
[Federal Register: July 7, 2009 (Volume 74, Number 128)]
[Notices]               
[Page 32210-32211]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr07jy09-106]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-60185; File No. SR-CBOE-2009-028]

 
Self-Regulatory Organizations; Chicago Board Options Exchange, 
Incorporated; Order Granting Approval of Proposed Rule Change Relating 
to Rebating Member Dues for Certain Members

June 29, 2009.

I. Introduction

    On May 6, 2009, the Chicago Board Options Exchange, Incorporated 
(``CBOE'' or ``Exchange'') filed with the Securities and Exchange 
Commission (``Commission''), 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 to amend its Fee Schedule to 
rebate member dues for certain members. The proposed rule change was 
published for comment in the Federal Register on May 26, 2009.\3\ The 
Commission received no comments on the proposal. This order approves 
the proposed rule change.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 59935 (May 18, 
2009), 74 FR 24888 (``Notice'').
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II. Description of the Proposal

    CBOE assesses dues with respect to every membership (unless a 
member is assessed the Hybrid Electronic Quoting Fee, in which case the 
member does not pay member dues).\4\ Under CBOE Rule 3.17(c), the 
membership lease agreement between a lessor member and a lessee member 
designates who is responsible for Exchange dues, fees and other 
charges. The Exchange represents that, typically, leases provide that 
the lessee is responsible for dues and therefore lessors do not have to 
pay dues.
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    \4\ Member dues are $450 per month. See CBOE Fees Schedule, 
Section 10.
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    Under the lessor compensation component of the Interim Trading 
Permit (``ITP'') program, the Exchange compensates a lessor for an 
``open lease'' while the ITP program is active

[[Page 32211]]

and ITPs are outstanding.\5\ The goal of this component of the ITP 
program is to put the lessor in a similar position as if the lessor's 
membership was leased. The Exchange asserts that this goal would be 
frustrated if the lessor is charged dues, because the lessor would be 
subject to an obligation the lessor would otherwise not be subject to 
if the lessor's membership was leased.
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    \5\ The ITP program is a program pursuant to which the Exchange 
has the authority to issue up to 50 ITPs. The ITP program is 
governed by CBOE Rule 3.27. The lessor compensation component of the 
ITP program is described in CBOE Rule 3.27(d). An ``open lease'' is 
defined in Rule 3.27(d) as a transferable Exchange membership 
available for lease.
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    In a separate proposed rule change, the Exchange instituted a 
waiver of member dues for any month that a lessor member receives a 
payment from the Exchange for an open lease under the ITP program, 
effective as of May 1, 2009.\6\ The Exchange now proposes to rebate 
dues to any lessor member who received such a payment from the Exchange 
during the period of August 1, 2008 through April 30, 2009.
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    \6\ See Securities Exchange Act Release No. 59892 (May 8, 2009), 
74 FR 22790 (May 14, 2009) (SR-CBOE-2009-027).
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III. Discussion

    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.\7\ 
Specifically, the Commission finds that the proposal is consistent with 
Section 6(b)(4) of the Act,\8\ which requires that the rules of a 
national securities exchange provide for the equitable allocation of 
reasonable dues, fees and other charges among members and issuers and 
other persons using its facilities.
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    \7\ 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).
    \8\ 15 U.S.C. 78f(b)(4).
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    As note above, CBOE recently adopted a waiver of member dues for 
any month that a lessor member receives a payment from the Exchange for 
an open lease under the ITP program, effective May 1, 2009.\9\ The 
current proposal will effectively allow CBOE to apply this same waiver 
retroactively by rebating to a lessor member its member dues for any 
month in which the lessor member received a payment from the Exchange 
for an open lease under the ITP program for the period August 1, 2008 
through April 30, 2009.
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    \9\ See supra, note 5.
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    The Commission believes that the rebate will put lessor members who 
received compensation from the Exchange for an open lease under the ITP 
program but who paid member dues since August 1, 2008 in the same 
position as those lessor members who are currently having their member 
dues waived pursuant to the fee waiver adopted as of May 1, 2009.\10\ 
The Commission also believes that the proposed rebate will further the 
goal of the Exchange's ITP program to put the lessor of an ``open 
lease'' in the same position as if the lessor's membership had been 
leased. The Commission notes that the Exchange represented that lease 
agreements typically provide that the lessee member is responsible for 
all dues and thus the lessor would generally not have to pay such dues. 
Accordingly, the Commission finds that the proposed fee rebate is 
consistent with the Act.
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    \10\ Id.
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IV. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\11\ that the proposed rule change (SR-CBOE-2009-028), be, and 
hereby is, approved.
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    \11\ 15 U.S.C. 78s(b)(2).

    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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Elizabeth M. Murphy,
Secretary.
[FR Doc. E9-15901 Filed 7-6-09; 8:45 am]

BILLING CODE 8010-01-P
