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Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to Transaction Fees for Electronically Executed Broker-Dealer Orders in IWM and QQQQ Options

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Start Preamble June 20, 2007.

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 May 29, 2007, the Chicago Board Options Exchange, Incorporated (“CBOE” or “Exchange”) filed with the Securities and Exchange Commission Start Printed Page 35274(“Commission”) the proposed rule change as described in Items I, II, and III below, which Items have been substantially prepared by the CBOE. 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 amend the CBOE Fees Schedule (“Fees Schedule”) to reduce transaction fees for electronically executed broker-dealer orders in options on the iShares Russell 2000 Index Fund (“IWM”) and the Nasdaq-100 Index Tracking Stock (“QQQQ”). The text of the proposed rule change is available at the CBOE, on the Exchange's Web site at​legal, and in 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, the Exchange 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 IV 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

Currently, the Exchange assesses a transaction fee of $.45 per contract on broker-dealer orders that are electronically executed on the CBOE Hybrid Trading System (“Hybrid”).[3] Manually executed broker-dealer orders are assessed a transaction fee of $.25 per contract.[4] The broker-dealer electronic transaction fee helps allocate to broker-dealer orders a fair share of the costs of running the automatic execution feature of Hybrid and related Exchange systems.

The Exchange proposes to reduce the broker-dealer electronic transaction fee from $.45 per contract to $.25 per contract in IWM and QQQQ options, so that both electronic and manual broker-dealer executions in these products would be assessed $.25 per contract. The Exchange believes it is reasonable and appropriate not to assess a higher fee for electronic broker-dealer executions in IWM and QQQQ options because these options are among the largest options contracts on the Exchange in terms of trading volume and generate significant revenues for the Exchange.

The Exchange implemented the proposed fee changes on June 1, 2007.

2. Statutory Basis

The proposed rule change is consistent with Section 6(b) of the Act,[5] in general, and furthers the objectives of Section 6(b)(4) [6] 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 and other persons using its facilities.

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

CBOE does not believe that the proposed rule change will impose any burden on competition that is 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

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 [7] and subparagraph (f)(2) of Rule 19b-4 [8] 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.[9]

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. Comments may be submitted by any of the following methods:

Electronic Comments

Paper Comments

  • Send paper comments in triplicate to Nancy M. Morris, Secretary, Securities and Exchange Commission, 100 F Street, NE., Washington, DC 20549-1090.

All submissions should refer to File Number SR-CBOE-2007-55. 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, please use only one method. The Commission will post all comments on the Commission's Internet Web site (​rules/​sro.shtml). 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 also will be available for inspection and copying at the principal office of the CBOE. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR-CBOE-2007-55 and should be submitted on or before July 18, 2007.

Start Signature
Start Printed Page 35275

For the Commission, by the Division of Market Regulation, pursuant to delegated authority.[10]

Florence E. Harmon,

Deputy Secretary.

End Signature End Preamble


3.  “Broker-dealer” orders are defined in Footnote 16 of the Fees Schedule as broker-dealer orders (orders with “B” origin code), non-member market-maker orders (orders with “N” origin code), and orders from specialists in the underlying security (orders with “Y” origin code).

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4.  However, electronically and manually executed broker-dealer orders in options on the S&P 100 Index (“OEX” and “XEO”), S&P 500 (“SPX”), and Morgan Stanley Retail Index (“MVR”) are charged $.30 per contract, $.40 per contract, and $.25 per contract, respectively. Telephone conversation between Jaime Galvan, Assistant Secretary, CBOE, and Sara Gillis, Attorney, Division of Market Regulation, Commission, on June 18, 2007.

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[FR Doc. E7-12388 Filed 6-26-07; 8:45 am]