Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Relating to Its Dividend and Merger Spread Fee Cap Program, 5090-5092 [E6-1162]
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Federal Register / Vol. 71, No. 20 / Tuesday, January 31, 2006 / Notices
nuclear power plants and the review of
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SRP Section 12.5 provides staff
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The Section 12.5 Acceptance Criteria
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revised at 60 FR 20185, April 25, 1995),
which changed the basis of the radiation
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several new limits (i.e., dose limits for
embryo/fetus, Planned Special
Exposures, a lower dose limit for
members of the public, etc.) and
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Also, new requirements in 10 CFR
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Contamination’’ (63 FR 39088, July 21,
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and industry standards; revising
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Dated at Rockville, MD, this 22nd day of
December, 2005.
For the Nuclear Regulatory Commission.
Stephen P. Klementowicz,
Acting Chief, Health Physics Branch, Division
of Inspection and Regional Support, Office
of Nuclear Reactor Regulation.
[FR Doc. E6–1202 Filed 1–30–06; 8:45 am]
BILLING CODE 7590–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–53171; File No. SR–CBOE–
2005–117)]
Self-Regulatory Organizations;
Chicago Board Options Exchange,
Incorporated; Notice of Filing and
Immediate Effectiveness of a Proposed
Rule Change Relating to Its Dividend
and Merger Spread Fee Cap Program
January 24, 2006.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on December
23, 2005, the Chicago Board Options
Exchange, Incorportated (‘‘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 CBOE. CBOE has designated the
proposed rule change as one
establishing or changing a due, fee, or
other charge, pursuant to Section
19(b)(3)(A)(ii) of the Act 3 and Rule 19b–
4(f)(2) thereunder,4 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 persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
CBOE proposes to amend its Fees
Schedule relating to its dividend and
merger spread transaction fee cap
program.
The text of the proposed rule change
is available on CBOE’s Web site at
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 15 U.S.C. 78s(b)(3)(A)(ii).
4 17 CFR 240.19b–4(f)(2).
2 17
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https://www.cboe.com, at the Office of
the Secretary at CBOE, and at the
Commission’s Public Reference Room.
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
Exchange included statements
concerning the purpose of, and basis for,
the proposed rule change and discussed
any comments it received on the
proposal. The text of these statements
may be examined at the places specified
in Item IV below. The Exchange has
prepared summaries, set forth in
Sections A, B, and C below, of the most
significant aspects of such statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The Exchange currently caps marketmaker, firm, and broker-dealer
transaction fees associated with
‘‘dividend spread’’ transactions at
$2,000 for all dividend spread
transactions executed on the same
trading day in the same options class.5
A similar fee cap is currently in place
for market-maker, firm, and brokerdealer transaction fees associated with
‘‘merger spread’’ transactions.6 These
fee caps are in effect as a pilot program
(‘‘Strategy Fee Cap’’) that is due to
expire on March 1, 2006.7
The Exchange proposes to amend its
Strategy Fee Cap program in the
following respects: (i) To reduce the
$2,000 per day per class fee cap to
$1,000 per day per class; (ii) to add
‘‘short stock interest’’ spreads; (iii) to
add a monthly fee cap of $50,000 per
initiating firm; (iv) to provide that the
Exchange may pass on the full amount
of any royalty or license fees to trade
participants on dividend, merger and
short stock interest spreads; (v) to rebate
floor brokerage fees associated with
dividend, merger and short stock
5 A ‘‘dividend spread’’ is defined as any trade
done to achieve a dividend arbitrage between any
two deep-in-the-money options.
6 A ‘‘merger spread’’ transaction is defined as a
transaction executed pursuant to a strategy
involving the simultaneous purchase and sale of
options of the same class and expiration date, but
with different strike prices, followed by the exercise
of the resulting long options position, each
executed prior to the date on which shareholders
of record are required to elect their respective form
of consideration, i.e., cash or stock.
7 See Securities Exchange Act Release Nos. 51468
(April 1, 2005), 70 FR 17742 (April 7, 2005); 51828
(June 13, 2005), 70 FR 35475 (June 20, 2005); and
52374 (September 1, 2005), 70 FR 53402 (September
8, 2005).
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Federal Register / Vol. 71, No. 20 / Tuesday, January 31, 2006 / Notices
hsrobinson on PROD1PC70 with NOTICES
interest spread transactions; and (vi) to
reduce the time period in which
dividend, merger and short stock
interest spread rebate request forms
must be submitted to the Exchange. The
proposed modifications to the Strategy
Fee Cap program are intended to make
the Exchange’s program more
competitive with the strategy fee cap
programs adopted by other exchanges.8
First, the Exchange proposes to
reduce the $2,000 per day per class fee
cap to $1,000 per day per class. Thus,
market-maker, firm, and broker-dealer
transaction fees will be capped at $1,000
for all dividend and merger spread
transactions executed on the same
trading day in the same options class.
The Exchange is reducing its per day,
per class fee cap to match the fee cap
of another exchange.9
Second, the Exchange proposes to
include short stock interest spreads in
the Strategy Fee Cap program. Marketmaker, firm, and broker-dealer
transaction fees will be capped at $1,000
for all short stock interest spread
transactions executed on the same
trading day in the same options class. A
short stock interest spread is defined as
a spread that uses two deep in-themoney put options followed by the
exercise of the resulting long position of
the same class in order to establish a
short stock interest arbitrage position.10
The fee cap on short stock interest
spreads will be subject to the same pilot
program applicable to dividend and
merger spreads expiring on March 1,
2006.
Third, the Exchange proposes to
further cap transaction fees associated
with dividend, merger and short stock
interest spreads at $50,000 per month,
initiating firm. The proposed $50,000
per month fee cap is also intended to
match the fee cap of another exchange.11
Fourth, the Exchange proposes to pass
on the full amount of any royalty or
license fees to trade participants on
dividend, merger and short stock
interest spreads. Certain classes of
options listed on the Exchange have as
their underlying issue licensed products
that carry a royalty fee, or license fee,
on every contract traded. These fees are
assessed by the issuing agency, and are
not Exchange transaction fees. License
fees that are charged to the Exchange are
passed on to the actual participants
executing the trade. Even though some
8 See, e.g., Securities Exchange Act Release Nos.
51787 (June 6, 2005), 70 FR 34174 (June 13, 2005);
and 52297 (August 18, 2005), 70 FR 49687 (August
24, 2005).
9 See PCX Options Fee Schedule.
10 See Securities Exchange Act Release No. 51787
(June 6, 2005), 70 FR 34174 (June 13, 2005).
11 Id.
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15:34 Jan 30, 2006
Jkt 208001
of the fees are passed on, the Strategy
Fee Cap would prevent the Exchange
from recovering these fees in their
entirety if they were to be included as
transaction fees. If license fees were to
be included as transaction fees, the
Exchange would face the possibility of
having to pay out substantial fees while
the Strategy Fee Cap would limit the
amount the Exchange would be able to
pass on to trade participants. Because of
the negative financial implications to
the Exchange, the Exchange will not
include license or royalty fees
associated with dividend, merger and
short stock interest spreads in the
calculation of the $1,000 per day per
class fee cap and the $50,000 per month
fee cap. Other exchanges have proposed
similar changes to their strategy fee
caps.12
Fifth, the Exchange proposes to rebate
floor brokerage fees associated with
dividend, merger, and short stock
interest spread transactions. The
Exchange believes rebating floor
brokerage fees for these spread
transactions is necessary in order for the
Exchange to be competitive in attracting
these strategies, in that other exchanges
do not assess variable floor brokerage
fees or significantly discount floor
brokerage fees.
Lastly, under the current Strategy Fee
Cap program, a rebate request form,
along with supporting documentation
(e.g., clearing firm transaction data),
must be submitted to the Exchange
within 30 days of the transactions in
order to qualify transactions for the cap.
The Exchange proposes to reduce the
time period in which dividend, merger,
and short stock interest spread rebate
request forms must be submitted to the
Exchange from within 30 days of the
transactions to within 3 business days of
the transactions. The Exchange believes
the reduced submission time period will
assist the Exchange in more efficiently
processing the rebate requests. The
Exchange believes that while the
submission timeframe has been
reduced, market participants eligible for
the program should be able to meet the
proposed deadline. The submission of a
rebate request form shall also be
required for the floor brokerage fee
rebate. Such rebate request form must
also be submitted to the Exchange
within 3 business days of the
transactions.
The Exchange intends to implement
the proposed changes to the Strategy
Fee Cap effective January 3, 2006.
12 See, e.g., Securities Exchange Act Release Nos.
52935 (December 9, 2005), 70 FR 75525 (December
20, 2005); and 53115 (January 13, 2006), 71 FR 3600
(January 23, 2006).
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2. Statutory Basis
The Exchange believes that its
proposal to amend its schedule of fees
is consistent with Section 6(b) of the
Act 13 in general, and furthers the
objectives of Section 6(b)(4) of the Act 14
in particular, in that it is an equitable
allocation of reasonable dues, fees, and
other charges among its members and
issuers and other persons using its
facilities.
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 the 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 on the proposed rule
change.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
The foregoing rule change has become
effective pursuant to Section
19(b)(3)(A)(ii) of the Act 15 and
subparagraph (f)(2) of Rule 19b–4
thereunder 16 because it establishes or
changes a due, fee, or other charge. 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 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 rulecomments@sec.gov. Please include File
Number SR–CBOE–2005–117 on the
subject line.
13 15
U.S.C. 78f(b).
U.S.C. 78f(b)(4).
15 15 U.S.C. 78s(b)(3)(A)(ii).
16 17 CFR 240.19b–4(f)(2).
14 15
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Federal Register / Vol. 71, No. 20 / Tuesday, January 31, 2006 / Notices
Paper Comments
• Send paper comments in triplicate
to Nancy M. Morris, Secretary,
Securities and Exchange Commission,
100 F Street, NE., Washington, DC
20549–9303.
All submissions should refer to File
Number SR–CBOE–2005–117. 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
Room. 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 SR–CBOE–2005–117 and
should be submitted on or before
February 21, 2006.
For the Commission, by the Division of
Market Regulation, pursuant to delegated
authority.17
Nancy M. Morris,
Secretary.
[FR Doc. E6–1162 Filed 1–30–06; 8:45 am]
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–53175; File No. SR–CBOE–
2005–101]
hsrobinson on PROD1PC70 with NOTICES
Self-Regulatory Organizations;
Chicago Board Options Exchange,
Inc.; Order Approving a Proposed Rule
Change Relating to Membership Rules
January 25, 2006.
I. Introduction
On November 29, 2005, the Chicago
Board Options Exchange, Incorporated
17 17
CFR 200.30–3(a)(12).
VerDate Aug<31>2005
15:34 Jan 30, 2006
Jkt 208001
(‘‘CBOE’’ or ‘‘Exchange’’) filed with the
Securities and Exchange Commission
(‘‘Commission’’ or ‘‘SEC’’), pursuant to
Section 19(b)(1) of the Securities
Exchange Act of 1934 (‘‘Act’’) 1 and Rule
19b–4 thereunder,2 a proposed rule
change seeking to modify CBOE Rule
3.9, relating to investigation of
membership applicants.
The proposed rule change was
published in the Federal Register on
December 22, 2005.3 The Commission
received no comments on the proposed
rule change. On January 23, 2006, the
Exchange submitted Amendment No. 1
to the proposed rule change.4 This order
approves the proposed rule change, as
amended by Amendment No 1.
II. Description
The Exchange is proposing to amend
CBOE Rule 3.9 (‘‘Application
Procedures and Approval or
Disapproval’’) subsection (f), which
currently requires CBOE’s Membership
Department to investigate each
applicant applying to be a member
organization, each associated person
required to be approved by the
Membership Committee pursuant to
CBOE Rule 3.6(b), and each applicant
applying to be an individual member
(collectively ‘‘Membership
Applicants’’). As part of the current
application process, Membership
Applicants are required to submit
fingerprints to the Exchange,5 which
CBOE then forwards to the Federal
Bureau of Investigation.
The Exchange currently requires
Membership Applicants to submit new
fingerprints to the Exchange for
processing, as part of the investigation
process pursuant to CBOE Rule 3.9(f),
even if the Membership Applicant was
recently fingerprinted at the Exchange
or another SRO. The proposed rule
change would change this requirement
to permit the Exchange to accept the
results of a fingerprint-based criminal
records check of the Membership
Applicant conducted by the Exchange
or another SRO within the prior year
pursuant to that investigation process.
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 See Securities Exchange Act Release No. 52952
(December 14, 2005), 70 FR 76087.
4 In Amendment No. 1, the Exchange proposed an
additional modification to CBOE Rule 3.9(f).
Specifically, the Exchange proposed a change so
that, as amended, the proposed rule would permit
the Exchange to rely on the results of a fingerprintbased criminal records check of an applicant
conducted by the Exchange itself, in addition to a
check conducted by another self-regulatory
organization (‘‘SRO’’), within the prior year.
Amendment No. 1 is a technical amendment and
therefore not subject to notice and comment.
5 See CBOE Rule 3.7(c).
2 17
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III. Discussion
After careful review, the Commission
finds that the proposed rule change is
consistent with the requirements of the
Act and the rules and regulations
thereunder applicable to a national
securities exchange.6 In particular, the
Commission finds that the proposed
rule change is consistent with Section
6(b)(5) of the Act 7 which requires,
among other things, that the rules of an
exchange be designed to promote just
and equitable principles of trade, to
remove impediments to and perfect the
mechanism of a free and open market,
and to protect investors and the public
interest.
In approving this proposed rule
change, the Commission notes that as
part of the application process, in
addition to a fingerprint-based criminal
records check, CBOE requires that a
Membership Applicant also submit a
Form U–4 (Uniform Application for
Securities Industry Registration or
Transfer). Form U–4 requires disclosure
of events that would constitute a
statutory disqualification under the Act.
Because the Exchange obtains this
information as part of the application
process, and because CBOE Rule 3.9(d)
requires Membership Applicants to
promptly update membership
application materials if the information
provided in the materials becomes
inaccurate or incomplete after the date
of submission, the Commission believes
that it is reasonable for the Exchange to
expect that its Membership Department
would have access to information that
would reveal whether a Membership
Applicant became subject to a statutory
disqualification subsequent to the date
of the results of a fingerprint-based
criminal records check conducted either
by the Exchange or by another SRO on
which CBOE would be relying.
IV. Conclusion
For the foregoing reasons, the
Commission finds that the proposed
rule change is consistent with the
requirements of the Act and the rules
and regulations thereunder.
It is therefore ordered, pursuant to
Section 19(b)(2) of the Act,8 that the
proposed rule change (SR–CBOE–2005–
101) is approved, as amended.
6 In approving this proposed rule change, the
Commission has considered the proposed rule’s
impact on efficiency, competition, and capital
formation. See 15 U.S.C. 78c(f).
7 15 U.S.C. 78f(b)(5).
8 15 U.S.C. 78s(b)(2).
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]]>Agencies
[Federal Register Volume 71, Number 20 (Tuesday, January 31, 2006)]
[Notices]
[Pages 5090-5092]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E6-1162]
=======================================================================
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-53171; File No. SR-CBOE-2005-117)]
Self-Regulatory Organizations; Chicago Board Options Exchange,
Incorporated; Notice of Filing and Immediate Effectiveness of a
Proposed Rule Change Relating to Its Dividend and Merger Spread Fee Cap
Program
January 24, 2006.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on December 23, 2005, the Chicago Board Options Exchange, Incorportated
(``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 CBOE. CBOE
has designated the proposed rule change as one establishing or changing
a due, fee, or other charge, pursuant to Section 19(b)(3)(A)(ii) of the
Act \3\ and Rule 19b-4(f)(2) thereunder,\4\ 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 persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ 15 U.S.C. 78s(b)(3)(A)(ii).
\4\ 17 CFR 240.19b-4(f)(2).
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
CBOE proposes to amend its Fees Schedule relating to its dividend
and merger spread transaction fee cap program.
The text of the proposed rule change is available on CBOE's Web
site at https://www.cboe.com, at the Office of the Secretary at CBOE,
and at the Commission's Public Reference Room.
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 Exchange included statements
concerning the purpose of, and basis for, the proposed rule change and
discussed any comments it received on the proposal. The text of these
statements may be examined at the places specified in Item IV below.
The Exchange has prepared summaries, set forth in Sections A, B, and C
below, of the most significant aspects of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange currently caps market-maker, firm, and broker-dealer
transaction fees associated with ``dividend spread'' transactions at
$2,000 for all dividend spread transactions executed on the same
trading day in the same options class.\5\ A similar fee cap is
currently in place for market-maker, firm, and broker-dealer
transaction fees associated with ``merger spread'' transactions.\6\
These fee caps are in effect as a pilot program (``Strategy Fee Cap'')
that is due to expire on March 1, 2006.\7\
---------------------------------------------------------------------------
\5\ A ``dividend spread'' is defined as any trade done to
achieve a dividend arbitrage between any two deep-in-the-money
options.
\6\ A ``merger spread'' transaction is defined as a transaction
executed pursuant to a strategy involving the simultaneous purchase
and sale of options of the same class and expiration date, but with
different strike prices, followed by the exercise of the resulting
long options position, each executed prior to the date on which
shareholders of record are required to elect their respective form
of consideration, i.e., cash or stock.
\7\ See Securities Exchange Act Release Nos. 51468 (April 1,
2005), 70 FR 17742 (April 7, 2005); 51828 (June 13, 2005), 70 FR
35475 (June 20, 2005); and 52374 (September 1, 2005), 70 FR 53402
(September 8, 2005).
---------------------------------------------------------------------------
The Exchange proposes to amend its Strategy Fee Cap program in the
following respects: (i) To reduce the $2,000 per day per class fee cap
to $1,000 per day per class; (ii) to add ``short stock interest''
spreads; (iii) to add a monthly fee cap of $50,000 per initiating firm;
(iv) to provide that the Exchange may pass on the full amount of any
royalty or license fees to trade participants on dividend, merger and
short stock interest spreads; (v) to rebate floor brokerage fees
associated with dividend, merger and short stock
[[Page 5091]]
interest spread transactions; and (vi) to reduce the time period in
which dividend, merger and short stock interest spread rebate request
forms must be submitted to the Exchange. The proposed modifications to
the Strategy Fee Cap program are intended to make the Exchange's
program more competitive with the strategy fee cap programs adopted by
other exchanges.\8\
---------------------------------------------------------------------------
\8\ See, e.g., Securities Exchange Act Release Nos. 51787 (June
6, 2005), 70 FR 34174 (June 13, 2005); and 52297 (August 18, 2005),
70 FR 49687 (August 24, 2005).
---------------------------------------------------------------------------
First, the Exchange proposes to reduce the $2,000 per day per class
fee cap to $1,000 per day per class. Thus, market-maker, firm, and
broker-dealer transaction fees will be capped at $1,000 for all
dividend and merger spread transactions executed on the same trading
day in the same options class. The Exchange is reducing its per day,
per class fee cap to match the fee cap of another exchange.\9\
---------------------------------------------------------------------------
\9\ See PCX Options Fee Schedule.
---------------------------------------------------------------------------
Second, the Exchange proposes to include short stock interest
spreads in the Strategy Fee Cap program. Market-maker, firm, and
broker-dealer transaction fees will be capped at $1,000 for all short
stock interest spread transactions executed on the same trading day in
the same options class. A short stock interest spread is defined as a
spread that uses two deep in-the-money put options followed by the
exercise of the resulting long position of the same class in order to
establish a short stock interest arbitrage position.\10\ The fee cap on
short stock interest spreads will be subject to the same pilot program
applicable to dividend and merger spreads expiring on March 1, 2006.
---------------------------------------------------------------------------
\10\ See Securities Exchange Act Release No. 51787 (June 6,
2005), 70 FR 34174 (June 13, 2005).
---------------------------------------------------------------------------
Third, the Exchange proposes to further cap transaction fees
associated with dividend, merger and short stock interest spreads at
$50,000 per month, initiating firm. The proposed $50,000 per month fee
cap is also intended to match the fee cap of another exchange.\11\
---------------------------------------------------------------------------
\11\ Id.
---------------------------------------------------------------------------
Fourth, the Exchange proposes to pass on the full amount of any
royalty or license fees to trade participants on dividend, merger and
short stock interest spreads. Certain classes of options listed on the
Exchange have as their underlying issue licensed products that carry a
royalty fee, or license fee, on every contract traded. These fees are
assessed by the issuing agency, and are not Exchange transaction fees.
License fees that are charged to the Exchange are passed on to the
actual participants executing the trade. Even though some of the fees
are passed on, the Strategy Fee Cap would prevent the Exchange from
recovering these fees in their entirety if they were to be included as
transaction fees. If license fees were to be included as transaction
fees, the Exchange would face the possibility of having to pay out
substantial fees while the Strategy Fee Cap would limit the amount the
Exchange would be able to pass on to trade participants. Because of the
negative financial implications to the Exchange, the Exchange will not
include license or royalty fees associated with dividend, merger and
short stock interest spreads in the calculation of the $1,000 per day
per class fee cap and the $50,000 per month fee cap. Other exchanges
have proposed similar changes to their strategy fee caps.\12\
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\12\ See, e.g., Securities Exchange Act Release Nos. 52935
(December 9, 2005), 70 FR 75525 (December 20, 2005); and 53115
(January 13, 2006), 71 FR 3600 (January 23, 2006).
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Fifth, the Exchange proposes to rebate floor brokerage fees
associated with dividend, merger, and short stock interest spread
transactions. The Exchange believes rebating floor brokerage fees for
these spread transactions is necessary in order for the Exchange to be
competitive in attracting these strategies, in that other exchanges do
not assess variable floor brokerage fees or significantly discount
floor brokerage fees.
Lastly, under the current Strategy Fee Cap program, a rebate
request form, along with supporting documentation (e.g., clearing firm
transaction data), must be submitted to the Exchange within 30 days of
the transactions in order to qualify transactions for the cap. The
Exchange proposes to reduce the time period in which dividend, merger,
and short stock interest spread rebate request forms must be submitted
to the Exchange from within 30 days of the transactions to within 3
business days of the transactions. The Exchange believes the reduced
submission time period will assist the Exchange in more efficiently
processing the rebate requests. The Exchange believes that while the
submission timeframe has been reduced, market participants eligible for
the program should be able to meet the proposed deadline. The
submission of a rebate request form shall also be required for the
floor brokerage fee rebate. Such rebate request form must also be
submitted to the Exchange within 3 business days of the transactions.
The Exchange intends to implement the proposed changes to the
Strategy Fee Cap effective January 3, 2006.
2. Statutory Basis
The Exchange believes that its proposal to amend its schedule of
fees is consistent with Section 6(b) of the Act \13\ in general, and
furthers the objectives of Section 6(b)(4) of the Act \14\ in
particular, in that it is an equitable allocation of reasonable dues,
fees, and other charges among its members and issuers and other persons
using its facilities.
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\13\ 15 U.S.C. 78f(b).
\14\ 15 U.S.C. 78f(b)(4).
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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 the 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 on the proposed rule
change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The foregoing rule change has become effective pursuant to Section
19(b)(3)(A)(ii) of the Act \15\ and subparagraph (f)(2) of Rule 19b-4
thereunder \16\ because it establishes or changes a due, fee, or other
charge. 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 furtherance of the purposes of the Act.
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\15\ 15 U.S.C. 78s(b)(3)(A)(ii).
\16\ 17 CFR 240.19b-4(f)(2).
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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 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-2005-117 on the subject line.
[[Page 5092]]
Paper Comments
Send paper comments in triplicate to Nancy M. Morris,
Secretary, Securities and Exchange Commission, 100 F Street, NE.,
Washington, DC 20549-9303.
All submissions should refer to File Number SR-CBOE-2005-117. 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 Room. 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
SR-CBOE-2005-117 and should be submitted on or before February 21,
2006.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\17\
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\17\ 17 CFR 200.30-3(a)(12).
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Nancy M. Morris,
Secretary.
[FR Doc. E6-1162 Filed 1-30-06; 8:45 am]
BILLING CODE 8010-01-P
