees with the Commission pursuant 
to Section 19(b) of the Act.
2. Statutory Basis
    The proposed rule change is consistent with Section 6(b) of the 
Act,\6\ in general, and furthers the objectives of Section 6(b)(4) of 
the Act \7\ in particular, in that it is designed to provide for the 
equitable allocation of reasonable dues, fees, and other charges among 
CBOE members and other persons using its facilities.
---------------------------------------------------------------------------

    \6\ 15 U.S.C. 78f(b).
    \7\ 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 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

    The proposed rule change has been designated by the CBOE as a 
``non-controversial'' rule change pursuant to Section 19(b)(3)(A) of 
the Act \8\ and subparagraph (f)(6) of Rule 19b-4 thereunder.\9\
---------------------------------------------------------------------------

    \8\ 15 U.S.C. 78s(b)(3)(A).
    \9\ 17 CFR 240.19b-4(f)(6)(i)-(ii).
---------------------------------------------------------------------------

    The foregoing rule change: (1) Does not significantly affect the 
protection of investors or the public interest, (2) does not impose any 
significant burden on competition, and (3) by its terms does not become 
operative for 30 days after the date of filing, or such shorter time as 
the Commission may designate if consistent with the protection of 
investors and the public interest. The CBOE has requested that the 
Commission waive the 30-day pre-operative period and the five-day pre-
filing notice requirement for ``non-controversial'' proposals and 
accelerate the operative date of the filing to October 1, 2004, to 
allow public customers to benefit from the reduced transaction fees in 
the subject options classes effective on that date. The Commission has 
determined to waive the five-day notice and the 30-day operative period 
as requested to permit public customers to benefit from the fee 
reduction without delay.\10\ Consequently, the proposed rule change has 
become effective pursuant to Section 19(b)(3)(A) of the Act \11\ and 
Rule 19b-4(f)(6) thereunder, with an operative date of October 1, 
2004.\12\
---------------------------------------------------------------------------

    \10\ For the purposes only of waiving the 30-day pre-operative 
period, the Commission has considered the proposed rule's impact on 
efficiency, competition, and capital formation. 15 U.S.C. 78c(f).
    \11\ 15 U.S.C. 78s(b)(3)(A).
    \12\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------

    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 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 No. SR-CBOE-2004-61 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 No. SR-CBOE-2004-61. This file 
number should be included on the subject line if e-mail is used. To 
help the 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 Room, 450 Fifth Street, 
NW., Washington, DC 20549. Copies of such filing will also 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

[[Page 59630]]

submissions. You should submit only information that you wish to make 
available publicly.
    All submissions should refer to File No. SR-CBOE-2004-61 and should 
be submitted on or before October 26, 2004.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\13\
---------------------------------------------------------------------------

    \13\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Margaret H. McFarland,
Deputy Secretary.
[FR Doc. E4-2491 Filed 10-4-04; 8:45 am]
BILLING CODE 8010-01-P