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Notice

Self-Regulatory Organizations; Notice of Filing and Immediate Effectiveness of Proposed Rule Change and Amendment No. 1 by the Chicago Board Options Exchange, Inc. Amending its Schedule of Exchange Fees

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Start Preamble July 26, 2001.

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 June 28, 2001, 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, II, and III below, which Items have been prepared by the CBOE. On July 20, 2001, the CBOE submitted Amendment No. 1 to the proposed rule change.[3] The Commission is publishing this notice to solicit comments on the proposed rule change and Amendment No. 1 from interested persons.

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

The CBOE proposes to amend its fee schedule. The text of the proposed rule Start Printed Page 40303change is available at the Office of the Secretary, CBOE and 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, as amended, 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

1. Purpose

The purpose of this proposed rule change is to make certain fee changes and deletions, and to renew and amend the Exchange's Prospective Fee Reduction Program. The proposal is the product of the Exchange's annual budget review. The fee changes were approved by the Exchange's Board of Directors pursuant to CBOE Rule 2.22. The CBOE proposes that the changes would be effective as of July 1, 2001.

The Exchange is amending the following fees. (1) Registration fees for Registered Representatives, Registered Options Principals, and Financial/Operations Principals will be increased from $45 to $55 for initial applications. Annual and transfer fees for these registered persons will be increased from $40 to $50. The Exchange proposes to amend CBOE Rule 2.22(b) to reflect the increase in these registration fees. (2) The ILX trading floor booth terminal rental fee will be increased from $400 to $425 per month, the ILX installation fee will be increased from $150 to $175 per month, the ILX removal fee will be increased from $100 to $125 per month, and the ILX relocation fee will be increased from $200 to $225 per month. (3) The various monthly booth fees will each be raised 10%. (4) The various membership application fees will each be raised 10%, except for the Fingerprint Processing fee, which will be raised 14% (from $35 to $40), and New Member Orientation Fee, which will remain unchanged at $500. The Exchange proposes to amend its Membership Fee Circular to reflect these membership application fee changes.

The various amendments contained in this filing are structured to fairly allocate the costs of operating the Exchange.

The Exchange proposes to renew and amend its Prospective Fee Reduction Program (“Program”). The Program provides 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 will be reduced in the following fiscal quarter in accordance with a fee reduction schedule. Trading volume in the fourth quarter of fiscal year 2001 will be used to determine the discount applied in the first quarter of fiscal year 2002. The CBOE proposes that the Program begin on July 1, 2001 at the beginning of the Exchange's 2002 fiscal year, and continue through the end of the Exchange's 2002 fiscal year, terminating June 30, 2002.

The amendments to the Program are structured to fairly allocate the costs of operating the Exchange in the event that the Exchange experiences higher volume. In addition, although the proposed rule change provides that the Exchange's Program will terminate at the end of the Exchange's 2002 fiscal year, the Exchange intends to evaluate this Program prior to the beginning of the 2002 fiscal year and may renew this Program in the same or modified form for the 2003 fiscal year.[4]

2. Statutory Basis

The Exchange believes the proposed rule change, as amended, is consistent with Section 6(b) Act [5] in general, and furthers the objectives of Section 6(b)(4) of the Act [6] in particular, in that it is designed to provide for the equitable allocation of reasonable dues, fees, and other changes among CBOE members.

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

The Exchange does not believe that the proposed rule change, as amended, will 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 either solicited or received.

III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action

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) [7] of the Act and Rule 19b-4(f)(2) [8] thereunder. At any time within 60 days of the filing of the proposed rule change, as amended, 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, as amended, 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, as amended, 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 CBOE. All submissions should refer to File No. SR-CBOE-2001-37 and should be submitted by August 23, 2001.

Start Signature

For the Commission, by the Division of Market Regulation, pursuant to delegated authority.[9]

Margaret H. McFarland,

Deputy Secretary.

End Signature End Preamble

Footnotes

3.  See letter to Nancy Sanow, Assistant Director, Division of Market Regulation (“Division”), Commission, from Christopher Hill, Attorney II, CBOE, dated July 19, 2001 (“Amendment No. 1”). In Amendment No. 1, the CBOE made technical corrections to the rule text.

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4.  The Commission notes and the Exchange acknowledges that it would be required to file a proposed rule change pursuant to Section 19(b) of the Act before renewing or modifying this program. Telephone conversation between Christopher Hill, Attorney II, CBOE, and Frank N. Genco, Attorney Advisor, Division, Commission on July 9, 2001.

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[FR Doc. 01-19281 Filed 8-1-01; 8:45 am]

BILLING CODE 8010-01-M