02-12205. Self-Regulatory Organizations; Notice of Filing and Immediate Effectiveness of Proposed Rule Change by the Chicago Board Options Exchange, Incorporated Relating to Fees for Telecommunications, Screen-Based Trading, and Market Data Products

May 9, 2002.

Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”)^[1] and Rule 19b-4 thereunder,^[2] notice hereby is given that on April 19, 2002, 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.

I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change

CBOE is proposing to make a change to its Fee Schedule to: (1) Reduce its telecommunication fees; (2) modify its connectivity fee schedule for the CBOE direct screen-based trading system; and (3) reflect charges for additional market data (regarding the New York Stock Exchange's OpenBook) now available through trading floor terminals rented by CBOE members. The text of the proposed rule change is available at the Exchange's Office of the Secretary 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, CBOE included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received regarding 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

Reduction of Telecommunication Fees

CBOE increased its telecommunications fees this year to help fund the installation of a new trading floor phone system.^[3] Because the installation of the phone system will take place later than previously anticipated, CBOE has decided that certain of the fees should be reduced. CBOE proposes to implement these reductions through the changes to Section 7G of the Exchange Fee Schedule.

Modification of Connectivity Fees for CBOE direct

In a previous rule filing, CBOE provided a detailed technical explanation of the connectivity fees imposed by the Exchange in connection with the CBOE direct screen-based trading platform.^[4] CBOE now proposes certain modifications to the connectivity fees that would reduce the costs of certain connectivity alternatives while also more fairly distributing the overall costs associated with CBOE direct connectivity. CBOE proposes to implement these modifications through the changes to Section 15 of the Exchange Fee Schedule.

Fees Relating to New NYSE Open Book Service

The New York Stock Exchange (“NYSE”) has launched a new market data product called OpenBook, which will display the NYSE book through all prices for an individual stock. OpenBook is accessible through quote vendors that supply the information as an add-on service. CBOE members who rent trading floor terminals will be able to access the OpenBook data for an additional fee, set forth in the proposed amendments to Section 7(G)(10) of the Exchange Fee Schedule. Although CBOE will collect the fee for OpenBook access, all of the fee will be passed on to the quote vendor.^[5]

2. Statutory Basis

CBOE believes that 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.

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

CBOE does not believe that the proposed rule change would impose any burden on competition 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

CBOE has asserted that, 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^[8] and subparagraph (f)(2) of Rule 19b-4 thereunder.^[9] 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, including whether the proposed rule change is consistent with the Act. Persons making written submissions should file six copies thereof with the Secretary, Securities and Exchange Commission, 450 Fifth Street NW., Washington DC 20549-0609. 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 at 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-2001-17 and should be submitted by June 6, 2002.

For the Commission, by the Division of Market Regulation, pursuant to delegated authority.^[10]

Margaret H. McFarland,

Deputy Secretary.

Footnotes

1.  15 U.S.C. 78s(b)(1).

2.  17 CFR 240.19b-4.

3.  See Securities Exchange Act Release No. 45269 (January 11, 2002), 67 FR 2710 (January 18, 2002) (SR-CBOE-2001-72).

4.  See Securities Exchange Act Release No. 45009 (October 31, 2001), 66 FR 56365 (November 7, 2001) (SR-CBOE-2001-55).

5.  Telephone conversation between Christopher Hill, Legal Division, CBOE, and Michael Gaw, Division of Market Regulation, Commission, on May 9, 2002.

6.  15 U.S.C. 78f(b).

7.  15 U.S.C. 78f(b)(4).

8.  15 U.S.C. 78s(b)(3)(A).

9.  17 CFR 240.19b-4(f)(2).

10.  17 CFR 200.30-3(a)(12).