Document ID: SEC-2007-1241-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: Chicago Board Options Exchange, Inc.
Posted Date: 2007-09-06T04:00Z

[Federal Register: September 6, 2007 (Volume 72, Number 172)]
[Notices]               
[Page 51283-51285]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr06se07-110]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-56338; File No. SR-CBOE-2007-94]

 
Self-Regulatory Organizations; Chicago Board Options Exchange, 
Incorporated; Notice of Filing and Immediate Effectiveness of Proposed 
Rule Change Relating to the ORS Order Cancellation Fee

August 29, 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 August 1, 2007, the Chicago Board Options Exchange, Incorporated 
(the ``CBOE'' or the ``Exchange'') filed with the Securities and 
Exchange Commission

[[Page 51284]]

(``Commission'') the proposed rule change as described in Items I and 
II below, which Items have been substantially prepared by the CBOE. The 
CBOE has filed the proposed rule change as one establishing or changing 
a due, fee, or other charge imposed by the Exchange under Section 
19(b)(3)(A)(ii) of the Act \3\ and Rule 19b-4(f)(2) thereunder,\4\ 
which renders the proposal 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)(ii).
    \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 CBOE proposes to amend its Order Routing System (``ORS'') order 
cancellation fee. The text of the proposed rule change is available at 
CBOE, the Commission's Public Reference Room, and http://www.cboe.org/legal
.

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 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 CBOE currently assesses an executing clearing member $1 for 
each cancelled ORS order in excess of the number of orders that the 
executing clearing member executes in a month for a customer or for 
itself. The purpose of the fee is to ease order backlogs on ORS. The 
fee is not charged if less than 500 ORS orders are cancelled in the 
month. The following ORS cancellation activity is exempt from the fee: 
(i) Cancelled ORS orders that improve the Exchange's prevailing bid-
offer (BBO) market when received; and (ii) fill and cancellation 
activity occurring within the first one minute of trading following the 
opening of each option class.
    The Exchange proposes three changes to the fee. First, the Exchange 
proposes to calculate the fee by counting only public customer (non-
broker-dealer) orders. The Exchange believes this change is appropriate 
since public customer orders in many products traded on the Exchange 
are not assessed transaction fees while all non-customer orders pay 
transaction fees, which helps offset cancellation costs.
    Second, the Exchange proposes to aggregate and count as one 
executed order for purposes of the fee, all public customer options 
orders from the same executing clearing member for itself or for a 
correspondent firm that are executed in the same series on the same 
side of the market at the same price within a 30 second period. This 
proposed change is intended to discourage firms from entering and 
executing multiple small orders to offset the cancellation of larger 
orders for purposes of avoiding the fee.
    Third, the Exchange proposes to increase the fee from $1.25 to 
$1.50 per cancelled ORS order.
    The proposed ORS order cancellation fee is similar to the 
cancellation fee of the International Securities Exchange. The Exchange 
intends to implement the proposed fee change on August 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 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 \7\ and Rule 19b-
4(f)(2) \8\ thereunder. At any time within 60 days of the filing of the 
proposed rule change the Commission may summarily abrogate such 
proposed 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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    \7\ 15 U.S.C. 78s(b)(3)(A).
    \8\ 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 Number SR-CBOE-2007-94 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-2007-94. 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, 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

[[Page 51285]]

the principal office of 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-2007-94 and should be submitted on or before 
September 27, 2007.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\9\
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    \9\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7-17572 Filed 9-5-07; 8:45 am]

BILLING CODE 8010-01-P