[Federal Register Volume 70, Number 173 (Thursday, September 8, 2005)]
[Notices]
[Pages 53402-53403]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E5-4885]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-52374; File No. SR-CBOE-2005-66]


Self-Regulatory Organizations; Chicago Board Options Exchange, 
Incorporated; Notice of Filing and Immediate Effectiveness of Proposed 
Rule Change Relating to an Extension of the Pilot Programs Applicable 
to Fee Caps for Dividend Spread and Merger Spread Transactions Until 
March 1, 2006

September 1, 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 August 24, 2005, 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 CBOE. The 
Exchange designated the proposed rule change as establishing or 
changing a due, fee, or other charge imposed by the Exchange 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 parties.
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    \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).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend its Fees Schedule to extend until 
March 1, 2006 the pilot programs applicable to fee caps on dividend 
spread and merger spread transactions. The text of the proposed rule 
change is available on the Exchange's Web site (http://www.cboe.com), 
at the Office of the Secretary, CBOE, and at the Commission.

[[Page 53403]]

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. 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 Exchange currently caps market-maker, firm, and broker-dealer 
transaction fees associated with ``dividend spread'' transactions \5\ 
at $2,000 for all dividend spread transactions executed on the same 
trading day in the same options class. A similar fee cap is currently 
in place for market-maker, firm, and broker-dealer transaction fees 
associated with ``merger spread'' transactions \6\ executed on the same 
trading day in the same options class.\7\ Both fee caps are in effect 
as pilot programs that are due to expire on September 1, 2005.\8\
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    \5\ A ``dividend spread'' is defined as any trade done to 
achieve a dividend arbitrage between any two deep-in-the-money 
options.
    \6\ A ``merger spread'' transaction is defined as a transaction 
executed pursuant to a strategy involving the simultaneous purchase 
and sale of options of the same class and expiration date, but with 
different strike prices, followed by the exercise of the resulting 
long options position, each executed prior to the date on which 
shareholders of record are required to elect their respective form 
of consideration, i.e., cash or stock.
    \7\ Telephone conversation between Jaime Galvan, Assistant 
Secretary, CBOE, and Steve Kuan, Special Counsel, Division of Market 
Regulation, Commission, on August 30, 2005.
    \8\ See Securities Exchange Act Release Nos. 51468 (April 1, 
2005), 70 FR 17742 (April 7, 2005) (SR-CBOE-2005-18), and 51828 
(June 13, 2005), 70 FR 35475 (June 20, 2005) (SR-CBOE-2005-42).
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    The Exchange proposes to extend both pilot programs until March 1, 
2006. No other changes are proposed. The Exchange believes that 
extension of these fee cap programs should attract additional liquidity 
and permit the Exchange to remain competitive.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\9\ in general, and furthers the 
objectives of Section 6(b)(4) of the Act \10\ 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.
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    \9\ 15 U.S.C. 78f(b).
    \10\ 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

    The foregoing rule change has become effective pursuant to Section 
19(b)(3)(A) of the Act \11\ and paragraph (f)(2) of Rule 19b-4 
thereunder \12\ because it is establishing or changing a due, fee, or 
other charge applicable only to the Exchange's members. 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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    \11\ 15 U.S.C. 78s(b)(3)(A).
    \12\ 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-2005-66 on the subject line.

Paper Comments

     Send paper comments in triplicate to Jonathan G. Katz, 
Secretary, Securities and Exchange Commission, 100 F Street, NE., 
Washington, DC 20549-9303.

All submissions should refer to File Number SR-CBOE-2005-66. 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. Copies of such 
filing also will be available for inspection and copying at the 
principal office of the Exchange. 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-2005-66 and should be submitted on or before 
September 29, 2005.

    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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Jonathan G. Katz,
Secretary.
[FR Doc. E5-4885 Filed 9-7-05; 8:45 am]
BILLING CODE 8010-01-P