Document ID: SEC-2010-0402-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Chicago BoardOptions Exchange, Inc.
Posted Date: 2010-03-16T04:00Z

[Federal Register: March 16, 2010 (Volume 75, Number 50)]
[Notices]               
[Page 12588-12590]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr16mr10-94]                         

-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-61674; File No. SR-CBOE-2010-025]

 
Self-Regulatory Organizations; Chicago Board Options Exchange, 
Incorporated; Notice of Filing and Immediate Effectiveness of Proposed 
Rule Change Relating to Permanent Approval of the Dividend, Merger and 
Short Stock Interest Strategies Fee Cap Pilot Program

March 9, 2010.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (the ``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby 
given that, on March 1, 2010, Chicago Board Options Exchange, 
Incorporated (``CBOE'' or the ``Exchange'') filed with the Securities 
and Exchange Commission (the ``Commission'') 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.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 15 U.S.C. 78a.
    \3\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    Chicago Board Options Exchange, Incorporated (``CBOE'' or 
``Exchange'')

[[Page 12589]]

proposes to amend its Fees Schedule to make permanent its dividend, 
merger and short stock interest strategies fee cap program. The text of 
the proposed rule change is available on the Exchange's Web site 
(http://www.cboe.org/legal), at the Exchange's Office of the Secretary 
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, 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 those statements may be examined at the places specified in 
Item IV below. 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

(a) Purpose
    The Exchange proposes to make permanent the pilot program for caps 
on market-maker, firm, and broker-dealer transaction fees associated 
with dividend, merger and short stock interest strategies, as described 
in Footnote 13 of the CBOE Fees Schedule (``Strategy Fee Cap''). Under 
this program, market-maker, firm and broker-dealer transaction fees are 
capped at $1,000 for all (i) dividend strategies,\4\ (ii) merger 
strategies \5\ and (iii) short stock interest strategies \6\ executed 
on the same trading day in the same options class. In addition, such 
transaction fees for these strategies are further capped at $25,000 per 
month per initiating member or firm. The Strategy Fee Cap pilot program 
is due to expire on March 1, 2010.
---------------------------------------------------------------------------

    \4\ A dividend strategy is defined as transactions done to 
achieve a dividend arbitrage involving the purchase, sale and 
exercise of in-the-money options of the same class, executed prior 
to the date on which the underlying stock goes ex-dividend.
    \5\ A merger strategy is defined as transactions done to achieve 
a merger arbitrage involving the purchase, sale and exercise of 
options of the same class and expiration date, each executed prior 
to the date on which shareholders of record are required to elect 
their respective form of consideration, i.e., cash or stock.
    \6\ A short stock interest strategy is defined as transactions 
done to achieve a short stock interest arbitrage involving the 
purchase, sale and exercise of in-the-money options of the same 
class.
---------------------------------------------------------------------------

    Other than requesting permanent approval of the pilot program, no 
other changes to the Strategy Fee Cap are being proposed at this 
time.\7\
---------------------------------------------------------------------------

    \7\ The Strategy Fee Cap pilot program is similar to fee cap 
pilot programs at other exchanges that were recently made permanent. 
See Securities Exchange Act Release No. 59566 (March 12, 2009), 74 
FR 11793 (March 19, 2009) (SR-PHLX-2009-18); and Securities Exchange 
Act Release No. 59478 (February 27, 2009), 74 FR 9857 (March 6, 
2009) (SR-NYSEALTR-2009-19).
---------------------------------------------------------------------------

(b) Statutory Basis
    The Exchange believes the proposed rule change is consistent with 
Section 6(b) of the Securities Exchange Act of 1934 (``Act''),\8\ in 
general, and furthers the objectives of Section 6(b)(4) \9\ of the Act 
in particular, in that it is designed to provide for the equitable 
allocation of reasonable dues, fees, and other charges among its 
members and other persons using its facilities. The Exchange believes 
permanent approval of the Strategy Fee Cap pilot program would benefit 
market participants who trade these strategies by lowering their fees 
and allow the Exchange to remain competitive with other exchanges that 
offer similar fee cap programs.
---------------------------------------------------------------------------

    \8\ 15 U.S.C. 78f(b).
    \9\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------

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 the 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

    The foregoing rule change has become effective pursuant to Section 
19(b)(3)(A) of the Act \10\ and subparagraph (f)(2) of Rule 19b-4 \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.
---------------------------------------------------------------------------

    \10\ 15 U.S.C. 78s(b)(3)(A).
    \11\ 17 CFR 240.19b-4(f)(2).
---------------------------------------------------------------------------

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-2010-025 on the subject line.

Paper Comments

     Send paper comments in triplicate to Elizabeth M. Murphy, 
Secretary, Securities and Exchange Commission, 100 F Street, NE., 
Washington, DC 20549-1090.

All submissions should refer to File Number SR-CBOE-2010-025. 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 Web site viewing and 
printing in the Commission's Public Reference Room, 100 F Street, NE., 
Washington, DC 20549, on official business days between the hours of 10 
a.m. and 3 p.m. Copies of such filing also will be available for 
inspection and copying at the principal office of the Exchange. All 
comments received will be posted without change; the Commission does 
not edit personal identifying information from submissions. You should 
submit only information that you wish to make publicly available. All 
submissions should refer to File Number SR-CBOE-2010-025 and should be 
submitted on or before April 6, 2010.

[[Page 12590]]

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\12\
---------------------------------------------------------------------------

    \12\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-5658 Filed 3-15-10; 8:45 am]
BILLING CODE 8011-01-P