[Federal Register Volume 61, Number 144 (Thursday, July 25, 1996)]
[Notices]
[Pages 38791-38793]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-18855]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-37454; File No. SR-CBOE-96-42]
Self-Regulatory Organizations; Notice of Filing and Immediate
Effectiveness of Proposed Rule Change by the Chicago Board Options
Exchange, Incorporated Relating to Exchange Fees
July 18, 1996.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''), 15 U.S.C. 78s(b)(1), notice is hereby given that on June 28,
1996, the Chicago Board Options Exchange, Incorporated (``CBOE'' or
``Exchange'') filed with the Securities and Exchange Commission
(``Commission'' or ``SEC'') 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 persons.
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange is proposing to renew and amend (i) its Fee Reduction
Program for Market-Maker Transaction Fees, Floor Broker Fees, and
Member Dues; and (ii) its Customer ``Large'' Trade Discount Program.
The text of the proposed rule change is available at the Office of
the Secretary, CBOE and at the Commission.
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
The purpose of this proposed rule change is to renew and amend (i)
the Exchange's Fee Reduction Program for Market-Maker Transaction Fees,
Floor Broker Fees, and Member Dues; and (ii) its Customer ``Large''
Trade Discount Program. The foregoing fee changes are being implemented
by the Exchange pursuant to CBOE Rule 2.22 and will take effect on July
1, 1996.
The Exchange's Fee Reduction Program for Market-Maker Transaction
Fees, Floor Broker Fees, and Member Dues currently provides that if at
the end of any quarter of the Exchange's fiscal year the Exchange's
average contract volume per day on a fiscal year-to-date basis exceeds
one of certain predetermined volume thresholds, the Exchange's market-
maker transaction fees, floor broker fees, and member dues will be
reduced in the following fiscal quarter in accordance with a fee
reduction schedule. The Program is scheduled to terminate on June 30,
1996 at the end of the Exchange's 1996 fiscal year. The Program is
proposed to be amended to provide that the Program will continue in
effect during the Exchange's 1997 fiscal year and will terminate on
June 30, 1997. The Program is also proposed to be amended to increase
the volume thresholds and decrease the fee reduction amounts which
currently apply under the Program. Specifically, the market-maker
transaction fee reduction, which currently ranges from $.01 to $.03 for
volumes of 625,000 to 750,000, as amended will be decreased to $.01 for
all volumes commencing at 675,000 contracts. Also, the floor broker fee
reduction, which currently ranges from $.005 to $.01 for volumes
ranging from 650,000 to 750,000 contracts, as amended will be decreased
to $.005 for all volumes commencing at 700,000 contracts. Finally, the
member dues fee reduction, which currently ranges from 25% to 100% for
volumes ranging from 625,000 to 750,000, as amended will increase the
volume thresholds and cap the fee reduction rate at 75%.
The Exchange's Customer ``Large'' Trade Discount Program currently
provides for discounts on the transaction fees that CBOE members pay
with respect to public customer orders for 500 or more contracts.
Specifically, for any month the Exchange's average contract volume per
day exceeds one of certain predetermined volume thresholds, the
transaction fees that are assessed by the Exchange in that month with
respect to public customer orders for 500 or more contracts are subject
to a discount in accordance with a discount schedule. The Program is
scheduled to terminate on June 30, 1996 at the end of the Exchange's
1996 fiscal year. The Program is proposed to be amended to provide that
the Program will continue in effect during the Exchange's 1997 fiscal
year and will terminate on June 30, 1997. In addition to renewing the
current fee discount percentages under the Program, the Program is also
proposed to amended to increase the threshold monthly average contract
volume per day from 550,000 contacts to 575,000 contacts to which a 30%
discount rate applies.\1\ In all other respects the Program remains
unchanged.
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\1\ Pursuant to this Program, if for any month the Exchange's
average contract volume per day is between 0 and 575,000 contracts,
then the customer large trade discount is 25%.
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The proposed amendments are the product of the Exchange's annual
budget review. The amendments are structured to fairly allocate the
costs of operating the Exchange in the event that the Exchange
experiences higher volume. In addition, although the proposed rule
change provides that the Exchange's Fee Reduction Program for Market-
Maker Transaction Fees, Floor Broker Fees, and Member Dues and the
Exchange's Customer ``Large'' Trade Discount Program will terminate at
the end of the Exchange's 1997 fiscal year, the Exchange intends to
evaluate these Programs prior to the beginning of the 1998 fiscal year
and may renew these Programs in the same or modified form for the 1998
fiscal year.
The proposed rule change is consistent with section 6(b) of the
Act, in general, and furthers the objectives of Section 6(b)(4) of the
Act in particular, in that it is designed to provide for the equitable
allocation of reasonable dues, fees, and other changes among CBOE
members.
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.
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 and Rule 19b-4 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,
[[Page 38793]]
or otherwise in furtherance of the purposes of the Act.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing. Persons making written submissions
should file six copies thereof with the Secretary, Securities and
Exchange Commission, 450 Fifth Street, N.W., Washington, D.C. 20549.
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 Section, 450 Fifth Street, N.W.,
Washington, D.C. 20549. Copies of such filing will also be available
for inspection and copying at the principal office of the CBOE. All
submissions should refer to the File No. SR-CBOE-96-42 and should be
submitted by August 15, 1996.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\2\
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\2\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 96-18855 Filed 7-24-96; 8:45 am]
BILLING CODE 8010-01-M