[Federal Register Volume 62, Number 242 (Wednesday, December 17, 1997)]
[Notices]
[Pages 66156-66157]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-32918]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-39433; File No. SR-CBOE-97-62]
Self-Regulatory Organizations; Notice of Filing and Immediate
Effectiveness of Proposed Rule Change by the Chicago Board Options
Exchange, Inc. Relating to Transaction Fees for Options on the Three
Dow Jones Averages
December 11, 1997.
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 December 3, 1997, the Chicago Board Options Exchange, Inc. (``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 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. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of
Substance of the Proposed Rule Change
The CBOE proposes to modify the Exchange transaction fees
applicable to transactions in options based on Dow Jones & Company
indexes (``Dow Jones'').
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 purpose of the proposed rule change is to modify the large
trade discount program applicable to transactions in options based on
Dow Jones indexes, three of which began trading on October 6, 1997.\3\
The fee changes, implemented by the Exchange pursuant to CBOE Rule
2.22, will be made retroactive to the launch of these products on
October 6, 1997.
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\3\ On September 3, 1997, the Commission approved CBOE's request
to trade options on the following Dow Jones indexes, the Dow Jones
Industrial Index (``DJX''), the Dow Jones Utilities Index (``DUX''),
and the Dow Jones Transportation Index (``DTX''). See Securities
Exchange Act Release Nos. 39011, 62 FR 47841 (September 11, 1997)
(order approving File No. SR-CBOE-97-26); 39013, 62 FR 47845
(September 11, 1997) (order approving File No. SR-CBOE-97-28); and
39012, 62 FR 47850 (September 11, 1997) (order approving File No.
SR-CBOE-97-27).
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The Exchange believes that because of the relatively small size of
the option contracts on the Dow Jones indexes, the current transaction
fees have been somewhat of a disincentive for institutional trading.
Consequently, the Exchange has decided to reduce the fees applicable to
large trade (i.e. those trades of over 1000 contracts) for all market
participants. Under the current Dow Jones large trade discount program,
customer orders in excess of one thousand contracts have received a
fifty percent discount on all contracts in excess of one thousand. As
before, the Dow Jones program will be separate and distinct from the
Large Trade Discount Program currently applicable to all other CBOE
products.
Retroactive to the launch date of October 6, 1997,\4\ the large
trade discount program for the Dow Jones products will be:
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\4\ The Exchange will recalculate October discounts with the
intent of including credits in November billing statements sent to
clearing firms. If programming changes are not completed by the end
of November, the Exchange will endeavor to send checks to clearing
firms in early December for October discounts.
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Customer Orders
First 1,000 contracts of an order are assessed regular
transaction fees (same as current program):
$0.40 per contract when the premium is $1 or more;
$0.20 per contract when the premium is under $1.
Contracts 1,001 and above of an order will receive a 100%
discount. (The current program provides a 50% discount.)
Member Firm Proprietary Orders
First 1,000 contracts are assessed regular transaction
fees of $0.10 (same as current program).
Contracts 1,001 and above will receive a 100% discount.
(The current program does not provide a discount.)
Market-Makers on the Other Side of Large Orders
All market-maker contracts on the other side of a Dow
Jones customer or member firm proprietary order of more than 1,000
contracts will receive a 100% discount on transaction fees. The waiver
of the transaction fee is applicable to all market-makers on the other
side of the trade and is applicable to the entire order, not just the
portion over 1,000 contracts.
Trade match fees of $0.04 per contracts and floor brokerage fees of
$0.03 per contracts under the original program will not be changed.
Large trade discounts will be calculated after each month end.
Discounts will be credited to clearing firms in the following month's
Exchange billing statements.
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) of
the Act \6\ in particular, in that it is designed to provide for the
equitable allocation of reasonable dues, fees, and other changes 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 a 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
The foregoing 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) of the Act \7\ and subparagraph (e) of
Rule 19b-4 thereunder.\8\ At any time within 60 days of the filing of
such 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 66157]]
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(e).
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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 submission
should file six copies thereof with the Secretary, Securities and
Exchange Commission, 450 Fifth Street, NW., Washington, DC 20549.
Copies of the submissions, 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, 450 Fifth Street, NW., Washington,
DC. Copies of such filing also will be available for inspection and
copying at the CBOE. All submissions should refer to File No. SR-CBOE-
97-62 and should be submitted by January 7, 1998.
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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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 97-32918 Filed 12-16-97; 8:45 am]
BILLING CODE 8010-01-M