[Federal Register: July 25, 2007 (Volume 72, Number 142)]
[Notices]
[Page 40910-40911]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr25jy07-102]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-56094; File No. SR-CBOE-2007-80]
Self-Regulatory Organizations; Chicago Board Options Exchange,
Incorporated; Notice of Filing and Immediate Effectiveness of Proposed
Rule Change To Extend Two Pilot Programs Related to the Exchange's
Automated Improvement Mechanism Until July 18, 2008
July 18, 2007.
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 July 13, 2007, the Chicago Board Options Exchange, Incorporated
(``Exchange'' or ``CBOE'') 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 Exchange. The Exchange filed the proposed rule change pursuant to
Section 19(b)(3)(A) of the Act \3\ and Rule 19b-4(f)(6) thereunder,\4\
which renders the proposed rule change effective upon filing with the
Commission. 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).
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
CBOE proposes to extend two pilot programs related to the
Exchange's Automated Improvement Mechanism (``AIM'') for one year,
until July 18, 2008. The text of the proposed rule change is available
on the Exchange's Web site (http://www.cboe.com), at the Exchange's
Office of the Secretary, and at the Commission's Public Reference Room.
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 those 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 parts of such
statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule Change
1. Purpose
In February 2006, CBOE obtained approval of a filing adopting the
AIM auction process.\5\ AIM exposes certain orders electronically to an
auction process to provide such orders with the opportunity to receive
an execution at an improved price. The AIM auction is available only
for orders that an Exchange member represents as agent and for which a
second order of the same size as the ``Agency Order'' (and on the
opposite side of the market) is also submitted (effectively stopping
the Agency Order at a given price).
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\5\ See Securities Exchange Act Release No. 53222 (February 3,
2006), 71 FR7089 (February 10, 2006) (approving SR-CBOE-2005-60).
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Two components of AIM were approved on a pilot basis: (1) That
there is no minimum size requirement for orders to be eligible for the
auction; and (2) that the auction will conclude prematurely anytime
there is a quote lock on the Exchange pursuant to Exchange Rule
6.45A(d).\6\ In connection with the pilot programs, the Exchange has
submitted to the Commission reports providing detailed AIM auction and
order execution data. In July 2006, the Exchange extended the pilot
program until July 18, 2007.\7\ The proposed rule change merely extends
the duration of the pilot programs until July 18, 2008. Extending the
pilots for an additional year will allow the Commission more time to
consider the impact of the pilot programs on AIM order executions.
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\6\ That rule relates to situations where a Market-Maker's quote
interacts with the quote of another CBOE Market-Maker (i.e. when
internal quotes lock).
\7\ See Securities Exchange Act Release No. 54147 (July 14,
2006), 71 FR 41487 (July 21, 2006) (SR-CBOE-2006-64).
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2. Statutory Basis
The Exchange believes the proposed rule change 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, in that by allowing the
Commission additional time to evaluate the AIM pilot programs, it
should serve to remove impediments to and perfect the mechanism of a
free and open market and a national market system, and protect
investors and the public interest.
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\8\ 15 U.S.C. 78f(b).
\9\ 15 U.S.C. 78(f)(b)(5).
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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 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 neither solicited nor received comments on the
proposal.
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 Rule 19b-4(f)(6) \11\ thereunder
because the proposal does not: (i) Significantly affect the protection
of investors or the public interest; (ii) impose any significant burden
on competition; and (iii) by its terms, 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.\12\
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\10\ 15 U.S.C. 78s(b)(3)(A).
\11\ 17 CFR 240.19b-4(f)(6).
\12\ Rule 19b-4(f)(6)(iii) under the Act requires the Exchange
to provide the Commission notice of the Exchange's intent to file
the proposed rule change, along with a brief description and text of
the proposed rule change, at least five business days prior to the
date of filing of the proposed rule change, or such shorter time as
designated by the Commission. See 17 CFR 240.19b-4(f)(6)(iii). The
Commission deems this requirement to have been satisfied by the
notice of intent filed by the Exchange on July 10, 2007.
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A proposed rule change filed under Rule 19b-4(f)(6) normally may
not
[[Page 40911]]
become operative prior to 30 days after the date of filing. However,
Rule 19b-4(f)(6)(iii) \13\ permits the Commission to designate a
shorter time if such action is consistent with the protection of
investors and the public interest. The Exchange has requested that the
Commission waive the 30-day operative delay period. The Commission
believes that waiver of the 30-day operative delay is consistent with
the protection of investors and the public interest, because the
proposal would allow the pilots to continue without interruption until
July 18, 2008.\14\ For this reason, the Commission designates the
proposal to be operative upon filing with the Commission.
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\13\ 17 CFR 240.19b-4(f)(6)(iii).
\14\ For purposes only of waiving the operative delay for this
proposal, the Commission has considered the proposed rule's impact
on efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
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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.\15\
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\15\ 15 U.S.C. 78s(b)(3)(C).
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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-2007-80 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-2007-80. 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 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 available publicly. All
submissions should refer to File Number SR-CBOE-2007-80 and should be
submitted on or before August 15, 2007.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\16\
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\16\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7-14311 Filed 7-24-07; 8:45 am]
BILLING CODE 8010-01-P