[Federal Register: November 26, 2001 (Volume 66, Number 227)]
[Notices]               
[Page 59038-59039]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr26no01-74]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-45075; File No. SR-CBOE-2001-57]

 
Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by the Chicago Board Options 
Exchange, Incorporated To Establish Fees for Excessive RFQs on Its New 
Screen-Based Trading System

November 19, 2001.
    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 October 30, 2001, 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.
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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

    CBOE is proposing to establish fees for excessive requests for 
quotes (``RFQs'') on the Exchange's screen-based trading system. The 
text of the proposed rule change is available at the principal office 
of the Exchange and 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
    CBOE is proposing to establish an excessive request for quote fee 
applicable to the Exchange's new screen-based trading system, CBOE 
direct.\3\ CBOEdirect is CBOE's new options trading engine. A component 
of trading on CBOEdirect is the RFQ process (although CBOE market-
makers may be required to provide continuous two-sided markets in 
products traded on the system). RFQs generally provide a mechanism for 
gauging the CBOE market in a particular option series in connection 
with effecting a trade in such series. Accordingly, the RFQ process is 
not meant to serve exclusively as an unlimited price discovery 
mechanism. Thus, CBOE is proposing to adopt an excessive RFQ fee based 
on what CBOE believes to be a more than reasonable RFQ-to-total-trade 
ratio.
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    \3\ The Exchange anticipates that, initially, trading on 
CBOEdirect will occur only during extended trading hours for a 
limited range of products. Separately, CBOE has filed a proposed 
rule change to adopt certain rules governing trading on CBOEdirect. 
See File No. SR-CBOE-00-55.
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    This monthly fee will equal $1 for any RFQ submitted by a member 
during a given calendar month if that member's RFQ-to-trade ratio for 
that month is greater than 5:1 and less than or equal to 10:1. 
Alternatively, this monthly fee will equal $5 for any RFQ submitted by 
a member during a given calendar month if that member's RFQ-to-trade 
ratio for that month is greater than 10:1. In this way, CBOE believes 
that the fee will help reduce excessive RFQs without prohibiting 
members from submitting excessive RFQs.
2. Statutory Basis
    CBOE believes that the proposed rule change is consistent with 
section 6(b) of

[[Page 59039]]

the Act \4\ in general and section 6(b)(4) \5\ 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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    \4\ 15 U.S.C. 78f(b).
    \5\ 15 U.S.C. 78f(b)(4).
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B. Self-Regulatory Organization's Statement on 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 represents that the proposed rule change 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)(ii) of 
the Act \6\ and subparagraph (f)(2) of Rule 19b-4 \7\ 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.
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    \6\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \7\ 17 CFR 240.19b-4(f)(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. 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-2001-57 and 
should be submitted by December 17, 2001.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\8\
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    \8\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 01-29358 Filed 11-23-01; 8:45 am]
BILLING CODE 8010-01-M