Federal Register / Vol. 65, No. 209 / Friday, October 27, 2000 / Notices 64465

13 17 CFR 200.30–3(a)(12).

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

2 17 CFR 240.19b-4.

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

4CSE Rule 11.9(a)(8) defines a professional

agency order as an order entered by a CSE Member

or approved dealer as agent for the account of a

broker-dealer, futures commission merchant or a

member of a contract market.

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

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

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

B. Self-Regulatory Organization’s

Statement on Burden on Competition

The CSE does not believe that the

proposed rule change will impose any

inappropriate burden on competition.

C. Self-Regulatory Organization’s

Statement on Comments on the

Proposed Rule Change Received From

Members, Participants, or Others

No comments were solicited or

received in connection with the

proposed rule change.

III. Date of Effectiveness of the

Proposed Rule Change and Timing for

Commission Action

Within 35 days of the date of

publication of this notice in the Federal

Register or within such longer period (i)

as the Commission may designate up to

90 days of such date if it finds such

longer period to be appropriate and

publishes its reasons for so finding or

(ii) as to which the Exchange consents,

the Commission will:

A. By order approve such proposed

rule change, or

B. Institute proceedings to determine

whether the proposed rule change

should be disapproved.

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.

Persons making written submissions

should file six copies thereof with the

Secretary, Securities, and Exchange

Commission, 450 Fifth Street, N.W.,

Washington, D.C. 20549–0609. 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 at

the Commission’s Public Reference

Room. Copies of such filing will also be

available for inspection and copying at

the principal office of the CSE. All

submissions should refer to file No. SR–

CSE–00–08 and should be submitted by

November 12, 2000.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.13

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 00–27649 Filed 10–26–00; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–43470; File No. SR–CSE–

00–07]

Self-Regulatory Organizations; Notice

of Filing and Immediate Effectiveness

of Proposed Rule Change by The

Cincinnati Stock Exchange,

Incorporated to Reduce the Fee to

Members for Professional Agency

Transactions

October 20, 2000.

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 October

13, 2000, The Cincinnati Stock

Exchange, Incorporated (‘‘CSE’’ 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 Exchange. The

Exchange has designated this proposal

as one establishing or changing a due,

fee, or other charge imposed by the CSE

under Section 19(b)(3)(A(ii) of the Act,3

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 CSE proposes to amend Exchange

Rule 11.10A(d), Professional Agency

Transactions, to reduce the fee to

members for professional agency

transactions 4 from $0.005 per share

($0.50/100 shares) to $0.0025/share

($0.25/100 shares). The text of the

proposed rule change is available at the

CSE 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

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

The proposed rule change amends the

Exchange’s fee schedule to decrease

professional agency transaction fees

from $0.005 per share ($0.50/100 shares)

to $0.0025 per share ($0.25/100 shares).

The fee reduction is proposed to allow

professional agency transactions to be

more competitive with other execution

execution types on the Exchange.

2. Statutory Basis

The Exchange believes the proposed

rule change is consistent with Section

6(b) of the Act 5 in general, and in

particular, furthers the objectives of

Section 6(b)(4) of the Act, 6 in that it is

designed to provide for the equitable

allocation of reasonable dues, fees and

other charges among its members.

B. Self-Regulatory Organization’s

Statement of Burden on Competition

The CSE does not believe that the

proposed rule change will impose any

inappropriate 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 in connection with the

proposed rule change.

III. Date of Effectiveness of the

Proposed Rule Change and Timing for

Commission Action

The proposed rule change has become

effective pursuant to Section

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

subparagraph (f)(2) of Rule 19b–4

64466 Federal Register / Vol. 65, No. 209 / Friday, October 27, 2000 / Notices

8 17 CFR 240.19b–4(f)(2).

9 17 CFR 200.30–3(a)(12).

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

2 17 CFR 240.19b–4.

3The ISE defines ‘‘Public Customer’’ in ISE Rule

100(29).

4The ISE defines ‘‘Non-Customer’’ in ISE Rule

100(19).

5 15 U.S.C. 78s(b)(3)(A).

thereunder,8 because it involves a

member due, fee, or other charge. 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 the Exchange. All

submissions should refer to file number

SR–CSE–00–07, and should be

submitted by November 17, 2000.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.9

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 00–27650 Filed 10–26–00; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34 43462; File No. SR–ISE–

00–10]

Self-Regulatory Organizations; Notice

of Filing of Proposed Rule Change by

the International Securities Exchange,

LLC Relating to Payment for Order

Flow

October 19, 2000

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 12, 2000, the International

Securities Exchange, LLC (the

‘‘Exchange’’ or ‘‘ISE’’) filed with the

Securities and Exchange Commission

the proposed rule change as described

in Items I, II, and III below, which items

have been prepared by the ISE. 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 is proposing to

establish a payment for order flow

program as follows:

Authorization To Impose a Paymentfor-Order-Flow Fee. The ISE will impose

fees on Primary Market Makers

(‘‘PMMs’’) and Competitive Market

Makers (‘‘CMMs’’). There will be up to

three separate fees on a per-contract

basis:

• Fees on transactions with Public

Customer; 3

• Fees on transactions with NonCustomers 4 other than market makers

on another options exchange (‘‘away

market makers’’); and

• Fees on transactions with away

market makers.

There will not be any fees on

transactions in which all parties are

PMMs and CMMs. The Exchange will

establish the specific fees in a separate

rule filing submitted pursuant to

Section 19(b)(3)(A) of the Act.5 The

three fees may be the same, or may

differ from each other; one or more fees

may be set at $0 per contract. The fees

on transactions with Non-Customers

and away market makers may not be

higher than the fee on Customer

transactions, however. In addition, the

fee on transactions with away market

makers will not be higher than the fee

on transactions with other NonCustomers.

The Exchange also will have the

flexibility to establish multi-tiered fees.

These tiers can be based on such factors

as the overall trading activity of an

option, the Exchange’s market share in

an option, or any other objective factor.

If the Exchange establishes multi-tiered

fees, the Exchange’s fee filing will

specify each of those fees.

Use of the Funds Generated by the Fee

to Pay for Order Flow. The Exchange

will separately account for the funds

this fee generates on a per-group basis.

That is, the Exchange will segregate

these funds according to each of the

groups of ‘‘bins’’ of options the

Exchange trades. The PMMs will use the

funds generated by the fee to pay

Electronic Access Members (‘‘EAMs’’)

for their order flow. The PMMs will

have full discretion regarding payments,

including which EAMs will be paid, the

amount of the payments, and the type

of order flow subject to the payment.

The Exchange also will establish ‘‘bin

advisory committees’’ (‘‘BACs’’)

consisting of the PMM and CMMs in a

bin. The Exchange will provide to all

bin members information regarding

payments made and the BACs will

provide a forum for the discussion of,

among other things, payment issues.

These committees will be advisory in

nature only, however, and the PMM will

retain full discretion over all payment

decisions.

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

ISE 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 ISE has prepared

summaries, set forth in sections A, B,

and C below, of the most significant

aspects of the 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 establish the structure for

an ISE payment-for-order-flow program.

This is a competitive response by the

Exchange to similar programs of the

other options exchanges. The proposal

has two parts: establishing the structure

of a fee to fund a payment-for-orderflow program; and establishing how the

funds the fees generate will be used to

pay for order flow.

Establishing a Fee Structure. The

Exchange is proposing the flexibility of

having up to three separate fees. The

highest level of market maker fees will

be on transactions between market

makers and Public Customers. Because

the funds generated will primarily be

used to pay for customer order flow, the

ISE believes that it is reasonable that

market makers be ‘‘taxed’’ primarily on