[Federal Register: July 18, 2007 (Volume 72, Number 137)]
[Notices]
[Page 39472-39474]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr18jy07-121]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-56050; File No. SR-CBOE-2007-76]
Self-Regulatory Organizations; Chicago Board Options Exchange,
Incorporated; Notice of Filing and Immediate Effectiveness of Proposed
Rule Change To Extend the Short Term Option Series Pilot Program
July 11, 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 2, 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 has designated this proposal as non-
controversial under Section 19(b)(3)(A)(iii) 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)(iii).
\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
The Exchange proposes to extend the period for its Short Term
Options Series pilot program (``Pilot Program'') through July 12, 2008,
and to amend the Pilot Program related to a restriction on overlapping
expirations of Short Term Option Series with Quarterly Options Series
and Quarterly Index Options (``QIX''). The text of the proposed rule
change is available on the Exchange's Web site (http://www.cboe.org/Legal
), at the Exchange's principal office, and at
[[Page 39473]]
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 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
On July 12, 2005, the Commission approved the Pilot Program.\5\ The
Pilot Program has since been extended and is currently scheduled to
expire on July 12, 2007.\6\
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\5\ See Securities Exchange Act Release No. 52011 (July 12,
2005), 70 FR 41451 (July 19, 2005) (File No. SR-CBOE-2004-63)
(``Pilot Program Approval Order'').
\6\ See Securities Exchange Act Release No. 53984 (June 14,
2006), 71 FR 35718 (June 21, 2006) (File No. SR-CBOE-2006-48); see
also Securities Exchange Act Release No. 54338 (August 21, 2006), 71
FR 50952 (August 28, 2006) (File No. SR-CBOE-2006-49) (order
approving a modification to the Pilot Program that increased the
number of series that may be listed for each class selected to
participate in the Pilot Program from five series to seven series).
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The Exchange has selected the following four options classes to
participant in the Pilot Program: S&P 500 Index options (SPX); S&P 100
Index American-style options (OEX); Mini-S&P 500 Index options (XSP);
and S&P 100 Index European-style options (XEO). CBOE believes the Pilot
Program has been successful and well received by its members and the
investing public. Thus, CBOE proposes to extend the Pilot Program
through July 12, 2008.
In support of the proposed rule change, and as required by the
Pilot Program Approval Order, the Exchange is submitting to the
Commission a Pilot Program report (the ``Report'') detailing the
Exchange's experience with the Pilot Program. Specifically, the Report
contains data and written analysis regarding the four options classes
included in the Pilot Program. The Report is being submitted under
separate cover and seeks confidential treatment under the Freedom of
Information Act.
The Exchange believes there is sufficient investor interest and
demand to extend the Pilot Program another year. The Exchange believes
that the Pilot Program has provided investors with additional means of
managing their risk exposures and carrying out their investment
objectives. Furthermore, the Exchange has not experienced any capacity-
related problems with respect to Short Term Option Series. The Exchange
also represents that is has the necessary system capacity to support
the option series listed under the Pilot Program.
Finally, the Exchange is proposing to amend the Pilot Program to
provide that no Short Term Option Series may have an expiration that
coincides with an expiration of Quarterly Options Series on the same
class. Currently, the Exchange's rules do not have such a restriction.
The Exchange is also proposing to amend the Pilot Program as it
pertains to index options to provide that no Short Term Option Series
may have an expiration that coincides with an expiration of QIX option
series on the same class. Currently, the Exchange's rules provide that
no Short Term Option Series may expire in the same week during which
the QIXs expire. The Exchange believes these changes should provide
consistency in the Exchange's rules with those of other exchanges
sponsoring similar pilot programs.\7\
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\7\ See, e.g., American Stock Exchange Rule 903, Commentary
.09(b); International Securities Exchange Rule 504, Supplementary
Material .03(b); and NYSE Arca Rule 5.19(a)(3).
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2. Statutory Basis
The Exchange believes the proposed rule change is consistent with
Section 6(b) of the Act.\8\ Specifically, the Exchange believes the
proposed rule change is consistent with Section 6(b)(5) of the Act,\9\
which requires that the rules of an exchange be designed to promote
just and equitable principles of trade, to prevent fraudulent and
manipulative acts, to remove impediments to and to perfect the
mechanism for a free and open market and a national market system, and,
in general, to protect investors and the public interest. The Exchange
believes that extension of the Pilot Program will result in a
continuing benefit to investors by allowing them additional means to
manage their risk exposures and carry out their investment objectives,
and will allow the Exchange to further study investor interest in Short
Term Option Series.
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\8\ 15 U.S.C. 78f(b).
\9\ 15 U.S.C. 78f(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 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
The Exchange has designated the proposed rule change as one that:
(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 of filing, or such shorter time as the Commission may designate if
consistent with the protection of investors and the public interest.
Therefore, the foregoing rule change has become effective pursuant to
Section 19(b)(3)(A) of the Act \10\ and subparagraph (f)(6) of Rule
19b-4 thereunder.\11\ The Exchange has asked the Commission to waive
the operative delay to permit the Pilot Program extension to become
operative prior to the 30th day after filing.\12\
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\10\ 15 U.S.C. 78s(b)(3)(A).
\11\ 17 CFR 240.19b-4(f)(6).
\12\ As required under Rule 19b-4(f)(6)(iii), the Exchange
provided the Commission with written notice of its intent to file
the proposed rule change at least five business before doing so.
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The Commission believes that waiving the 30-day operative delay is
consistent with the protection of investors and the public interest
because it will allow the benefits of the Pilot Program to continue
without interruption.\13\ Therefore, the Commission designates the
proposal operative upon filing.\14\
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\13\ For purposes only of waiving the 30-day operative delay,
the Commission has considered the proposed rule's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
\14\ As set forth in the Commission's original release providing
notice filing of CBOE's proposal to adopt the Pilot Program, if the
Exchange were to propose an extension, an expansion, or permanent
approval of the Pilot Program, the Exchange would submit, along with
any filing proposing such amendments to the program, a report that
would provide an analysis of the Pilot Program covering the entire
period during which the Pilot Program was in effect. The report
would include, at a minimum: (1) Data and written analysis on the
open interest and trading volume in the classes for which Short Term
Option Series were opened; (2) an assessment of the appropriateness
of the option classes selected for the Pilot Program; (3) an
assessment of the impact of the Pilot Program on the capacity of the
Exchange, OPRA, and market data vendors (to the extent data from
market data vendors is available); (4) any capacity problems or
other problems that arose during the operation of the Pilot Program
and how the Exchange addressed such problems; (5) any complaints
that the Exchange received during the operation of the Pilot Program
and how the Exchange addressed them; and (6) any additional
information that would assist in assessing the operation of the
Pilot Program. The report must be submitted to the Commission at
least sixty (60) days prior to the expiration date of the Pilot
Program. See Securities Exchange Act Release No. 51172 (February 9,
2005), 70 FR 7979 (February 16, 2005) (File No. SR-CBOE-2004-63).
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[[Page 39474]]
At any time within 60 days of the filing of the proposed rule
change, the Commission may summarily abrogate the 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 other CBOE
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 No. SR-CBOE-2007-76 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-2007-76. 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 Commissions 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-2007-76 and should be submitted on
or before August 8, 2007.\15\
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\15\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.
J. Lynn Taylor,
Assistant Secretary. 7
[FR Doc. E7-13874 Filed 7-17-07; 8:45 am]
BILLING CODE 8010-01-P