Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”), and rule 19b-4 thereunder, notice is hereby given that on December 26, 2002, the Chicago Board Options Exchange, Incorporated (“CBOE” or “Exchange”) filed with the Securities and Exchange Commission (“Commission” or “SEC”) the proposed rule change as described in items I, II and III below, which items have been prepared by the Exchange. CBOE has designated this proposal as one establishing or changing a due, fee, or other charge imposed by the Exchange under section 19(b)(3)(A)(ii) of the Act, which renders the proposal effective upon filing with the Commission. 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 make a change to its fee schedule related to options on the Russell 2000® Index (“RUT”). The text of the proposed rule change is available at the Office of the Secretary, CBOE 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 Exchange included statements concerning the purpose of and basis for its proposal and discussed any comments it received regarding the proposal. 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
The purpose of the proposed rule change is to impose a new per contract fee on the Designated Primary Market-Maker (“DPM”) for RUT options. Specifically, the Exchange proposes to impose an additional fee of $0.16 per contract to be charged to the DPM for options on the RUT for all RUT option transactions in which the DPM trades for its proprietary account. Currently, all DPMs are charged $0.19 per contract for transactions for their proprietary accounts. The charge to the DPM for the options on the RUT, therefore, now will be $0.35 per contract when the new $0.16 fee is combined with the $0.19 fee which is currently in effect for all DPMs. This fee will be used to assist the Exchange in offsetting a new per contract license fee that is being paid to Russell by CBOE.
The Exchange believes this fee is reasonable and justified because the DPM for the RUT has been awarded special status for the product (i.e. the DPM status) and thus, stands to gain the most from continued CBOE listing of the product, which is dependent upon payment of the per contract license fee. In addition, the current DPM for the RUT applied for the DPM status with full knowledge that the Exchange intended to impose a per contract license fee on the DPM to recoup some, Start Printed Page 2596but not all, of the per contract license fees that the Exchange pays in order to receive permission to trade the RUT at the CBOE. The DPM has indicated its willingness to pay this fee. In addition, the Exchange represents that the total amounts collected through this per contract fee shall not exceed the total per contract license fees paid to Russell. Finally, the Exchange believes that this proposed rule change is substantially identical to a previous CBOE rule filing, SR-CBOE-00-33, which the Exchange filed with the Commission on July 31, 2000.
2. Statutory Basis
The Exchange believes that the proposal is consistent with section 6(b) of the Act  in general and furthers the objectives of section 6(b)(4) of the Act  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 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.
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
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 and subparagraph (f) of rule 19b-4 thereunder. At any time within 60 days of the filing of the 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 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 number SR-CBOE-2002-72 and should be submitted by February 7, 2003.Start Signature
For the Commission, by the Division of Market Regulation, pursuant to delegated authority.
Margaret H. McFarland,
4. Securities Exchange Act Release No. 43226 (August 29, 2000), 65 FR 54332 (September 7, 2000).Back to Citation
[FR Doc. 03-1107 Filed 1-16-03; 8:45 am]
BILLING CODE 8010-01-P