Document ID: SEC-2010-0559-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Chicago Board Options Exchange, Inc.
Posted Date: 2010-04-13T04:00Z

[Federal Register: April 13, 2010 (Volume 75, Number 70)]
[Notices]               
[Page 18934-18935]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr13ap10-104]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-61852; File No. SR-CBOE-2010-034]

 
Self-Regulatory Organizations; Chicago Board Options Exchange, 
Incorporated; Notice of Filing and Immediate Effectiveness of Proposed 
Rule Change Relating to Temporary Membership Status and Interim Trading 
Permit Access Fees

April 6, 2010.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ notice is hereby given that on March 29, 2010, the 
Chicago Board Options Exchange, Incorporated (``CBOE'' or the 
``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 prepared by the CBOE. The 
Commission is publishing this notice to solicit comments on the 
proposed rule change from interested parties.
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    \1\ 15 U.S.C. 78s(b)(1).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    CBOE proposes to adjust (i) the monthly access fee for persons 
granted temporary CBOE membership status (``Temporary Members'') 
pursuant to Interpretation and Policy .02 under CBOE Rule 3.19 (``Rule 
3.19.02'') and (ii) the monthly access fee for Interim Trading Permit 
(``ITP'') holders under CBOE Rule 3.27. The text of the proposed rule 
change is available on the Exchange's Web site (http://www.cboe.org/
Legal/), at the Exchange's Office of the Secretary, 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, CBOE 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 CBOE 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
    The current access fee for Temporary Members under Rule 3.19.02 \2\ 
and the current access fee for ITP holders under Rule 3.27 \3\ are both 
$4,875 per month. Both access fees are currently set at the indicative 
lease rate \4\ for March 2010. The Exchange proposes to adjust both 
access fees effective at the beginning of April 2010. Specifically, 
instead of setting these access fees at the indicative lease rate, the 
Exchange proposes to revise both the Temporary Member access fee and 
the ITP access fee to be $7,500 per month commencing on April 1, 2010.
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    \2\ See Securities Exchange Act Release No. 56458 (September 18, 
2007), 72 FR 54309 (September 24, 2007) (SR-CBOE-2007-107) for a 
description of the Temporary Membership status under Rule 3.19.02.
    \3\ See Securities Exchange Act Release No. 58178 (July 17, 
2008), 73 FR 42634 (July 22, 2008) (SR-CBOE-2008-40) for a 
description of the Interim Trading Permits under Rule 3.27.
    \4\ The indicative lease rate is defined under Rule 3.27(b) as 
the highest clearing firm floating monthly rate of the CBOE Clearing 
Members that assist in facilitating at least 10% of the CBOE 
transferable membership leases. Rule 3.27(b) defines the clearing 
firm floating monthly rate as the floating monthly rate that a 
Clearing Member designates, in connection with transferable 
membership leases that the Clearing Member assisted in facilitating, 
for leases that utilize that monthly rate. The concepts of an 
indicative lease rate and of a clearing firm floating month rate 
were previously utilized in the CBOE rule filings that set and 
adjusted the Temporary Member access fee. Both concepts are also 
codified in Rule 3.27(b) in relation to ITPs.
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    Because Temporary Members and ITP holders possess a feature that 
does not exist in the typical lease arrangement for a CBOE transferable 
membership, the Exchange believes that it is equitable to assess 
Temporary Members and ITP holders an access fee that is higher than the 
indicative lease rate.\5\ Specifically, under CBOE Rules 3.19 and 3.27, 
access to the Exchange by Temporary Members and ITP holders may only be 
terminated at their own direction except in the following limited 
circumstances: (i) As a result of regulatory action against the 
Temporary Member or ITP holder, (ii) in the event of a demutualization, 
or (iii) through a rule change approved by the Commission. On the other 
hand, the typical lease arrangement for a transferable membership can 
be terminated by the lessor without cause upon a month's notice to the 
lessee. As a result, Temporary Members and ITP holders enjoy more 
certainty than lessees with respect to their trading access to the 
Exchange.
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    \5\ See, e.g., Securities Exchange Act Release No. 58200 (July 
21, 2008), 73 FR 43805 (July 28, 2008) (SR-CBOE-2008-77).
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    CBOE also believes that the proposed access fees are reasonable 
when compared to the average indicative lease rate over the last six 
months and to indicative lease rate levels during the past year. 
Specifically, the average indicative lease rate between October 2009 
and March 2010 was $8,493, which is in excess of the proposed $7,500 
rate. Additionally, the indicative lease rate was above $10,000 between 
June 2009 and November 2009, peaking at $11,900 in October 2010. Also, 
in as recently as January 2010, the indicative lease rate exceeded the 
proposed $7,500 when the indicative lease rate was $7,928. Accordingly, 
the Exchange considers $7,500 to be a reasonable rate for monthly 
access to the Exchange.
    Each of the proposed access fees will remain in effect until such 
time either that the Exchange submits a further rule filing pursuant to 
Section 19(b)(3)(A)(ii) of the Act \6\ to modify the applicable access 
fee or the applicable status (i.e., the Temporary Membership status or 
the ITP status) is terminated. Accordingly, the Exchange may further 
adjust the proposed access fees in the future if the Exchange 
determines that it would be appropriate to do so.
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    \6\ 15 U.S.C. 78s(b)(3)(A)(ii).
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    The procedural provisions of the CBOE Fee Schedule related to the 
assessment of each proposed access fee are not proposed to be changed 
and will remain the same as the current procedural provisions relating 
to the assessment of that access fee.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\7\ in general, and furthers the 
objectives of Section 6(b)(4)

[[Page 18935]]

of the Act,\8\ in particular, in that it is designed to provide for the 
equitable allocation of reasonable dues, fees, and other charges among 
persons using its facilities. CBOE believes that the proposed access 
fees are reasonable when compared to the average indicative lease rate 
over the last six months and to indicative lease rate levels during the 
past year for the reasons described above. In addition, CBOE believes 
that the proposed access fees are equitable in that they apply 
uniformly to all Temporary Members and ITP holders.
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    \7\ 15 U.S.C. 78f(b).
    \8\ 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 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 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 \9\ and subparagraph (f)(2) 
of Rule 19b-4 \10\ 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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    \9\ 15 U.S.C. 78s(b)(3)(A).
    \10\ 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-2010-034 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-2010-034. 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 available publicly. All 
submissions should refer to File No. SR-CBOE-2010-034 and should be 
submitted on or before May 4, 2010.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\11\
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    \11\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-8364 Filed 4-12-10; 8:45 am]
BILLING CODE 8011-01-P