66156 Federal Register / Vol. 62, No. 242 / Wednesday, December 17, 1997 / Notices

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

2 17 CFR 240.19b–4.

3On September 3, 1997, the Commission

approved CBOE’s request to trade options on the

following Dow Jones indexes, the Dow Jones

Industrial Index (‘‘DJX’’), the Dow Jones Utilities

Index (‘‘DUX’’), and the Dow Jones Transportation

Index (‘‘DTX’’). See Securities Exchange Act

Release Nos. 39011, 62 FR 47841 (September 11,

1997) (order approving File No. SR–CBOE–97–26);

39013, 62 FR 47845 (September 11, 1997) (order

approving File No. SR–CBOE–97–28); and 39012,

62 FR 47850 (September 11, 1997) (order approving

File No. SR–CBOE–97–27).

4The Exchange will recalculate October

discounts with the intent of including credits in

November billing statements sent to clearing firms.

If programming changes are not completed by the

end of November, the Exchange will endeavor to

send checks to clearing firms in early December for

October discounts.

5 15 U.S.C. 78f(b).

6 15 U.S.C. 78f(b)(4).

7 15 U.S.C. 78s(b)(3)(A).

8 17 CFR 19b–4(e).

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–39433; File No. SR–CBOE–

97–62]

Self-Regulatory Organizations; Notice

of Filing and Immediate Effectiveness

of Proposed Rule Change by the

Chicago Board Options Exchange, Inc.

Relating to Transaction Fees for

Options on the Three Dow Jones

Averages

December 11, 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 December

3, 1997, 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, II, and III below, which Items

have been 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 CBOE proposes to modify the

Exchange transaction fees applicable to

transactions in options based on Dow

Jones & Company indexes (‘‘Dow

Jones’’).

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 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 the proposed rule

change is to modify the large trade

discount program applicable to

transactions in options based on Dow

Jones indexes, three of which began

trading on October 6, 1997.3 The fee

changes, implemented by the Exchange

pursuant to CBOE Rule 2.22, will be

made retroactive to the launch of these

products on October 6, 1997.

The Exchange believes that because of

the relatively small size of the option

contracts on the Dow Jones indexes, the

current transaction fees have been

somewhat of a disincentive for

institutional trading. Consequently, the

Exchange has decided to reduce the fees

applicable to large trade (i.e. those

trades of over 1000 contracts) for all

market participants. Under the current

Dow Jones large trade discount program,

customer orders in excess of one

thousand contracts have received a fifty

percent discount on all contracts in

excess of one thousand. As before, the

Dow Jones program will be separate and

distinct from the Large Trade Discount

Program currently applicable to all other

CBOE products.

Retroactive to the launch date of

October 6, 1997,4 the large trade

discount program for the Dow Jones

products will be:

Customer Orders

• First 1,000 contracts of an order are

assessed regular transaction fees (same

as current program):

• $0.40 per contract when the

premium is $1 or more;

• $0.20 per contract when the

premium is under $1.

• Contracts 1,001 and above of an

order will receive a 100% discount.

(The current program provides a 50%

discount.)

Member Firm Proprietary Orders

• First 1,000 contracts are assessed

regular transaction fees of $0.10 (same

as current program).

• Contracts 1,001 and above will

receive a 100% discount. (The current

program does not provide a discount.)

Market-Makers on the Other Side of

Large Orders

• All market-maker contracts on the

other side of a Dow Jones customer or

member firm proprietary order of more

than 1,000 contracts will receive a 100%

discount on transaction fees. The waiver

of the transaction fee is applicable to all

market-makers on the other side of the

trade and is applicable to the entire

order, not just the portion over 1,000

contracts.

Trade match fees of $0.04 per

contracts and floor brokerage fees of

$0.03 per contracts under the original

program will not be changed. Large

trade discounts will be calculated after

each month end. Discounts will be

credited to clearing firms in the

following month’s Exchange billing

statements.

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) 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 will impose a

burden on competition.

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

The foregoing rule change establishes

or changes a due, fee, or other charge

imposed by the Exchange and therefore

has become effective pursuant to

Section 19(b)(3)(A) of the Act 7 and

subparagraph (e) of Rule 19b–4

thereunder.8 At any time within 60 days

of the filing of such 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,
Federal Register / Vol. 62, No. 242 / Wednesday, December 17, 1997 / Notices 66157

9 17 CFR 200.30–3(a)(12).

1The Commission approved the Regulatory

Circular (Regulatory Circular 96–73) containing the

current OEX telephone policy on July 26, 1996. See

Securities Exchange Act Release No. 37487 (July 26,

1996), 61 FR 40686 (August 5, 1996) (order

approving File No. SR–CBOE–96–14).

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 submission

should file six copies thereof with the

Secretary, Securities and Exchange

Commission, 450 Fifth Street, NW.,

Washington, DC 20549. Copies of the

submissions, 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, 450 Fifth Street, NW.,

Washington, DC. Copies of such filing

also will be available for inspection and

copying at the CBOE. All submissions

should refer to File No. SR–CBOE–97–

62 and should be submitted by January

7, 1998.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.9

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 97–32918 Filed 12–16–97; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–39435; File No. SR–CBOE–

97–55]

Self-Regulatory Organizations; Notice

of Filing and Order Granting

Accelerated Approval of Proposed

Rule Change by the Chicago Board

Options Exchange, Inc., Relating to the

Telephone Policy for the S&P 100

Index (‘‘OEX’’) Options Post

December 11, 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 October 9, 1997,

the Chicago Board Options Exchange,

Inc. (‘‘CBOE’’ or ‘‘Exchange’’) filed with

the Securities and Exchange

Commission (‘‘SEC’’ or ‘‘Commission’’)

the proposed rule change as described

in Items I and II below, which Items

have been prepared by the selfregulatory organization. The

Commission is publishing this notice to

solicit comments on the proposed rule

change from interested persons and

approving this proposal on an

accelerated basis.

I. Self-Regulatory Organization’s

Statement of the Terms of Substance of

the Proposed Rule Change

The CBOE proposes to amend its

current policy governing the use of

member-owned or Exchange-owned

telephones located at the post where

Standard & Poor’s 100 Index (‘‘OEX’’)

options are traded to allow market

makers to receive incoming telephone

calls from locations outside the CBOE

building on telephones at the OEX

post.1

The text of the regulatory circular 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 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

The purpose of the proposed rule

change is to amend the Exchange’s

current regulatory circular (Regulatory

Circular 96–73) governing the use of

telephones at the OEX option trading

post by eliminating the restriction

against market makers receiving

incoming calls at the OEX post from

locations outside of the Exchange

building. According to the CBOE, when

the OEX Floor Procedure Committee

(‘‘Committee’’) recommended that the

Exchange adopt a policy prohibiting

market makers from receiving incoming

calls at the OEX post, the Committee

was concerned that the receipt of

telephone calls would interfere with the

market makers’ fulfillment of their

duties to make markets and fill orders.

However, the CBOE notes that all other

trading posts on the CBOE’s floor have

successfully allowed market makers to

receive incoming calls without any

detrimental effects on the conduct of

business at those locations. In fact, the

Exchange has found that allowing

market makers to receive incoming calls

can allow them to stay in contact with

outside parties who can provide

information to the market makers that

may assist them in performing their

duties.

The proposed change to allow market

makers to receive incoming calls will

make the OEX telephone policy

consistent with the telephone policy at

all other trading locations on the

CBOE’s floor in this respect. Under the

proposal, the Exchange will allow

market makers to have their own

dedicated telephone or telephone line if

space permits. The Exchange will retain

the discretion to decide whether a

market maker may have its own

telephone or a dedicated line on an

Exchange telephone depending on the

space restrictions in the post.

The Exchange also is amending the

OEX telephone installation application

and agreement to reflect the proposed

change.

The Exchange believes the proposed

rule change will allow market makers to

better perform their duties by giving

them more open access to outside

information. In addition, the proposed

change will make the OEX telephone

policy consistent with the policies

elsewhere on the Exchange floor. For

the foregoing reasons, the Exchange

believes the rule proposal is consistent

with and furthers the objectives of

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

designed to perfect the mechanisms of

a free and open market and to protect

investors and the public interest by

providing better access to the OEX post.

(B) Self-Regulatory Organization’s

Statement on Burden on Competition

The CBOE does not believe that the

proposed rule change will impose any

burden on competition.

(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

The CBOE has requested that the

proposed rule change be given

accelerated effectiveness pursuant to