[Federal Register Volume 60, Number 165 (Friday, August 25, 1995)]
[Notices]
[Pages 44372-44374]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-21153]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-36119; File No. SR-CBOE-95-31]
Self-Regulatory Organizations; Notice of Filing and Immediate
Effectiveness of Proposed Rule Change by the Chicago Board Options
Exchange, Inc., Relating to Exchange Fees
August 18, 1995.
Pursuant to section 19(b)(1) of the Securities Exchange Act of
1934, 15 U.S.C. 78s(b)(1), notice is hereby given that on July 3, 1995,
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 CBOE. The
Commission is publishing this notice to solicit comments on the
proposed rule change from interested persons.
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The CBOE hereby gives notice that it is proposing to amend (i) its
Fee Reduction Program for Market-Maker Transaction Fees, Floor Broker
Fees, and Member Dues; (ii) its Fee Discount Program for Customer
``Block'' Transactions; (iii) its Fee Discount Program for SPX and OEX
Transaction Fees charged to Chicago Mercantile Exchange (``CME'')
Members; and (iv) certain Exchange fees.
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 amend (i) the
Exchange's Fee Reduction Program for Market-Maker Transaction Fees,
Floor Broker Fees, and Member Dues; (ii) the Exchange's Fee Discount
Program for Customer ``Block'' Transactions; (iii) the Exchange's Fee
Discount Program for SPX and OEX Transaction Fees Charged to CME
members; and (iv) certain Exchange fees. The foregoing fee changes are
being implemented by the Exchange pursuant to CBOE Rule 2.22 and became
effective on July 1, 1995.
The Exchange's Fee Reduction Program for Market-Maker Transaction
Fees, Floor Broker Fees, and Member Dues (``Program'') currently
provides
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that if at the end of any quarter of the Exchange's fiscal year the
Exchange's average contract volume per day on a fiscal year-to-date
basis exceeds one of certain predetermined volume thresholds, the
Exchange's Market-Maker transaction fees, Floor Broker fees, and member
dues will be reduced in the following fiscal quarter in accordance with
a fee reduction schedule. The Program is ongoing and has no termination
date. The Program is proposed to be amended to change the current
volume thresholds and fee reduction amounts under the Program. The
Program is also proposed to be amended to provide that the Program will
terminate on June 30, 1996 at the end of the Exchange's 1996 fiscal
year. In addition, the proposed rule change makes certain editorial
changes to the provisions that describe the Program without affecting
their substance.
The Exchange's Fee Discount Program for Customer ``Block''
Transactions (``Quantity Program'') currently provides for discounts on
the transaction fees that CBOE members pay with respect to public
customer orders for 500 or more contracts. The Quantity Program also
currently provides for a higher discount if a public customer order is
for 1,000 or more contracts. The Quantity Program is ongoing and
currently has no termination date. Under the proposed rule change, the
Quantity Program will retain its current feature that a discount is
applicable regardless of the Exchange's volume level, but will be
amended to provide for increased discounts in the event that the
Exchange's volume level exceeds one of certain predetermined volume
thresholds. Specifically, for any month the Exchange's average contract
volume per day exceeds one of the predetermined volume thresholds
referred to above, the transaction fees that are assessed by the
Exchange in that month with respect to public customer orders for 500
or more contracts will be subject to a larger discount in accordance
with a discount schedule. The Quantity Program is also proposed to be
amended to provide that all public customer orders for 500 or more
contracts will receive the same discount, to provide that the Quantity
Program will terminate on June 10, 1996 at the end of the Exchange's
1996 fiscal year, and to change the name of the Quantity Program to the
Customer ``Large'' Trade Discount Program. In addition, the proposed
rule change makes certain editorial changes to the provisions that
describe the Quantity Program without affecting their substance.
The Exchange's Fee Discount Program for SPX and OEX Transaction
Fees Charged to CME Members (``Reciprocity Program'') was established
pursuant to an agreement between the Exchange and the CME and currently
provides that on transactions for their own account in SPX and OEX
option contracts, CME members are eligible to receive the transaction
fee rates that the Exchange charges to CBOE member firms on their
proprietary transactions. Although the Exchange charges CME members the
transaction fee rates that the Exchange charges with respect to public
customer orders, CME members may submit an itemized rebate request to
the Exchange's Accounting Department and receive a rebate under the
Reciprocity Program equal to the difference between the customer
transaction fee rate and the member firm proprietary transaction fee
rate. In order for a CME member to be eligible to receive a rebate
under the Program with respect to a particular transaction, a rebate
request listing such transaction must be received by the Accounting
Department no later than 60 days after the end of the month in which
the transaction was consummated and must include the information
relating to the transaction which was reported to the Exchange's trade
match system. The Program is ongoing and has no termination date.
The Reciprocity Program is proposed to be amended to eliminate the
eligibility of CME members to receive member firm proprietary rates and
instead to make CME members eligible to receive a 14% discount on the
customer transaction fee rates that they are charged through the
submission of rebate requests in accordance with the same procedural
requirements that are currently in place under the Reciprocity Program.
This 14% discount is equal to the discount that the CME currently
provides to CBOE members with respect to CME transaction fees on
transactions for their own account in S&P 500 and S&P 100 futures
contracts. In addition, the proposed rule change makes certain
editorial changes to the provisions that describe the Reciprocity
Program without affecting their substance.
The proposed rule change also amends four Exchange fees.
First, the proposed rule change increases the SPX Phone Position
Monthly Rental Fee from $150 to $300. The Exchange charges this fee for
the rental of a telephone position adjacent to or near the SPX trading
pit. The new rate is equal to the rate that the Exchange charges for
the rental of a booth adjacent to or near the OEX trading pit.
Second, the proposed rule change increases the Exchange Bulletin
Annual Subscription Fee from $75 to $100. The Exchange Bulletin is a
weekly publication of the Exchange that contains Exchange notices of a
regulatory, administrative, operational, and informational nature. The
Exchange provides all Exchange members with one subscription to the
Exchange Bulletin free of charge. The Exchange Bulletin Annual
Subscription Fee is applicable to additional Exchange Bulletin
subscriptions from Exchange members and to Exchange Bulletin
subscriptions from those who are not members of the Exchange.
Third, the proposed rule change will alter the Inactive Nominee
Status Maintenance Fee charged by the Exchange to a fixed fee of $600
per quarter. This fee is currently equal to the amount of the
Exchange's quarterly membership dues.\1\ This fee is provided for by
CBOE Rule 3.8(b)(1), is payable quarterly by Exchange member firms for
each inactive nominee status that such firms wish to maintain, and is
payable regardless of any waiver of membership dues which might be
applicable. The Exchange's Membership Fee Circular will be amended to
reflect this fee change.
\1\ The Exchange's membership dues are currently $625 per
quarter.
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Fourth, the proposed rule change amends the Application,
Maintenance, and Transfer Registration Fees that the Exchange charges
member firms with respect to their Registered Representatives (``RRs'')
as described in CBOE Rule 9.3 and their Registered Options Principals
(``ROPs'') as described in CBOE Rule 9.2. Specifically, the proposed
rule change (i) increases from $15 to $25 the Application Registration
Fee that the Exchange charges for each new RR or ROP applicant, (ii)
increases from $15 per year to $20 per year the Maintenance
Registration Fee that the Exchange charges for the maintenance of each
RR and ROP registration, and (iii) increases from $15 to $20 the
Transfer Registration Fee that the Exchange charges for each RR or ROP
who transfers from another organization. The foregoing Registration
Fees are set forth in CBOE Rule 2.22(b), and therefore that Rule will
be amended to reflect these fee changes.
The proposed amendments are the product of the Exchange's annual
budget review. The CBOE represents that the amendments are structured
to fairly allocate the costs of operating the Exchange in the event
that the Exchange experiences higher volume and to shift
[[Page 44374]]
a portion of the Exchange's revenue from variable fees to fixed fees.
In addition, although the proposed rule change provides that the
Exchange's Program and Quantity Program will terminate at the end of
the Exchange's 1996 fiscal year, the Exchange intends to evaluate these
Programs prior to the beginning of the 1997 fiscal year and may renew
these Programs in the same or modified form for the 1997 fiscal year.
The CBOE represents that the proposed rule change is consistent
with Section 6 of the Act, in general, and Section 6(b)(4), in
particular, in that it provides for the equitable allocation of
reasonable dues, fees, and other charges among CBOE members.
B. Self-Regulatory Organization's Statement on Burden on Competition
CBOE does not believe that 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
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 rule change described herein 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) of the Act and Rule 19b-4(e)
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.
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, 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 5 U.S.C. 552, will be available for inspection and copying in the
Commission's Public Reference Section, 450 Fifth Street NW.,
Washington, D.C. 20549. Copies of such filing will also be available
for inspection and copying at the principal office of CBOE. All
submissions should refer to File No. SR-CBOE-95-31 and should be
submitted by September 15, 1995.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\2\
\2\ 17 CFR 200.30-3(a)(12) (1994).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 95-21153 Filed 8-24-95; 8:45 am]
BILLING CODE 8010-01-M
