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SECURITIES AND EXCHANGE COMMISSION
Securities and Exchange Commission
DOCUMENT ID: [Release No. 34-56937; File No. SR-CBOE-2007-127]
NOTICE: NOTICES
ACTION: Self-regulatory organizations; proposed rule changes:
SUBJECT CATEGORY: Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing and Immediate Effectiveness of Proposed Rule Change and Amendment No. 1 Thereto Relating to Cancellation Fees
DOCUMENT SUMMARY: December 10, 2007.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 [[Page 71466]]
(``Act''),\1\ and Rule 19b4 thereunder,\2\ notice is hereby given that
on November 1, 2007, the Chicago Board Options Exchange, Incorporated
(the ``CBOE'' or the ``Exchange'') filed with the Securities and
Exchange Commission (``Commission'') the proposed rule change as
described in Items I and II below, which Items have been substantially
prepared by the CBOE. On November 30, 2007, CBOE filed Amendment No. 1
to the proposed rule change. The CBOE has filed the proposed rule
change as one establishing or changing a due, fee, or other charge
imposed by the Exchange under Section 19(b)(3)(A)(ii) of the Act \3\
and Rule 19b4(f)(2) thereunder,\4\ which renders the proposal
effective upon filing with the Commission. The Commission is publishing
this notice, as amended, to solicit comments on the proposed rule change from interested persons.
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b4.
\3\ 15 U.S.C. 78s(b)(3)(A)(ii).
\4\ 17 CFR 240.19b4(f)(2).
I. SelfRegulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change
The CBOE proposes to (i) reduce the book execution fee in classes trading on the ``Hybrid 3.0 Platform'', and (ii) amend its Order Routing System (``ORS'') order cancellation fee. The text of the proposed rule change is available at CBOE, the Commission's Public Reference Room, and http://www.cboe.org/legal. II. SelfRegulatory 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. SelfRegulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to implement the following fee changes on November 1, 2007.
Hybrid 3.0 Book Execution Fee
On June 7, 2007, the Commission approved the Exchange's ``Hybrid
3.0'' trading platform.\5\ The remaining nonHybrid classes trading on
the Exchange have moved to the Hybrid 3.0 platform.\6\ The new Hybrid
3.0 classes no longer utilize the services of an Exchange Order Book
Official (``OBO'') \7\. Pursuant to Section 7 of the CBOE Fees
Schedule, the Exchange assessed per contract fees on orders in non
Hybrid index option classes resting in the electronic book that were
executed on the floor by the OBO (``OBO Execution Fees''). These OBO
Execution Fees are $.25 per contract excluding market orders and
certain limit orders entered prior to the opening rotation, and $.10
per contract for accommodation liquidations (cabinet trades).\8\
\5\ See Securities Exchange Act Release No. 55874 (June 7, 2007), 72 FR 32688 (June 13, 2007).
\6\ The classes that trade on the Hybrid 3.0 platform are
options on the S&P 100 Index (``OEX''), options on the S&P 500 Index
(``SPX'') and options on the Morgan Stanley Retail Index (``MVR'').
\7\ An ``Order Book Official'' is defined in CBOE Rule 7.1 as an
Exchange employee designated pursuant to CBOE Rule 7.3 who is
responsible for (i) maintaining the book with respect to the classes
of options assigned to him; (ii) effecting proper executions of
orders placed with him; (iii) displaying bids and offers pursuant to
CBOE Rule 7.7 of these Rules; and (iv) monitoring the market for the classes of options assigned to him.
\8\ An ``accommodation'' or ``cabinet'' trade refers to trades
in listed options on the Exchange that are worthless or not actively
traded. Cabinet trading is conducted in accordance with CBOE Rule 6.54.
The Exchange proposes to reduce the $.25 per contract fee to $.18
per contract, rename the fee ``Hybrid 3.0 Book Execution Fee'', and
eliminate the $.10 per contract fee for accommodation liquidations. The
fee would apply to book executions in Hybrid 3.0 classes (currently,
OEX, SPX and MVR). Specifically, orders in Hybrid 3.0 classes resting
in the electronic book that are executed would be assessed a fee of
$.18 per contract. This fee would not apply to orders in SPX options
resting in the SPX electronic book that are executed during opening
rotation on the final settlement date of CBOE Volatility Index
(``VIX'') options and futures, as orders entered to participate in such
opening rotation help to facilitate the calculation of a settlement price for VIX options and futures.\9\
\9\ The opening rotation procedures in options series used to
calculate the final settlement price of volatility indexes are described in CBOE Rule 6.2B.01.
The Hybrid 3.0 book execution system has helped to improve execution time as well as service and efficiency. The Hybrid 3.0 Book Execution Fee is designed to help the Exchange recover its costs of developing the system and offset the cost of maintaining and enhancing the system in the future.
ORS Order Cancellation Fee
CBOE currently assesses an executing clearing member $1.50 for each cancelled public customer ORS order in excess of the number of public customer orders that the executing clearing member executes in a month for itself or for a correspondent firm. The purpose of the fee is to ease order backlogs on ORS and related systems. The fee is not charged if less than 500 public customer orders are cancelled in a month by the executing clearing member for itself or for a correspondent firm. The Exchange aggregates and counts as one executed order for purposes of the fee all public customer options orders from the same executing clearing member for itself or for a correspondent firm that are executed in the same series on the same side of the market at the same price within a 30 second period. The following ORS order activity is exempt from the fee: (i) Cancelled ORS orders that improve the Exchange's prevailing bidoffer (BBO) market when received; and (ii) fill and cancellation activity occurring within the first one minute of trading following the opening of each option class.
The Exchange proposes to amend the fee by additionally exempting
the following activity: (i) Complex order \10\ fills and cancels; (ii)
unfilled FillorKill (``FOK'') orders \11\, and (iii) unfilled
ImmediateorCancel (``IOC'') orders. \12\ Because this activity does
not contribute excessively to system congestion the Exchange believes
it is appropriate to exclude this activity from the calculation of the fee.
\10\ ``Complex Order'' is defined in CBOE Rule 6.53C(a).
\11\ ``FillorKill'' order is defined in CBOE Rule 6.53(j) as
an order which is to be executed in its entirety as soon as it is
represented in the trading crowd, and such order, if not so executed, is to be treated as cancelled.
\12\ ``ImmediateorCancel'' order is defined in CBOE Rule
6.53(k) as a market or limit order which is to be executed in whole
or in part as soon as such order is represented in the trading
crowd. Any portion not so executed is to be treated as cancelled.
Additionally, the Exchange proposes to exempt from the fee fill and
cancellation activity in MiniSPX Index Options (XSP). CBOE intends to
undertake a marketing relaunch of the XSP product due in part to the
inclusion of XSP options in the expanded penny pilot program recently
approved by the Commission.\13\ In conjunction with the marketing re launch, CBOE has
[[Page 71467]]
determined to exclude activity in XSP options from the calculation of the fee.
\13\ See Securities and Exchange Act Release No. 56565 (September 27, 2007), 72 FR 56403 (October 3, 2007).
2. Statutory Basis
The proposed rule change is consistent with Section 6(b) of the Act
\14\, in general, and furthers the objectives of Section 6(b)(4) \15\
of the Act 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.
\14\ 15 U.S.C. 78f(b).
\15\ 15 U.S.C. 78f(b)(4).
B. SelfRegulatory Organization's Statement on Burden on Competition
CBOE does not believe that the proposed rule change will impose any
burden on competition that is not necessary or appropriate in furtherance of purposes of the Act.
C. SelfRegulatory 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 proposed 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 \16\ and Rule 19b
4(f)(2) \17\ thereunder. At any time within 60 days of the filing of
the proposed rule change the Commission may summarily abrogate such
proposed 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.\18\
\16\ 15 U.S.C. 78s(b)(3)(A).
\17\ 17 CFR 19b4(f)(2).
\18\ For purposes of calculating the 60day abrogation period,
the Commission considers the abrogation period to have commenced on November 30, 2007.
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
Paper Comments
All submissions should refer to File Number SRCBOE2007127. This file number should be included on the subject line if email 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, 100 F Street, NE., Washington, DC 20549, 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 SRCBOE2007127 and should be submitted on or before January 7, 2008.
For the Commission, by the Division of Market Regulation, pursuant to delegated authority.\19\
\19\ 17 CFR 200.303(a)(12).
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E724310 Filed 121407; 8:45 am]
BILLING CODE 801101P
SUMMARY: Chicago Board Options Exchange, Inc.,
DOCUMENT BODY 2: December 10, 2007.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 [[Page 71466]]
(``Act''),\1\ and Rule 19b4 thereunder,\2\ notice is hereby given that
on November 1, 2007, the Chicago Board Options Exchange, Incorporated
(the ``CBOE'' or the ``Exchange'') filed with the Securities and
Exchange Commission (``Commission'') the proposed rule change as
described in Items I and II below, which Items have been substantially
prepared by the CBOE. On November 30, 2007, CBOE filed Amendment No. 1
to the proposed rule change. The CBOE has filed the proposed rule
change as one establishing or changing a due, fee, or other charge
imposed by the Exchange under Section 19(b)(3)(A)(ii) of the Act \3\
and Rule 19b4(f)(2) thereunder,\4\ which renders the proposal
effective upon filing with the Commission. The Commission is publishing
this notice, as amended, to solicit comments on the proposed rule change from interested persons.
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b4.
\3\ 15 U.S.C. 78s(b)(3)(A)(ii).
\4\ 17 CFR 240.19b4(f)(2).
I. SelfRegulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change
The CBOE proposes to (i) reduce the book execution fee in classes trading on the ``Hybrid 3.0 Platform'', and (ii) amend its Order Routing System (``ORS'') order cancellation fee. The text of the proposed rule change is available at CBOE, the Commission's Public Reference Room, and http://www.cboe.org/legal. II. SelfRegulatory 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. SelfRegulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to implement the following fee changes on November 1, 2007.
Hybrid 3.0 Book Execution Fee
On June 7, 2007, the Commission approved the Exchange's ``Hybrid
3.0'' trading platform.\5\ The remaining nonHybrid classes trading on
the Exchange have moved to the Hybrid 3.0 platform.\6\ The new Hybrid
3.0 classes no longer utilize the services of an Exchange Order Book
Official (``OBO'') \7\. Pursuant to Section 7 of the CBOE Fees
Schedule, the Exchange assessed per contract fees on orders in non
Hybrid index option classes resting in the electronic book that were
executed on the floor by the OBO (``OBO Execution Fees''). These OBO
Execution Fees are $.25 per contract excluding market orders and
certain limit orders entered prior to the opening rotation, and $.10
per contract for accommodation liquidations (cabinet trades).\8\
\5\ See Securities Exchange Act Release No. 55874 (June 7, 2007), 72 FR 32688 (June 13, 2007).
\6\ The classes that trade on the Hybrid 3.0 platform are
options on the S&P 100 Index (``OEX''), options on the S&P 500 Index
(``SPX'') and options on the Morgan Stanley Retail Index (``MVR'').
\7\ An ``Order Book Official'' is defined in CBOE Rule 7.1 as an
Exchange employee designated pursuant to CBOE Rule 7.3 who is
responsible for (i) maintaining the book with respect to the classes
of options assigned to him; (ii) effecting proper executions of
orders placed with him; (iii) displaying bids and offers pursuant to
CBOE Rule 7.7 of these Rules; and (iv) monitoring the market for the classes of options assigned to him.
\8\ An ``accommodation'' or ``cabinet'' trade refers to trades
in listed options on the Exchange that are worthless or not actively
traded. Cabinet trading is conducted in accordance with CBOE Rule 6.54.
The Exchange proposes to reduce the $.25 per contract fee to $.18
per contract, rename the fee ``Hybrid 3.0 Book Execution Fee'', and
eliminate the $.10 per contract fee for accommodation liquidations. The
fee would apply to book executions in Hybrid 3.0 classes (currently,
OEX, SPX and MVR). Specifically, orders in Hybrid 3.0 classes resting
in the electronic book that are executed would be assessed a fee of
$.18 per contract. This fee would not apply to orders in SPX options
resting in the SPX electronic book that are executed during opening
rotation on the final settlement date of CBOE Volatility Index
(``VIX'') options and futures, as orders entered to participate in such
opening rotation help to facilitate the calculation of a settlement price for VIX options and futures.\9\
\9\ The opening rotation procedures in options series used to
calculate the final settlement price of volatility indexes are described in CBOE Rule 6.2B.01.
The Hybrid 3.0 book execution system has helped to improve execution time as well as service and efficiency. The Hybrid 3.0 Book Execution Fee is designed to help the Exchange recover its costs of developing the system and offset the cost of maintaining and enhancing the system in the future.
ORS Order Cancellation Fee
CBOE currently assesses an executing clearing member $1.50 for each cancelled public customer ORS order in excess of the number of public customer orders that the executing clearing member executes in a month for itself or for a correspondent firm. The purpose of the fee is to ease order backlogs on ORS and related systems. The fee is not charged if less than 500 public customer orders are cancelled in a month by the executing clearing member for itself or for a correspondent firm. The Exchange aggregates and counts as one executed order for purposes of the fee all public customer options orders from the same executing clearing member for itself or for a correspondent firm that are executed in the same series on the same side of the market at the same price within a 30 second period. The following ORS order activity is exempt from the fee: (i) Cancelled ORS orders that improve the Exchange's prevailing bidoffer (BBO) market when received; and (ii) fill and cancellation activity occurring within the first one minute of trading following the opening of each option class.
The Exchange proposes to amend the fee by additionally exempting
the following activity: (i) Complex order \10\ fills and cancels; (ii)
unfilled FillorKill (``FOK'') orders \11\, and (iii) unfilled
ImmediateorCancel (``IOC'') orders. \12\ Because this activity does
not contribute excessively to system congestion the Exchange believes
it is appropriate to exclude this activity from the calculation of the fee.
\10\ ``Complex Order'' is defined in CBOE Rule 6.53C(a).
\11\ ``FillorKill'' order is defined in CBOE Rule 6.53(j) as
an order which is to be executed in its entirety as soon as it is
represented in the trading crowd, and such order, if not so executed, is to be treated as cancelled.
\12\ ``ImmediateorCancel'' order is defined in CBOE Rule
6.53(k) as a market or limit order which is to be executed in whole
or in part as soon as such order is represented in the trading
crowd. Any portion not so executed is to be treated as cancelled.
Additionally, the Exchange proposes to exempt from the fee fill and
cancellation activity in MiniSPX Index Options (XSP). CBOE intends to
undertake a marketing relaunch of the XSP product due in part to the
inclusion of XSP options in the expanded penny pilot program recently
approved by the Commission.\13\ In conjunction with the marketing re launch, CBOE has
[[Page 71467]]
determined to exclude activity in XSP options from the calculation of the fee.
\13\ See Securities and Exchange Act Release No. 56565 (September 27, 2007), 72 FR 56403 (October 3, 2007).
2. Statutory Basis
The proposed rule change is consistent with Section 6(b) of the Act
\14\, in general, and furthers the objectives of Section 6(b)(4) \15\
of the Act 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.
\14\ 15 U.S.C. 78f(b).
\15\ 15 U.S.C. 78f(b)(4).
B. SelfRegulatory Organization's Statement on Burden on Competition
CBOE does not believe that the proposed rule change will impose any
burden on competition that is not necessary or appropriate in furtherance of purposes of the Act.
C. SelfRegulatory 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 proposed 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 \16\ and Rule 19b
4(f)(2) \17\ thereunder. At any time within 60 days of the filing of
the proposed rule change the Commission may summarily abrogate such
proposed 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.\18\
\16\ 15 U.S.C. 78s(b)(3)(A).
\17\ 17 CFR 19b4(f)(2).
\18\ For purposes of calculating the 60day abrogation period,
the Commission considers the abrogation period to have commenced on November 30, 2007.
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
Paper Comments
All submissions should refer to File Number SRCBOE2007127. This file number should be included on the subject line if email 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, 100 F Street, NE., Washington, DC 20549, 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 SRCBOE2007127 and should be submitted on or before January 7, 2008.
For the Commission, by the Division of Market Regulation, pursuant to delegated authority.\19\
\19\ 17 CFR 200.303(a)(12).
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E724310 Filed 121407; 8:45 am]
BILLING CODE 801101P
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