Document ID: SEC-2006-0619-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: Chicago Board Options Exchange,  Inc.
Posted Date: 2006-05-12T04:00Z

[Federal Register: May 12, 2006 (Volume 71, Number 92)]
[Notices]               
[Page 27756-27757]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr12my06-111]                         

[[Page 27756]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-53767; File No. SR-CBOE-2006-43]

 
Self-Regulatory Organizations; Chicago Board Options Exchange, 
Incorporated; Notice of Filing and Immediate Effectiveness of a 
Proposed Rule Change Relating to Its Marketing Fee Program

May 8, 2006.
    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 April 28, 2006, 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. The CBOE has designated this proposal as one establishing or 
changing a due, fee, or other charge imposed by the 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

    The CBOE proposes to amend its Fees Schedule and its marketing fee 
program. Below is the text of the proposed rule change. Proposed new 
language is in italics; deleted language is in [brackets].

Chicago Board Options Exchange, Inc.

Fees Schedule

[March 1] May 1, 2006

    1. No Change.

  2. Marketing Fee (6)(16).......................................   $.65

    3.-4. No Change.
    Footnotes:
    (1)-(5) No Change.
    (6) The Marketing Fee will be assessed only on transactions of 
Market-Makers, RMMs, e-DPMs, DPMs, and LMMs resulting from orders for 
less than 1,000 contracts (i) from payment accepting firms, or (ii) 
that have designated a ``Preferred Market-Maker'' under CBOE Rule 8.13 
at the rate of $.65 per contract on all classes of equity options, 
options on HOLDRs, options on SPDRs, [and] options on DIA, options on 
NDX, and options on RUT. The fee will not apply to: Market-Maker-to-
Market-Maker transactions including transactions resulting from orders 
from non-member market-makers; transactions resulting from P/A orders; 
transactions resulting from accommodation liquidations (cabinet 
trades); and transactions resulting from dividend strategies, merger 
strategies, and short stock interest strategies as defined in footnote 
13 of this Fees Schedule. This fee shall not apply to index options and 
options on ETFs (other than options on SPDRs, [and] options on DIA, 
options on NDX, and options on RUT). A Preferred Market-Maker will only 
be given access to the marketing fee funds generated from a Preferred 
order if the Preferred Market-Maker has an appointment in the class in 
which the Preferred order is received and executed. If less than 80% of 
the marketing fee funds are paid out by the DPM/LMM or Preferred 
Market-Maker in a given month, then the Exchange would refund such 
surplus at the end of the month on a pro rata basis based upon 
contributions made by the Market-Makers, RMMs, e-DPMs, DPMs and LMMs. 
However, if 80% or more of the accumulated funds in a given month are 
paid out by the DPM/LMM or Preferred Market-Maker, there will not be a 
rebate for that month and the funds will carry over and will be 
included in the pool of funds to be used by the DPM/LMM or Preferred 
Market-Maker the following month. At the end of each quarter, the 
Exchange would then refund any surplus, if any, on a pro rata basis 
based upon contributions made by the Market-Makers, RMMs, DPMs, e-DPMs 
and LMMs. CBOE's marketing fee program as described above will be in 
effect until June 2, 2006.
    Remainder of Fees Schedule--No change.

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 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 states that, currently, its marketing fee is assessed upon 
DPMs, LMMs, e-DPMs, RMMs, and Market-Makers at the rate of $.65 per 
contract on transactions of Market-Makers, RMMs, e-DPMs, DPMs, and LMMs 
resulting from orders for less than 1,000 contracts (i) from payment 
accepting firms, or (ii) that have designated a ``Preferred Market-
Maker'' under CBOE Rule 8.13. The Exchanges notes that this fee does 
not apply to: Market-Maker-to-Market-Maker transactions (which includes 
all transactions between any combination of DPMs, e-DPMs, RMMs, LMMs, 
and Market-Makers, and transactions resulting from orders from non-
member market-makers); transactions resulting from inbound P/A orders; 
transactions resulting from accommodation liquidation (cabinet trades); 
or transactions resulting from dividend strategies, merger strategies, 
and short stock interest strategies. CBOE states that the marketing fee 
is assessed on all equity option classes and options on HOLDRs[reg], 
options on SPDRs[reg], and options on DIA.
    CBOE now proposes to amend its marketing fee program to assess the 
fee on options on the Nasdaq-100[reg] (NDXTM) Index and 
options on the Russell 2000[reg] (RUT) Index. The fee would commence in 
NDX and RUT options on May 1, 2006.
    CBOE states that it is not amending its marketing fee program in 
any other respect.
2. Statutory Basis
    The Exchange believes that 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) of the Act,\6\ in particular, in that it 
is designed to provide for the equitable allocation of reasonable dues, 
fees, and other charges among CBOE members.
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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

    The Exchange does not believe that the proposed rule change will 
impose any inappropriate burden on competition not necessary or 
appropriate in furtherance of the purposes of the Act.

[[Page 27757]]

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    No written comments were either solicited or received.

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 \7\ and Rule 19b-
4(f)(2) \8\ 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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    \7\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \8\ 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-2006-43 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-2006-43. 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-2006-43 and should be submitted on or before June 
2, 2006.

    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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Nancy M. Morris,
Secretary.
[FR Doc. E6-7245 Filed 5-11-06; 8:45 am]

BILLING CODE 8010-01-P