[Federal Register Volume 69, Number 242 (Friday, December 17, 2004)]
[Notices]
[Pages 75575-75576]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E4-3703]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-50837; File No. SR-CBOE-2004-76]


Self Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by the Chicago Board Options 
Exchange, Inc. Relating to a DPM and Market-Maker Transaction Fee in 
Options on the Mini-Nasdaq-100 Index

December 10, 2004.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(the ``Act''),\1\ and Rule 19b-4 thereunder\2\ notice is hereby given 
that on November 23, 2004, the Chicago Board Options Exchange, Inc. 
(``CBOE'' or the ``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. 
The Commission is publishing this notice to solicit comments on the 
proposed rule change from interested parties.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self Regulatory Organization's Statement of the Terms and Substance 
of the Proposed Rule Change

    CBOE proposes to amend its Fee Schedule to establish a $.10 per 
contract license fee on all Designated Primary Market-Maker and market-
maker contracts traded in options on the Mini-Nasdaq-100 Index 
(``MNX''). 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. 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, Proposed Rule Change

1. Purpose
    The Exchange proposes to establish a $.10 per contract license fee 
on all Designated Primary Market-Maker (``DPM'') and market-maker 
contracts traded in MNX options.
    Currently, the MNX DPM is charged a $.25 per contract supplemental 
transaction fee for transactions for its proprietary account, in 
addition to the regular transaction fee of $.24 per contract. The $.25 
per contract supplemental transaction fee is charged to the DPM to 
assist the Exchange in offsetting some of the royalty fees that the 
Exchange must pay to the Nasdaq Stock Market (``Nasdaq'') for its 
license to trade the MNX product.\3\
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    \3\ Securities Exchange Act Release No. 43226 (August 29, 2000), 
65 FR 54322 (September 7, 2000) (SR-CBOE-00-33).
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    On November 23, 2004, MNX options will begin trading on the 
Exchange's Hybrid Trading System (``Hybrid''). In light of MNX options 
moving to the Hybrid system, the Exchange has determined to spread the 
license fee obligation among all market-makers in the MNX trading 
crowd, including the DPM. Instead of assessing only the MNX

[[Page 75576]]

DPM a supplemental fee of $.25 per contract, the Exchange proposes to 
assess the MNX DPM and all MNX market-makers a license fee of $.10 per 
contract (in addition to the regular transaction fee of $.24 per 
contract) to help the Exchange meet its license fee obligation to 
Nasdaq.
    The Exchange believes that the proposed license fee results in a 
more equitable allocation of the MNX license fee obligation in MNX's 
new Hybrid Trading System environment. The proposed license fee is 
consistent with similar license fees that the Exchange has previously 
implemented to recover license costs for the RUT and DJX option 
classes.\4\ The Exchange intends to implement this license fee on 
December 1, 2004.
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    \4\ Securities Exchange Act Release No. 49601 (April 22, 2004), 
69 FR 23836 (April 30, 2004) (SR-CBOE-2004-19) (RUT license fee), 
and Securities Exchange Act Release Act No. 48223 (July 24, 2003), 
68 FR 44978 (July 31, 2003) (SR-CBOE-2003-26) (DJX license fee).
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2. Statutory Basis
    The Exchange believes that the proposed rule change 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

    CBOE does not believe that the proposed rule change will impose any 
burden on competition that is 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

    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)(ii) \7\ of the Act and subparagraph 
(f)(2) of Rule 19b-4 \8\ 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.
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    \7\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \8\ 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. 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-2004-76 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-2004-76. 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 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-2004-76 and 
should be submitted on or before January 7, 2005.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\9\
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    \9\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. E4-3703 Filed 12-16-04; 8:45 am]
BILLING CODE 8010-01-P