Document ID: SEC-2007-0868-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: Chicago Board Options Exchange, Inc.
Posted Date: 2007-06-27T04:00Z

[Federal Register: June 27, 2007 (Volume 72, Number 123)]
[Notices]               
[Page 35273-35275]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr27jn07-101]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-55927; File No. SR-CBOE-2007-55]

 
Self-Regulatory Organizations; Chicago Board Options Exchange, 
Incorporated; Notice of Filing and Immediate Effectiveness of Proposed 
Rule Change Relating to Transaction Fees for Electronically Executed 
Broker-Dealer Orders in IWM and QQQQ Options

June 20, 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 May 29, 2007, the Chicago Board Options Exchange, Incorporated 
(``CBOE'' or ``Exchange'') filed with the Securities and Exchange 
Commission

[[Page 35274]]

(``Commission'') the proposed rule change as described in Items I, II, 
and III below, which Items have been substantially prepared by the 
CBOE. 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.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend the CBOE Fees Schedule (``Fees 
Schedule'') to reduce transaction fees for electronically executed 
broker-dealer orders in options on the iShares Russell 2000 Index Fund 
(``IWM'') and the Nasdaq-100 Index Tracking Stock (``QQQQ''). The text 
of the proposed rule change is available at the CBOE, on the Exchange's 
Web site at http://www.cboe.org/legal, and in 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
    Currently, the Exchange assesses a transaction fee of $.45 per 
contract on broker-dealer orders that are electronically executed on 
the CBOE Hybrid Trading System (``Hybrid'').\3\ Manually executed 
broker-dealer orders are assessed a transaction fee of $.25 per 
contract.\4\ The broker-dealer electronic transaction fee helps 
allocate to broker-dealer orders a fair share of the costs of running 
the automatic execution feature of Hybrid and related Exchange systems.
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    \3\ ``Broker-dealer'' orders are defined in Footnote 16 of the 
Fees Schedule as broker-dealer orders (orders with ``B'' origin 
code), non-member market-maker orders (orders with ``N'' origin 
code), and orders from specialists in the underlying security 
(orders with ``Y'' origin code).
    \4\ However, electronically and manually executed broker-dealer 
orders in options on the S&P 100 Index (``OEX'' and ``XEO''), S&P 
500 (``SPX''), and Morgan Stanley Retail Index (``MVR'') are charged 
$.30 per contract, $.40 per contract, and $.25 per contract, 
respectively. Telephone conversation between Jaime Galvan, Assistant 
Secretary, CBOE, and Sara Gillis, Attorney, Division of Market 
Regulation, Commission, on June 18, 2007.
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    The Exchange proposes to reduce the broker-dealer electronic 
transaction fee from $.45 per contract to $.25 per contract in IWM and 
QQQQ options, so that both electronic and manual broker-dealer 
executions in these products would be assessed $.25 per contract. The 
Exchange believes it is reasonable and appropriate not to assess a 
higher fee for electronic broker-dealer executions in IWM and QQQQ 
options because these options are among the largest options contracts 
on the Exchange in terms of trading volume and generate significant 
revenues for the Exchange.
    The Exchange implemented the proposed fee changes on June 1, 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) \6\ 
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 members and other persons using its facilities.
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    \5\ 15 U.S.C. 78f(b).
    \6\ 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 
burden on competition that is not necessary or appropriate in 
furtherance of 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 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 \7\ and subparagraph (f)(2) 
of Rule 19b-4 \8\ 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.\9\
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    \7\ 15 U.S.C. 78s(b)(3)(A).
    \8\ 17 CFR 240.19b-4(f)(2).
    \9\ Id.
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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-2007-55 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-2007-55. 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. Copies of such 
filing also will be available for inspection and copying at the 
principal office of the 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-2007-55 and should be submitted on or before July 
18, 2007.

[[Page 35275]]

    For the Commission, by the Division of Market Regulation, 
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. E7-12388 Filed 6-26-07; 8:45 am]

BILLING CODE 8010-01-P