[Federal Register Volume 70, Number 23 (Friday, February 4, 2005)]
[Notices]
[Pages 6057-6059]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E5-432]


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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-51101; File No. SR-CBOE-2005-09]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by the Chicago Board Options 
Exchange, Inc. To Amend its Marketing Fee Program To Provide for a 
Monthly Refund of Any Surplus

January 28, 2005.
    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 January 14, 2005, 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 CBOE. The CBOE has 
designated this proposal as one establishing or changing a due, fee, or 
other charge imposed by the CBOE under Section 19(b)(3)(A)(ii) of the 
Act,\3\ and Rule 19b-4(f)(2) thereunder,\4\ which renders the proposal 
effective upon filing with the Commission. 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\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \4\ 17 CFR 240.19b-4(f)(2).
---------------------------------------------------------------------------

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

    The CBOE proposes to amend its marketing fee program to provide for 
a monthly, rather than quarterly, refund of any surplus. Below is the 
text of the proposed rule change. Proposed new language is italicized; 
proposed deletions are in [brackets].
CHICAGO BOARD OPTIONS EXCHANGE, INC.
FEE SCHEDULE
    1.-4. No change.

[[Page 6058]]

NOTES:
    (1)-(5) No change.
    (6) The Marketing Fee will be assessed only on transactions of 
Market-Makers, e-DPMs and DPMs at the rate of $.22 per contract on all 
classes of equity options, options on HOLDRs[reg], and options on 
SPDRs[reg]. The fee will not apply to Market-Maker-to-Market-Maker 
transactions. This fee shall not apply to index options and options on 
ETFs (other than options on SPDRs). Should any surplus of the marketing 
fees at the end of each month occur, [those funds would be carried 
forward to the following month. T]the Exchange would then refund such 
surplus at the end of the month[quarter,] if any, on a pro rata basis 
based upon contributions made by the Market-Makers, e-DPMs and DPMs.
    (7)-(14) No change.
* * * * *

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 its proposal and discussed any 
comments it had received regarding the proposal. 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
    On October 29, 2004, the CBOE amended its marketing fee program.\5\ 
The current marketing fee is assessed upon DPMs, e-DPMs, and Market-
Makers at a rate of $0.22 for every contract they enter into on the 
Exchange, other than Market-Maker-to-Market-Maker transactions, 
including all transaction between any combination of DPMs, e-DPMs, and 
Market-Makers.\6\ Currently, the marketing fee is assessed in all 
equity option classes, options on HOLDRs,\7\ and options on SPDRs 
\[reg]\.\8\ Furthermore, should any surplus of the marketing fees at 
the end of each month occur, those funds are carried forward to the 
following month. The Exchange then refunds such surplus at the end of 
the quarter.
---------------------------------------------------------------------------

    \5\ See Securities Exchange Act Release No. 50736 (November 24, 
2004), 69 FR 69966 (December 1, 2004) (SR-CBOE-2004-68) (``Release 
No. 34-50736'').
    \6\ See Release No. 34-50736 for a more detailed description of 
the CBOE's marketing fee program.
    \7\ HOLDRs are trust-issued receipts that represent an 
investor's beneficial ownership of a specified group of stocks. See 
Interpretation .07 to CBOE Rule 5.3.
    \8\ See Securities Exchange Act Release No. 51052 (January 18, 
2005), 70 FR 3757 (January 26, 2005) (SR-CBOE-2005-05).
---------------------------------------------------------------------------

    The Exchange now proposes to amend its marketing fee program to 
provide for a monthly, rather than quarterly, refund of any surplus.\9\ 
The CBOE states that, based on its recent experience with the current 
marketing fee program, it now believes that a monthly, rather than 
quarterly, refund is more efficient for administrative purposes.\10\ 
The Exchange states that, consistent with the current marketing fee 
program, it will continue to refund any surplus on a pro rata basis 
based upon contributions made by the Market-Makers, e-DPMs, and DPMs.
---------------------------------------------------------------------------

    \9\ The Exchange states that the Marketing Fee Oversight 
Committee will continue to conduct quarterly reviews of the 
marketing fee program, including aspects related surpluses and the 
program's effectiveness. Telephone conversation between Andrew 
Spiwak, Director Legal Division and Chief Enforcement Attorney, 
CBOE, and David Liu, Attorney, Division of Market Regulation 
(``Division''), Commission, on December 18, 2005.
    \10\ Telephone conversation between Andrew Spiwak, Director 
Legal Division and Chief Enforcement Attorney, CBOE, and David Liu, 
Attorney, Division, Commission, on December 18, 2005.
---------------------------------------------------------------------------

2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act \11\ in general, and furthers the 
objectives of Section 6(b)(4) of the Act \12\ in particular, in that it 
is designed to provide for the equitable allocation of reasonable dues, 
fees, and other charges among the CBOE's members.
---------------------------------------------------------------------------

    \11\ 15 U.S.C. 78f(b).
    \12\ 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

    The CBOE neither solicited nor received written comments 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) of the Act \13\ and subparagraph 
(f)(2) of Rule 19b-4 thereunder.\14\ Accordingly, the proposal will 
take effect upon filing with the Commission. 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.
---------------------------------------------------------------------------

    \13\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \14\ 17 CFR 240.19b-4(f)(2).
---------------------------------------------------------------------------

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-2005-09 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-2005-09. 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

[[Page 6059]]

available for inspection and copying in the Commission's Public 
Reference Room. Copies of the 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-2005-09 and should be 
submitted on or before February 25, 2005.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\15\
Margaret H. McFarland,
Deputy Secretary.
---------------------------------------------------------------------------

    \15\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

[FR Doc. E5-432 Filed 2-3-05; 8:45 am]
BILLING CODE 8010-01-P