[Federal Register: August 7, 2007 (Volume 72, Number 151)]
[Notices]
[Page 44194-44196]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr07au07-100]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-56177; File No. SR-CBOE-2007-89]
Self-Regulatory Organizations; Chicago Board Options Exchange,
Incorporated; Notice of Filing and Immediate Effectiveness of Proposed
Rule Change To Extend the Duration of CBOE Rule 6.45A(b) Pertaining to
Orders Represented in Open Outcry
August 1, 2007.
Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given
that on July 25, 2007, the Chicago Board Options Exchange, Incorporated
(``CBOE'' or ``Exchange'') filed with the Securities and Exchange
Commission (the ``Commission'') the proposed rule change as described
in Items I and II below, which Items have been substantially prepared
by the CBOE. The Exchange filed the proposal as a ``non-controversial''
proposed rule change pursuant to section 19(b)(3)(A)(iii) of the Act
\3\ and Rule 19b-4(f)(6) thereunder,\4\ which renders it 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)(iii).
\4\ 17 CFR 240.19b-4(f)(6).
\5\ The Exchange has requested that the Commission waive the 5
day pre-filing notice and 30-day operative delay required by Rule
19b-4(f)(6)(iii), 17 CFR 240.19b-4(f)(6)(iii). See discussion infra
Section III.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The CBOE proposes to extend the duration of CBOE Rule 6.45A(b) (the
``Rule''), relating to the allocation of orders represented in open
outcry in equity option classes designated by the Exchange to be traded
on the CBOE Hybrid Trading System (``Hybrid'') through December 31,
2007. No other changes are being made to the Rule. The text of the
proposed rule change is available at CBOE, the Commission's Public
Reference Room, and (http://www.cboe.org/Legal).
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 CBOE included statements
concerning
[[Page 44195]]
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 March 2005, the Commission approved revisions to CBOE Rule 6.45A
related to the introduction of Remote Market-Makers.\6\ Among other
things, the Rule, pertaining to the allocation of orders represented in
open outcry in equity options classes traded on Hybrid, was amended to
clarify that only in-crowd market participants would be eligible to
participate in open outcry trade allocations. In addition, the Rule was
amended to limit the duration of the Rule until September 14, 2005. The
duration of the Rule was thereafter extended through July 31, 2007.\7\
As the duration period expires on July 31, 2007, the Exchange proposes
to extend the effectiveness of the Rule through December 31, 2007.\8\
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\6\ See Securities Exchange Act Release No. 51366 (March 14,
2005), 70 FR 13217 (March 18, 2005) (SR-CBOE-2004-75).
\7\ See Securities Exchange Act Release Nos. 52423 (September
14, 2005), 70 FR 55194 (September 20, 2005) (SR-CBOE-2005-76)
(extending the duration of the Rule through December 14, 2005);
52957 (December 15, 2005), 70 FR 76085 (December 22, 2005) (SR-CBOE-
2005-102) (extending the Rule through March 14, 2006); 53524 (March
21, 2006), 71 FR 15235 (March 27, 2006) (SR-CBOE-2006-22) (extending
the duration of the Rule through July 14, 2006); 54164 (July 17,
2006), 71 FR 42143 (July 25, 2006) (SR-CBOE-2006-60) (extending the
duration of the Rule through October 31, 2006); 54680 (November 1,
2006), 71 FR 65554 (November 8, 2006) (SR-CBOE-2006-86) (extending
the duration of the Rule through January 31, 2007); 55219 (February
1, 2007), 72 FR 6305 (February 9, 2007) (SR-CBOE-2007-10) (extending
the duration of the Rule through April 30, 2007) and 55676 (April
27, 2007), 72 FR 25348 (May 4, 2007) (SR-CBOE-2007-40) (extending
the duration of the Rule through July 31, 2007).
\8\ In order to effect proprietary transactions on the floor of
the Exchange, in addition to complying with the requirements of the
Rule, members are also required to comply with the requirements of
Section 11(a)(1) of the Act, 15 U.S.C. 78k(a)(1), or qualify for an
exemption. Section 11(a)(1) restricts securities transactions of a
member of any national securities exchange effected on that exchange
for (i) the member's own account, (ii) the account of a person
associated with the member, or (iii) an account over which the
member or a person associated with the member exercises discretion,
unless a specific exemption is available. The Exchange has issued
regulatory circulars to members informing them of the applicability
of these Section 11(a)(1) requirements each time the duration of the
Rule was extended. See CBOE Regulatory Circulars RG05-103 (November
2, 2005), RG06-001 (January 3, 2006), RG06-34 (April 7, 2006), RG06-
79 (July 31, 2006), RG06-115 (November 8, 2006), RG07-21 (February
8, 2007) and RG07-53 (May 17, 2007). The Exchange represents that it
expects to issue a similar regulatory circular to members reminding
them of the applicability of the Section 11(a)(1) requirements with
respect to the proposed rule change.
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2. Statutory Basis
Extension of the duration of the Rule will allow the Exchange to
continue to operate under the existing allocation parameters for orders
represented in open outcry in Hybrid on an uninterrupted basis.
Accordingly, CBOE believes the proposed rule change is consistent with
the Act and the rules and regulations under the Act applicable to a
national securities exchange and, in particular, the requirements of
section 6(b) of the Act.\9\ Specifically, the Exchange believes the
proposed rule change is consistent with the section 6(b)(5) \10\
requirements that the rules of an exchange be designed to promote just
and equitable principles of trade, to prevent fraudulent and
manipulative acts, and, in general, to protect investors and the public
interest.
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\9\ 15 U.S.C. 78f(b).
\10\ 15 U.S.C. 78f(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 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
The Exchange neither solicited nor received comments on the
proposal.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Because the foregoing proposed rule change does not: (1)
Significantly affect the protection of investors or the public
interest; (2) impose any significant burden on competition; and (3)
become operative for thirty 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, it has become
effective pursuant to section 19(b)(3)(A) of the Act \11\ and Rule 19b-
4(f)(6) \12\ thereunder.\13\
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\11\ 15 U.S.C. 78s(b)(3)(A).
\12\ 17 CFR 240.19b-4(f)(6).
\13\ The Exchange has requested that the Commission waive the
requirement that the Exchange provide the Commission written notice
of its 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 on which the Exchange filed the
proposed rule change pursuant to Rule 19b-4(f)(6)(iii). The
Commission hereby grants this request. See 17 CFR 240.19b-
4(f)(6)(iii).
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A proposed rule change filed under Commission Rule 19b-4(f)(6) \14\
normally does not become operative prior to thirty days after the date
of filing. The CBOE requests that the Commission waive the 30-day
operative delay, as specified in Rule 19b-4(f)(6)(iii), and designate
the proposed rule change to become operative immediately to allow the
Exchange to continue to operate under the existing allocation
parameters for orders represented in open outcry in Hybrid on an
uninterrupted basis. The Commission believes that waiving the 30-day
operative delay is consistent with the protection of investors and the
public interest because such waiver will allow the CBOE to continue to
operate under the Rule without interruption. For these reasons, the
Commission designates the proposed rule change as operative upon
filing.\15\
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\14\ 17 CFR 240.19b-4(f)(6).
\15\ For the purposes only of waiving the operative date of this
proposal, the Commission has considered the proposed rule's impact
on efficiency, competition, and capital formation. 15 U.S.C. 78c(f).
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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-2007-89 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.
[[Page 44196]]
All submissions should refer to File Number SR-CBOE-2007-89. 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-2007-89 and should be
submitted on or before August 28, 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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Nancy M. Morris,
Secretary.
[FR Doc. E7-15310 Filed 8-6-07; 8:45 am]
BILLING CODE 8010-01-P