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Self-Regulatory Organizations; Order Approving Proposed Rule Change by the Chicago Board Options Exchange, Incorporated Relating to a One-Year Pilot for Options Intermarket Linkage Fees

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Information about this document as published in the Federal Register.

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Start Preamble April 29, 2003.

On March 12, 2003, the Chicago Board Options Exchange, Incorporated (“CBOE” or “Exchange”) filed with the Securities and Exchange Commission (“Commission”), pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”),[1] and Rule 19b-4 thereunder,[2] a proposed rule change to amend its fee structure to clarify which fees apply to trades pertaining to the options intermarket linkage (“Linkage”) and to specify that such fees are for a one-year pilot.

The Commission published the proposal rule change for comment in the Federal Register on March 25, 2003.[3] The Commission received no comments on the proposal. This order approves the proposal rule change.

Four CBOE fees would potentially apply to Linkage trades other than satisfaction orders: a transaction fee ($.19 per contract for equity options and QQQ options, $.30 per contract for OEF options with a premium greater than or equal to $1.00, and $.15 per contract for OEF options with a premium less than $1.00); a $.05 per contract trade match fee; a $.30 per contract RAES fee if the order is executed in whole or in part on RAES; and a $.04 per contract floor brokerage fee if any portion of the order is manually handled. Each of these Linkage-related fees would be implemented as a one-year pilot, expiring on January 31, 2004.

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 [4] and, in particular, the requirements of section 6 of the Act.[5] The Commission finds that the proposed rule change is consistent with section 6(b)(4) of the Act,[6] which requires that the rules of an exchange provide equitable allocation of reasonable dues, fees and other charges among its members and other persons using its facilities. The Commission believes the one-year pilot will give the Exchange and the Commission the opportunity to evaluate whether these fees are appropriate.

It is therefore ordered, pursuant to section 19(b)(2) of the Act,[7] that the proposed rule change is approved on a pilot basis until January 31, 2004.

Start Signature

For the Commission, by the Division of Market Regulation, pursuant to delegated authority.[8]

Margaret H. McFarland,

Deputy Secretary.

End Signature End Preamble


3.  See Securities Exchange Act Release No. 47515 (March 17, 2003), 68 FR 14445.

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4.  In approving this proposed rule change, the Commission notes that it has considered the proposed rule's impact on efficiency, competition, and capital formation. 15 U.S.C. 78c(f).

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[FR Doc. 03-11092 Filed 5-5-03; 8:45 am]