Document ID: SEC-2008-0993-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Chicago Board Options Exchange, Inc.
Posted Date: 2008-07-17T04:00Z

[Federal Register: July 17, 2008 (Volume 73, Number 138)]
[Notices]               
[Page 41140-41141]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr17jy08-137]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-58127; File No. SR-CBOE-2008-68]

 
Self-Regulatory Organizations; Chicago Board Options Exchange, 
Incorporated; Notice of Filing and Immediate Effectiveness of a 
Proposed Rule Change To Amend the CBOE Fees Schedule

 July 9, 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 June 30, 2008, the Chicago Board Options Exchange, Incorporated 
(``CBOE'' or ``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 
Exchange. CBOE has designated this proposal as one establishing or 
changing a due, fee, or other charge imposed by CBOE 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

    CBOE proposes to amend its Fees Schedule to establish fees for 
transactions in binary options on broad-based indexes and to amend its 
marketing fee program. The Exchange also proposes to make a technical 
amendment by deleting all references to the obsolete term ``RMM'' from 
its Fees Schedule. The text of the proposed rule change is available at 
the Exchange, the Commission's Public Reference Room, and http://
www.cboe.com.

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. CBOE has substantially 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

Establish Transaction Fees for Binary Options

    The Exchange recently received approval to list and trade binary 
options on broad-based indexes, and the purpose of this rule change is 
to establish transaction fees for binary options on broad-based 
indexes.\5\ The Exchange proposes to extend the existing fees for 
transactions in traditional index options to binary options on broad-
based indexes. To affect the current proposal, the Exchange proposes to 
add a reference to ``binary options'' in Footnotes 1 and 6 in the CBOE 
Fees Schedule.
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    \5\ See Securities Exchange Act Release No. 57850 (May 22, 
2008), 73 FR 31169 (May 30, 2008) (SR-CBOE-2006-105).
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    The amount of the transactions fees for binary options on broad-
based indexes would be as follows:
     $0.20 per contract for Market-Maker, Designated Primary 
Market-Maker and Remote Market-Maker transactions;
     $0.20 per contract for member firm proprietary 
transactions;
    The fees for broker-dealer transactions are as follows:
     $0.25 per contract for manually executed transactions 
other than OEX, XEO and SPX;
     $0.30 per contract for OEX or XEO;
     $0.40 per contract for SPX;
     $0.45 per contract for electronically executed 
transactions other than OEX, XEO and SPX (i.e., broker-dealer orders 
that are automatically executed on the CBOE Hybrid Trading System); \6\
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    \6\ Broker-dealer manual and electronic transaction fees would 
apply to 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).
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    The fees for customer transactions shall be as follows:
     $0.18 per contract for transactions other than OEX, XEO, 
SPX, DXL and Volatility Indexes;
     $0.30 per contract for OEX or XEO;
     $0.35 per contract for SPX, premium < $1;
     $0.40 per contract for DXL and Volatility Indexes;
     $0.45 per contract for SPX, premium > or = $1;

[[Page 41141]]

     $0.30 per contract for Linkage Orders; and
     $0.10 per contract CFLEX surcharge fee.
    In addition, a surcharge fee of $0.06 would apply to non-public 
customer transactions in binary options on OEX, XEO, SPX, and 
Volatility Indexes, and a surcharge fee of $0.10 would apply to non-
public customer transactions in binary options on DJX, DXL, MNX, NDX, 
and RUT. These surcharge fees help the Exchange recoup license fees the 
Exchange pays to the different reporting authorities in order to list 
options on the respective broad-based indexes.
    The Exchange's Liquidity Provider Sliding Scale \7\ would apply to 
transaction fees in binary options, but the Exchange's marketing fee 
\8\ would not apply. The Exchange believes the rule change would 
further the Exchange's goal of introducing new products to the 
marketplace that are competitively priced. In order to promote the 
launch of binary options on broad-based indexes, the Exchange proposes 
to waive the applicable transactions fees beginning with the launch of 
trading on July 1, 2008 through October 1, 2008.
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    \7\ See Footnote 10 of the CBOE Fees Schedule.
    \8\ See Footnote 6 of the CBOE Fees Schedule.
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Amend Exchange's Marketing Fee Program

    CBOE also proposes to amend its marketing fee program to assess the 
fee in XSP options at the rate of $0.10 per contract. XSP options are 
options based on the S&P 500[supreg] Index and have 1/10th the value of 
the S&P 500 index options. CBOE currently assesses its marketing fee at 
the rate of $0.10 per contract in SPY options, which are options on the 
SPDR exchange-traded fund (ETF) which is designed to track the 
performance of the S&P 500[supreg] Index. CBOE believes that assessing 
the marketing fee in XSP will allow CBOE Market-Makers, e-DPMs, or DPMs 
to compete better for order flow in XSP options class if it assessed 
the marketing fee in it, just as it assesses the fee in SPY options. 
CBOE proposes to implement this change to the marketing fee program 
beginning on July 1, 2008. CBOE is not amending its marketing fee 
program in any other respects.

Technical Change--Delete All References to ``RMM''

    CBOE also proposes to make a technical amendment throughout its 
Fees Schedule. Specifically, CBOE proposes to delete all references to 
``RMM,'' in light of the recent approval of SR-CBOE-2007-120, which 
filing deleted reference to RMM in CBOE's rules among other changes.\9\
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    \9\ See Securities Exchange Act Release No. 57615 (April 3, 
2008), 73 FR 19537 (April 10, 2008) (SR-CBOE-2007-120).
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2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act \10\ in general, and furthers the 
objectives of Section 6(b)(4) of the Act \11\ 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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    \10\ 15 U.S.C. 78f(b).
    \11\ 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

    The foregoing proposed rule change has been designated as a fee 
change pursuant to Section 19(b)(3)(A)(ii) of the Act \12\ and Rule 
19b-4(f)(2) \13\ thereunder, because it establishes or changes a due, 
fee, or other charge imposed by the Exchange. Accordingly, the proposal 
will take effect upon filing with the Commission. At any time within 60 
days of the filing of such 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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    \12\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \13\ 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@gov. Please include File 
Number SR-CBOE-2008-68 on the subject line.

Paper Comments

     Send paper comments in triplicate to Secretary, Securities 
and Exchange Commission, 100 F Street, NE., Washington, DC 20549-1090.

All submissions should refer to File Number SR-CBOE-2008-68. 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 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 
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-2008-68 and should be submitted on or before August 7, 2008.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\14\
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    \14\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Acting Secretary.
[FR Doc. E8-16345 Filed 7-16-08; 8:45 am]

BILLING CODE 8010-01-P