[Federal Register Volume 70, Number 96 (Thursday, May 19, 2005)]
[Notices]
[Pages 28968-28969]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E5-2500]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-51687; File No. SR-CBOE-2005-36]


Self-Regulatory Organizations; Chicago Board Options Exchange, 
Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule 
Change and Amendment Nos. 1 and 2 Thereto Relating to Waiver of May 
2005 Member Dues for CBOE Market-Makers

May 12, 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 May 2, 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. On May 4, 
2005, the CBOE submitted Amendment No. 1 to the proposed rule 
change.\3\ On May 5, 2005, the CBOE submitted Amendment No. 2 to the 
proposed rule change.\4\ 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,\5\ and Rule 19b-4(f)(2) 
thereunder,\6\ which renders the proposal effective upon filing with 
the Commission. The Commission is publishing this notice to solicit 
comments on the proposed rule change, as amended, from interested 
persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ In Amendment No. 1, the CBOE amended the rule text of the 
proposed rule change to clarify that the dues waiver applies to the 
Reduced Value Russell 2000 index options, which are a hybrid options 
class.
    \4\ In Amendment No. 2, the CBOE made technical corrections to 
the rule text of the proposed rule change.
    \5\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \6\ 17 CFR 240.19b-4(f)(2).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The CBOE proposes to amend its Fees Schedule to waive May 2005 
member dues for CBOE market-makers who automatically execute 2000 
contracts or more during May 2005 in hybrid options classes. Below is 
the text of the proposed rule change, as amended. Proposed new language 
is italicized; proposed deletions are in [brackets].
CHICAGO BOARD OPTIONS EXCHANGE, INC.
FEES SCHEDULE
[APRIL 25] MAY 2, 2005
    1.-4. Unchanged.
    Notes: (1)-(15) Unchanged.
    5.-8. Unchanged.

    9. MEMBER DUES* $450 per month

    * The Exchange will waive May 2005 member dues for CBOE market-
makers who automatically execute 2000 contracts or more (through the 
use of ``M'' orders) during May 2005 in hybrid options classes, i.e., 
all equity options classes and the MNX, QQQQ, Reduced Value Russell 
2000 and SPDR options classes.
    10.-23. Unchanged.
* * * * *

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 proposed rule change and 
discussed any comments it had 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
    On January 10, 2005, the Commission approved a CBOE rule proposal 
(SR-CBOE-2005-01) \7\ to allow CBOE market participants \8\ the ability 
to submit

[[Page 28969]]

orders for automatic execution. As a result of that rule change, 
Market-Makers, DPMs, eDPMs and RMMs (collectively, ``CBOE Market-
Makers'') for the first time have the ability to submit orders that are 
eligible to execute automatically against resting orders in the 
electronic book in hybrid options classes (i.e., all equity options 
classes, the CBOE Mini-NDX index option classes (``MNX''), the option 
classes based on the Nasdaq-100's Depository Receipts (``QQQQ''), the 
Reduced Value Russell 2000 index option classes,\9\ and the option 
classes based on Standard & Poor's Depository Receipts (``SPDRs 
options'')). An order submitted for automatic execution by a CBOE 
Market-Maker is marked with an ``M'' origin code.
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    \7\ See Securities Exchange Act Release No. 51003 (January 10, 
2005), 70 FR 2682 (January 14, 2005).
    \8\ CBOE Rule 6.45A defines a market participant as a market-
maker, an in-crowd DPM, an e-DPM, a Remote Market-Maker and a floor 
broker representing orders in the trading crowd.
    \9\ See Amendment No. 1, Supra note 3.
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    As part of a marketing campaign to make CBOE Market-Makers aware of 
the benefits of this improved access to orders in the book, the 
Exchange proposes to waive May 2005 member dues for CBOE Market-Makers 
who automatically execute 2000 contracts or more (through the use of 
``M'' orders) during May 2005 in hybrid options classes. Qualifying 
members would receive a rebate of member dues. The rebate will be 
processed in June as a credit on billing statements produced at month-
end.
    The Exchange believes that the proposed dues waiver will be 
successful in attracting additional liquidity to the CBOE.
2.Statutory Basis
    The Exchange believes that the proposed rule change, as amended, is 
consistent with Section 6(b) of the Act,\10\ in general, and furthers 
the objectives of Section 6(b)(4) of the Act,\11\ in particular, in 
that it is designed to provide for the equitable allocation of 
reasonable dues, fees, and other charges among CBOE's members.
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    \10\ 15 U.S.C. 78f(b).
    \11\ 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, as 
amended, 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

    Because the foregoing rule change, as amended, 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 \12\ 
and subparagraph (f)(2) of Rule 19b-4 thereunder.\13\ 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, as amended, 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.\14\
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    \12\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \13\ 17 CFR 240.19b-4(f)(2).
    \14\ For purposes of calculating the 60-day period within which 
the Commission may summarily abrogate the proposed rule change, as 
amended, under Section 19(b)(3)(C) of the Act, the Commission 
considers the period to commence on May 5, 2005, the date on which 
the Exchange submitted Amendment No. 2. See 15 U.S.C. 78s(b)(3)(C).
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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-2005-36 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-2005-36. 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, as 
amended, 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. 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-2005-36 and should be 
submitted on or before June 9, 2005.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\15\
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    \15\ 17 CFR 200.30-3(a)(12).
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J. Lynn Taylor,
Assistant Secretary.
[FR Doc. E5-2500 Filed 5-18-05; 8:45 am]
BILLING CODE 8010-01-P