[Federal Register: January 14, 2005 (Volume 70, Number 10)]
[Notices]
[Page 2680-2682]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr14ja05-102]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-51006; File No. SR-CBOE-2005-04]
Self-Regulatory Organizations; Chicago Board Options Exchange,
Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule
Change Relating to the Systematizing of Orders in the Standard and
Poor's Depositary Receipts (``SPDR'') Option Class
January 10, 2005.
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 10, 2005, the Chicago Board Options Exchange, Inc. (``CBOE''
or ``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 prepared by the CBOE. The Exchange has
filed the proposal as a
[[Page 2681]]
``non-controversial'' rule change pursuant to Section 19(b)(3)(A) of
the Act,\3\ and Rule 19b-4(f)(6) 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.
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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).
\4\ 17 CFR 240.19b-4(f)(6).
\5\ The CBOE asked the Commission to waive the 30-day operative
delay. See Rule 19b-4(f)(6)(iii). 17 CFR 240.19b-4(f)(6)(iii).
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
CBOE proposes to amend its rules relating to the systematizing of
orders in the Standard and Poor's Depositary Receipts (``SPDR'') option
class. The text of the proposed rule change is below. Proposed new
language is in italics.
CHAPTER VI
* * * * *
Section B: Member Activities on the Floor
* * * * *
Required Order Information
Rule 6.24
(a)(1)-(2) No change.
(a)(3) Orders in Certain Index Option Classes and the Standard and
Poor's Depositary Receipts (``SPDR'') Option Class. The requirement to
systematize orders as set forth in this Rule shall commence on March
28, 2005, in the following option classes: the S&P 500 index option
class (SPX), the SPDR option class, the S&P 100 index option class
(OEX), and the European-style S&P 100 index option class (XEO).
(a)(4) No change.
(b)-(c) No change.
* * * Interpretations and Policies:
.01--.07 No change.
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 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
In connection with the development of a Consolidated Options Audit
Trail System (``COATS''), CBOE recently amended CBOE Rule 6.24 to
require that each order, cancellation of, or change to an order
transmitted to CBOE must be ``systematized'', in a format approved by
the Exchange, either before it is sent to the Exchange or upon receipt
on the floor of the Exchange.\6\ An order is systematized if: (i) The
order is sent electronically to the Exchange; or (ii) the order that is
sent to the Exchange non-electronically (e.g., telephone orders) is
input electronically into the Exchange's systems contemporaneously upon
receipt on the Exchange, and prior to representation of the order.
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\6\ See Securities Exchange Act Release No. 50996 (January 7,
2005) (SR-CBOE-2004-77).
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The requirements of CBOE Rule 6.24 to systematize orders commenced
on January 10, 2005 in all option classes traded on CBOE, except for
the S&P 500 index option class (SPX), the S&P 100 index option class
(OEX), and the European-style S&P 100 index option class (XEO). In
these option classes, the requirement to systematize orders will
commence on March 28, 2005. In its rule change amending CBOE Rule 6.24,
CBOE noted that the extension until March 28, 2005, for these option
classes is reasonable and appropriate because the manner in which these
option classes trade is significantly different than equity option
classes and because of the trading environment that exists in these
option classes.\7\
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\7\ Moreover, CBOE noted in its rule filing that it initially
developed its floor broker workstation (``FBW'') to assist its
members in complying with their obligations to systematize orders
for COATS. However, the FBW was designed specifically for COATS
compliance in equity option classes, and not for use in index option
classes. Upon being advised in late December 2003 that the
requirement to systematize orders also applied to non-equity option
classes, the Exchange actively pursued developing an alternative
technology to utilize in index option classes.
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The purpose of this rule filing is to amend CBOE Rule 6.24 to state
that the requirement to systematize orders in the S&P Depositary
Receipts Trust (``SPDR'') option class will commence on March 28, 2005,
as it will for SPX, OEX and XEO options. Options on SPDRs, which is an
exchange-traded fund based on the S&P 500 index, began trading on CBOE
on January 10, 2005. CBOE anticipates that options on SPDRs will traded
in a manner similar to SPX options (an index option based on the S&P
500 index), and therefore believes it is reasonable and appropriate to
extend the requirement to systematize orders in options on SPDRs until
March 28, 2005.
2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act \8\ in general, and furthers the objectives of Section
6(b)(5) of the Act \9\ in particular. Specifically, the Exchange
believes the proposed rule change is consistent with the Section
6(b)(5) \10\ because it will enhance CBOE's audit trail for orders by
incorporating non-electronic orders into COATS, and will permit CBOE to
reconstruct markets in a more efficient and effective manner.
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\8\ 15 U.S.C. 78f(b).
\9\ 15 U.S.C. 78f(b)(5).
\10\ 15 U.S.C. 78(f)(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition 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
The Exchange has neither solicited nor received comments on the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Because the foregoing rule change: (1) Does not significantly
affect the protection of investors or the public interest; (2) does not
impose any significant burden on competition; and (3) does not become
operative for 30 days from the date on which it was filed, or such
shorter time as the Commission may designate if consistent with the
protection of investors and the public interest, the proposed rule
change has become effective pursuant to Section 19(b)(3)(A) of the Act
\11\ and Rule 19b-4(f)(6) thereunder.\12\
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\11\ 15 U.S.C. 78s(b)(3)(A)
\12\ 17 CFR 240.19b-4(f)(6).
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A proposed rule change filed under Rule 19b-4(f)(6) \13\ normally
does not become operative prior to 30 days after the date of filing.
However, Rule 19b-4(f)(6)(iii) permits the Commission to designate a
shorter time if such action is consistent with the protection of
investors and the public interest. The Exchange satisfied the five-day
pre-filing requirement. The Exchange further requested that the
Commission
[[Page 2682]]
waive the 30-day operative delay, as specified in Rule 19b-
4(f)(6)(iii), and designate the proposed rule change immediately
operative. The Commission notes that by waiving the operative period,
the Exchange has stated that it will be able to implement trading in
options on SPDRs expeditiously, which the Exchange states should serve
to enhance the depth and liquidity of the SPDR market as well as the
products for which SPDRs or the S&P 500 Index is the underlying
benchmark. For these reasons, the Commission, consistent with the
protection of investors and the public interest, has waived the 30-day
operative date requirement for this proposed rule change, and has
determined to designate the proposed rule change as operative on
January 10, 2005, the date it was submitted to the Commission.
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\13\ 17 CFR 240.19b-4(f)(6).
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At any time within 60 days of the filing of such 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 (http://www.sec.gov/rules/sro.shtml.
); or Send an e-mail to rule-comments@sec.gov. Please include
File Number SR-CBOE-2005-04 on the subject line.
Paper Comments
Send paper comments in triplicate to Jonathan G. Katz,
Secretary, Securities and Exchange Commission, 450 Fifth Street, NW.,
Washington, DC 20549-0609.
All submissions should refer to File Number SR-CBOE-2005-04. 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 the
filing also will be available for inspection and copying at the
principal offices 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-2005-04 and should be submitted on or before
February 4, 2005.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\14\
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\14\ 17 CFR 200.30-3(a)(12).
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Jill M. Peterson,
Assistant Secretary.
[FR Doc. E5-133 Filed 1-13-05; 8:45 am]
BILLING CODE 8010-01-P