Document ID: SEC-2007-0654-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: Chicago Board Options Exchange, Inc.
Posted Date: 2007-05-09T04:00Z

[Federal Register: May 9, 2007 (Volume 72, Number 89)]
[Notices]               
[Page 26430-26432]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr09my07-129]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-55677; File No. SR-CBOE-2007-32]

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

 April 27, 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 March 29, 2007, the Chicago Board Options Exchange, Incorporated 
(``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 substantially 
prepared by the CBOE. The Commission is publishing this notice to 
solicit comments on the proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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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 increase transaction fees for certain electronically 
executed orders. The text of the proposed rule change is available at 
the CBOE, on the Exchange's Web site at http://www.cboe.org/legal, and 

in the Commission's Public Reference Room.

[[Page 26431]]

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 charges $.25 per contract for broker-dealer 
transactions and $.26 per contract for non-member market-maker 
transactions, except for such transactions in options on the S&P 100 
Index (``OEX'' and ``XEO'') and options on the S&P 500 (``SPX''), which 
are charged $.30 per contract for broker-dealer and market-maker 
transactions and $.40 per contract for broker-dealer and market-maker 
transactions, respectively. The purpose of this proposed rule change is 
to amend the Fees Schedule to establish a higher fee for 
``electronically executed'' broker-dealer and non-member market-maker 
orders, i.e., broker-dealer and non-member market-maker orders that are 
automatically executed on the CBOE Hybrid Trading System (``Hybrid'').
    The Exchange proposes to assess electronically executed broker-
dealer and non-member market-maker orders a transaction fee of $.45 per 
contract. Manually executed broker-dealer and non-member market-maker 
orders would be assessed a transaction fee of $.25 per contract. The 
$.26 per contract non-member market-maker transaction fee would be 
deleted from the Fees Schedule. OEX, XEO and SPX broker-dealer and non-
member market-maker fees would remain unchanged. Broker-dealer and non-
member market-maker orders for options on the Morgan Stanley Retail 
Index (``MVR'') would be charged $.25 per contract.\3\ A new Footnote 
16 is proposed to be added to the Fees Schedule clarifying that the 
broker-dealer manual and electronic transaction fees apply to 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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    \3\ OEX, MVR and SPX are currently non-Hybrid classes.
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    No changes are proposed to Linkage order fees. The proposed broker-
dealer electronic transaction fee is comparable to the RAES Access Fee 
assessed by the Exchange on certain orders executed through the RAES 
system in non-Hybrid classes, which is a fee assessed in addition to 
standard transaction fees.\4\ Like the RAES Access Fee, the Exchange 
believes the proposed broker-dealer electronic transaction fee will 
help allocate to such orders a fair share of the costs of running the 
automatic execution feature of Hybrid and related Exchange systems.
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    \4\ See CBOE Fees Schedule, Section 4.
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    The proposed fees are modeled after the broker-dealer transaction 
fees of the NYSE Arca, Inc. (``NYSE Arca'').\5\ The Exchange believes 
its proposed $.45 per contract fee is reasonable in that it is less 
than the $.50 per contract fee assessed by NYSE Arca on electronically 
executed broker-dealer and non-member market-maker orders.
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    \5\ See Securities Exchange Act Release No. 54309 (August 11, 
2006), 71 FR 48571 (August 21, 2006) (SR-NYSEArca-2006-25).
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2. Statutory Basis
    The proposed rule change is consistent with Section 6(b) of the 
Act,\6\ in general, and furthers the objectives of Section 6(b)(4) \7\ 
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.
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    \6\ 15 U.S.C. 78f(b).
    \7\ 15 U.S.C. 78f(b)(4).
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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 \8\ and subparagraph (f)(2) 
of Rule 19b-4\9\ 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.\10\
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    \8\ 15 U.S.C. 78s(b)(3)(A).
    \9\ 17 CFR 240.19b-4(f)(2).
    \10\ Id.
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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

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml.
); or     Send an e-mail to rule-comments@sec.gov. Please include 

File Number SR-CBOE-2007-32 on the subject line.

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-2007-32. 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 (http://www.sec.gov/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

[[Page 26432]]

information from submissions. You should submit only information that 
you wish to make available publicly. All submissions should refer to 
File Number SR-CBOE-2007-32 and should be submitted on or before May 
30, 2007.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\11\
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    \11\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
 [FR Doc. E7-8812 Filed 5-8-07; 8:45 am]

BILLING CODE 8010-01-P