Self-Regulatory Organizations; Notice of Filing and Immediate Effectiveness of Proposed Rule Change and Amendment No. 1 Thereto by the Chicago Board Options Exchange, Inc. Amending Its Marketing Fee Relating to Remote Market-Makers, 24663-24665 [E5-2239]
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Federal Register / Vol. 70, No. 89 / Tuesday, May 10, 2005 / Notices
Any interested person may, on or
before May 31, 2005, comment on the
facts bearing upon whether the
application has been made in
accordance with the rules of the Amex,
and what terms, if any, should be
imposed by the Commission for the
protection of investors. All comment
letters may be submitted by either of the
following methods:
Electronic Comments
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/delist.shtml); or
• Send an e-mail to rulecomments@sec.gov. Please include the
File Number 1–15025 or;
Paper Comments
• Send paper comments in triplicate
to Jonathan G. Katz, Secretary,
Securities and Exchange Commission,
450 Fifth Street, NW., Washington, DC
20549–0609.
All submissions should refer to File
Number 1–15025. This file number
should be included on the subject line
if e-mail is used. To help us 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
(https://www.sec.gov/rules/delist.shtml).
Comments are also available for public
inspection and copying in the
Commission’s Public Reference Room.
All comments received will be posted
without change; we do not edit personal
identifying information from
submissions. You should submit only
information that you wish to make
available publicly.
The Commission, based on the
information submitted to it, will issue
an order granting the application after
the date mentioned above, unless the
Commission determines to order a
hearing5 on the matter.
For the Commission, by the Division
of Market Regulation, pursuant to
delegated authority.5
Jonathan G. Katz,
Secretary.
[FR Doc. E5–2269 Filed 5–9–05; 8:45 am]
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–51650; File No. SR–CBOE–
2005–34]
Self-Regulatory Organizations; Notice
of Filing and Immediate Effectiveness
of Proposed Rule Change and
Amendment No. 1 Thereto by the
Chicago Board Options Exchange, Inc.
Amending Its Marketing Fee Relating
to Remote Market-Makers
May 3, 2005.
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 25,
2005, 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. On
April 26, 2005, the CBOE submitted
Amendment No. 1 to the proposed rule
change.3 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,4 and Rule 19b–4(f)(2)
thereunder,5 which renders the proposal
effective upon filing with the
Commission. The Commission is
publishing this notice to solicit
comments on the proposed rule change,
as amended, from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to amend its
marketing fee to impose the fee on
transactions of Remote Market-Makers
(‘‘RMMs’’). The marketing fee will be
assessed at the rate of $.22 per contract
on all classes of equity options, options
on HOLDRs, and options on SPDRs.
The fee will not apply to Market-Makerto-Market-Maker transactions. Below is
the text of the proposed rule change, as
amended. Proposed new language is
italicized.
CHICAGO BOARD OPTIONS
EXCHANGE, INC.
FEE SCHEDULE
1. No change.
2. MARKET-MAKER, RMM, e-DPM &
DPM MARKETING FEE (in option
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 In Amendment No. 1, the CBOE made technical
corrections to the rule text of the proposed rule
change.
4 15 U.S.C. 78s(b)(3)(A)(ii).
5 17 CFR 240.19b–4(f)(2).
2 17
5 17
CFR 200.30–3(a)(1).
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Frm 00166
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Sfmt 4703
24663
classes in which a DPM has been
appointed)(6).........................$.22
3.–4. No change.
NOTES:
(1)–(5) No change.
(6) The Marketing Fee will be
assessed only on transactions of MarketMakers, RMMs, e-DPMs and DPMs at
the rate of $.22 per contract on all
classes of equity options, options on
HOLDRs, and options on SPDRs. The
fee will not apply to Market-Maker-toMarket-Maker transactions. This fee
shall not apply to index options and
options on ETFs (other than options on
SPDRs). Should any surplus of the
marketing fees at the end of each month
occur, the Exchange would then refund
such surplus at the end of the month if
any, on a pro rata basis based upon
contributions made by the MarketMakers, RMMs, e-DPMs and DPMs.
(7)–(15) 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
CBOE included statements concerning
the purpose of and basis for its proposal
and discussed any comments it had
received regarding the proposal. 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
On October 29, 2004, the CBOE
amended its marketing fee program.6
The current marketing fee is assessed
upon Designated Primary MarketMakers (‘‘DPMs’’), electronic Designated
Primary Market-Makers (‘‘e-DPMs’’),
and Market-Makers at a rate of $.22 for
every contract they enter into on the
Exchange other than Market-Maker-toMarket-Maker transactions (which
includes all transactions between any
combination of DPMs, e-DPMs, and
Market-Makers). The marketing fee is
assessed in all equity option classes,
options on HOLDRs,7 and options on
6 For a description of the CBOE’s marketing fee
program, see Securities Exchange Act Release No.
50736 (Nov. 24, 2004), 69 FR 69966 (Dec. 1, 2004)
(SR–CBOE–2004–68).
7 HOLDRs are trust-issued receipts that represent
an investor’s beneficial ownership of a specified
E:\FR\FM\10MYN1.SGM
Continued
10MYN1
24664
Federal Register / Vol. 70, No. 89 / Tuesday, May 10, 2005 / Notices
SPDRs.8 The Exchange recently
established a new membership status
called RMMs.9 The RMM program
allows individuals and member
organizations to stream quotes into
designated Hybrid 2.0 classes from
locations outside of the Exchange’s
physical trading crowds. RMMs may
create customized class appointments,
called virtual trading crowds (‘‘VTCs’’),
which allow them to cover a range of
classes irrespective of their geographic
locations on the CBOE trading floor.10
This proposed rule change amends
the marketing fee program to include
RMMs in the classification of Exchange
members subject to the marketing fee.
The Exchange states that the purpose of
the marketing fee plan is to provide the
members of the Exchange with the
ability to compete for the opportunity to
trade with those orders that may
otherwise be routed to other exchanges.
The marketing fee will be assessed
whereby DPMs, e-DPMs, RMMs, and
Market-Makers will be debited $.22 for
every contract they enter into on the
Exchange other than Market-Maker-toMarket-Maker transactions (which
includes all transactions between any
combination of DPMs, e-DPMs, RMMs,
and Market-Makers).
According to the Exchange, all funds
generated by the marketing fee will be
collected by the Exchange and recorded
according to the DPM, station, and class
(‘‘Trading Crowds’’) where the options
subject to the fee are traded. The money
collected will be disbursed by the
Exchange according to the instructions
of the DPM. The CBOE states that those
funds will be available to the DPM
solely for those Trading Crowds where
the fee was assessed and may only be
used by that DPM to attract orders in the
classes of options where the DPM is
appointed. Funds collected from RMMs
and e-DPMs will be used to attract order
flow for the classes in which the RMM
and e-DPM are appointed. The
Exchanges notes that its Board of
Directors has previously established a
Marketing Fee Oversight Committee,
which will conduct a quarterly review
to determine the effectiveness of the
marketing fee and which may
group of stocks. See Interpretation .07 to CBOE Rule
5.3.
8 See Securities Exchange Act Release No. 51052
(Jan. 18, 2005), 70 FR 3757 (Jan. 26, 2005) (SR–
CBOE–2005–05).
9 See Securities Exchange Act Release No. 51366
(Mar. 14, 2005), 70 FR 13217 (Mar. 18, 2005) (SR–
CBOE–2004–75).
10 On April 19, 2005, the SEC granted accelerated
approval to SR–CBOE–2005–23, amending CBOE
Rule 8.4 to remove the Physical Trading Crowd
appointment alternative for RMMs. See Securities
Exchange Act Release No. 51543 (Apr. 14, 2005), 70
FR 20952 (Apr. 22, 2005) (SR–CBOE–2005–23).
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16:17 May 09, 2005
Jkt 205001
recommend to the Exchange that it
modify the fee in the future based upon
its effectiveness.
As in the current marketing fee
program, the Exchange states that it will
not be involved in the determination of
the terms governing the orders that
qualify for payment with any payment
accepting firm or the amount of any
such payment. The Exchange will
provide administrative support for the
program in such matters as maintaining
the funds, keeping track of the number
of qualified orders each firm directs to
the Exchange, and making the necessary
debits and credits to the accounts of the
traders and the payment accepting firms
to reflect the payments that are made.
The Exchange states that fees collected
during a calendar month shall only be
available to the DPM for payment for
that calendar month’s order flow.
The Exchange believes that it is
important to note that Exchange MarketMakers, RMMs, DPMs, and e-DPMs will
have no way of identifying prior to
execution whether a particular order is
from a payment-accepting firm, or from
a firm that does not accept payment for
their order flow.
Consistent with the current marketing
fee, the Exchange states that it will
continue to refund any surplus at the
end of the month on a pro rata basis
based upon contributions made by the
Market-Makers, RMMs, e-DPMs, and
DPMs.
2. Statutory Basis
The Exchange believes that the
proposed rule change, as amended, is
consistent with Section 6(b) of the Act 11
in general, and furthers the objectives of
Section 6(b)(4) of the Act 12 in
particular, in that it is designed to
provide for the equitable allocation of
reasonable dues, fees, and other charges
among the CBOE’s members.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposed rule change, as amended,
will impose any burden on competition
that is not necessary or appropriate in
furtherance of the purposes of the Act.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants or Others
The CBOE neither solicited nor
received written comments with respect
to the proposed rule change, as
amended.
PO 00000
11 15
12 15
U.S.C. 78f(b).
U.S.C. 78f(b)(4).
Frm 00167
Fmt 4703
Sfmt 4703
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Because the foregoing rule change, as
amended, establishes or changes a due,
fee, or other charge imposed by the
Exchange, it has become effective
pursuant to Section 19(b)(3)(A)(ii) of the
Act 13 and subparagraph (f)(2) of Rule
19b–4 thereunder.14 Accordingly, the
proposal will take effect upon filing
with the Commission. At any time
within 60 days of the filing of the
proposed rule change, as amended, 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.15
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed rule
change, as amended, is consistent with
the Act. Comments may be submitted by
any of the following methods:
Electronic Comments
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an e-mail to rulecomments@sec.gov. Please include File
Number SR–CBOE–2005–34 on the
subject line.
Paper Comments
• Send paper comments in triplicate
to Jonathan G. Katz, Secretary,
Securities and Exchange Commission,
450 Fifth Street, NW., Washington, DC
20549–0609.
All submissions should refer to File
Number SR–CBOE–2005–34. 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 (https://www.sec.gov/
rules/sro.shtml). Copies of the
submission, all subsequent
amendments, all written statements
with respect to the proposed rule
13 15
U.S.C. 78s(b)(3)(A)(ii).
CFR 240.19b–4(f)(2).
15 For purposes of calculating the 60-day period
within which the Commission may summarily
abrogate the proposed rule change, as amended,
under Section 19(b)(3)(C) of the Act, the
Commission considers the period to commence on
April 26, 2005, the date on which the Exchange
submitted Amendment No. 1. See 15 U.S.C.
78s(b)(3)(C).
14 17
E:\FR\FM\10MYN1.SGM
10MYN1
Federal Register / Vol. 70, No. 89 / Tuesday, May 10, 2005 / Notices
change, as amended, 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 the 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–2005–34 and should
be submitted on or before May 31, 2005.
For the Commission, by the Division of
Market Regulation, pursuant to delegated
authority.16
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. E5–2239 Filed 5–9–05; 8:45 am]
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–51643; File No. SR–FICC–
2005–01]
Self-Regulatory Organizations; Fixed
Income Clearing Corporation; Notice of
Filing of a Proposed Rule Change
Relating to Timely Notification of
Significant Events That Effect a
Change in Control of a Member or
Could Have a Substantial Impact on a
Member’s Business or Financial
Condition
May 2, 2005.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’),1 notice is hereby given that on
January 6, 2005, the Fixed Income
Clearing Corporation (‘‘FICC’’) 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 primarily by FICC.
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 proposed rule change would
require certain FICC members to notify
FICC when they experience an event
that would effect a change in control of
such member or could have a
substantial impact on such member’s
business or financial condition.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission,
FICC 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. FICC has prepared
summaries, set forth in Sections A, B,
and C below, of the most significant
aspects of such statements.2
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
Currently, FICC’s Government
Securities Division’s (‘‘GSD’’) rules
require a member to ‘‘promptly’’ inform
FICC when they experience a ‘‘material
change in control or financial
condition.’’ 3 FICC’s Mortgage-Backed
Securities Division’s (‘‘MBSD’’) rules do
not contain any similar requirements.
FICC believes that the GSD rule does
not cover a broad-enough scope of
events that FICC should be aware of in
order to properly manage the risks that
such events might pose to FICC and its
membership. In addition, FICC believes
that the current rule is not effectively
enforceable because the terms
‘‘promptly’’ and ‘‘material change in
control or financial condition’’ are not
adequately defined.
Under the proposed rule change, GSD
netting members and MBSD clearing
members would be required to provide
oral and written notification to FICC
upon experiencing a ‘‘Reportable
Event.’’ The term ‘‘Reportable Event’’
would be defined as an event that
would effect a change in control of a
GSD netting member or an MBSD
clearing member or an event that could
have a substantial impact on those types
of member’s business or financial
condition including, but not limited to:
(a) Material organizational changes
including mergers, acquisitions, changes
2 The
Commission has modified the text of the
summaries prepared by FICC.
3 GSD Rule 3, Section 4.
16 17
1 15
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
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24665
in corporate form, name changes,
changes in the ownership of a netting or
clearing member or its affiliates, and
material changes in management; (b)
material changes in business lines,
including new business lines
undertaken; and (c) status as a
defendant in litigation which could
reasonably impact the netting or
clearing member’s financial condition or
ability to conduct business.4
In order to provide FICC with enough
time to analyze the implications of a
Reportable Event and to determine an
appropriate course of action, FICC
believes that it is important for it to
learn of a Reportable Event as soon as
possible. As such, a netting or clearing
member must submit written notice to
FICC at least 90 calendar days prior to
the effective date of such Reportable
Event unless the member demonstrates
that it could not have reasonably done
so and also provides oral and written
notice to FICC as soon as possible.
Failure to so notify FICC would result
in a $5,000 fine.
FICC believes that the proposed rule
change is consistent with the
requirements of Section 17A of the Act
and the rules and regulations
thereunder because it should enhance
FICC’s ability to collect and evaluate the
type of information that it needs to be
aware of in order to properly manage
risks and enforce its rules, thereby
assuring the safeguarding of securities
and funds for which FICC is in control.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
FICC does not believe that the
proposed rule change will have any
impact or impose any burden on
competition.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
Written comments relating to the
proposed rule change have not yet been
solicited or received. FICC will notify
the Commission of any written
comments it receives.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Within thirty-five days of the date of
publication of this notice in the Federal
Register or within such longer period (i)
as the Commission may designate up to
ninety days of such date if it finds such
longer period to be appropriate and
4 A similar requirement was added as Addendum
T to the National Securities Clearing Corporation’s
rules in 1998. Securities Exchange Act Release No.
40582 (Oct. 20, 1998), 63 FR 57346 (Oct. 27, 1998).
E:\FR\FM\10MYN1.SGM
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]]>Agencies
[Federal Register Volume 70, Number 89 (Tuesday, May 10, 2005)]
[Notices]
[Pages 24663-24665]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E5-2239]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-51650; File No. SR-CBOE-2005-34]
Self-Regulatory Organizations; Notice of Filing and Immediate
Effectiveness of Proposed Rule Change and Amendment No. 1 Thereto by
the Chicago Board Options Exchange, Inc. Amending Its Marketing Fee
Relating to Remote Market-Makers
May 3, 2005.
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 25, 2005, 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. On April 26,
2005, the CBOE submitted Amendment No. 1 to the proposed rule
change.\3\ 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,\4\ and Rule 19b-4(f)(2) thereunder,\5\
which renders the proposal effective upon filing with the Commission.
The Commission is publishing this notice to solicit comments on the
proposed rule change, as amended, from interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ In Amendment No. 1, the CBOE made technical corrections to
the rule text of the proposed rule change.
\4\ 15 U.S.C. 78s(b)(3)(A)(ii).
\5\ 17 CFR 240.19b-4(f)(2).
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to amend its marketing fee to impose the fee
on transactions of Remote Market-Makers (``RMMs''). The marketing fee
will be assessed at the rate of $.22 per contract on all classes of
equity options, options on HOLDRs[reg], and options on SPDRs[reg]. The
fee will not apply to Market-Maker-to-Market-Maker transactions. Below
is the text of the proposed rule change, as amended. Proposed new
language is italicized.
CHICAGO BOARD OPTIONS EXCHANGE, INC.
FEE SCHEDULE
1. No change.
2. MARKET-MAKER, RMM, e-DPM & DPM MARKETING FEE (in option classes
in which a DPM has been appointed)(6).........................$.22
3.-4. No change.
NOTES:
(1)-(5) No change.
(6) The Marketing Fee will be assessed only on transactions of
Market-Makers, RMMs, e-DPMs and DPMs at the rate of $.22 per contract
on all classes of equity options, options on HOLDRs[reg], and options
on SPDRs[reg]. The fee will not apply to Market-Maker-to-Market-Maker
transactions. This fee shall not apply to index options and options on
ETFs (other than options on SPDRs). Should any surplus of the marketing
fees at the end of each month occur, the Exchange would then refund
such surplus at the end of the month if any, on a pro rata basis based
upon contributions made by the Market-Makers, RMMs, e-DPMs and DPMs.
(7)-(15) 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 CBOE included statements
concerning the purpose of and basis for its proposal and discussed any
comments it had received regarding the proposal. 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
On October 29, 2004, the CBOE amended its marketing fee program.\6\
The current marketing fee is assessed upon Designated Primary Market-
Makers (``DPMs''), electronic Designated Primary Market-Makers (``e-
DPMs''), and Market-Makers at a rate of $.22 for every contract they
enter into on the Exchange other than Market-Maker-to-Market-Maker
transactions (which includes all transactions between any combination
of DPMs, e-DPMs, and Market-Makers). The marketing fee is assessed in
all equity option classes, options on HOLDRs[reg],\7\ and options on
[[Page 24664]]
SPDRs[reg].\8\ The Exchange recently established a new membership
status called RMMs.\9\ The RMM program allows individuals and member
organizations to stream quotes into designated Hybrid 2.0 classes from
locations outside of the Exchange's physical trading crowds. RMMs may
create customized class appointments, called virtual trading crowds
(``VTCs''), which allow them to cover a range of classes irrespective
of their geographic locations on the CBOE trading floor.\10\
---------------------------------------------------------------------------
\6\ For a description of the CBOE's marketing fee program, see
Securities Exchange Act Release No. 50736 (Nov. 24, 2004), 69 FR
69966 (Dec. 1, 2004) (SR-CBOE-2004-68).
\7\ HOLDRs are trust-issued receipts that represent an
investor's beneficial ownership of a specified group of stocks. See
Interpretation .07 to CBOE Rule 5.3.
\8\ See Securities Exchange Act Release No. 51052 (Jan. 18,
2005), 70 FR 3757 (Jan. 26, 2005) (SR-CBOE-2005-05).
\9\ See Securities Exchange Act Release No. 51366 (Mar. 14,
2005), 70 FR 13217 (Mar. 18, 2005) (SR-CBOE-2004-75).
\10\ On April 19, 2005, the SEC granted accelerated approval to
SR-CBOE-2005-23, amending CBOE Rule 8.4 to remove the Physical
Trading Crowd appointment alternative for RMMs. See Securities
Exchange Act Release No. 51543 (Apr. 14, 2005), 70 FR 20952 (Apr.
22, 2005) (SR-CBOE-2005-23).
---------------------------------------------------------------------------
This proposed rule change amends the marketing fee program to
include RMMs in the classification of Exchange members subject to the
marketing fee. The Exchange states that the purpose of the marketing
fee plan is to provide the members of the Exchange with the ability to
compete for the opportunity to trade with those orders that may
otherwise be routed to other exchanges. The marketing fee will be
assessed whereby DPMs, e-DPMs, RMMs, and Market-Makers will be debited
$.22 for every contract they enter into on the Exchange other than
Market-Maker-to-Market-Maker transactions (which includes all
transactions between any combination of DPMs, e-DPMs, RMMs, and Market-
Makers).
According to the Exchange, all funds generated by the marketing fee
will be collected by the Exchange and recorded according to the DPM,
station, and class (``Trading Crowds'') where the options subject to
the fee are traded. The money collected will be disbursed by the
Exchange according to the instructions of the DPM. The CBOE states that
those funds will be available to the DPM solely for those Trading
Crowds where the fee was assessed and may only be used by that DPM to
attract orders in the classes of options where the DPM is appointed.
Funds collected from RMMs and e-DPMs will be used to attract order flow
for the classes in which the RMM and e-DPM are appointed. The Exchanges
notes that its Board of Directors has previously established a
Marketing Fee Oversight Committee, which will conduct a quarterly
review to determine the effectiveness of the marketing fee and which
may recommend to the Exchange that it modify the fee in the future
based upon its effectiveness.
As in the current marketing fee program, the Exchange states that
it will not be involved in the determination of the terms governing the
orders that qualify for payment with any payment accepting firm or the
amount of any such payment. The Exchange will provide administrative
support for the program in such matters as maintaining the funds,
keeping track of the number of qualified orders each firm directs to
the Exchange, and making the necessary debits and credits to the
accounts of the traders and the payment accepting firms to reflect the
payments that are made. The Exchange states that fees collected during
a calendar month shall only be available to the DPM for payment for
that calendar month's order flow.
The Exchange believes that it is important to note that Exchange
Market-Makers, RMMs, DPMs, and e-DPMs will have no way of identifying
prior to execution whether a particular order is from a payment-
accepting firm, or from a firm that does not accept payment for their
order flow.
Consistent with the current marketing fee, the Exchange states that
it will continue to refund any surplus at the end of the month on a pro
rata basis based upon contributions made by the Market-Makers, RMMs, e-
DPMs, and DPMs.
2. Statutory Basis
The Exchange believes that the proposed rule change, as amended, is
consistent with Section 6(b) of the Act \11\ in general, and furthers
the objectives of Section 6(b)(4) of the Act \12\ in particular, in
that it is designed to provide for the equitable allocation of
reasonable dues, fees, and other charges among the CBOE's members.
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\11\ 15 U.S.C. 78f(b).
\12\ 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, as
amended, will impose any burden on competition that is not necessary or
appropriate in furtherance of the purposes of the Act.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants or Others
The CBOE neither solicited nor received written comments with
respect to the proposed rule change, as amended.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Because the foregoing rule change, as amended, establishes or
changes a due, fee, or other charge imposed by the Exchange, it has
become effective pursuant to Section 19(b)(3)(A)(ii) of the Act \13\
and subparagraph (f)(2) of Rule 19b-4 thereunder.\14\ Accordingly, the
proposal will take effect upon filing with the Commission. At any time
within 60 days of the filing of the proposed rule change, as amended,
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.\15\
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\13\ 15 U.S.C. 78s(b)(3)(A)(ii).
\14\ 17 CFR 240.19b-4(f)(2).
\15\ For purposes of calculating the 60-day period within which
the Commission may summarily abrogate the proposed rule change, as
amended, under Section 19(b)(3)(C) of the Act, the Commission
considers the period to commence on April 26, 2005, the date on
which the Exchange submitted Amendment No. 1. See 15 U.S.C.
78s(b)(3)(C).
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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, as amended, is consistent with the Act. Comments may be
submitted by any of the following methods:
Electronic Comments
Use the Commission's Internet comment form (https://
www.sec.gov/rules/sro.shtml); or
Send an e-mail to rule-comments@sec.gov. Please include
File Number SR-CBOE-2005-34 on the subject line.
Paper Comments
Send paper comments in triplicate to Jonathan G. Katz,
Secretary, Securities and Exchange Commission, 450 Fifth Street, NW.,
Washington, DC 20549-0609.
All submissions should refer to File Number SR-CBOE-2005-34. 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 (https://www.sec.gov/
rules/sro.shtml). Copies of the submission, all subsequent amendments,
all written statements with respect to the proposed rule
[[Page 24665]]
change, as amended, 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 the 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-2005-34 and should be
submitted on or before May 31, 2005.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\16\
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\16\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. E5-2239 Filed 5-9-05; 8:45 am]
BILLING CODE 8010-01-P
