6668 Federal Register / Vol. 65, No. 28 / Thursday, February 10, 2000 / Notices

26 In Amendment No. 6, the Exchange committed

to distribute a Regulatory Circular to announce the

changes to its members. The Regulatory Circular

will also remind members of the priority principles

under CBOE Rule 6.45(a) and (b).

27 15 U.S.C. 78s(b)(2).

28 17 CFR 200.30–3(a)(12).

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

2 17 CFR 240.19b–4.

3See Letter from Stephanie C. Mullins, Attorney,

CBOE, to Sonia Patton, Attorney, Division of Market

Regulation (‘‘Division’’), Commission, dated

January 21, 2000 (‘‘Amendment No. 1’’).

Amendment No. 1 states that all option classes on

Friede Goldman International (FGI), Northwest

Airlines Corporation (NAQ), Open Market, Inc.

(OQM), Orbital Science Corp. (ORB), Onsale, Inc.

(QOL), Prime Medical Services, Inc. (QSI),

Synovous Financial Corp. (SNV), Wackenhut

Corrections Corp. (WHC), and Zebra Technologies

Corp. (ZBQ) were designated to Designated Primary

Market-Makers (‘‘DPMs’’) on September 7, 1999 and

all option classes on The Boeing Company (BA)

were designated to DPMs on September 13, 1999.

Amendment No. 1 also states that no market-maker

surcharges were assessed on these options after

their designation to DPMs.

4See Securities Exchange Act Release No. 41121

(Feb. 26, 1999), 64 FR 11523 (March 9, 1999) (order

approving CBOE Rule 2.40). The Exchange imposes

a market-maker surcharge to allow the Exchange

and its member firms to better compete with other

exchanges in floor brokerage and order book rates.

The surcharge is used to (i) reimburse the Exchange

to the extent that the order book official (‘OBO’’)

brokerage rate is reduced if the reduction is based

upon a recommendation of resident market-makers,

and (ii) pay stationary floor brokers (‘‘SFBs’’) to

induce them to reduce the brokerage rates they

charge their customers. A resident market-maker is

defined under CBOE Rule 2.40(a)(ii) as a marketmaker who transacted at least 80% of his marketmaker contracts in option classes traded in the

trading crowd where the particular option class is

traded in the prior calendar month. An SFB is

defined under CBOE Rule 2.40(a)(i) as a floor broker

who (i) has established a busines in the trading

crowd for an option class of accepting and

executing orders for members or registered brokerdealers and (ii) transacted at least 80% of his orders

for the previous month in the trading crowd at

which a particular option class is traded.

degree to which live ammo orders

accumulate on the live ammo screens

during the pilot period.

The Commission finds good cause for

approving Amendment No. 6 to the

proposed rule change prior to the

thirtieth day after the date of

publication of notice in the Federal

Register. In Amendment No. 6, CBOE

requests that the proposal be approved

on a pilot basis for a nine-month period.

Amendment No. 6 also would remove

the requirement that the live ammo to

RAES feature may only be used in

unusual market conditions or when

there is a large influx of orders to the

Book. As amended, the proposal would

permit the OBO (or DPM) to employ the

live ammo to RAES feature at any time

when the OBO (or DPM) determines that

there are more orders on the live ammo

screen than can be expeditiously

handled in open outcry.26 The

Commission finds good cause for

accelerating approval of Amendment

No.6 to allow the Exchange to address

immediately the order processing

problems caused by the live ammo

system while developing the needed

systems enhancements to eliminate

these problems in the future.

V. Solicitation of Comments

Interested persons are invited to

submit written data, views, and

arguments concerning Amendment No.

6, including whether Amendment No. 6

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 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 CBOE. All

submissions should refer to File No.

SR–CBOE–98–27 and should be

submitted by March 2, 2000.

VI. Conclusion

It Is Therefore Ordered, pursuant to

Section 19(b)(2) of the Act,27 that the

proposed rule change, as amended, (SR–

CBOE–98–27) is approved on a pilot

basis until October 31, 2000.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.28

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 00–3033 Filed 2–9–00; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–42382; File No. SR–CBOE–

99–52]

Self-Regulatory Organizations; Notice

of Filing and Immediate Effectiveness

of Proposed Rule Change by the

Chicago Board Options Exchange, Inc.

Amending Its Market-Maker Surcharge

Fee Schedule

February 3, 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 2, 1999, 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 Exchange

filed Amendment No. 1 3 to the

proposed rule change on January 23,

2000. 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 is proposing to make

changes to its fee schedule pursuant to

CBOE rule 2.40,4 entitled ‘‘MarketMaker Surcharge for Brokerage.’’

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, Proposed Rule

Change

1. Purpose

Pursuant to CBOE Rule 2.40, on

September 1, 1999, the Exchange’s

Equity Floor Procedure Committee

(‘‘EFPC’’) approved the following fees

for the following option classes:

Federal Register / Vol. 65, No. 28 / Thursday, February 10, 2000 / Notices 6669

6The Exchange interprets Rule 2.40 to allow the

EFPC to vote on market-maker surcharge before a

class has been listed for trading on another

exchange. Rule 2.40, however, provides that the

market-maker surcharge may not actually be

assessed until the class has been listed for trading

on another exchange. 7Telephone conversation between Stephanie C.

Mullins, Attorney, CBOE, and Gordon Fuller,

Special Counsel, Division, Commission (December

10, 1999). 8 15 U.S.C. 78f(b).

9 15 U.S.C. 78f(b)(4).

10 15 U.S.C. 78s(b)(3)(A)(ii). 11 15 CFR 240.19b–4(f)(2). 12 In reviewing this proposal, the Commission has

considered its impact on efficiency, competition,

and capital formation. 15 U.S.C. 78c(f). 13 17 CFR 200.30–3(a)(12).

Option class

Marketmaker surcharge (per

contract)

Order book

official brokerage rate

(per contract) 5

The Boeing Company (BA) ............................................................................................................................................. 0.14 $0.00

Friede Goldman International (FGI) ................................................................................................................................ 0.02 0.00

Northwest Airlines Corporation (NAQ) ............................................................................................................................ 0.02 0.00

Open Market, Inc. (OQM) ................................................................................................................................................ 0.02 0.00

Orbital Science Corp. (ORB) ........................................................................................................................................... 0.02 0.00

Onsale, Inc. (QOL) .......................................................................................................................................................... 0.02 0.00

Prime Medical Services, Inc. (QSI0 ................................................................................................................................ 0.02 0.00

Synovous Financial Corp. (SNV) ..................................................................................................................................... 0.02 0.00

Wackenhut Corrections Corp. (WHC) ............................................................................................................................. 0.02 0.00

Zebra Technologies Corp. (ZBQ) .................................................................................................................................... 0.02 0.02

5The market-maker surcharge will be used in reimburse the Exchange for the reduction in the OBO brokerage rate from $0.20 in the relevant

option classes. Any remaining funds will be paid to SFBs as proved in Exchange Rule 2.40.

These fees went into effect on

Thursday, September 2, 1999. All of the

option classes above are currently

multiple listed on at least one other

exchange. The most recent certification

for multiple listing relates to options on

The Boeing Company (BA) (‘‘Boeing’’),

which were listed on the Pacific

Exchange (‘‘PCX’’) beginning on

September 2, 1999. All of the marketmaker surcharge fees, except those

applicable to Boeing, reflect reductions

in former market-maker surcharge fees

imposed pursuant to Exchange Rule

2.40.

With respect to options on Boeing,

CBOE Rule 2.40(e) requires that an

option be listed for trading on another

exchange before a market-maker

surcharge fee can be assessed. Boeing

has been certified by the Options

Clearing Corporation to be listed on the

PCX. Therefore, the CBOE began

assessing the market-market surcharge

on September 2, 1999, when Boeing was

first listed on the PCX.6

The CBOE represents that the marketmaker surcharge fees were effective

from September 2, 1999 until the

options at issue were designated to

DPMs—September 7, 1999 for FGI,

NAQ, OQM, QOL, QSI, SNV, WHC, and

ZBQ, and September 13, 1999 for BA.

The fees were eliminated when the

options were designated to DPMs.7

2. Statutory Basis

The proposed rule change is

consistent with Section 6(b) of the Act,8

in general, and furthers the objectives of

Section 6(b)(4),9 in particular, in that it

is designed to provide for the equitable

allocation of reasonable dues, fees, and

other charges 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

any burden on competition not

necessary or appropriate in furtherance

of the purposes of the Act.

C. Self-Regulatory Organization’s

Statement of Comments on the

Proposed Rule Change Received From

Members, Participants, or Others

The Exchange did not solicit or

receive written 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 charge imposed by the Exchange,

it has become effective pursuant to

Section 19(b)(3)(A)(ii) of the Act,10 and

Rule 19b–4(f)(2) 11 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.12

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, 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 CBOE. All

submissions should refer to the File No.

SR–CBOE–99–52 and should be

submitted by March 2, 2000.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.13

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 00–3037 Filed 2–9–00; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–42385; File No. SR–MSRB–

00–01]

Self-Regulatory Organizations; Notice

of Filing of Proposed Rule Change by

the Municipal Securities Rulemaking

Board Relating to Supervision of

Correspondence With the Public

February 3, 2000.

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

Securities Exchange Act of 1934