Self-Regulatory Organizations; Chicago Board Options Exchange, Inc; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Relating to the Sales Value Fee, 36676-36678 [E5-3295]
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36676
Federal Register / Vol. 70, No. 121 / Friday, June 24, 2005 / Notices
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–BSE–2005–15 and should
be submitted on or before July 15, 2005.
For the Commission, by the Division of
Market Regulation, pursuant to delegated
authority.6
Jill M. Peterson,
Assistant Secretary.
[FR Doc. E5–3294 Filed 6–23–05; 8:45 am]
BILLING CODE 8010–01–P
[Release No. 34–51880; File No. SR–CBOE–
2005–38]
Self-Regulatory Organizations;
Chicago Board Options Exchange, Inc;
Notice of Filing and Immediate
Effectiveness of a Proposed Rule
Change Relating to the Sales Value
Fee
pursuant to Rule2 19b–4(f)(6) under the
Act,3 which renders the proposal
effective upon filing with the
Commission. The Commission is
publishing this notice to solicit
comments on the proposed rule change
from interested parties.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
SECURITIES AND EXCHANGE
COMMISSION
June 20, 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 May 13,
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 and II below, which Items have
been prepared by the CBOE. The
Exchange filed a proposed rule change
as a ‘‘non-controversial’’ rule change
The CBOE proposes to amend its Fees
Schedule and rules and issue a
Regulatory Circular relating to its ‘‘Sales
Value Fee.’’ The text of the proposed
rule change is below. Proposed new
language is italicized; proposed
deletions are in brackets.
Chicago Board Options Exchange, Inc.—
Fees Schedule
[May 2] May 13, 2005
1.–4. Unchanged.
Notes: (1)–(15) Unchanged.
5. ETFs, STRUCTURED PRODUCTS,
RIGHTS, WARRANTS (per round lot):
(A) TRANSACTION FEES:
Customer $.00 ..........................................................................................................................................
Member Firm Proprietary .10 .................................................................................................................
Market Maker .05 ....................................................................................................................................
(B) LISTING FEES:
Initial Fee (minimum) $10,000.
Annual Fee 2,500—10,000.
(C) SEC VALUE FEE:
$0.00252 for every $100 of value sold (seller only)].
6. SALES VALUE FEE:
The Sales Value Fee (‘‘Fee’’) is
assessed by CBOE to each member for
sales of securities on CBOE with respect
to which CBOE is obligated to pay a fee
to the SEC under Section 31 of the
Exchange Act. To the extent there may
be any excess monies collected under
this Section 6, the Exchange may retain
those monies to help fund its general
operating expenses. The sales
transactions to which the Fee applies
are sales of options (other than options
on a security index), sales of non-option
securities, and sales of securities
resulting from the exercise of physicaldelivery options traded on CBOE. The
Fee is collected indirectly from members
through their clearing firms by OCC on
behalf of CBOE with respect to options
sales and options exercises. CBOE
collects the Fee indirectly from members
through their clearing firms with respect
to non-option sales. Consistent with
CBOE Rule 3.23, the Fee is collected by
billing the member’s designated clearing
firm for the amount owed by the
6 17
1 15
member to the Exchange. The amount of
the Fee is calculated as described below.
Calculation of Fee for Options Sales
and Options Exercises: The Sales Value
Fee is equal to (i) the Section 31 fee rate
multiplied by (ii) the member’s
aggregate dollar amount of covered sales
resulting from options transactions
occurring on the Exchange during any
computational period. Calculation of
Fee for Non-Options Sales: The Sales
Value Fee is calculated using the same
formula as the formula above for
options transactions, except as applied
only to the member’s covered sales other
than those resulting from options
transactions.
6.–9. Renumbered 7.–10. Otherwise
unchanged.
[10. {Reserved}]
11.–23. Unchanged.
Remainder of Fee Schedule—
Unchanged.
*
*
*
*
*
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
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CHAPTER XXX
Stocks, Warrants and Other Securities
[Rule 30.60. Securities and Exchange
Commission Transaction Fee There
shall be paid to the Exchange by each
member and member organization, in
such manner and at such time as the
Exchange shall direct, the sum of one
cent for each $300 or fraction thereof of
the dollar volume of securities sold by
such member or member organization
on the Exchange. The monies so paid to
the Exchange shall be paid to the
Securities and Exchange Commission as
the transaction fee imposed upon the
Exchange under the Exchange Act.
* * * Interpretations and Policies:
.01 The fee required to be paid
under this Rule does not apply to any
bond, debenture, or other evidence of
indebtedness, or any security which the
Securities and Exchange Commission
may, by rule, exempt from imposition of
the fee.]
CFR 240.19b–4.
CFR 240.19b–4(f)(6).
Frm 00120
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MAXIMUM FEE:
N/A
$100 per side
$100 per side
E:\FR\FM\24JNN1.SGM
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Federal Register / Vol. 70, No. 121 / Friday, June 24, 2005 / Notices
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, Proposed Rule
Change
1. Purpose
Pursuant to Section 5(c) of the CBOE
Fees Schedule and CBOE Rule 30.60,
the Exchange currently assesses a fee on
its members for sales of securities on the
Exchange to recoup amounts paid by the
Exchange to the Commission under
Section 31 of the Act.4 On June 28,
2004,5 the Commission established new
procedures governing the calculation,
payment, and collection of fees and
assessments on securities transactions
owed by national securities exchanges
and associations under Section 31 of the
Act (‘‘Adopting Release’’).6 In the
Adopting Release, the Commission
stated that the fees SROs pass to their
members and the fees members pass to
their customers are not ‘‘Section 31
Fees’’ or ‘‘SEC Fees’’ and should not be
labeled as such.7
In response to the statements made by
the Commission in the Adopting
Release, the Exchange proposes to
amend its Fees Schedule to change the
name of its fee, provide greater
explanation and description of the fee
and how it is collected, and clarify that
it applies with respect to both covered
sales of options and covered sales of
non-option securities. The Exchange
also proposes to delete CBOE Rule 30.60
since the fee will be set forth and fully
described in the CBOE Fees Schedule.
Specifically, the Exchange proposes to
delete Section 5(c) of the CBOE Fees
Schedule, which is currently labeled
‘‘SEC Value Fee.’’ The Exchange
4 15
U.S.C. 78ee.
the notice prepared by the CBOE in its Form
19b–4 filing, the CBOE inadvertently referred to this
date as July 28, 2004. Telephone conversation
between Jamie Galvin, Senior Attorney, CBOE and
Hong-Anh Tran, Special Counsel, Division of
Market Regulation (‘‘Division’’), Commission, dated
May 17, 2005.
6 See Securities Exchange Act Release No. 49928
(June 28, 2004), 69 FR 41060 (July 7, 2004).
7 Id. at 41072.
5 In
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proposes to add a new CBOE Section 6
to the Fees Schedule labeled ‘‘Sales
Value Fee.’’ Proposed new CBOE
Section 6 defines the Sales Value Fee
(‘‘Fee’’) as the fee assessed by CBOE to
each member for sales of securities on
CBOE with respect to which CBOE is
obligated to pay a fee to the SEC under
Section 31 of the Act. Proposed CBOE
Section 6 provides that, to the extent the
Exchange may collect more from
members under CBOE Section 6 than is
due from the Exchange to the
Commission under Section 31 of the
Act, for example due to rounding
differences, the excess monies collected
may be used by the Exchange to fund its
general operating expenses.
Proposed CBOE Section 6 explains
that the transactions to which the Fee
applies are sales of options (other than
options on a security index), sales of
non-option securities, and sales of
securities resulting from the exercise of
physical-delivery options traded on
CBOE. The Fee is collected indirectly
from members through their clearing
firms by the Options Clearing
Corporation (‘‘OCC’’) on behalf of the
Exchange with respect to options sales
and options exercises. The Exchange
collects the Fee indirectly from
members through their clearing firms
with respect to non-option sales.
Consistent with CBOE Rule 3.23, the
Fee is collected by billing the member’s
designated clearing firm for the amount
owed by the member to the Exchange.
Proposed CBOE Section 6 also sets
forth the formula for calculating the Fee
with respect to covered options and
non-options transactions. The Fee with
respect to options sales and options
exercises is equal to (i) the
Commission’s Section 31 fee rate
multiplied by (ii) the member’s
aggregate dollar amount of covered sales
resulting from options transactions
occurring on the Exchange during any
computational period. The Fee with
respect to non-options sales is
calculated using the same formula as the
formula for options transactions, except
as applied only to the member’s covered
sales other than those resulting from
options transactions. The Exchange
notes that, if the Commission’s Section
31 fee rate changes in the middle of a
month, the Exchange will perform a
separate calculation with respect to
covered sales under the new fee rate for
the remaining portion of the month.
In further response to the statements
made by the Commission in the
Adopting Release, the Exchange
proposes to issue a Regulatory Circular
to its members that prohibits members
from characterizing the pass-through of
the CBOE Sales Value Fee to their
PO 00000
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Sfmt 4703
36677
customers as a ‘‘Section 31 fee,’’ ‘‘SEC
fee,’’ or other label that implies an SEC
rule or requirement that these funds be
collected from broker-dealers or
customers. The proposed Regulatory
Circular would become effective
approximately 45 days following
effectiveness of the proposed rule
change.
2. Statutory Basis
The Exchange believes that for this
proposed rule change is consistent with
Section 6(b)(4) of the Act,8 which
permits the rules of an Exchange to
provide for the equitable allocation of
reasonable dues, fees, and other charges
among its members, and issuers and
other persons using its facilities. In
addition, the Exchange believes that the
proposed rule change, including the
proposed Regulatory Circular, is
consistent with Section 6(b)(5) of the
Act 9 in that it is designed to prevent
fraudulent and manipulative acts and
practices, to promote just and equitable
principles of trade, and, in general, to
protect investors and the public interest.
B. Self-Regulatory 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. 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 proposed rule change
has become effective pursuant to
Section 19(b)(3)(A) of the Act10 and
Rule 19b–4(f)(6) thereunder 11 because it
does not: (i) significantly affect the
protection of investors or the public
interest; (ii) impose any significant
burden on competition; and (iii) become
operative prior to 30 days after the date
of filing (or such shorter time as the
Commission may designate if consistent
with the protection of investors and the
public interest). A proposed rule change
filed under 19b–4(f)(6) normally does
not become operative prior to 30 days
after the date of filing. However, Rule
8 15
U.S.C. 78f(b)(4).
U.S.C. 78f(b)(5).
10 15 U.S.C. 78s(b)(3)(A).
11 17 CFR 240.19b–4(f)(6).
9 15
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36678
Federal Register / Vol. 70, No. 121 / Friday, June 24, 2005 / Notices
19b–4(f)(6)(iii) permits the Commission
to designate a shorter time if such action
is consistent with the protection of
investors and the public interest. The
Exchange satisfied the five-day prefiling requirement. The Exchange
requests that the Commission waive the
30-day operative delay, as specified in
Rule 19b–4(f)(6)(iii),12 and designate the
proposed rule change to become
operative immediately.
The Commission hereby grants that
request.13 The Commission believes that
waiving the 30-day operative date is
consistent with the protection of
investors and the public interest
because doing so will allow the
Exchange’s Fees Schedule and Rules to
be consistent with the Commission’s
guidance on Section 31 without undue
delay.
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,
or otherwise in the furtherance of the
purposes of the Act.
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
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. Copies of such 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–2005–38 and should
be submitted on or before July 15, 2005.
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:
Jill M. Peterson,
Assistant Secretary.
[FR Doc. E5–3295 Filed 6–23–05; 8:45 am]
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–2005–38 on the
subject line.
[Release No. 34–51870; File No. SR–DTC–
2005–03]
Paper Comments
• Send paper comments in triplicate
to Jonathan G. Katz, Secretary,
Securities and Exchange Commission,
Station Place, 100 F Street, NE.,
Washington, DC 20549–9303.
All submissions should refer to File
Number SR–CBOE–2005–38. 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
June 17, 2005.
12 17
CFR 240.19b–4(f)(6)(iii).
the purposes only of accelerating the
operative date of this proposal, the Commission has
considered the proposed rule’s impact on
efficiency, competition, and capital formation. See
15 C.S.C. 78c(f).
13 For
VerDate jul<14>2003
19:06 Jun 23, 2005
Jkt 205001
For the Commission, by the Division of
Market Regulation, pursuant to delegated
authority.14
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
Self-Regulatory Organizations; The
Depository Trust Company; Order
Granting Approval of a Proposed Rule
Change Relating to a Modification of
the Fee Structure
I. Introduction
On April 26, 2005, The Depository
Trust Company (‘‘DTC’’) filed with the
Securities and Exchange Commission
(‘‘Commission’’) proposed rule change
SR–DTC–2005–03 pursuant to Section
19(b)(1) of the Securities Exchange Act
of 1934 (‘‘Act’’).1 Notice of the proposal
was published in the Federal Register
on May 13, 2005.2 No comment letters
were received. For the reasons
discussed below, the Commission is
granting approval of the proposed rule
change.
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 Securities Exchange Act Release No. 51675,
(May 9, 2005), 70 FR 25630.
PO 00000
14 17
1 15
Frm 00122
Fmt 4703
Sfmt 4703
II. Description
DTC is a subsidiary of the Depository
Trust and Clearing Corporation
(‘‘DTCC’’). Participants of DTC and their
affiliates may from time to time utilize
the services of DTCC subsidiaries that
are not registered as clearing agencies
with the Commission. Such subsidiaries
include Global Asset Solutions LLC and
DTCC Deriv/Serv LLC. In addition,
participants of DTC and their affiliates
may utilize the services of other third
parties through DTCC. DTC has
determined that it would be more
efficient and less costly if the fees that
participants agree to pay for such
services were collected by DTC rather
than through independent billing
mechanisms that would otherwise have
to be established by each subsidiary of
DTCC that is not a registered clearing
agency and by each third party that is
not a registered clearing agency.
The proposed rule change will make
clear that DTC may collect from its
participants fees and charges of other
subsidiaries of DTCC and of other third
party service providers. DTC will enter
into appropriate agreements with such
subsidiaries and other third party
service providers regarding DTC’s
collection of fees. Furthermore, the rule
change makes clear that as a part of its
collecting fees and charges for services
provided to its participants, DTC may
similarly collect fees and charges for
services provided to affiliates of its
participants.
III. Discussion
Section 17A(a)(1)(B) of the Act
provides that inefficient procedures for
clearance and settlement impose
unnecessary costs on investors and
persons facilitating transactions by and
acting on behalf of investors.3 Although
the services provided by unregulated
DTCC subsidiaries and by other third
parties are not core clearance and
settlement services, they are related to
the clearance and settlement operations
of DTC and of its participants. By
streamlining the fee collection process
for these services so that DTC’s
participants will pay these fees to DTC
as a part of their normal monthly DTC
bills, the proposed rule change should
help to improve efficiency in the
operations of DTC participants and
thereby should remove unnecessary cost
for DTC participants and for the persons
(i.e., the DTCC subsidiaries and the
other entities providing services to DTC
participants) facilitating transactions by
and acting on behalf of investors.
Accordingly, the Commission finds that
3 15
E:\FR\FM\24JNN1.SGM
U.S.C. 78q–1(a)(A)(B).
24JNN1
]]>Agencies
[Federal Register Volume 70, Number 121 (Friday, June 24, 2005)]
[Notices]
[Pages 36676-36678]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E5-3295]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-51880; File No. SR-CBOE-2005-38]
Self-Regulatory Organizations; Chicago Board Options Exchange,
Inc; Notice of Filing and Immediate Effectiveness of a Proposed Rule
Change Relating to the Sales Value Fee
June 20, 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 May 13, 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 and
II below, which Items have been prepared by the CBOE. The Exchange
filed a proposed rule change as a ``non-controversial'' rule change
pursuant to Rule\2\ 19b-4(f)(6) under the Act,\3\ which renders the
proposal effective upon filing with the Commission. The Commission is
publishing this notice to solicit comments on the proposed rule change
from interested parties.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The CBOE proposes to amend its Fees Schedule and rules and issue a
Regulatory Circular relating to its ``Sales Value Fee.'' The text of
the proposed rule change is below. Proposed new language is italicized;
proposed deletions are in brackets.
Chicago Board Options Exchange, Inc.--Fees Schedule
[May 2] May 13, 2005
1.-4. Unchanged.
Notes: (1)-(15) Unchanged.
5. ETFs, STRUCTURED PRODUCTS, RIGHTS, WARRANTS (per round lot):
(A) TRANSACTION FEES: MAXIMUM FEE:
Customer $.00.................. N/A
Member Firm Proprietary .10.... $100 per side
Market Maker .05............... $100 per side
(B) LISTING FEES:
Initial Fee (minimum) $10,000..
Annual Fee 2,500--10,000.......
(C) SEC VALUE FEE:
$0.00252 for every $100 of
value sold (seller only)].
6. SALES VALUE FEE:
The Sales Value Fee (``Fee'') is assessed by CBOE to each member
for sales of securities on CBOE with respect to which CBOE is obligated
to pay a fee to the SEC under Section 31 of the Exchange Act. To the
extent there may be any excess monies collected under this Section 6,
the Exchange may retain those monies to help fund its general operating
expenses. The sales transactions to which the Fee applies are sales of
options (other than options on a security index), sales of non-option
securities, and sales of securities resulting from the exercise of
physical-delivery options traded on CBOE. The Fee is collected
indirectly from members through their clearing firms by OCC on behalf
of CBOE with respect to options sales and options exercises. CBOE
collects the Fee indirectly from members through their clearing firms
with respect to non-option sales. Consistent with CBOE Rule 3.23, the
Fee is collected by billing the member's designated clearing firm for
the amount owed by the member to the Exchange. The amount of the Fee is
calculated as described below.
Calculation of Fee for Options Sales and Options Exercises: The
Sales Value Fee is equal to (i) the Section 31 fee rate multiplied by
(ii) the member's aggregate dollar amount of covered sales resulting
from options transactions occurring on the Exchange during any
computational period. Calculation of Fee for Non-Options Sales: The
Sales Value Fee is calculated using the same formula as the formula
above for options transactions, except as applied only to the member's
covered sales other than those resulting from options transactions.
6.-9. Renumbered 7.-10. Otherwise unchanged.
[10. {Reserved{time} ]
11.-23. Unchanged.
Remainder of Fee Schedule--Unchanged.
* * * * *
CHAPTER XXX
Stocks, Warrants and Other Securities
[Rule 30.60. Securities and Exchange Commission Transaction Fee
There shall be paid to the Exchange by each member and member
organization, in such manner and at such time as the Exchange shall
direct, the sum of one cent for each $300 or fraction thereof of the
dollar volume of securities sold by such member or member organization
on the Exchange. The monies so paid to the Exchange shall be paid to
the Securities and Exchange Commission as the transaction fee imposed
upon the Exchange under the Exchange Act.
* * * Interpretations and Policies:
.01 The fee required to be paid under this Rule does not apply to
any bond, debenture, or other evidence of indebtedness, or any security
which the Securities and Exchange Commission may, by rule, exempt from
imposition of the fee.]
[[Page 36677]]
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, Proposed Rule Change
1. Purpose
Pursuant to Section 5(c) of the CBOE Fees Schedule and CBOE Rule
30.60, the Exchange currently assesses a fee on its members for sales
of securities on the Exchange to recoup amounts paid by the Exchange to
the Commission under Section 31 of the Act.\4\ On June 28, 2004,\5\ the
Commission established new procedures governing the calculation,
payment, and collection of fees and assessments on securities
transactions owed by national securities exchanges and associations
under Section 31 of the Act (``Adopting Release'').\6\ In the Adopting
Release, the Commission stated that the fees SROs pass to their members
and the fees members pass to their customers are not ``Section 31
Fees'' or ``SEC Fees'' and should not be labeled as such.\7\
---------------------------------------------------------------------------
\4\ 15 U.S.C. 78ee.
\5\ In the notice prepared by the CBOE in its Form 19b-4 filing,
the CBOE inadvertently referred to this date as July 28, 2004.
Telephone conversation between Jamie Galvin, Senior Attorney, CBOE
and Hong-Anh Tran, Special Counsel, Division of Market Regulation
(``Division''), Commission, dated May 17, 2005.
\6\ See Securities Exchange Act Release No. 49928 (June 28,
2004), 69 FR 41060 (July 7, 2004).
\7\ Id. at 41072.
---------------------------------------------------------------------------
In response to the statements made by the Commission in the
Adopting Release, the Exchange proposes to amend its Fees Schedule to
change the name of its fee, provide greater explanation and description
of the fee and how it is collected, and clarify that it applies with
respect to both covered sales of options and covered sales of non-
option securities. The Exchange also proposes to delete CBOE Rule 30.60
since the fee will be set forth and fully described in the CBOE Fees
Schedule.
Specifically, the Exchange proposes to delete Section 5(c) of the
CBOE Fees Schedule, which is currently labeled ``SEC Value Fee.'' The
Exchange proposes to add a new CBOE Section 6 to the Fees Schedule
labeled ``Sales Value Fee.'' Proposed new CBOE Section 6 defines the
Sales Value Fee (``Fee'') as the fee assessed by CBOE to each member
for sales of securities on CBOE with respect to which CBOE is obligated
to pay a fee to the SEC under Section 31 of the Act. Proposed CBOE
Section 6 provides that, to the extent the Exchange may collect more
from members under CBOE Section 6 than is due from the Exchange to the
Commission under Section 31 of the Act, for example due to rounding
differences, the excess monies collected may be used by the Exchange to
fund its general operating expenses.
Proposed CBOE Section 6 explains that the transactions to which the
Fee applies are sales of options (other than options on a security
index), sales of non-option securities, and sales of securities
resulting from the exercise of physical-delivery options traded on
CBOE. The Fee is collected indirectly from members through their
clearing firms by the Options Clearing Corporation (``OCC'') on behalf
of the Exchange with respect to options sales and options exercises.
The Exchange collects the Fee indirectly from members through their
clearing firms with respect to non-option sales. Consistent with CBOE
Rule 3.23, the Fee is collected by billing the member's designated
clearing firm for the amount owed by the member to the Exchange.
Proposed CBOE Section 6 also sets forth the formula for calculating
the Fee with respect to covered options and non-options transactions.
The Fee with respect to options sales and options exercises is equal to
(i) the Commission's Section 31 fee rate multiplied by (ii) the
member's aggregate dollar amount of covered sales resulting from
options transactions occurring on the Exchange during any computational
period. The Fee with respect to non-options sales is calculated using
the same formula as the formula for options transactions, except as
applied only to the member's covered sales other than those resulting
from options transactions. The Exchange notes that, if the Commission's
Section 31 fee rate changes in the middle of a month, the Exchange will
perform a separate calculation with respect to covered sales under the
new fee rate for the remaining portion of the month.
In further response to the statements made by the Commission in the
Adopting Release, the Exchange proposes to issue a Regulatory Circular
to its members that prohibits members from characterizing the pass-
through of the CBOE Sales Value Fee to their customers as a ``Section
31 fee,'' ``SEC fee,'' or other label that implies an SEC rule or
requirement that these funds be collected from broker-dealers or
customers. The proposed Regulatory Circular would become effective
approximately 45 days following effectiveness of the proposed rule
change.
2. Statutory Basis
The Exchange believes that for this proposed rule change is
consistent with Section 6(b)(4) of the Act,\8\ which permits the rules
of an Exchange to provide for the equitable allocation of reasonable
dues, fees, and other charges among its members, and issuers and other
persons using its facilities. In addition, the Exchange believes that
the proposed rule change, including the proposed Regulatory Circular,
is consistent with Section 6(b)(5) of the Act \9\ in that it is
designed to prevent fraudulent and manipulative acts and practices, to
promote just and equitable principles of trade, and, in general, to
protect investors and the public interest.
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\8\ 15 U.S.C. 78f(b)(4).
\9\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory 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. 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 proposed rule change has become effective pursuant to
Section 19(b)(3)(A) of the Act\10\ and Rule 19b-4(f)(6) thereunder \11\
because it does not: (i) significantly affect the protection of
investors or the public interest; (ii) impose any significant burden on
competition; and (iii) become operative prior to 30 days after the date
of filing (or such shorter time as the Commission may designate if
consistent with the protection of investors and the public interest). A
proposed rule change filed under 19b-4(f)(6) normally does not become
operative prior to 30 days after the date of filing. However, Rule
[[Page 36678]]
19b-4(f)(6)(iii) permits the Commission to designate a shorter time if
such action is consistent with the protection of investors and the
public interest. The Exchange satisfied the five-day pre-filing
requirement. The Exchange requests that the Commission waive the 30-day
operative delay, as specified in Rule 19b-4(f)(6)(iii),\12\ and
designate the proposed rule change to become operative immediately.
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\10\ 15 U.S.C. 78s(b)(3)(A).
\11\ 17 CFR 240.19b-4(f)(6).
\12\ 17 CFR 240.19b-4(f)(6)(iii).
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The Commission hereby grants that request.\13\ The Commission
believes that waiving the 30-day operative date is consistent with the
protection of investors and the public interest because doing so will
allow the Exchange's Fees Schedule and Rules to be consistent with the
Commission's guidance on Section 31 without undue delay.
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\13\ For the purposes only of accelerating the operative date of
this proposal, the Commission has considered the proposed rule's
impact on efficiency, competition, and capital formation. See 15
C.S.C. 78c(f).
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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, or otherwise
in the 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, including whether the proposed rule
change 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-2005-38 on the subject line.
Paper Comments
Send paper comments in triplicate to Jonathan G. Katz,
Secretary, Securities and Exchange Commission, Station Place, 100 F
Street, NE., Washington, DC 20549-9303.
All submissions should refer to File Number SR-CBOE-2005-38. 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 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. Copies of
such 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-2005-38 and should be submitted on or before July
15, 2005.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\14\
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\14\ 17 CFR 200.30-3(a)(12).
Jill M. Peterson,
Assistant Secretary.
[FR Doc. E5-3295 Filed 6-23-05; 8:45 am]
BILLING CODE 8010-01-P
