[Federal Register Volume 62, Number 195 (Wednesday, October 8, 1997)]
[Notices]
[Pages 52602-52603]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-26576]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-39179; File No. SR-CBOE-97-47]
Self-Regulatory Organizations; Notice of Filing and Immediate
Effectiveness of Proposed Rule Change by the Chicago Board Options
Exchange, Incorporated Relating to Option Trading Permit Bid Fee
October 1, 1997.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act'')\1\, notice is hereby given that on September 18, 1997, 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.
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\1\ 15 U.S.C. Sec. 78s(b)(1).
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I. Self-Regulatory Organization's Statement of the Terms of
Substance of the Proposed Rule Change
The CBOE is proposing to amend the manner in which it assesses the
Exchange fee that is charged when a person submits a bid to receive an
Option Trading Permit (``OTP'') from the OTP lease pool.
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
CBOE Rule 3.27(a)(3) provides for the creation of an OTP lease pool
to be administered by the Exchange. The procedures for the
administration of this lease pool were previously filed with and
approved by the Commission.\2\ Under these procedures, the Exchange
conducts an auction every six months during which members and non-
members who have qualified for membership may submit bids equal to the
monthly rent that the bidder is willing to pay for a month-to-month OTP
lease. Upon the close of the bidding period, OTPs in the pool are
awarded to the highest bidders in a number equal to the total number of
OTPs in the lease pool at that time. The monthly rent to be paid by a
lessee is the dollar value of the bid submitted by that lessee.
Following each auction, the Exchange continues to accept bids for OTP
leases. Should any OTP lessee desire to give up that lessee's OTP prior
to the next auction, the OTP is transferred to the highest bidder at a
monthly lease price equal to the new lessee's bid for the remainder of
the six month auction cycle.
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\2\ The procedures for the administration of the OTP lease pool
were filed with the Commission in SR-CBOE-97-14. SR-CBOE-97-14
provided for the issuance of OTPs in connection with the transfer of
the options business of the New York Stock Exchange, Inc. to CBOE
and defined the rights and obligations associated with OTPs. SR-
CBOE-97-14 was approved by the Commission in Securities Exchange Act
Release No. 38541 (April 23, 1997), 62 FR 23516 (April 30, 1997).
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The procedures for the administration of the OTP lease pool also
provide that a non-refundable $500 fee will be assessed by the Exchange
any time an OTP bid is submitted. This fee is intended to cover
Exchange costs in connection with its administration of the OTP lease
pool.
The Exchange proposes to amend the manner in which it assesses the
$500 OTP bid fee. Specifically, the Exchange proposes not to charge the
fee to any current OTP lease pool lessee who submits a bid in
connection with one of the Exchange's bi-annual OTP lease pool
auctions. The $500 OTP bid fee would continue to be assessed to anyone
who submits a bid in connection with one of the Exchange's bi-annual
OTP lease pool auctions and is not currently an OTP lease pool lessee.
In addition, the $500 OTP bid fee would continue to be assessed to
anyone who is not currently an OTP lease pool lessee and submits an OTP
bid during a six month OTP lease cycle and not in connection with one
of the Exchange's bi-annual OTP lease pool auctions.
The Exchange has determined that it is not necessary to assess a
$500 OTP bid fee to a current OTP lease pool lessee in connection with
a bi-annual OPT lease auction because that person will have already
paid a $500 OTP bid fee to the Exchange.\3\
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\3\ It should be noted that a current OTP lease pool lessee may
not submit an OTP bid during the six month OTP lease cycle (except
for a bid that is in connection with the next bi-annual OTP lease
pool auction). This is the case because in order for a person to
submit an OTP bid, that person must be immediately eligible to
become an OTP lease pool lessee. A current OTP lease pool lessee is
not immediately eligible to become an OTP lease pool lessee for
another OTP because that person is already leasing an OTP from the
lease pool, and a person can only lease one OTP from the lease pool
at a time.
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The Exchange also proposes to amend the procedures for the
administration of the OTP lease pool to clarify that the $500 OTP bid
fee is not assessed when a bid is canceled or replaced with another
bid. The Exchange is not waiving the $500 OTP bid fee for an OTP lease
pool lessee who terminates his or her OTP lease and later submits
another bid for an OTP in the lease pool because there is
administrative work involved in processing a change in OTP lessees.
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 charges.
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.
[[Page 52603]]
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 proposed rule change establishes or changes a due, fee, or
other charge imposed by the Exchange and therefore, has become
effective pursuant to Section 19(b)(3)(A)(ii) \4\ of the Act and Rule
19b-4(e)(2) \5\ thereunder. At any time within 60 days of the filing of
a rule change, the Commission may summarily abrogate the 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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\4\ 15 U.S.C. Sec. 78s(b)(3)(A)(ii).
\5\ 17 CFR 240.19b-4(e)(2).
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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, DC 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. Sec. 552, will be available for inspection and copying at
the Commission's Public Reference Room. Copies of such filing will also
be available for inspection and copying at the principal office of the
CBOE. All submissions should refer to File No. SR-CBOE-97-47 and should
be submitted by October 29, 1997.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\6\
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\6\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 97-26576 Filed 10-7-97; 8:45 am]
BILLING CODE 8010-01-M