[Federal Register: March 25, 2003 (Volume 68, Number 57)]
[Notices]
[Page 14445-14446]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr25mr03-89]
[[Page 14445]]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-47515; File No. SR-CBOE-2003-11]
Self-Regulatory Organizations; Notice of Filing of Proposed Rule
Change by the Chicago Board Options Exchange, Incorporated Relating to
Linkage Fees
March 17, 2003.
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 12, 2003 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 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
The Exchange proposes to provide that its linkage fee structure
operate as a pilot program for one year. The text of the proposed rule
change is below; proposed language is italicized.\3\
* * * * *
Chicago Board Options Exchange, Inc.--Fee Schedule, January 31, 2003
------------------------------------------------------------------------
Per contract
------------------------------------------------------------------------
1. Option Transaction Fees 1 2 3 4 7:
Equity & QQQ Options ..............
* * * * * * *
VI. Non-Member Market Maker (not eligible for $.19
Prospective Fee Reduction Program) 8...................
Index Options
* * * * * * *
V. Non-Member Market Maker 8:
[sbull] S & P 100 (including OEF), PREMIUM OR = $1........................................
[sbull] S & P 100 (including OEF), PREMIUM < $1..... .15
* * * * * * *
2. Trade Match Fee 1 4 7:
* * * * * * *
[sbull] All Other Equity, QQQ and Index Orders 8.... .05
3. Floor Brokerage Fee 1 5:
[sbull] All Other Equity, QQQ and Index Options 8....... .04
4. Raes Access Fee (Retail Automatic Execution System) 1
4:
* * * * * * *
[sbull] Non-Customer Transactions (Origin Code Other .30
Than ``C'')8...........................................
------------------------------------------------------------------------
Notes:
* * * * * * *
\8\ Includes, on a pilot basis until January 31, 2004, orders from
members of other exchanges executing Linkage transactions, except for
Satisfaction Orders, which are not assessed Exchange fees per Linkage
rules.
* * * * * * *
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 on 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.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ At the request of the CBOE, nonsubstantive modifications
were made to the proposed rule text as filed with the Commission to
indicate omitted language. Telephone call between Angelo Evangelou,
Senior Attorney, Legal Division, CBOE, and Jennifer Lewis, Attorney,
Division of Market Regulation, Commission, on March 17, 2003.
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A. Self-Regulatory Organization's Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule Change
1. Purpose
On January 31, 2003, the Commission approved a CBOE proposal adding
rules concerning the intermarket options linkage.\4\ As part of that
filing, CBOE submitted an amendment making minor changes to the text of
the proposed linkage rules and modifying CBOE's fee schedule to make
clear that CBOE fees for linkage orders would be the same as CBOE fees
for non-linkage orders from the same originating source (market makers
on other exchanges). This filing merely proposes to establish that
CBOE's fees for linkage orders will operate under a pilot program to
allow the Commission and CBOE to gauge the suitability of the current
linkage fees. The pilot would last until January 31, 2004.
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\4\ See Securities Exchange Act Release No. 47294 (January 31,
2003), 68 FR 6527 (February 7, 2003) approving SR-CBOE-2002-61.
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Because all linkage orders received by CBOE are for the account of
a broker-dealer market maker on another exchange, CBOE proposes that
the fees applicable to such orders to be the same as fees applicable to
market makers on other exchanges that submit orders to CBOE outside of
the linkage taking into account how those orders are handled at CBOE.
More specifically, the ``regular'' transaction fee applicable to non-
member market makers would apply to linkage orders (currently $.19 per
contract for equity options and QQQ options, and $.30 or $.15 per
contract for OEF options depending on premium). Further, a $.05 per
contract
[[Page 14446]]
trade match fee would also apply to each linkage order. Lastly, if a
linkage order is executed in whole or in part on RAES,\5\ a $.30 per
contract RAES fee would apply, and if any portion of a linkage order is
manually handled, a $.04 per contract floor brokerage fee is assessed.
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\5\ RAES is the automated execution system feature of the
Exchange's order routing system that is owned and operated by the
Exchange and that provides automated order execution and reporting
services for options. See Exchange rule 6.8.
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2. Statutory Basis
The Exchange believes that the proposed rule change meets the
requirement of section 6(b)(5) under the Act \6\ in that it is designed
to prevent fraudulent and manipulative acts and practices, to promote
just and equitable principles of trade, to foster cooperation and
coordination with persons engaged in regulating, clearing, settling,
processing information with respect to, and facilitating transaction in
securities, to remove impediments to and perfect the mechanism for a
free and open market and a national market system, and, in general, to
protect investors and the public interest.
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\6\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange believes that the proposed rule change does not impose
any burden on competition that is not necessary or appropriate in
furtherance of the purposes of the Exchange 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
Within 35 days of the date of publication of this notice in the
Federal Register or within such longer period (i) as the Commission may
designate up to 90 days of such date if it finds such longer period to
be appropriate and publishes its reasons for so finding or (ii) as to
which the self-regulatory organization consents, the Commission will:
(A) By order approve such proposed rule change; or
(B) Institute proceedings to determine whether the proposed rule
change should be disapproved.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views and
arguments concerning the foregoing, including whether the proposal 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 in the Commission's
Public Reference Room. 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-2003-11 and should be submitted by
April 15, 2003.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\7\
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\7\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 03-6989 Filed 3-24-03; 8:45 am]
BILLING CODE 8010-01-P