Document ID: SEC-2010-1179-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Chicago Board Options Exchange, Inc.
Posted Date: 2010-08-05T04:00Z

[Federal Register: August 5, 2010 (Volume 75, Number 150)]
[Notices]               
[Page 47329-47330]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr05au10-100]                         

[[Page 47329]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-62579; File No. SR-CBOE-2010-068]

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

July 28, 2010.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given 
that on July 16, 2010, Chicago Board Options Exchange, Incorporated 
(``Exchange'' or ``CBOE'') 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 
Exchange. The Exchange has designated this proposal as one establishing 
or changing a due, fee, or other charge imposed by CBOE under Section 
19(b)(3)(A)(ii) of the Act \3\ and Rule 19b-4(f)(2) thereunder.\4\ 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.
    \3\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \4\ 17 CFR 240.19b-4(f)(2).
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I. Self-Regulatory Organization's Statement of the Terms of the 
Substance of the Proposed Rule Change

    The Exchange proposes to amend its Fees Schedule to make changes 
related to options on Exchange-Traded Notes and Exchange-Traded Funds. 
The text of the proposed rule change is available on the Exchange's Web 
site at http://www.cboe.org/Legal, at the Exchange's Office of the 
Secretary, on the Commission's Web site at http://www.sec.gov, and at 
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 self-regulatory organization 
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. The Exchange has prepared 
summaries, set forth in sections A, B, and C below, of the most 
significant parts of such statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
Exchange-Traded Note (``ETN'') Options 5
    The first change being proposed by this filing is to codify the 
Exchange's existing practice of assessing fees for transactions in ETN 
options at the same rates charged for Exchange-Traded Fund (``ETF'') 
options.\6\ To affect this change, the Exchange is proposing to amend 
Section 1, Index Options, to the Fees Schedule by including references 
to ETNs throughout that section. The transaction fees for ETN options 
are as follows:
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    \5\ ETN options are also referred to as ``Index Linked 
Securities'' in Interpretation and Policy .13 to Rule 5.3. See also 
Securities Exchange Act Release No. 58204 (July 22, 2008), 73 FR 
43807 (July 28, 2008) (order approving proposal to list and trade 
ETN options) (SR-CBOE-2008-64).
    \6\ See e.g., Securities Exchange Act Release No. 61696 (March 
12, 2010), 75 FR 13174 (March 18, 2010) (noting the Exchange's 
belief that the marketplace and investors expect ETN options to 
trade in a similar manner to ETF options) (SR-CBOE-2010-005).
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     $0.20 per contract for Market-Maker and Designated Primary 
Market-Maker transactions;\7\
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    \7\ This is the standard rate that is subject to the Liquidity 
Provider Sliding Scale as set forth in Footnote 10 to the Fees 
Schedule.
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     $0.20 per contract for Clearing Trading Permit Holder 
proprietary transactions;
     $0.25 per contract for manually executed broker-dealer 
transactions;
     $0.45 per contract for electronically executed broker-
dealer transactions;
     $0.20 per contract for voluntary professional 
transactions;
     $0.20 per contract for professional transactions;
     $0.18 per contract for customer transactions; and
     $0.10 per contract CFLEX surcharge fee.
    The Exchange is also proposing to amend Section 2, Marketing Fee, 
to the Fees Schedule to codify the marketing fee ($0.25) that will be 
assessed to any ETN options classes that participate in the Penny 
Pilot. Currently, there are no ETN options classes in the Penny Pilot.
    In addition, the Exchange is proposing to add a reference to ETN 
options to Footnote 6 regarding the assessment of the marketing fee, 
which is $0.65 per contract for those classes not in the Penny 
Pilot.\8\
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    \8\ See Section 2, Marketing Fee, of the Fees Schedule.
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    The Exchange is also proposing to add a reference to ETN options to 
Footnote 9 regarding the waiver of transaction fees for customer orders 
of 99 contracts or less and the charging of any leg of a complex order 
in ETN options that exceed 99 contracts, even if the leg is only 
partially executed below the 99 contract threshold.
    Lastly, the Exchange is proposing to add a reference to ETN options 
to Section 18, Customer Large Trade Discount, which provides that 
regular customer transaction fees will only be charged up to the first 
3,000 contracts.
Exchange-Traded Note and HOLDRs Options
    The second change being proposed by this filing is to amend Section 
2, Marketing Fee, to the Fees Schedule to codify the marketing fee 
($0.25) that will be assessed to any ETF and Holding Company Depository 
Receipts (``HOLDRs'') option classes that participate in the Penny 
Pilot (other than those ETF options that are either assessed a modified 
marketing fee or no marketing fee).
    In addition, the Exchange notes that options on the iShares MSCI 
Emerging Markets Index Fund (``EEM'') and the iShares MSCI Taiwan Index 
Fung [sic] (``EWT'') are not assessed a marketing fee.\9\ EEM and EWT 
are classes that participate in the Penny Pilot. Similar to QQQQ and 
IWM (which are not assessed a marketing fee and participate in the 
Penny Pilot), the Exchange is proposing to add EEM and EWT to QQQQ and 
IWM to Section 2, Marketing Fee, to clarify that no marketing fee 
applies to these Penny Pilot classes.
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    \9\ See Footnote 6 of the Fees Schedule.
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2. Statutory Basis
    The proposed rule change is consistent with Section 6(b) of the 
Act,\10\ in general, and furthers the objectives of Section 6(b)(4) 
\11\ 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 Trading Permit Holders and other persons using its 
facilities. The Exchange believes the fee changes proposed by this 
filing are equitable and reasonable in that [sic] will codify the 
Exchange's existing practice of assessing fees for ETN options in a 
manner similar to ETF options. In addition, the changes proposed by 
this filing clarify CBOE's Fees Schedule.
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    \10\ 15 U.S.C. 78f(b).
    \11\ 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

[[Page 47330]]

burden on competition 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

    The Exchange neither solicited nor received comments on the 
proposal.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Because the foregoing proposed 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 \12\ and 
subparagraph (f)(2) of Rule 19b-4 \13\ 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.
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    \12\ 15 U.S.C. 78s(b)(3)(A).
    \13\ 17 CFR 240.19b-4(f)(2).
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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-2010-068 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-2010-068. 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-2010-068 and should be 
submitted on or before August 26, 2010.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\14\
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    \14\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-19365 Filed 8-4-10; 8:45 am]
BILLING CODE 8010-01-P