Document ID: SEC-2008-0527-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Chicago Board Options Exchange, Inc.
Posted Date: 2008-04-07T04:00Z

[Federal Register: April 7, 2008 (Volume 73, Number 67)]
[Notices]               
[Page 18833-18835]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr07ap08-106]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-57593; File No. SR-CBOE-2008-38]

 
Self-Regulatory Organizations; Chicago Board Options Exchange, 
Incorporated; Notice of Filing and Immediate Effectiveness of Proposed 
Rule Change Regarding Fees for the CBOE Stock Exchange

April 1, 2008.
    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 31, 2008, the Chicago Board Options Exchange, Incorporated 
(``Exchange'' or ``CBOE'') 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 Exchange has designated this proposal as 
one establishing a due, fee, or other charge imposed by the Exchange 
under Section 19(b)(3)(A) of the Act \3\ and Rule 19b-4(f)(2) 
thereunder,\4\ which renders it effective upon filing with the 
Commission. 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).
    \4\ 17 CFR 240.19b-4(f)(2).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to modify its fees applicable to the CBOE 
Stock Exchange (``CBSX''). The text of the proposed rule change is 
available on the Exchange's Web site (http://www.cboe.org/legal), at 
the Exchange's principal office, 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 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.

[[Page 18834]]

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

1. Purpose
    The CBSX fee schedule lists the fees applicable to trading on CBSX. 
The CBOE Complex Order Auction system (``COA'') and Complex Order Book 
(``COB''), governed by CBOE Rule 6.53C, facilitate the handling and 
execution of complex orders by allowing for complex orders to rest in 
the system and allowing for inbound complex orders to trigger an 
auction where auction participants may submit complex order responses 
to trade with the order that is being auctioned. Until recently, Rule 
6.53C applied only to complex orders containing only options 
components. In recent months, CBOE implemented an enhancement to the 
Rule 6.53C COA/COB system to facilitate the execution of complex orders 
containing a stock component (e.g., a buy-write order).\5\ As detailed 
in that filing, the stock component of a stock-option complex order 
handled by the system is executed on CBSX. The present filing seeks to 
adopt special charges for the stock executions that result from stock-
option orders trading pursuant to Rule 6.53C.
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    \5\ See Securities Exchange Act Release No. 56903 (December 5, 
2007), 72 FR 70356 (December 11, 2007) (SR-CBOE-2007-68).
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    The CBSX transaction fees for these orders will be based on whether 
the stock-option order that initiated an execution pursuant to Rule 
6.53C ultimately trades against another stock-option order or against 
unrelated orders in the respective markets (CBOE and CBSX). By way of 
example, a buy-write order auctioned by the system may trigger 
responses to trade against the entire buy-write order as a package--
this is a stock-option order trading against another stock-option 
order. On the other hand, a buy-write order processed by the system 
could also ultimately be filled by: (i) The option component (an order 
to sell a call) trading against a straight order to buy that call 
resting in the CBOE Hybrid book, and (ii) the stock component (an order 
to buy stock) trading against a straight sell order in the CBSX book.
    A stock trade on CBSX consisting of the stock component of two 
stock-option orders trading against each other pursuant to Rule 6.53C 
shall be charged as follows: the order that triggered a COA or that 
triggered a trade with a resting COB order shall be charged $0.0005 per 
share subject to a $1.00 minimum charge and a $25.00 maximum charge. 
The order that responded to the auction or that was resting in the COB 
prior to the trade shall not be charged and shall not receive a rebate.
    A stock trade on CBSX consisting of the stock component of a stock-
option order handled pursuant to Rule 6.53C trading against a resting 
stock order on the CBSX book shall be charged as follows: the resting 
order is considered a Maker of liquidity and receives the applicable 
Maker rebate pursuant to the CBSX fee schedule, and the non-resting 
stock order is charged the standard Taker rate pursuant to the CBSX fee 
schedule.
    The changes take effect on Tuesday, April 1, 2008.
2. Statutory Basis
    The Exchange believes that 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) of the Act \7\ in particular, in that it 
is designed to provide for the equitable allocation of reasonable dues, 
fees, and other charges among Exchange 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

    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.

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 proposed rule change establishes or changes a 
due, fee, or other charge imposed by the Exchange, it has become 
effective upon filing pursuant to Section 19(b)(3)(A) of the Act \8\ 
and Rule 19b-4(f)(2) thereunder.\9\ 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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    \8\ 15 U.S.C. 78s(b)(3)(A).
    \9\ 17 CFR 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 No. SR-CBOE-2008-38 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-2008-38. 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 Commissions 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 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 available publicly. All submissions 
should refer to File Number SR-CBOE-2008-38 and should be submitted on 
or before April 28, 2008.

[[Page 18835]]

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\10\
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    \10\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
 [FR Doc. E8-7115 Filed 4-4-08; 8:45 am]

BILLING CODE 8011-01-P