Federal Register / Vol. 62, No. 198 / Tuesday, October 14, 1997 / Notices 53357

1Telephone conversation between Kathy

Marshall, Boston Stock Exchange, and Christine

Richardson, Division of Market Regulation,

Commission (Sep. 17, 1997).

2For example, assume Member Firm ABC

generated $100,000 in total transaction fees,

$60,000 of which were associated with electronic

order flow. Assume further that this $100,000

related to 200,000 total shares traded during the

month. Under the new fee maximum, ABC’s

electronic order flow fees would be capped at

$50,000 and any electronic order flow executed

beyond this maximum would be assessed at $0.00

throughout the remainder of the month. At the end

of the month, the Exchange would calculate the

total fees generated by ABC’s account, here $90,000

($50,000 in electronic order flow plus $40,000 in

non-electronic order flow), and divide it by the total

number of shares traded during the month. Here,

the Exchange would divide $90,000 by 200,000

shares, which would equate to a rate of $.45 per 100

average monthly shares. Thus ABC would pay a

total of $90,000 in transaction fees for that month.

If, however, the resulting rate were greater than $.45

per 100 average monthly shares, the total

transaction fees would be further reduced to this

maximum. Telephone Conversation between Kathy

Marshall, Boston Stock Exchange, and Christine

Richardson, Division of Market Regulation,

Commission (Sep. 24, 1997).

3For example, assume Member Firm ABC

executed 2,500,000 multiple automated cross trade

shares in a month comprised of 21 trading days.

Under the new proposal, the cost structure of the

first 2,100,000 multiple automated cross trade

shares (21 trading days × 100,000 average daily

shares) would not change. However, for every share

of this type executed above and beyond 100,000

average daily shares (in this example, 2,100,000

shares), the cost per share would be the lesser of

$.0025 per share or the original rate per share at the

time of execution. If a 7,500 share cross trade

generated a total fee of $30.00 ($.0040 per share),

the total fee of this trade would be capped at $18.75

($.0025 per share) for a reduction in the cost of the

trade of $11.25. If the same trade generated a total

fee of $15.00 ($.0020 per share), the total cost of the

trade would remain at $15.00. Telephone

Conversation between Kathy Marshall, Boston

Stock Exchange, and Christine Richardson, Division

of Market Regulation, Commission (Oct. 1, 1997).

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 97–27041 Filed 10–10–97; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 39199; File No. SR–BSE–97–

05]

Self-Regulatory Organizations; Notice

of Filing and Immediate Effectiveness

of Proposed Rule Change by the

Boston Stock Exchange Relating to Its

Transaction Fee Schedule

October 3, 1997.

Pursuant to Section 19(b)(1) of the

Securities Exchange Act of 1934

(‘‘Act’’), 15 U.S.C. 78s(b)(1), notice is

hereby given that on September 4, 1997,

the Boston Stock Exchange, Inc. (‘‘BSE’’

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 self-regulatory

organization. The Commission is

publishing this notice to solicit

comments on the proposed rule change

from interested persons.

I. Self-Regulatory Organization’s

Statement on the Terms of Substance of

the Proposed Rule Change

The Exchange seeks to amend its

transaction fee schedule to implement

two additional transaction fee

maximums.

The text of the proposed rule change

is available at the Office of the

Secretary, BSE 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

self-regulatory organization 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 self-regulatory organization 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 the proposed fee

revision is to respond to the needs of the

Exchange’s constituents with respect to

overall competitive market conditions

and customer satisfaction. As such, the

Exchange intends to implement two

additional transaction fee maximums.

A monthly transaction fee maximum

(including both Trade Recording and

Comparison and Value Charge fees) of

$50,000 per member firm for all

electronic order flow (both incoming

and outgoing trades) is being

implemented. The monthly electronic

transaction fee maximum of $50,000

will precede the existing total volume

maximum of $.45 per 100 average

monthly shares. Member firms will

continue to pay the current rate for

Trade Recording and Comparison and

Value Charge fees on all electronic

trades up to the maximum charge of

$50,000 for this type of order flow. Any

electronic trading beyond the $50,000

electronic transaction fee cap will be

assessed at $0.00 per 100 average

monthly shares throughout the

remainder of the month.1 If at month’s

end, a member firm’s fee for electronic

order flow has reached the $50,000

maximum and its total volume rate per

100 average monthly shares exceeds

$.45, the firm’s transaction fees will

then be capped at $.45 per 100 average

monthly shares.2

A transaction fee maximum

(including both Trade Recording and

Comparison and Value Charge fees) for

multiple automated cross trades is also

being implemented. The transaction fee

maximum of $.25 per 100 shares will

apply once a firm has executed 100,000

average daily multiple automated cross

trade shares. This maximum is in

addition to the maximum rate per trade

side of $25.00 for Trade Recording and

Comparison fees and $50.00 for Value

Charge fees. Member firms will pay the

lesser of $.25 per 100 shares or the

original rate per share at the time of

execution.3

2. Statutory Basis

The basis for the proposed rule

change is Section 6(b)(5) of the Act, in

that the proposed rule change is

designed to promote just and equitable

principles of trade; to foster cooperation

and coordination with persons engaged

in regulating clearing, settling,

processing information with respect to,

and facilitating transactions in

securities; to remove impediments to

and perfect the mechanism of a free and

open market and a national market

system; and, in general, to protect

investors and the public interest; and is

not designed to permit unfair

discrimination between customers,

issuers, brokers or dealers.

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

The Exchange has neither solicited

nor received comments on 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 change imposed by the Exchange,

it has become effective pursuant to

Section 19(b)(3)(A) of the Act and

subparagraph (e) of Rule 19b–4
53358 Federal Register / Vol. 62, No. 198 / Tuesday, October 14, 1997 / Notices

4 17 CFR 200.30–3(a)(12).

1 15 U.S.C. 78s(b)(1).

2 17 CFR 240.19b–4.

3The Exchange filed Amendment No. 1 to the

proposed rule change, the substance of which is

incorporated into this notice. See letter from

Timothy H. Thompson, Senior Attorney, CBOE, to

John Ayanian, Special Counsel, Market Regulation,

Commission, dated September 16, 1997

(‘‘Amendment No. 1’’).

4The Exchange’s OEX firm quote program was

approved by the Commission under Section 19(b)

of the Act in Securities Exchange Act Release No.

37388 (June 28, 1996), 61 FR 35821 (July 8, 1996).

thereunder. At any time within 60 days

of the filing of such proposed rule

change, the Commission may summarily

abrogate such rule change if its 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.

Persons making written submissions

should file six copies thereof with the

Secretary, Securities and Exchange

Commission, 450 Fifth Street, N.W.,

Washington, D.C. 20549. 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 the filing will also be

available for inspection and copying at

the principal office of the Exchange. All

submissions should refer to File No.

SR–BSE–97–05 and should be

submitted by November 4, 1997.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.4

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 97–27047 Filed 10–10–97; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–39202; File No. SR–CBOE–

97–45]

Self-Regulatory Organizations; Notice

of Filing and Order Granting

Accelerated Approval of Proposed

Rule Change by the Chicago Board

Options Exchange, Inc., Relating to

Certain Rules Governing Market-Maker

Obligations With Respect to the

Trading of Options on the DJIA

October 3, 1997.

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

September 8, 1997,3 the Chicago Board

Options Exchange, Inc. (‘‘CBOE’’ or

‘‘Exchange’’) filed with the Securities

and Exchange Commission

(‘‘Commission’’) the proposed rule

change as described in Items I and II

below, which Items have been prepared

by the self-regulatory organization. The

Commission is publishing this notice to

solicit comments on the proposed rule

change from interested persons and is

granting accelerated approval to the

proposed rule change.

I. Self-Regulatory Organization’s

Statement of the Terms of Substance of

the Proposed Rule Change

The CBOE proposes to amend certain

of its rules governing market-maker

obligations with respect to the trading of

options on the Dow Jones Industrial

Average (‘‘DJIA’’ or ‘‘Index’’). 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

self-regulatory organization 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 III below.

The self-regulatory organization 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 Exchange is proposing to amend

certain Exchange rules governing

market-maker obligations with respect

to the trading of options on the DJIA

(trading symbol ‘‘DJX’’). Specifically,

the Exchange is proposing to make the

following changes with respect to

trading in options on the DJIA: (i)

Amending Rule 24.17 to apply the rules

governing the Retail Automatic

Execution System (‘‘RAES’’) eligibility

in options on the Standard & Poor’s 100

Stock Index (‘‘S&P 100’’) (‘‘OEX’’) to

options on the DJIA; (ii) amending Rule

24.17 to add an interpretation and

policy that the provisions of paragraph

(b)(v)(C) and (D) will not apply to DJX

market makers until December 1, 1997;

(iii) creating Rule 24.17A, RAES

Operations in Options on the DJIA,

which applies the RAES operations in

OEX to DJX and states that the Exchange

can determine the maximum order size

for RAES orders for options on the DJIA

up to 100 contracts, a higher level than

for OEX; (iv) amending paragraph (a)(2)

of Rule 8.51 (and related interpretations)

governing the minimum firm quote

requirement, for a market-maker trading

crowd; (v) applying the terms of the

previously approved OEX firm quote

program to the DJX trading crowd, and

amending the fine amount under the

Minor Rule Plan for violations of the

Firm Quote Rule; (vi) amending the fine

schedule for violations of the Firm

Quote Rule for OEX; and (vii) amending

Rule 8.16, RAES Eligibility in Equity

Options, to indicate that it does not

apply to DJIA options.4

The purpose for these proposed rule

changes is to enhance market-maker

obligations with respect to the trading of

options on the DJIA. The Exchange

expects these change to enhance the

depth and liquidity of the market for

options on the DJIA. The Exchange also

notes that because option contracts on

the DJIA will be based upon one-one

hundredth of the value of the DJIA,

these options contracts will overlie

approximately one-tenth of the value

that other broad-based index options

overlie, such as options on the Standard

& Poor’s 500 Stock Index (‘‘SPX’’) and

on OEX. This is so because the values

of the S&P 500 Index and the S&P 100

Index currently are approximately onetenth of the value of the DJIA, yet OEX

and SPX are based on the full value of

their respective underlying indexes.

Consequently, the Exchange believes an

increase in these market-maker

obligations is necessary to ensure an

appropriate level of market-maker

commitment.

Under the proposed rule change, the

rules applicable to RAES in OEX will

apply to RAES in DJX. The proposed

rule change revises Rule 24.17, RAES

Eligibility in OEX to refer to ‘‘Option

Class’’ instead of OEX. ‘‘Option Class’’

will mean either OEX or DJX, as

appropriate. Also, the Rule will be

revised to refer to the ‘‘appropriate

Committee’’ which will mean the OEX

Market Performance Committee’’ the