

[Federal Register: March 3, 2006 (Volume 71, Number 42)]
[Notices]               
[Page 11003-11007]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr03mr06-104]                         

-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-53372; File No. SR-CBOE-2006-10]

 
Self-Regulatory Organizations; Chicago Board Options Exchange, 
Incorporated; Notice of Filing and Immediate Effectiveness of Proposed 
Rule Change Relating to Exchange Fees for Fiscal Year 2006

February 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 January 31, 2006, the Chicago Board Options Exchange, Incorporated 
(``CBOE'' or ``Exchange'') filed with the Securities and Exchange 
Commission (``Commission'') the proposed rule change as described in 
Items I, II and III below, which Items have been prepared by the CBOE. 
The CBOE has designated this proposal as one establishing or changing a 
due, fee, or other charge imposed by the CBOE under section 
19(b)(3)(A)(ii) of the Act \3\ and Rule 19b-4(f)(2) thereunder,\4\ 
which renders the proposal effective upon filing with the 
Commission.\5\ 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).
    \5\ The Exchange intends for the proposed changes to the Fees 
Schedule to take effect on February 1, 2006.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend its Fees Schedule to make various 
changes for fiscal year 2006. The text of the proposed rule change is 
included below. Proposed new language is italicized; proposed deletions 
are in [brackets].

Chicago Board Options Exchange, Inc.

Fees Schedule

[January 13] February 1, 2006
    1. Options Transaction Fees (1)(3)(4)(7)(16):


                                                                  Per
                                                               contract

Equity Options (13):
    I. Customer.............................................         .00
    II. Market-Maker (MM) (standard rate)(10)...............         .22
    III. Member Firm Proprietary: (11)......................  ..........
         Facilitation Of Customer Order.............         .20
         Non-Facilitation Order.....................         .24
    IV. Broker-Dealer.......................................         .25
    V. Non-Member Market Maker..............................         .26
    VI. Designated Primary Market-Maker (DPM) (10)(14)......         .12
         As of March 1, 2006........................         .14
    VII. Electronic DPM (e-DPM) (14)........................         .25
    VIII. Linkage Orders (8)................................         .24
    IX. Remote Market-Maker (14)............................         .26
    QQQQ and SPDR Options: Unchanged.

[[Page 11004]]


    Index Options (includes Dow Jones DIAMONDS, OEF and
     other ETF and HOLDRs options)[(17)(18)]: Remainder of
     section unchanged.


    2. Marketing Fee (6)(16) Unchanged.
    3. Floor Brokerage Fee (1)(5)(16)[(17)(18)]:

 [Equity & QQQQ Customer Order......................       $.00]
 [All Other Equity, QQQQ And Index] DXL, OEX and SPX         .04
 Options [(8)]..............................................
 DXL, OEX and SPX Crossed Orders....................         .02


    4. RAES Access Fee (Retail Automatic Execution System) (1)(4)(16): 
Unchanged.

Footnotes

    1.-7. Unchanged.
    8. Linkage order fees in effect on a pilot basis until July 31, 
2006, except for Satisfaction Orders, which are not assessed Exchange 
fees per Linkage rules. The [floor brokerage fee for ``all other 
equity, QQQQ and index options'' and the] RAES access fee for non-
customer transactions also apply to linkage orders.
    9.-16. Unchanged.
    [17. Transaction, floor brokerage and OBO fees are waived through 
December 15, 2005 for transactions involving closing a position in 
reduced-value SPX LEAPS and simultaneously opening a corresponding 
position in full-value SPX LEAPS.
    18. All fees for trading in XSP options are waived through January 
31, 2006.]
    5.-9. Unchanged.
    10. Member Dues[*] $450 per month.

    [ * The Exchange will waive May 2005 member dues for CBOE Market-
Makers who automatically execute 2000 contracts or more (through the 
use of ``M'' orders) during May 2005 in hybrid options classes, i.e., 
all equity options classes and the MNX, QQQQ and SPDR options classes.]
    11.-17. Unchanged.
    18. Customer Large Trade Discount: A customer large trade discount 
program in the form of a cap on customer transaction fees is in effect 
for the index options set forth below. [MNX is not included in the 
program since MNX customer fees were significantly reduced in June 
2002.] Floor brokerage fees are not subject to the cap on fees.
    Regular customer transaction fees will only be charged up to the 
following quantity of contracts per order, for options based on the 
following underlying indexes:
    [squf] Dow Jones indexes (including Diamonds) and SPX--
charge only the first 5,000 contracts.
    [squf] [SPX--charge only the first 5,000 contracts].
    [squf] OEX (including XEO & OEF), NDX & other indexes--
charge only the first 3,000 contracts.
    19. Prospective Fee Reduction Program: Fee reductions will be in 
effect [August 1, 2004] February 1, 2006 through [January] December 31, 
2006 under the following scenarios:
     If CBOE volume exceeds [predetermined average] 2,300,000 
contracts per day (CPD) [thresholds] at the end of any month on a 
fiscal year-to-date (YTD) basis, Market-Maker and DPM transaction and 
floor brokerage fees will be reduced in the subsequent month [according 
to the schedule presented below:] by 10% per contract from standard 
rates.
     If CBOE volume exceeds 2,550,000 contracts per day (CPD) 
at the end of any month on a fiscal year-to-date (YTD) basis, Market-
Maker and DPM transaction and floor brokerage fees will be reduced in 
the subsequent month by 20% per contract from standard rates.

----------------------------------------------------------------------------------------------------------------
                                                                    QQQQ/SPDR/
                                   Fees discount     Equities      Index market-   Equities DPM        Floor
       [FY05 ytd avg. CPD            (percent)     market-maker      maker/DPM      trans. fees      brokerage
                                                    reductions      reductions      reductions      reductions
----------------------------------------------------------------------------------------------------------------
1,300,000.......................              10           $.022           $.024           $.012           $.004
1,400,000.......................              15            .033            .036            .018            .006
1,500,000.......................              20            .044            .048            .024            .008
1,600,000.......................              25            .055            .060            .030            .010
1,700,000.......................              30            .066            .072            .036            .012
1,800,000.......................              35            .077            .084            .042            .014
1,900,000.......................              40            .088            .096            .048            .016
2,000,000.......................              45            .099            .108            .054           .018]
----------------------------------------------------------------------------------------------------------------

    20. Cap on Member Firm Proprietary and Firm Facilitation Fees: 
Effective [February 2, 2004] February 1, 2006, the Exchange will cap 
Member Firm** Proprietary and Firm Facilitation fees at [$75,000] 
$100,000 per month per firm. Specifics of the plan are as follows:
     Fees eligible for the cap program include Member Firm 
Proprietary and Firm Facilitation transaction [and trade match] fees in 
all products.
     Member Firm Proprietary and Firm Facilitation orders must 
include designated firm origin codes (e.g. ``F'') on trade input 
records to be eligible for the cap calculation.
     Cap calculations will be performed after each month-end 
and credits will be processed in the next billing period.
    License fees for Member Firm Proprietary and Firm Facilitation fee 
cap: Due to CBOE's obligation to pay license fees on many products, the 
Exchange will assess a ten cent per contract license fee on all 
licensed products, excluding OEX, after a firm has reached a cap on 
Member Firm Proprietary and Firm Facilitation fees for any month.
    --*--
    ** This program applies to member organizations for orders for the 
proprietary account of any member or non-member broker dealer that 
derives more than 35% of its annual, gross revenues from commissions 
and principal transactions with customers. Member organizations will be 
required to verify this amount to the Exchange by

[[Page 11005]]

certifying that they have reached this threshold and by submitting a 
copy of their annual report, which was prepared in accordance with 
Generally Accepted Accounting Principles (``GAAP''). In the event that 
a member organization has not been in business for one year, the most 
recent quarterly reports, prepared in accordance with GAAP, will be 
accepted.
    21. DPM Linkage Fees Credits: PA Orders: [Effective October 1, 2005 
through January 31, 2006,] CBOE will rebate DPM transaction fees 
generated from transactions against customer orders that underlie 
outbound principal acting as agent (PA) orders. In addition, when DPMs 
incur fees to execute PA orders at other exchanges, those DPMs will be 
credited up to an additional $.20 per contract, up to the amount of 
total fees CBOE receives from inbound linkage transaction fees. The 
foregoing credit is apportioned to DPMs pro-rata based on the number of 
contracts executed by each DPM at other exchanges via PA orders. This 
program shall expire upon the earlier of: (i) Thirty days after 
Commission approval of use of an Exchange account to send and respond 
to PA orders; or (ii) July 31, 2006 (the expiration date of the Linkage 
fees pilot program).
    P Orders: Effective February 1, 2006, CBOE will rebate DPM 
transaction fees generated from transactions against broker-dealer 
orders (``B'' or ``F'' origin) that underlie outbound principal (P) 
orders (``CBOE Transactions''). In addition, when DPMs incur fees to 
execute such P orders at other exchanges (``Away Transactions''), those 
DPMs will be credited up to an additional $.20 per contract. CBOE will 
also credit DPMs up to an additional $.09 per contract on both CBOE 
Transactions and Away Transactions to help offset Options Clearing 
Corporation (OCC) and clearing firm fees incurred by DPMs on those 
transactions. The foregoing credits are up to the amount of total fees 
CBOE receives from inbound linkage transaction fees. The $.20 per 
contract credit is apportioned to DPMs pro-rata based on the number of 
contracts executed by each DPM in connection with Away Transactions. 
The $.09 per contract credit is apportioned to DPMs pro-rata based on 
the number of contracts executed by each DPM in connection with both 
CBOE Transactions and Away Transactions.
    22. Reserved
    23. Fixed Annual Fee Alternative for DPMs and e-DPMs: Effective 
[October 1, 2004] February 1, 2006, DPMs and e-DPMs may elect to pay a 
fixed annual fee of [$1.75] $2.25 million instead of being assessed 
transaction fees on a per contract basis for their DPM, [and] e-DPM and 
RMM transactions only in all equity option classes. The fixed fee does 
not cover any floor brokerage fees. DPMs electing to pay the fixed fee 
will neither be charged CBOE transaction fees for CBOE transactions 
related to outgoing P/A orders or P orders (as defined in section 21 of 
this Fees Schedule), nor will they receive the rebate for such fees as 
set forth in Section 21 of this Fees Schedule. However, [pursuant to 
the second phase of linkage fee relief set forth in section 21 of this 
Fee Schedule,] all CBOE DPMs, including those electing the fixed annual 
fee, [who pay transaction fees at other exchanges to execute P/A orders 
there, will receive a credit of up to $.20 per contract (with the total 
of such credits not to exceed the total amount of inbound linkage 
transaction fees received by CBOE) to help offset the transaction fees 
of other exchanges that CBOE DPMs incur in filling P/A orders at those 
exchanges] are eligible to receive the $.20 per contract and $.09 per 
contract credits set forth in section 21 of this Fees Schedule.

[Effective July 1, 2005, DPMs and e-DPMs who elect the fixed annual fee 
alternative described above may elect to pay an RMM fixed annual fee of 
$250,000 instead of being assessed transaction fees on a per contract 
basis for their RMM transactions only in all equity options.]

    If a DPM or e-DPM who has elected the fixed annual fee alternative 
merges or combines operations with a DPM or e-DPM who has not elected 
the fixed annual fee alternative, then the fixed annual fee will be 
increased and assessed to the surviving DPM/e-DPM entity. The amount of 
the increase will be based on the number of contracts traded and 
transaction fees paid during the previous twelve months by the DPM or 
e-DPM organization who had not previously elected the fixed annual fee 
alternative. The amount of the increase will be prorated based on the 
amount of time remaining in the then current year of the fixed fee 
annual program. If two DPMs or e-DPMs who elected the fixed annual fee 
alternative merge or combine operations, the fixed fee paid to CBOE by 
these two organizations will be unaffected. No adjustments or refunds 
will be made to either entity.
    Remainder of Fees Schedule--Unchanged.

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 proposed rule change. 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 purpose of this proposed rule change is to amend the CBOE Fees 
Schedule to make various fee changes. The proposed changes are the 
product of the Exchange's annual budget review. The Exchange proposes 
to amend the fees as noted below.
a. Equity Options DPM Transaction Fee
    The Exchange proposes to increase the equity options Designated 
Primary Market-Maker (``DPM'') transaction fee. The Exchange believes 
that increasing this fee is appropriate given that DPM costs are 
expected to decrease as the result of implementation of the PAR 
Official program.\6\ The current equity options DPM transaction fee is 
$.12 per contract. The Exchange proposes to increase the fee to $.14 
per contract as of March 1, 2006 to coincide with the PAR Official 
program roll-out, which is expected to be completed in February 2006.
---------------------------------------------------------------------------

    \6\ On November 18, 2005, Commission approved a CBOE rule change 
that proposed to remove a DPM's obligation and ability to execute 
orders as an agent, including as a floor broker, in its allocated 
securities on the Exchange in any trading station and that allows 
the Exchange to appoint an Exchange employee or independent 
contractor (``PAR Official'') to assume much of the functions and 
obligations that DPMs previously held. See Securities Exchange Act 
Release No. 52798 (November 18, 2005), 70 FR 71344 (November 28, 
2005).
---------------------------------------------------------------------------

b. Floor Brokerage Fees
    The Exchange proposes to eliminate floor brokerage fees in all 
products except options on the Jumbo Dow Jones Industrial Average 
(``DXL''), options on the S&P 100 index (``OEX'') and options on the 
S&P 500 index (``SPX''). Effective February 1, 2006, only floor brokers 
executing orders in DXL, OEX and SPX options will be charged the $.04 
floor

[[Page 11006]]

brokerage fee and the $.02 fee for crossed orders.\7\ The Exchange 
believes eliminating floor brokerage fees in the foregoing manner will 
make the Exchange's fees more competitive with the floor brokerage fees 
charged by other exchanges.
---------------------------------------------------------------------------

    \7\ See CBOE Fees Schedule, section 3. The Exchange also 
proposes a non-substantive change to Footnote 8 of the Fees Schedule 
regarding Linkage orders to reflect the changes to section 3. In 
addition, the Exchange notes that DXL, OEX and SPX options are 
currently singly-listed; therefore, orders for these options are not 
sent through the Intermarket Options Linkage (``Linkage''). 
Telephone conversation between Jaime Galvan, Assistant Secretary, 
CBOE and Nancy J. Sanow, Assistant Director, Geoffrey Pemble, 
Special Counsel, and Sara Gillis, Attorney, Division of Market 
Regulation, Commission on February 13, 2006.
---------------------------------------------------------------------------

c. Customer Large Trade Discount Program
    The Exchange proposes to include options on the Mini-Nasdaq-100 
index (``MNX'') in the Customer Large Trade Discount program. The 
Customer Large Trade Discount program provides a discount in the form 
of a cap on the quantity of customer contracts that are assessed 
transaction fees for most CBOE index options.\8\ When the program was 
first established in July 2003,\9\ MNX options were not included since 
MNX customer transaction fees had been significantly reduced in June 
2002.\10\ The Exchange now proposes to include MNX options in the 
program, effective February 1, 2006. MNX regular customer transaction 
fees will only be charged up to the first 3,000 contracts per order.
---------------------------------------------------------------------------

    \8\ See CBOE Fees Schedule, section 18.
    \9\ See Securities Exchange Act Release No. 48223 (July 24, 
2003), 68 FR 44978 (July 31, 2003).
    \10\ See Securities Exchange Act Release No. 46045 (June 6, 
2002), 67 FR 41284 (June 17, 2002).
---------------------------------------------------------------------------

d. Prospective Fee Reduction Program
    The Exchange proposes to modify and continue its Prospective Fee 
Reduction Program for fiscal year 2006. The Program is intended to 
limit Market-Maker and DPM fees in periods of high volume.\11\ The 
thresholds for fee reductions have been reviewed and adjusted, as they 
are each year, to account for the anticipated working capital needs of 
the Exchange for the coming year. Fee reductions will be in effect 
February 1, 2006 under the scenarios noted below.
---------------------------------------------------------------------------

    \11\ See CBOE Fees Schedule, Section 19.
---------------------------------------------------------------------------

    If CBOE volume exceeds 2,300,000 contracts per day (``CPD'') at the 
end of any month on a fiscal year-to-date (``YTD'') basis, Market-Maker 
and DPM transaction and floor brokerage fees will be reduced in the 
subsequent month by 10% per contract from standard rates. If CBOE 
volume exceeds 2,550,000 CPD at the end of any month on a fiscal YTD 
basis, Market-Maker and DPM transaction and floor brokerage fees will 
be reduced in the subsequent month by 20% per contract from standard 
rates.
e. Member Firm Proprietary and Firm Facilitation Fee Cap
    The Exchange currently caps member firm proprietary and firm 
facilitation fees at $75,000 per month per firm.\12\ The Exchange 
proposes to increase the cap to $100,000 per month per firm. No other 
changes to the program are proposed.
---------------------------------------------------------------------------

    \12\ See CBOE Fees Schedule, Section 20, and Securities Exchange 
Act Release No. 49341 (March 1, 2004), 69 FR 10492 (March 5, 2004).
---------------------------------------------------------------------------

f. Extension of DPM Linkage Fee Credit for P/A Orders
    The Exchange, pursuant to section 21 of the CBOE Fees Schedule, 
credits DPMs for transaction fees they incur related to the execution 
of outbound principal acting as agent (``P/A'') orders, as defined in 
the Linkage Plan. This ``DPM Linkage Fees Credit'' is accomplished via 
a rebate and a credit, as follows: (i) The Exchange rebates transaction 
fees that DPMs incur when they trade against a customer order that 
underlies a P/A order the DPM sent through the Linkage; and (ii) the 
Exchange credits the DPMs up to an additional $.20 per contract to help 
offset some of the fees the DPMs incur for submitting P/A orders 
through the Linkage (this program is referred to herein as the ``P/A 
Rebate Program''). The P/A Rebate Program is currently due to expire on 
January 31, 2006.\13\
---------------------------------------------------------------------------

    \13\ See Securities Exchange Act Release No. 53044 (December 30, 
2005), 71 FR 957 (January 6, 2006).
---------------------------------------------------------------------------

    The Exchange proposes to extend the P/A Rebate Program. A proposed 
amendment to the Linkage Plan has also been separately submitted to the 
Commission to permit an Exchange account, instead of the DPM's account, 
to be used by PAR Officials to send and respond to P/A orders 
(``Linkage Account Plan Amendment'').\14\ When an Exchange account is 
used to send and respond to P/A orders, there would no longer be a need 
for the P/A Rebate Program. Therefore, the Exchange proposes to extend 
the P/A Rebate Program until the earlier of: (i) Thirty days after 
Commission approval of the Linkage Account Plan Amendment (i.e., 
Commission approval of use of an Exchange account to send and respond 
to P/A orders); or (ii) July 31, 2006, which is the expiration date of 
the Linkage fees pilot program. The thirty day time period after 
Commission approval of the Linkage Account Plan Amendment is intended 
to allow for the P/A Rebate Program to continue while the Exchange 
rolls-out the required systems changes needed to utilize the Exchange 
account.
---------------------------------------------------------------------------

    \14\ Telephone conversation between Jaime Galvan, Assistant 
Secretary, CBOE and Nancy J. Sanow, Assistant Director, Geoffrey 
Pemble, Special Counsel, and Sara Gillis, Attorney, Division of 
Market Regulation, Commission on February 13, 2006.
---------------------------------------------------------------------------

g. DPM Linkage Fee Credit for Certain P Orders
    The Exchange proposes to adopt a program similar to the P/A Rebate 
Program (but with one difference) to credit DPMs for transaction fees 
they incur related to the execution of outbound Principal orders on 
behalf of orders that are for the account of a broker-dealer (for 
purposes of the proposed program, such Principal orders are referred to 
as ``P orders''). Specifically, the Exchange proposes to adopt a rebate 
program (``P Rebate Program'') under which: (i) The Exchange will 
rebate transaction fees that DPMs incur when they trade against a 
broker-dealer order (orders that are marked with either a ``B'' or 
``F'' origin code) that underlies a P order the DPM sent through the 
Linkage; and (ii) the Exchange will credit DPMs up to an additional 
$.20 per contract to help offset some of the fees DPMs incur for 
submitting such P orders through the Linkage.\15\
---------------------------------------------------------------------------

    \15\ The Exchange has represented that, although not 
specifically referenced in the rule text, this rebate program will 
be subject to the July 31, 2006 expiration of the Linkage fee pilot 
program noted in Footnote 8 of the Fees Schedule. Telephone 
conversation between Jaime Galvan, Assistant Secretary, CBOE and 
Nancy J. Sanow, Assistant Director, Geoffrey Pemble, Special 
Counsel, and Sara Gillis, Attorney, Division of Market Regulation, 
Commission on February 13, 2006.
---------------------------------------------------------------------------

    In addition, the Exchange proposes to credit DPMs up to an 
additional $.09 per contract on both P order-related executions (the 
CBOE transaction against the broker-dealer order underlying the 
outbound P order and the P order transaction at another exchange), to 
help offset the OCC and clearing firm fees DPMs incur on those 
transactions.\16\
---------------------------------------------------------------------------

    \16\ The $.09 per contract credit is based on a estimated OCC 
fee of $.02 per contract and estimated average clearing firm fee of 
$.07 per contract.
---------------------------------------------------------------------------

    As under the P/A Rebate Program, the aggregate amount of the $.20 
per contract and $.09 per contract credits for all DPMs under the P 
Rebate Program will be limited to no more than the total amount of fees 
that the Exchange earns from fees generated by inbound Linkage 
transaction fees. The $.20 per contract credit will be apportioned to 
DPMs pro-

[[Page 11007]]

rata based on the number of contracts executed by each DPM at other 
exchanges via such P orders. The $.09 per contract credit will be 
apportioned to DPMs pro-rata based on the number of contracts executed 
by each DPM at CBOE against broker-dealer orders that underlie outbound 
P orders and at other exchanges via such P orders. A DPM will be 
expected to reimburse the Exchange to the extent that the funds 
received by the DPM via the P Rebate Program exceed the DPM's actual 
costs incurred in executing Linkage-related transactions.\17\
---------------------------------------------------------------------------

    \17\ Section 23 of the Fees Schedule, which includes a cross 
reference to section 21, is also proposed to be amended to reflect 
the changes to section 21.
---------------------------------------------------------------------------

    The purpose of the P Rebate Program is to further assist DPMs in 
offsetting the additional costs they incur in routing orders to other 
exchanges in order to obtain the National Best Bid or Offer (``NBBO''). 
Unlike the P/A Rebate Program, the P Rebate Program is not proposed to 
expire, except subject to the Linkage fees pilot specified in Footnote 
8 of the CBOE Fees Schedule. The Exchange intends to implement the P 
Rebate Program on February 1, 2006.
h. Fixed Annual Fee
    Pursuant to section 23 of the CBOE Fees Schedule, the Exchange 
offers a fixed annual fee program for DPMs and Electronic Designated 
Primary Market-Makers (``e-DPMs''). The program offers DPMs and e-DPMs 
the alternative of choosing a fixed annual fee of $2 million instead of 
being assessed transaction fees on a per contract basis for its DPM, e-
DPM and Remote Market-Maker (``RMM'') transactions in equity options 
classes.\18\
---------------------------------------------------------------------------

    \18\ The DPM and e-DPM fixed annual fee for 2005 was $1.75 
million for DPM and e-DPM equity options transactions and $250,000 
for RMM equity options transactions. See Securities Exchange Act 
Release No. 50058 (July 22, 2004), 69 FR 45861 (July 30, 2004), and 
Securities Exchange Act Release No. 51746 (May 26, 2005), 70 FR 
32855 (June 6, 2005).
---------------------------------------------------------------------------

    The Exchange proposes to increase the DPM and e-DPM fixed annual 
fee for fiscal year 2006 to $2.25 million for DPM, e-DPM and RMM equity 
options transactions. No other changes to the program are proposed.
i. Miscellaneous, Non-substantive Changes
    The Exchange proposes a few non-substantive changes to its Fees 
Schedule to remove references to fee waiver programs that have expired. 
Specifically, the Exchange proposes to delete Footnotes 17 and 18, 
which relate to expired fee waiver programs applicable to SPX LEAPS and 
XSP options. The Exchange also proposes to delete a reference to an 
expired member dues waiver program in section 10 of the Fees Schedule.
2. Statutory Basis
    The CBOE believes that the proposed rule change is consistent with 
section 6(b) of the Act,\19\ in general, and furthers the objectives of 
section 6(b)(4) \20\ 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.
---------------------------------------------------------------------------

    \19\ 15 U.S.C. 78f(b).
    \20\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------

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 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 \21\ and subparagraph (f)(2) 
of Rule 19b-4 \22\ 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.\23\
---------------------------------------------------------------------------

    \21\ 15 U.S.C. 78s(b)(3)(A).
    \22\ 17 C.F.R. 240.19b-4(f)(2).
    \23\ Id.
---------------------------------------------------------------------------

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-2006-10 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-2006-10. 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. 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-2006-10 and should be submitted on or before March 
24, 2006.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\24\
---------------------------------------------------------------------------

    \24\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Nancy M. Morris,
Secretary.
[FR Doc. E6-3014 Filed 3-2-06; 8:45 am]

BILLING CODE 8010-01-P
