[Federal Register Volume 73, Number 77 (Monday, April 21, 2008)]
[Notices]
[Pages 21394-21395]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-8519]


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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-57668; File No. SR-CBOE-2008-36]


Self-Regulatory Organizations; Chicago Board Options Exchange, 
Incorporated; Notice of Filing and Immediate Effectiveness of Proposed 
Rule Change Relating to Fee Changes

April 15, 2008.
    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 March 28, 2008, the Chicago Board Options Exchange, Incorporated 
(``Exchange'' or ``CBOE'') 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 substantially 
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 Exchange proposes to amend the Hybrid 3.0 book execution fee. 
The text of the proposed rule change is available on the Exchange's Web 
site (http://www.cboe.org/legal), at the principal office of the 
Exchange, and at the Commission's Public Reference Room.

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
    On November 1, 2007, the Exchange implemented a fee of $.18 per 
contract applicable to orders in Hybrid 3.0 classes resting in the 
electronic book that are executed.\5\ The classes that trade on the 
Hybrid 3.0 platform are options on the S&P 100 Index (``OEX''), options 
on the S&P 500 Index (``SPX'') and options on the Morgan Stanley Retail 
Index (``MVR''). The fee does not apply to orders in SPX options 
resting in the SPX electronic book that are executed during opening 
rotation on the final settlement date of CBOE Volatility Index 
(``VIX'') options and futures. On February 1, 2008, the Exchange 
extended the fee to apply to orders in Hybrid 3.0 classes that are 
executed by the Hybrid Agency Liaison (``HAL'') system.\6\
---------------------------------------------------------------------------

    \5\ See Securities Exchange Act Release No. 56937 (December 10, 
2007), 72 FR 71465 (December 17, 2007) (SR-CBOE-2007-127).
    \6\ See Securities Exchange Act Release No. 57374 (February 22, 
2008), 73 FR 10845 (February 28, 2008) (SR-CBOE-2008-13). HAL is 
governed by CBOE Rule 6.14.
---------------------------------------------------------------------------

    The Exchange now proposes to adopt three additional exceptions to 
the Hybrid electronic execution fee. Specifically, the Exchange will 
assess $.18 per contract to all electronic executions in Hybrid 3.0 
classes except: (i) Orders in SPX options in the SPX electronic book 
that are executed during opening rotation on the final settlement date 
of VIX options and futures (which orders are currently exempt from the 
fee); (ii) executions by market-makers against orders in the complex 
order auction (``COA'') and Simple Auction Liaison (``SAL'') systems 
\7\ in their appointed classes; (iii) executions by market-makers 
against orders in the electronic book, HAL and the complex order book 
(``COB'') in their appointed classes; and (iv) orders executed by a 
broker. The fee will be renamed ``Hybrid 3.0 execution fee.''
---------------------------------------------------------------------------

    \7\ COA and SAL are governed by CBOE Rules 6.53C and 6.13A, 
respectively.
---------------------------------------------------------------------------

    In pre-Hybrid 3.0 trading, market-makers that provided liquidity by 
trading against orders on the Retail Automatic Execution System 
(``RAES'') in their appointed classes did not pay the RAES Access Fee. 
Likewise, the Exchange believes it is appropriate to exempt from the 
Hybrid 3.0 execution fee executions by market-makers against orders in 
COA and SAL in their appointed classes.
    Market-makers in pre-Hybrid 3.0 trading did not pay an execution 
fee (other than standard transaction fees) to trade against orders 
resting in the electronic book in their appointed classes. Likewise, 
the Exchange believes it is appropriate to exempt from the Hybrid 3.0 
execution fee executions by market-makers against orders in the 
electronic book, HAL and COB in their appointed classes.
    In addition, the Exchange does not believe it would be appropriate 
to charge the fee to orders that are executed electronically by a 
broker since such orders are already subject to brokerage fees by a 
broker. A similar exemption existed for the RAES Access Fee.\8\ In 
addition, the Exchange is deleting Section 4 of the CBOE Fees Schedule 
regarding the RAES access fee, and revising accompanying footnotes 
accordingly, because the RAES system is no longer in use.
---------------------------------------------------------------------------

    \8\ Orders received by and executed on the RAES were assessed 
the RAES Access Fee that was set forth in Section 4 of the CBOE Fees 
Schedule, with one exception that was set forth in footnote 9 of the 
Fees Schedule.
---------------------------------------------------------------------------

    Hybrid 3.0 execution systems benefit market participants by 
improving execution time, service, efficiency, and in some cases 
providing price improvement. The Hybrid 3.0 execution fee is designed 
to help the Exchange recover its costs of developing these systems and 
offset the cost of maintaining and enhancing these systems in the 
future.\9\
---------------------------------------------------------------------------

    \9\ In pre-Hybrid 3.0 trading, orders resting in the electronic 
book that were executed paid an Order Book Official execution fee.

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

[[Page 21395]]

2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the objectives of Section 6 of the Act,\10\ in general, and 
furthers the objectives of Section 6(b)(4),\11\ 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 
CBOE facilities.
---------------------------------------------------------------------------

    \10\ 15 U.S.C. 78f(b).
    \11\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------

B. Self-Regulatory Organization's Statement on Burden on Competition

    The proposed rule change does not 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 Exchange has not solicited, and does not intend to solicit, 
comments on this proposed rule change. The Exchange has not received 
any unsolicited written comments from members or other interested 
parties.

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) of the Act \12\ and Rule 19b-4(f)(2) 
\13\ thereunder. At any time within 60 days of the filing of such 
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.
---------------------------------------------------------------------------

    \12\ 15 U.S.C. 78s(b)(3)(A).
    \13\ 17 CFR 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 No. SR-CBOE-2008-36 on the subject line.

Paper Comments

     Send paper comments in triplicate to Nancy M. Morris, 
Secretary, Securities and Exchange Commission, 100 F Street, NE., 
Washington, DC 20549-1090.

All submissions should refer to File Number SR-CBOE-2008-36. 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 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, 100 F Street, NE., 
Washington, DC 20549, on official business days between the hours of 10 
a.m. and 3 p.m. 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-2008-36 and should be 
submitted on or before May 12, 2008.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\14\
---------------------------------------------------------------------------

    \14\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Florence E. Harmon,
Deputy Secretary.
 [FR Doc. E8-8519 Filed 4-18-08; 8:45 am]
BILLING CODE 8010-01-P