Document ID: SEC-2008-0274-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Chicago Board Options Exchange, Inc.
Posted Date: 2008-02-20T05:00Z

[Federal Register: February 20, 2008 (Volume 73, Number 34)]
[Notices]               
[Page 9377-9378]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr20fe08-128]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-57317; File No. SR-CBOE-2007-151]

 
Self-Regulatory Organizations; Chicago Board Options Exchange, 
Incorporated; Order Approving Proposed Rule Change Relating to Linkage 
Fees

I. Introduction

    On December 20, 2007, Chicago Board Options Exchange, Incorporated 
(``CBOE'' or the ``Exchange'') filed with the Securities and Exchange 
Commission (``Commission''), pursuant to section 19(b)(1) of the 
Securities Exchange Act of 1934 (``Act''),\1\ and Rule 19b-4 
thereunder,\2\ a proposed rule change to amend its Options Intermarket 
Linkage (``Linkage'') fees. The proposed rule change was published for 
comment in the Federal Register on January 9, 2008.\3\ The Commission 
received no comments on the proposal. This order approves the proposal.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 57083 (January 2, 
2008), 73 FR 1651.

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[[Page 9378]]

II. Description of the Proposal

    Under the Exchange's current Fees Schedule, Principal (``P'') and 
Principal Acting as Agent (``P/A'') Orders \4\ are charged a 
transaction fee of $.26 per contract.\5\ Satisfaction orders are not 
assessed Exchange fees. Linkage fees are operating under a pilot 
program scheduled to expire on July 31, 2008. The Exchange has proposed 
to increase its Linkage transaction fee for P and P/A Orders from $.26 
per contract to $.30 per contract.
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    \4\ Under the Plan for the Purpose of Creating and Operating an 
Options Intermarket Linkage (``Plan'') and Exchange Rule 6.80(12), 
which tracks the language of the Plan, a ``Linkage Order'' means an 
Immediate or Cancel Order routed through the Linkage as permitted 
under the Plan. There are three types of Linkage Orders: (i) ``P/A 
Order'', which is an order for the principal account of a specialist 
(or equivalent entity on another Participant Exchange that is 
authorized to represent Public Customer orders), reflecting the 
terms of a related unexecuted Public Customer order for which the 
specialist is acting as agent; (ii) ``P Order'', which is an order 
for the principal account of an Eligible Market Maker and is not a 
P/A Order; and (iii) ``Satisfaction Order,'' which is an order sent 
through the Linkage to notify a member of another Participant 
Exchange of a Trade-Through and to seek satisfaction of the 
liability arising from that Trade-Through.
    \5\ Linkage orders in MNX, NDX and RUT options are also charged 
a $.10 per contract surcharge fee. See CBOE Fees Schedule, Footnote 
14.
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III. Discussion

    After careful review, the Commission finds that the proposed rule 
change, is consistent with the requirements of the Act and the rules 
and regulations thereunder applicable to a national securities exchange 
\6\ and, in particular, the requirements of section 6 of the Act.\7\ 
Specifically, the Commission finds that the proposal is consistent with 
section 6(b)(4),\8\ 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\ The Commission has considered the proposed rule change's 
impact on efficiency, competition and capital formation. 15 U.S.C. 
78c(f).
    \7\ 15 U.S.C. 78f(b).
    \8\ 15 U.S.C. 78f(b)(4).
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    The Exchange has represented that the proposed fee increase would 
help the Exchange partially offset its costs of crediting Linkage fees 
and related costs to Designated Primary Market-Makers (``DPMs'') 
pursuant to the Exchange's DPM Linkage Fees Credit Program.\9\ The 
Commission believes that the proposed increase in fees is reasonable 
for this purpose. Further, the Commission notes that the fees proposed 
by CBOE are commensurate with the fees charged by other options 
exchanges for Linkage Orders. Finally, the Commission notes that the 
Exchange's fees are operating under a pilot program in effect until 
July 31, 2008.\10\
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    \9\ See CBOE Fees Schedule, Section 21.
    \10\ See CBOE Fees Schedule, footnote 8.
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IV. Conclusion

    It is therefore ordered, pursuant to section 19(b)(2) of the 
Act,\11\ that the proposed rule change (SR-CBOE-2007-151) is approved.
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    \11\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\12\
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    \12\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E8-3059 Filed 2-19-08; 8:45 am]

BILLING CODE 8011-01-P