Document ID: SEC-2007-0947-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: Chicago Board Options Exchange, Inc.
Posted Date: 2007-07-13T04:00Z

[Federal Register: July 13, 2007 (Volume 72, Number 134)]
[Notices]               
[Page 38636-38637]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr13jy07-123]                         

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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-56026; File No. SR-CBOE-2007-72]

 
Self-Regulatory Organizations; Chicago Board Options Exchange, 
Incorporated; Notice of Filing and Immediate Effectiveness of Proposed 
Rule Change Relating to Exchange Fees

July 6, 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 June 29, 2007, 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 Exchange. 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\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

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

    CBOE proposes to amend its Fees Schedule to: (i) Adopt a surcharge 
fee for transactions in options on the CBOE Volatility Index (``VIX''); 
and (ii) clarify the assessment of the Sales Value Fee. The text of the 
proposed rule change is available at: http://www.cboe.org/legal, the 

Exchange's principal office, and the Commission's Public Reference 
Room.

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
VIX Options Surcharge Fee
    The Exchange proposes to adopt a $0.04 per contract surcharge fee 
on all non-public-customer transactions in VIX options to help the 
Exchange recoup license fees the Exchange pays to Standard and Poor's 
for its license to trade the VIX product. The proposed surcharge fee is 
identical to the surcharge fee currently assessed on non-public-
customer transactions in options on the S&P 100 Index (``OEX'' and 
``XEO'') and options on the S&P 500 Index (``SPX''). The Exchange 
intends to implement this fee on July 2, 2007.
Sales Value Fee
    Section 6 of the CBOE Fees Schedule describes the Sales Value Fee 
and how the fee is assessed. The Sales Value Fee is defined as the fee 
assessed by CBOE to each member for sales of securities on CBOE with 
respect to which CBOE is obligated to pay a fee to the Commission under 
Section 31 of the Act.\3\ Section 6 of the CBOE Fees Schedule also 
applies to trading on the CBOE Stock Exchange, LLC (``CBSX'').
---------------------------------------------------------------------------

    \3\ 15 U.S.C. 78ee.
---------------------------------------------------------------------------

    The Sales Value Fee is applied not only to sales executed on CBOE 
and CBSX, but also to sell orders that originate at CBSX and are routed 
to other trading centers pursuant to CBOE Rule 52.10 (Order Routing to 
Other Trading Centers). Accordingly, the Exchange proposes to amend 
section 6 of the Fees Schedule to clarify that the Sales Value Fee is 
also assessed by CBOE to each member for orders to sell securities that 
originate at CBSX and are routed to and executed on another trading 
center.
    The Exchange has entered into an arrangement with the National 
Securities Clearing Corporation (``NSCC'') whereby NSCC will collect 
the Sales Value Fee (among other fees) with respect to non-options 
sales on behalf of CBSX from CBSX members through their clearing firms 
and remit the fees to CBSX. The Exchange proposes to amend section 6 of 
the Fees Schedule to reflect this new fee collection procedure.\4\
---------------------------------------------------------------------------

    \4\ Prior to Regulation NMS, the Sales Value Fee was assessed by 
CBOE to each CBSX member for orders to sell securities that 
originated at CBSX and were routed via the Intermarket Trading 
System (``ITS'') to, and executed on, another exchange. Pursuant to 
arrangements between CBOE and other ITS participant exchanges, CBOE 
paid to the exchange on which the covered sale occurred the Sales 
Value Fee collected by CBOE from the CBSX member that originated the 
sell order. In the current Regulation NMS environment, CBOE now 
routes orders to other trading centers via a private linkage 
pursuant to an agreement between CBSX and a third-party technology 
provider (``Routing Firm''). CBSX's Routing Firm is assessed a fee 
by an away trading center for covered sales resulting from sell 
orders originating on CBSX and routed to and executed by the Routing 
Firm on that trading center. CBOE collects the Sales Value Fee from 
the CBSX member that originated the sell order but instead of 
passing the fee to an away exchange, CBOE now passes the fee to the 
Routing Firm to reimburse the Routing Firm for the fee it paid to 
the away trading center. See E-mail from Jamie Galvan, Assistant 
Secretary, CBOE, to David Michehl, Special Counsel, Division of 
Market Regulation, Commission dated July 6, 2007.
---------------------------------------------------------------------------

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 charges among 
CBOE members and issuers and other persons using its facilities.
---------------------------------------------------------------------------

    \5\ 15 U.S.C. 78f(b).
    \6\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------

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 that is not necessary or appropriate 
in furtherance of the purposes of the Act.

[[Page 38637]]

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 proposed rule change has become effective pursuant to 
section 19(b)(3)(A)(ii) of the Act \7\ and Rule 19b-4(f)(2) 
thereunder,\8\ because it establishes or changes a due, fee, or other 
charge imposed by the Exchange. Accordingly, the proposal will take 
effect upon filing with the Commission.
---------------------------------------------------------------------------

    \7\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \8\ 17 CFR 240.19b-4(f)(2).
---------------------------------------------------------------------------

    At any time within 60 days of the filing of such 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 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-2007-72 on the subject line.

Paper Comments

     Send paper comments in triplicate to Nancy M. Morris, 
Secretary, Securities and Exchange Commission, Station Place, 100 F 
Street, NE., Washington, DC 20549-1090.

All submissions should refer to File Number SR-CBOE-2007-72. 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, 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 CBOE. 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 available publicly. All 
submissions should refer to File Number SR-CBOE-2007-72 and should be 
submitted on or before August 3, 2007.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\9\
---------------------------------------------------------------------------

    \9\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Florence E. Harmon,
Deputy Secretary.
 [FR Doc. E7-13592 Filed 7-12-07; 8:45 am]

BILLING CODE 8010-01-P