[Federal Register Volume 62, Number 225 (Friday, November 21, 1997)]
[Notices]
[Pages 62383-62384]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-30625]
[[Page 62383]]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-39324; File No. SR-CBOE-97-53]
Self-Regulatory Organizations; Notice of Filing and Immediate
Effectiveness of Proposed Rule Change by the Chicago Board Options
Exchange, Incorporated, Relating to Exchange Fees
November 13, 1997.
Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of
1934 (``Act''), notice is hereby given that on October 3, 1997, 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 the Exchange. The Commission is publishing
this notice to solicit comments on the proposed rule change from
interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
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I. Self-Regulatory Organization's Statement of the Terms of
Substance of the Proposed Rule Change
The Exchange seeks to establish various fees and discounts relating
to options based on Dow Jones & Company (``Dow Jones'') indexes, and
the use of the Exchange's new cellular phone and pager systems. The
Exchange also seeks to indefinitely suspend its Prospective Fee
Reduction Program for Market-Maker Transaction Fees, Floor Broker Fees,
and Member Dues.
The text of the proposed rule change is available at the Office of
the Secretary, the Exchange 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, the Exchange 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 Exchange 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 purpose of the proposed rule change: is (i) To establish fees
relating to options based on Dow Jones indexes, three of which began
trading on October 6, 1997; \2\ (ii) to indefinitely suspend, effective
October 1, 1997, the Exchange's Prospective Fee Reduction Program for
Market-Maker Transaction Fees, Floor Broker Fees, and Member Dues; \3\
(iii) to establish user fees relating to the Exchange's new trading-
floor cellular phone system; and (iv) to impose fees for the repair of
abusive damage to pagers. The Exchange is implementing these fee
changes pursuant to Exchange Rule 2.22.
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\2\ On October 6, 1997, the Exchange commenced trading options
on the following Dow Jones indexes: the Dow Jones Industrial Index
(``DJX''), the Dow Jones Utilities Index (``DUX''), and the Dow
Jones Transportation Index (``DTX'').
\3\ The Exchange filed its proposed rule change with the
Commission on October 3, 1997. However, the proposed rule change
indefinitely suspends the Exchange's Prospective Fee Reduction
Program for Market-Maker Transaction Fees, Floor Broker Fees, and
Member Dues, as of October 1, 1997. The Commission notes that a
proposed rule change made pursuant to Section 19(b)(3)(A) of the
Act, such as SR-CBOE-97-53, is not effective until filed with the
Commission.
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The Exchange proposes to establish a transaction fee schedule for
all options based on Dow Jones indexes that is identical to the current
OEX transaction fee schedule. The fees would be as follows: (1) Forty
cents per contract for customer transactions that have a premium
greater than or equal to one dollar; (2) twenty cents per contract for
customer transactions that have a premium less than one dollar; (3) ten
cents per contract for member firm proprietary transactions; and (4)
six cents per contract for market maker transactions.
In addition, the Exchange proposes to apply a Large Trade Discount
Program to Dow Jones indexes, through which customer orders in excess
of one thousand contracts would receive a discount. While the first one
thousand contracts of a customer order will be assessed regular
transaction fee rates, all contracts in excess of one thousand would
receive a fifty percent discount. It should be noted that the discount
program relating to Dow Jones products will be separate and distinct
from the Large Trade Discount Program currently applicable to all other
Exchange products. The Exchange proposes to cap Retail Automated
Execution System (``RAES'') fees for Dow Jones indexes, so that the fee
of twenty five cents per contract only applies to the first twenty five
contracts of any RAES order.
The Exchange also proposes, effective October 1, 1997, to
indefinitely suspend its Prospective Fed Reduction Program for Market-
Maker Transaction Fees, Floor Broker Fees, and Member Dues. As a result
of the large expenditure of resources devoted to the commencement of
options trading in the Dow Jones indexes, the Exchange finds it
necessary to indefinitely suspend its Prospective Fee Reduction Program
to recoup working capital.
The Exchange further proposes to establish fees for its new
trading-floor cellular phone system. A lease fee of one hundred dollars
per month is proposed to be charged for each cellular phone.
Additionally, a lost, stolen, or damaged phone fee will be assessed at
the current replacement or repair cost.
Finally, the Exchange proposes to impose a fee for abusive damage
to pagers. The fee will be assessed at the current repair cost.
2. Statutory Basis
The Exchange represents that the proposed rule change is consistent
with Section 6(b) \4\ of the Act, in general, and furthers the
objectives of Section 6(b)(4) \5\ of the Act, in particular, in that it
is designed to provide for the equitable allocation of reasonable dues,
fees, and other charges among Exchange members.
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\4\ 15 U.S.C. 78f(b).
\5\ 15 U.S.C. 78f(b)(4).
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B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe the proposed rule change will impose
any inappropriate burden on competition.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
The Exchange did not solicit or receive written comments 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 establishes or changes a due, fee, or
other charge imposed by the Exchange and, therefore, has become
effective pursuant to Section 19(b)(3)(A) \6\ of the Act and
subparagraph (e) of Rule 19b-4 \7\ thereunder. At any time within 60
days of the filing of the proposed rule change, the Commission may
summarily
[[Page 62384]]
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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\6\ 15 U.S.C. 78s(b)(3)(A).
\7\ 17 CFR 240.19b-4(e).
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IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing. Persons making written submissions
should file six copies thereof with the Secretary, Securities and
Exchange Commission, 450 Fifth Street, NW., Washington, DC 20549.
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 will also be available for
inspection and copying at the principal office of the Exchange. All
submissions should refer to the File No. SR-CBOE-97-53 and should be
submitted by December 12, 1997.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\8\
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\8\ 17 CFR 200.30(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 97-30625 Filed 11-20-97; 8:45 am]
BILLING CODE 8010-01-M
