[Federal Register: February 9, 2004 (Volume 69, Number 26)]
[Notices]
[Page 6008-6009]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr09fe04-86]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-49172; File No. SR-CBOE-2004-06]
Self-Regulatory Organizations; Notice of Filing and Order
Granting Accelerated Approval of Proposed Rule Change by the Chicago
Board Options Exchange, Inc. Relating to the Extension of a Linkage Fee
Pilot Program
February 2, 2004.
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 February 2, 2004, the Chicago Board Options Exchange, Inc.
(``Exchange'' or ``CBOE'') filed with the Securities and Exchange
Commission (``Commission'') the proposed rule change as described in
Items I and II 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 and is approving the
proposed rule change on an accelerated basis.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The CBOE proposes to extend the current pilot program for six
months until July 31, 2004 applicable to Options Intermarket Linkage
(``Linkage'') fees.
The proposed fee schedule is available at 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 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 III 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 Exchange's current fee structure for Principal (``P'') and
Principal Acting as Agent (``P/A'') Orders \3\ executed on the Exchange
is operating under a pilot program scheduled to expire on January 31,
2004.\4\ Currently, because all Linkage Orders received by CBOE are for
the account of a broker-dealer market maker on another exchange, the
fees applicable to P and P/A Orders are 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.
The Exchange now proposes to extend the pilot program to July 31, 2004.
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\3\ Under the Plan and Exchange Rule 6.80(12) which tracks the
language of the Plan, a ``Linkage Order'' means an Immediate or
Cancel order routed through the Linkage as permitted under the Plan
for the Purpose of Creating and Operating an Options Intermarket
Linkage. There are three types of Linkage Orders:
(i) ``P/A Order,'' which is an order for the principal account
of a specialist (or equivalent entity on another Participant
Exchange that is authorized to represent Public Customer orders),
reflecting the terms of a related unexecuted Public Customer order
for which the specialist is acting as agent;
(ii) ``P Order,'' which is an order for the principal account of
an Eligible Market Maker and is not a P/A Order; and
(iii) ``Satisfaction Order,'' which is an order sent through the
Linkage to notify a member of another Participant Exchange of a
Trade-Through and to seek satisfaction of the liability arising from
that Trade-Through.
\4\ See Securities Exchange Act Release No. 47761 (April 29,
2003), 68 FR 24042 (May 6, 2003) (SR-CBOE-2003-11).
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2. Statutory Basis
The Exchange believes that its proposal to amend its schedule of
dues, fees and charges is consistent with Section 6(b) of the Act \5\
in general, and furthers the objectives of Section 6(b)(4) of the Act
\6\ in particular, in that it is an equitable allocation of reasonable
dues, fees, and other charges.
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\5\ 15 U.S.C. 78f(b).
\6\ 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 that the proposed rule change will
impose any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Act.
[[Page 6009]]
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants or Others
No written comments were either solicited or received with respect
to the proposed rule change.
III. 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.
Comments may also be submitted electronically at the following e-mail
address: rule-comments@sec.gov. All comment letters should refer to
File No. SR-CBOE-2004-06. This file number should be included on the
subject line if e-mail is used. To help the Commission process and
review your comments more efficiently, comments should be sent in
hardcopy or by e-mail but not by both methods. 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 the Exchange. All
submissions should be submitted by March 1, 2004.
IV. Commission's Findings and Order Granting Accelerated Approval of
Proposed Rule Change
After careful consideration, the Commission finds that the proposed
rule change is consistent with the requirements of the Act and the
rules and regulations thereunder, applicable to a national securities
exchange,\7\ and, in particular, with the requirements of Section 6(b)
of the Act \8\ and the rules and regulations thereunder. The Commission
finds that the proposed rule change is consistent with Section 6(b)(4)
of the Act,\9\ which requires that the rules of the Exchange provide
for the equitable allocation of reasonable dues, fees, and other
charges among its members and other persons using its facilities. The
Commission believes that the extension of the CBOE's Linkage fee pilot
until July 31, 2004 will give the Exchange and the Commission further
opportunity to evaluate whether such fees are appropriate.
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\7\ In approving this rule, the Commission notes that it has
considered its impact on efficiency, competition, and capital
formation. 15 U.S.C. 78c(f).
\8\ 15 U.S.C. 78f(b).
\9\ 15 U.S.C. 78f(b)(4).
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The Commission finds good cause, pursuant to Section 19(b)(2) of
the Act,\10\ for approving the proposed rule change prior to the
thirtieth day after the date of publication of the notice of the filing
thereof in the Federal Register. The Commission believes that granting
accelerated approval will preserve the Exchange's existing pilot
program for Linkage fees without interruption as the CBOE and the
Commission further consider the appropriateness of Linkage fees.
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\10\ 15 U.S.C. 78s(b)(2).
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V. Conclusion
It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\11\ that the proposed rule change (SR-CBOE-2004-06) is hereby
approved on an accelerated basis for a pilot period to expire on July
31, 2004.
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\11\ Id.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\12\
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\12\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 04-2696 Filed 2-6-04; 8:45 am]
BILLING CODE 8010-01-P