[Federal Register Volume 63, Number 92 (Wednesday, May 13, 1998)]
[Notices]
[Pages 26657-26658]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-12707]
[[Page 26657]]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-39963; File No. SR-CBOE-98-16]
Self-Regulatory Organizations; Notice of Filing and Immediate
Effectiveness of Proposed Rule Change by the Chicago Board Options
Exchange, Inc. Relating to Exchange Fees
May 6, 1998.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act'') \1\ and Rule 19b-4 \2\ thereunder, notice is hereby given
that on April 22, 1998, the Chicago Board Options Exchange, Inc.
(``CBOE'' or ``Exchange'') filed with the Securities and Exchange
Commission (``SEC'' or ``Commission'') the proposed rule change as
described in Items I, II, and III below, which Items have been prepared
by the CBOE.\3\ 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).
\2\ 17 CFR 240.19b-4.
\3\ The proposed rule change required a technical amendment to
clarify the fee schedule. Telephone conversation between Timothy
Thompson, Senior Attorney, CBOE, and Karl Varner, Staff Attorney,
SEC, on April 29, 1998.
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I. Self-Regulatory Organization's Statement of the Terms of
Substance of the Proposed Rule Change
The CBOE is proposing to change its Order Book Official (``book'')
rate schedule for index options. The text of the proposed rule change
is available at the Office of the Secretary, CBOE 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 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
The purpose of the proposed rule change is to change the book fee
schedule applicable to index options. The Exchange recently changed the
book fees for equity options.\4\ The book fees are billed at the end of
each month and so this change will be reflected in the bills for all
May transactions. These fees changes are being implemented by the
Exchange pursuant to CBOE Rule 2.22. Under the new schedule, index
option book execution services will be capped at a rate of $1.25 per
contract. The current rate schedule for index options assess various
charges for book executions depending on the premium and the order
size. The current schedule for index options is as follows:
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\4\ Securities Exchange Act Release No. 39618 (February 4,
1998), 63 FR 7019 (February 11, 1998) [File No. SR-CBOE-98-01]
(changing the book fee rate for equity options to $0.45 per
contract).
\5\ Premium equals the option price in dollars, calculated on a
per-share basis for equity option contracts, and calculated on a
per-unit basis for index option contracts. The ranges set forth
include their lower bounds.
Accommodation liquidations and cabinet trades are off-market
trades at a price of $1 per option contract.
The definitions were clarified during a telephone conversation
between Timothy Thompson, Senior Attorney, CBOE, and Karl Varner,
Staff Attorney, SEC, on May 5, 1998.
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First ten Eleven and
Premium \5\ contracts above
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Accommodation Liquidations.................. $0.10 $0.10
Cabinet trades.............................. 0.10 0.10
Under $0.50................................. 0.35 0.28
$0.50-1..................................... 0.525 0.455
1-2......................................... 0.63 0.525
2-4......................................... 0.77 0.63
4-8......................................... 1.05 0.91
8-14........................................ 1.40 1.05
14-20....................................... 1.75 1.295
20 and above................................ 2.10 1.61
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The new schedule will be as follows:
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First ten Eleven and
Premium contracts above
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Accommodation Liquidations.................. $0.10 $0.10
Cabinet trades.............................. 0.10 0.10
Under $0.50................................. 0.35 0.28
$0.50-1..................................... 0.525 0.455
1-2......................................... 0.63 0.525
2-4......................................... 0.77 0.63
4-8......................................... 1.05 0.91
8-14........................................ 1.25 1.05
14 and above................................ 1.25 1.25
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[[Page 26658]]
* * * * *
As with the previous schedule, cabinet trades/accommodation
liquidations, as described in CBOE Rules 6.54 and 21.15, will continue
to be charged $0.10 per contract. In addition, as in the previous
schedule, no execution fee will be assessed for market orders for any
index option sent to the book prior to the opening and executed during
opening rotation. Also, as before, no execution fee will be assessed
for limit orders in options on the Standard & Poor's 100 Index sent to
the book prior to the opening and executed during opening rotation. The
new fee schedule should reduce the overall Order Book Official book
fees paid by all Exchange members. The Exchange believes that the
reduction in the book fees will allow the Exchange to compete more
effectively for business in these types of products.
The proposed rule change is consistent with Section 6(b) of the
Act,\6\ in general, and furthers the objectives of Section 6(b)(4) of
the Act \7\ in particular, in that it is designed to provide for the
equitable allocation of reasonable dues, fees, and other charges among
CBOE members.
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\6\ 15 U.S.C. 78f(b).
\7\ 15 U.S.C. 78f(b)(4).
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B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange believes that the proposed rule change will not result
in 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
Comments were neither solicited nor received.
III. Date of Effectiveness of the Proposed Rule Change and Timing
for Commission Action
The proposed rule change establishes or changes a due, fee, or
other charge imposed by the Exchange and, therefore, has become
effective immediately upon filing with the Commission, pursuant to
Section 19(b)(3)(A)(ii) of the Act \8\ and subparagraph (e)(2) of Rule
19b-4 \9\ thereunder. 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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\8\ 15 U.S.C. 78s(b)(3)(A)(ii).
\9\ 17 CFR 240.19b-4(e)(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.\10\ Persons making written
submissions should file six copies thereof with the Secretary,
Securities and Exchange Commission, 450 Fifth Street, N.W., Washington,
D.C. 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 U.S.C. Sec. 552, will be available for inspection and
copying in the Commission's Public Reference Room. Copies of such
filing will also be available for inspection and copying at the
principal office of the Exchange. All submissions should refer to File
No. SR-CBOE-98-16 and should be submitted by June 3, 1998.
\10\ In reviewing this proposal, the Commission has considered
the proposed rule change's impact on efficiency, competition, and
capital formation. 15 U.S.C. 78c(f).
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For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\11\
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\11\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 98-12707 Filed 5-12-98; 8:45 am]
BILLING CODE 8010-01-M
