Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing and Immediate Effectiveness of Proposed Rule Change and Amendment No. 1 Thereto Relating to Cancellation Fees, 71465-71467 [E7-24310]

Download as PDF Federal Register / Vol. 72, No. 241 / Monday, December 17, 2007 / Notices I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The proposed rule change would make minor technical changes to Sections 3 and 4 of Article XVI of OCC’s By-Laws pertaining to yield-based Treasury options. II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, OCC 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. OCC has prepared summaries, set forth in sections (A), (B), and (C) below, of the most significant aspects of such statements. 4 ebenthall on PROD1PC69 with NOTICES A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change The purpose of this rule change is to make minor technical changes to Sections 3 and 4 of Article XVI of OCC’s By-Laws, pertaining to yield-based Treasury options. In 2004, OCC amended Sections 3 and 4 of Article XVI to conform those sections to the corresponding By-Law provisions governing index options. 5 However, OCC delayed implementing these changes until they were disclosed in a supplement to the options disclosure document, Characteristics and Risks of Standardized Options. 6 Distribution of such a supplement recently began. In connection with preparing the supplement, OCC determined that minor technical changes to Sections 3 and 4 of Article XVI were warranted in order to more precisely conform these Sections to the disclosures made in the supplement. OCC also determined to correct an erroneous cross-reference to another By-Laws provision. The proposed change is consistent with Section 17A of the Act because it more precisely conforms the terms of Sections 3 and 4 of Article XVI to disclosures made in a supplement to the options disclosure document, thereby increasing the protection of investors and promoting the prompt and accurate 4 The Commission has modified parts of these statements. 5 Securities Exchange Act Release No. 50895 (December 20, 2004), 69 FR 78085 (December 29, 2004) (File No. SR–OCC–2004–11). 6 Securities Exchange Act Release No. 55702 (May 3, 2007), 72 FR 26671 (May 10, 2007) (File No. SR– ODD–2007–02). VerDate Aug<31>2005 15:28 Dec 14, 2007 Jkt 214001 clearance and settlement of yield-based Treasury options. The proposed rule change is not inconsistent with the existing rules of OCC, including any other rules proposed to be amended. B. Self-Regulatory Organization’s Statement on Burden on Competition OCC does not believe that the proposed rule change would 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 were not and are not intended to be solicited with respect to the proposed rule change, and none have been received. 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)(iii) of the Act 7 and Rule 19b–4(f)(4) 8 promulgated thereunder because the proposal effects a change in an existing service of OCC that (A) does not adversely affect the safeguarding of securities or funds in the custody or control of OCC or for which it is responsible and (B) does not significantly affect the respective rights or obligations of OCC or persons using the service. At any time within sixty days of the filing of the proposed rule change, the Commission could have summarily abrogated such rule change if it appeared to the Commission that such action was 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 (http://www.sec.gov/ rules/sro.shtml); or • Send an e-mail to rulecomments@sec.gov. Please include File Number SR–OCC–2007–07 on the subject line. Paper Comments • Send paper comments in triplicate to Nancy M. Morris, Secretary, 7 15 8 17 PO 00000 U.S.C. 78s(b)(3)(A)(iii). CFR 240.19b–4(f)(4). Frm 00121 Fmt 4703 Sfmt 4703 71465 Securities and Exchange Commission, 100 F Street, NE., Washington, DC 20549–1090. All submissions should refer to File Number SR–OCC–2007–07. 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 (http://www.sec.gov/ rules/sro.shtml). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for inspection and copying in the Commission’s Public Reference Room, 100 F Street, NE., Washington, DC 20549, on official business days between the hours of 10 a.m. and 3 p.m. Copies of such filing also will be available for inspection and copying at the principal office of OCC. 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–OCC–2007–07 and should be submitted on or before January 7, 2008. For the Commission by the Division of Trading and Markets, pursuant to delegated authority. 9 Florence E. Harmon, Deputy Secretary. [FR Doc. E7–24308 Filed 12–14–07; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–56937; File No. SR–CBOE– 2007–127] Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing and Immediate Effectiveness of Proposed Rule Change and Amendment No. 1 Thereto Relating to Cancellation Fees December 10, 2007. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 9 17 E:\FR\FM\17DEN1.SGM CFR 200.30–3(a)(12). 17DEN1 71466 Federal Register / Vol. 72, No. 241 / Monday, December 17, 2007 / Notices (‘‘Act’’),1 and Rule 19b–4 thereunder,2 notice is hereby given that on November 1, 2007, the Chicago Board Options Exchange, Incorporated (the ‘‘CBOE’’ or the ‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘Commission’’) the proposed rule change as described in Items I and II below, which Items have been substantially prepared by the CBOE. On November 30, 2007, CBOE filed Amendment No. 1 to the proposed rule change. The CBOE has filed the proposed rule change as one establishing or changing a due, fee, or other charge imposed by the Exchange under Section 19(b)(3)(A)(ii) of the Act 3 and Rule 19b–4(f)(2) thereunder,4 which renders the proposal effective upon filing with the Commission. The Commission is publishing this notice, as amended, to solicit comments on the proposed rule change from interested persons. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The CBOE proposes to (i) reduce the book execution fee in classes trading on the ‘‘Hybrid 3.0 Platform’’, and (ii) amend its Order Routing System (‘‘ORS’’) order cancellation fee. The text of the proposed rule change is available at CBOE, the Commission’s Public Reference Room, and http:// www.cboe.org/legal. II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the CBOE included statements concerning the purpose of, and basis for, the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The CBOE has prepared summaries, set forth in Sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change ebenthall on PROD1PC69 with NOTICES 1. Purpose The Exchange proposes to implement the following fee changes on November 1, 2007. 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 VerDate Aug<31>2005 15:28 Dec 14, 2007 Jkt 214001 Hybrid 3.0 Book Execution Fee On June 7, 2007, the Commission approved the Exchange’s ‘‘Hybrid 3.0’’ trading platform.5 The remaining nonHybrid classes trading on the Exchange have moved to the Hybrid 3.0 platform.6 The new Hybrid 3.0 classes no longer utilize the services of an Exchange Order Book Official (‘‘OBO’’) 7. Pursuant to Section 7 of the CBOE Fees Schedule, the Exchange assessed per contract fees on orders in non-Hybrid index option classes resting in the electronic book that were executed on the floor by the OBO (‘‘OBO Execution Fees’’). These OBO Execution Fees are $.25 per contract excluding market orders and certain limit orders entered prior to the opening rotation, and $.10 per contract for accommodation liquidations (cabinet trades).8 The Exchange proposes to reduce the $.25 per contract fee to $.18 per contract, rename the fee ‘‘Hybrid 3.0 Book Execution Fee’’, and eliminate the $.10 per contract fee for accommodation liquidations. The fee would apply to book executions in Hybrid 3.0 classes (currently, OEX, SPX and MVR). Specifically, orders in Hybrid 3.0 classes resting in the electronic book that are executed would be assessed a fee of $.18 per contract. This fee would not apply to orders in SPX options resting in the SPX electronic book that are executed during opening rotation on the final settlement date of CBOE Volatility Index (‘‘VIX’’) options and futures, as orders entered to participate in such opening rotation help to facilitate the calculation of a settlement price for VIX options and futures.9 The Hybrid 3.0 book execution system has helped to improve execution time as well as service and efficiency. The Hybrid 3.0 Book Execution Fee is designed to help the Exchange recover its costs of developing the system and 5 See Securities Exchange Act Release No. 55874 (June 7, 2007), 72 FR 32688 (June 13, 2007). 6 The classes that trade on the Hybrid 3.0 platform are options on the S&P 100 Index (‘‘OEX’’), options on the S&P 500 Index (‘‘SPX’’) and options on the Morgan Stanley Retail Index (‘‘MVR’’). 7 An ‘‘Order Book Official’’ is defined in CBOE Rule 7.1 as an Exchange employee designated pursuant to CBOE Rule 7.3 who is responsible for (i) maintaining the book with respect to the classes of options assigned to him; (ii) effecting proper executions of orders placed with him; (iii) displaying bids and offers pursuant to CBOE Rule 7.7 of these Rules; and (iv) monitoring the market for the classes of options assigned to him. 8 An ‘‘accommodation’’ or ‘‘cabinet’’ trade refers to trades in listed options on the Exchange that are worthless or not actively traded. Cabinet trading is conducted in accordance with CBOE Rule 6.54. 9 The opening rotation procedures in options series used to calculate the final settlement price of volatility indexes are described in CBOE Rule 6.2B.01. PO 00000 Frm 00122 Fmt 4703 Sfmt 4703 offset the cost of maintaining and enhancing the system in the future. ORS Order Cancellation Fee CBOE currently assesses an executing clearing member $1.50 for each cancelled public customer ORS order in excess of the number of public customer orders that the executing clearing member executes in a month for itself or for a correspondent firm. The purpose of the fee is to ease order backlogs on ORS and related systems. The fee is not charged if less than 500 public customer orders are cancelled in a month by the executing clearing member for itself or for a correspondent firm. The Exchange aggregates and counts as one executed order for purposes of the fee all public customer options orders from the same executing clearing member for itself or for a correspondent firm that are executed in the same series on the same side of the market at the same price within a 30 second period. The following ORS order activity is exempt from the fee: (i) Cancelled ORS orders that improve the Exchange’s prevailing bid-offer (BBO) market when received; and (ii) fill and cancellation activity occurring within the first one minute of trading following the opening of each option class. The Exchange proposes to amend the fee by additionally exempting the following activity: (i) Complex order 10 fills and cancels; (ii) unfilled Fill-or-Kill (‘‘FOK’’) orders 11, and (iii) unfilled Immediate-or-Cancel (‘‘IOC’’) orders. 12 Because this activity does not contribute excessively to system congestion the Exchange believes it is appropriate to exclude this activity from the calculation of the fee. Additionally, the Exchange proposes to exempt from the fee fill and cancellation activity in Mini-SPX Index Options (XSP). CBOE intends to undertake a marketing re-launch of the XSP product due in part to the inclusion of XSP options in the expanded penny pilot program recently approved by the Commission.13 In conjunction with the marketing re-launch, CBOE has 10 ‘‘Complex Order’’ is defined in CBOE Rule 6.53C(a). 11 ‘‘Fill-or-Kill’’ order is defined in CBOE Rule 6.53(j) as an order which is to be executed in its entirety as soon as it is represented in the trading crowd, and such order, if not so executed, is to be treated as cancelled. 12 ‘‘Immediate-or-Cancel’’ order is defined in CBOE Rule 6.53(k) as a market or limit order which is to be executed in whole or in part as soon as such order is represented in the trading crowd. Any portion not so executed is to be treated as cancelled. 13 See Securities and Exchange Act Release No. 56565 (September 27, 2007), 72 FR 56403 (October 3, 2007). E:\FR\FM\17DEN1.SGM 17DEN1 Federal Register / Vol. 72, No. 241 / Monday, December 17, 2007 / Notices determined to exclude activity in XSP options from the calculation of the fee. 2. Statutory Basis The proposed rule change is consistent with Section 6(b) of the Act 14, in general, and furthers the objectives of Section 6(b)(4) 15 of the Act in particular, in that it is designed to provide for the equitable allocation of reasonable dues, fees, and other charges among CBOE members and other persons using its facilities. 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 Because the foregoing proposed rule change establishes or changes a due, fee, or other charge imposed by the Exchange, it has become effective pursuant to Section 19(b)(3)(A) of the Act 16 and Rule 19b–4(f)(2) 17 thereunder. At any time within 60 days of the filing of the proposed rule change the Commission may summarily abrogate such proposed rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act.18 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: ebenthall on PROD1PC69 with NOTICES Electronic Comments • Use the Commission’s Internet comment form (http://www.sec.gov/ rules/sro.shtml); or • Send an e-mail to rulecomments@sec.gov. Please include File Number SR–CBOE–2007–127 on the subject line. Paper Comments • Send paper comments in triplicate to Nancy M. Morris, Secretary, Securities and Exchange Commission, 100 F Street, NE., Washington, DC 20549–1090. All submissions should refer to File Number SR–CBOE–2007–127. 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 (http://www.sec.gov/ rules/sro.shtml). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for inspection and copying in the Commission’s Public Reference Room, 100 F Street, NE., Washington, DC 20549, on official business days between the hours of 10 a.m. and 3 p.m. Copies of such filing also will be available for inspection and copying at the principal office of CBOE. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR–CBOE–2007–127 and should be submitted on or before January 7, 2008. For the Commission, by the Division of Market Regulation, pursuant to delegated authority.19 Florence E. Harmon, Deputy Secretary. [FR Doc. E7–24310 Filed 12–14–07; 8:45 am] BILLING CODE 8011–01–P 14 15 U.S.C. 78f(b). U.S.C. 78f(b)(4). U.S.C. 78s(b)(3)(A). 17 17 CFR 19b–4(f)(2). 18 For purposes of calculating the 60-day abrogation period, the Commission considers the abrogation period to have commenced on November 30, 2007. 15 15 16 15 VerDate Aug<31>2005 15:28 Dec 14, 2007 Jkt 214001 19 17 PO 00000 CFR 200.30–3(a)(12). Frm 00123 Fmt 4703 Sfmt 4703 71467 SECURITIES AND EXCHANGE COMMISSION [Release No. 34–56936; File No. SR–FINRA– 2007–022] Self-Regulatory Organizations; Financial Industry Regulatory Authority, Inc.; Notice of Filing and Order Granting Accelerated Approval of Proposed Rule Change Relating to FINRA’s NYSE Rule 342.13 and the General Securities Principal Examination December 10, 2007. Pursuant to Section 19(b)(1) 1 of the Securities Exchange Act of 1934 (‘‘Act’’) and Rule 19b–4 thereunder,2 notice is hereby given that on November 9, 2007, the Financial Industry Regulatory Authority, Inc. (‘‘FINRA’’) (f/k/a National Association of Securities Dealers, Inc. (‘‘NASD’’)) filed with the Securities and Exchange Commission (‘‘Commission’’) the proposed rule change as described in Items I and II below, which Items have been substantially prepared by FINRA. This order provides notice of the proposed rule change and approves the proposed rule change on an accelerated basis. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change FINRA is proposing to amend FINRA’s New York Stock Exchange LLC (‘‘NYSE’’) Rule 342.13 (Acceptability of Supervisors) 3 to eliminate the requirement that the General Securities Principal Examination (‘‘Series 24 Examination’’) be passed after July 1, 2001 in order to be recognized by NYSE as an acceptable alternative to the General Securities Sales Supervisor Qualification Examination (‘‘Series 9/10 Examination’’) for persons whose duties do not include supervision of options or municipal securities sales activities. The proposed rule change is identical to a rule change by the NYSE to its version 1 15 U.S.C. 78s(b)(1). CFR 240.19b–4. 3 FINRA has incorporated certain NYSE rules into its rulebook, including NYSE Rule 342. This incorporated NYSE rule applies solely to those members of FINRA that also are members of NYSE on or after July 30, 2007 (‘‘Dual Members’’), and until the time FINRA adopts a consolidated rulebook applicable to all of its members. The incorporated NYSE rules apply to the same categories of persons to which they applied as of July 30, 2007. In applying the incorporated NYSE rules to Dual Members, FINRA also has incorporated the related interpretive positions set forth in the NYSE Rule Interpretations Handbook and NYSE Information Memos. 2 17 E:\FR\FM\17DEN1.SGM 17DEN1

Agencies

[Federal Register Volume 72, Number 241 (Monday, December 17, 2007)]
[Notices]
[Pages 71465-71467]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E7-24310]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-56937; File No. SR-CBOE-2007-127]


Self-Regulatory Organizations; Chicago Board Options Exchange, 
Incorporated; Notice of Filing and Immediate Effectiveness of Proposed 
Rule Change and Amendment No. 1 Thereto Relating to Cancellation Fees

December 10, 2007.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934

[[Page 71466]]

(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on November 1, 2007, the Chicago Board Options Exchange, Incorporated 
(the ``CBOE'' or the ``Exchange'') filed with the Securities and 
Exchange Commission (``Commission'') the proposed rule change as 
described in Items I and II below, which Items have been substantially 
prepared by the CBOE. On November 30, 2007, CBOE filed Amendment No. 1 
to the proposed rule change. The CBOE has filed the proposed rule 
change as one establishing or changing a due, fee, or other charge 
imposed by the Exchange under Section 19(b)(3)(A)(ii) of the Act \3\ 
and Rule 19b-4(f)(2) thereunder,\4\ which renders the proposal 
effective upon filing with the Commission. The Commission is publishing 
this notice, as amended, to solicit comments on the proposed rule 
change from interested persons.
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    \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).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The CBOE proposes to (i) reduce the book execution fee in classes 
trading on the ``Hybrid 3.0 Platform'', and (ii) amend its Order 
Routing System (``ORS'') order cancellation fee. The text of the 
proposed rule change is available at CBOE, the Commission's Public 
Reference Room, and http://www.cboe.org/legal.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the CBOE included statements 
concerning the purpose of, and basis for, the proposed rule change and 
discussed any comments it received on the proposed rule change. The 
text of these statements may be examined at the places specified in 
Item IV below. The CBOE has prepared summaries, set forth in Sections 
A, B, and C below, of the most significant aspects of such statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to implement the following fee changes on 
November 1, 2007.
Hybrid 3.0 Book Execution Fee
    On June 7, 2007, the Commission approved the Exchange's ``Hybrid 
3.0'' trading platform.\5\ The remaining non-Hybrid classes trading on 
the Exchange have moved to the Hybrid 3.0 platform.\6\ The new Hybrid 
3.0 classes no longer utilize the services of an Exchange Order Book 
Official (``OBO'') \7\. Pursuant to Section 7 of the CBOE Fees 
Schedule, the Exchange assessed per contract fees on orders in non-
Hybrid index option classes resting in the electronic book that were 
executed on the floor by the OBO (``OBO Execution Fees''). These OBO 
Execution Fees are $.25 per contract excluding market orders and 
certain limit orders entered prior to the opening rotation, and $.10 
per contract for accommodation liquidations (cabinet trades).\8\
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    \5\ See Securities Exchange Act Release No. 55874 (June 7, 
2007), 72 FR 32688 (June 13, 2007).
    \6\ The classes that trade on the Hybrid 3.0 platform are 
options on the S&P 100 Index (``OEX''), options on the S&P 500 Index 
(``SPX'') and options on the Morgan Stanley Retail Index (``MVR'').
    \7\ An ``Order Book Official'' is defined in CBOE Rule 7.1 as an 
Exchange employee designated pursuant to CBOE Rule 7.3 who is 
responsible for (i) maintaining the book with respect to the classes 
of options assigned to him; (ii) effecting proper executions of 
orders placed with him; (iii) displaying bids and offers pursuant to 
CBOE Rule 7.7 of these Rules; and (iv) monitoring the market for the 
classes of options assigned to him.
    \8\ An ``accommodation'' or ``cabinet'' trade refers to trades 
in listed options on the Exchange that are worthless or not actively 
traded. Cabinet trading is conducted in accordance with CBOE Rule 
6.54.
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    The Exchange proposes to reduce the $.25 per contract fee to $.18 
per contract, rename the fee ``Hybrid 3.0 Book Execution Fee'', and 
eliminate the $.10 per contract fee for accommodation liquidations. The 
fee would apply to book executions in Hybrid 3.0 classes (currently, 
OEX, SPX and MVR). Specifically, orders in Hybrid 3.0 classes resting 
in the electronic book that are executed would be assessed a fee of 
$.18 per contract. This fee would not apply to orders in SPX options 
resting in the SPX electronic book that are executed during opening 
rotation on the final settlement date of CBOE Volatility Index 
(``VIX'') options and futures, as orders entered to participate in such 
opening rotation help to facilitate the calculation of a settlement 
price for VIX options and futures.\9\
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    \9\ The opening rotation procedures in options series used to 
calculate the final settlement price of volatility indexes are 
described in CBOE Rule 6.2B.01.
---------------------------------------------------------------------------

    The Hybrid 3.0 book execution system has helped to improve 
execution time as well as service and efficiency. The Hybrid 3.0 Book 
Execution Fee is designed to help the Exchange recover its costs of 
developing the system and offset the cost of maintaining and enhancing 
the system in the future.
ORS Order Cancellation Fee
    CBOE currently assesses an executing clearing member $1.50 for each 
cancelled public customer ORS order in excess of the number of public 
customer orders that the executing clearing member executes in a month 
for itself or for a correspondent firm. The purpose of the fee is to 
ease order backlogs on ORS and related systems. The fee is not charged 
if less than 500 public customer orders are cancelled in a month by the 
executing clearing member for itself or for a correspondent firm. The 
Exchange aggregates and counts as one executed order for purposes of 
the fee all public customer options orders from the same executing 
clearing member for itself or for a correspondent firm that are 
executed in the same series on the same side of the market at the same 
price within a 30 second period. The following ORS order activity is 
exempt from the fee: (i) Cancelled ORS orders that improve the 
Exchange's prevailing bid-offer (BBO) market when received; and (ii) 
fill and cancellation activity occurring within the first one minute of 
trading following the opening of each option class.
    The Exchange proposes to amend the fee by additionally exempting 
the following activity: (i) Complex order \10\ fills and cancels; (ii) 
unfilled Fill-or-Kill (``FOK'') orders \11\, and (iii) unfilled 
Immediate-or-Cancel (``IOC'') orders. \12\ Because this activity does 
not contribute excessively to system congestion the Exchange believes 
it is appropriate to exclude this activity from the calculation of the 
fee.
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    \10\ ``Complex Order'' is defined in CBOE Rule 6.53C(a).
    \11\ ``Fill-or-Kill'' order is defined in CBOE Rule 6.53(j) as 
an order which is to be executed in its entirety as soon as it is 
represented in the trading crowd, and such order, if not so 
executed, is to be treated as cancelled.
    \12\ ``Immediate-or-Cancel'' order is defined in CBOE Rule 
6.53(k) as a market or limit order which is to be executed in whole 
or in part as soon as such order is represented in the trading 
crowd. Any portion not so executed is to be treated as cancelled.
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    Additionally, the Exchange proposes to exempt from the fee fill and 
cancellation activity in Mini-SPX Index Options (XSP). CBOE intends to 
undertake a marketing re-launch of the XSP product due in part to the 
inclusion of XSP options in the expanded penny pilot program recently 
approved by the Commission.\13\ In conjunction with the marketing re-
launch, CBOE has

[[Page 71467]]

determined to exclude activity in XSP options from the calculation of 
the fee.
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    \13\ See Securities and Exchange Act Release No. 56565 
(September 27, 2007), 72 FR 56403 (October 3, 2007).
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2. Statutory Basis
    The proposed rule change is consistent with Section 6(b) of the Act 
\14\, in general, and furthers the objectives of Section 6(b)(4) \15\ 
of the Act in particular, in that it is designed to provide for the 
equitable allocation of reasonable dues, fees, and other charges among 
CBOE members and other persons using its facilities.
---------------------------------------------------------------------------

    \14\ 15 U.S.C. 78f(b).
    \15\ 15 U.S.C. 78f(b)(4).
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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

    Because the foregoing proposed rule change establishes or changes a 
due, fee, or other charge imposed by the Exchange, it has become 
effective pursuant to Section 19(b)(3)(A) of the Act \16\ and Rule 19b-
4(f)(2) \17\ thereunder. At any time within 60 days of the filing of 
the proposed rule change the Commission may summarily abrogate such 
proposed rule change if it appears to the Commission that such action 
is necessary or appropriate in the public interest, for the protection 
of investors, or otherwise in furtherance of the purposes of the 
Act.\18\
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    \16\ 15 U.S.C. 78s(b)(3)(A).
    \17\ 17 CFR 19b-4(f)(2).
    \18\ For purposes of calculating the 60-day abrogation period, 
the Commission considers the abrogation period to have commenced on 
November 30, 2007.
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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 (http://
www.sec.gov/rules/sro.shtml); or
     Send an e-mail to rule-comments@sec.gov. Please include 
File Number SR-CBOE-2007-127 on the subject line.

Paper Comments

     Send paper comments in triplicate to Nancy M. Morris, 
Secretary, Securities and Exchange Commission, 100 F Street, NE., 
Washington, DC 20549-1090.

All submissions should refer to File Number SR-CBOE-2007-127. 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 (http://www.sec.gov/rules/
sro.shtml). Copies of the submission, all subsequent amendments, all 
written statements with respect to the proposed rule change that are 
filed with the Commission, and all written communications relating to 
the proposed rule change between the Commission and any person, other 
than those that may be withheld from the public in accordance with the 
provisions of 5 U.S.C. 552, will be available for inspection and 
copying in the Commission's Public Reference Room, 100 F Street, NE., 
Washington, DC 20549, on official business days between the hours of 10 
a.m. and 3 p.m. Copies of such filing also will be available for 
inspection and copying at the principal office of CBOE. All comments 
received will be posted without change; the Commission does not edit 
personal identifying information from submissions. You should submit 
only information that you wish to make available publicly. All 
submissions should refer to File Number SR-CBOE-2007-127 and should be 
submitted on or before January 7, 2008.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\19\
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    \19\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
 [FR Doc. E7-24310 Filed 12-14-07; 8:45 am]
BILLING CODE 8011-01-P