[Federal Register Volume 75, Number 50 (Tuesday, March 16, 2010)]
[Notices]
[Pages 12588-12590]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-5658]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-61674; File No. SR-CBOE-2010-025]
Self-Regulatory Organizations; Chicago Board Options Exchange,
Incorporated; Notice of Filing and Immediate Effectiveness of Proposed
Rule Change Relating to Permanent Approval of the Dividend, Merger and
Short Stock Interest Strategies Fee Cap Pilot Program
March 9, 2010.
Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of
1934 (the ``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby
given that, on March 1, 2010, Chicago Board Options Exchange,
Incorporated (``CBOE'' or the ``Exchange'') filed with the Securities
and Exchange Commission (the ``Commission'') the proposed rule change
as described in Items I, II, and III below, which Items have been
prepared by the self-regulatory organization. The Commission is
publishing this notice to solicit comments on the proposed rule change
from interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 15 U.S.C. 78a.
\3\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
Chicago Board Options Exchange, Incorporated (``CBOE'' or
``Exchange'')
[[Page 12589]]
proposes to amend its Fees Schedule to make permanent its dividend,
merger and short stock interest strategies fee cap program. The text of
the proposed rule change is available on the Exchange's Web site
(http://www.cboe.org/legal), at the Exchange's Office of the Secretary
and at the Commission.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, 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 those statements may be examined at the places specified in
Item IV below. 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
(a) Purpose
The Exchange proposes to make permanent the pilot program for caps
on market-maker, firm, and broker-dealer transaction fees associated
with dividend, merger and short stock interest strategies, as described
in Footnote 13 of the CBOE Fees Schedule (``Strategy Fee Cap''). Under
this program, market-maker, firm and broker-dealer transaction fees are
capped at $1,000 for all (i) dividend strategies,\4\ (ii) merger
strategies \5\ and (iii) short stock interest strategies \6\ executed
on the same trading day in the same options class. In addition, such
transaction fees for these strategies are further capped at $25,000 per
month per initiating member or firm. The Strategy Fee Cap pilot program
is due to expire on March 1, 2010.
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\4\ A dividend strategy is defined as transactions done to
achieve a dividend arbitrage involving the purchase, sale and
exercise of in-the-money options of the same class, executed prior
to the date on which the underlying stock goes ex-dividend.
\5\ A merger strategy is defined as transactions done to achieve
a merger arbitrage involving the purchase, sale and exercise of
options of the same class and expiration date, 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.
\6\ A short stock interest strategy is defined as transactions
done to achieve a short stock interest arbitrage involving the
purchase, sale and exercise of in-the-money options of the same
class.
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Other than requesting permanent approval of the pilot program, no
other changes to the Strategy Fee Cap are being proposed at this
time.\7\
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\7\ The Strategy Fee Cap pilot program is similar to fee cap
pilot programs at other exchanges that were recently made permanent.
See Securities Exchange Act Release No. 59566 (March 12, 2009), 74
FR 11793 (March 19, 2009) (SR-PHLX-2009-18); and Securities Exchange
Act Release No. 59478 (February 27, 2009), 74 FR 9857 (March 6,
2009) (SR-NYSEALTR-2009-19).
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(b) Statutory Basis
The Exchange believes the proposed rule change is consistent with
Section 6(b) of the Securities Exchange Act of 1934 (``Act''),\8\ in
general, and furthers the objectives of Section 6(b)(4) \9\ of the Act
in particular, in that it is designed to provide for the equitable
allocation of reasonable dues, fees, and other charges among its
members and other persons using its facilities. The Exchange believes
permanent approval of the Strategy Fee Cap pilot program would benefit
market participants who trade these strategies by lowering their fees
and allow the Exchange to remain competitive with other exchanges that
offer similar fee cap programs.
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\8\ 15 U.S.C. 78f(b).
\9\ 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 with respect to 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) of the Act \10\ and subparagraph (f)(2) of Rule 19b-4 \11\
thereunder. 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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\10\ 15 U.S.C. 78s(b)(3)(A).
\11\ 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 (http://www.sec.gov/rules/sro.shtml); or
Send an e-mail to [email protected]. Please include
File Number SR-CBOE-2010-025 on the subject line.
Paper Comments
Send paper comments in triplicate to Elizabeth M. Murphy,
Secretary, Securities and Exchange Commission, 100 F Street, NE.,
Washington, DC 20549-1090.
All submissions should refer to File Number SR-CBOE-2010-025. 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 Web site viewing and
printing 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 the Exchange. 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 publicly available. All
submissions should refer to File Number SR-CBOE-2010-025 and should be
submitted on or before April 6, 2010.
[[Page 12590]]
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\12\
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\12\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-5658 Filed 3-15-10; 8:45 am]
BILLING CODE 8011-01-P