[Federal Register: February 21, 2008 (Volume 73, Number 35)]
[Notices]
[Page 9609-9610]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr21fe08-115]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-57326; File No. SR-CBOE-2008-03]
Self-Regulatory Organizations; Chicago Board Options Exchange,
Incorporated; Notice of Filing of Proposed Rule Change Relating to
Complex Orders
Feburary 13, 2008.
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 14, 2008, the Chicago Board Options Exchange, Incorporated
(``CBOE'' or ``Exchange'') filed with the Securities and Exchange
Commission (``Commission'') a proposed rule change as described in
Items I, II, and III below, which Items have been prepared
substantially by CBOE. 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.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to amend its rules regarding complex orders.
The text of the proposed rule change is available at CBOE, the
Commission's Public Reference Room, and http://www.cboe.com/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, 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. CBOE 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
The Exchange is proposing to amend its priority provisions
contained in CBOE Rules 6.45, 6.45A and 6.45B to provide that a complex
order may be executed at a net debit or credit price with another
member without giving priority to equivalent bids (offers) in the
individual series legs that are represented in the public customer
limit order book, provided that one leg of the complex order betters
the corresponding bid (offer) in the public customer limit order book
by at least the amount determined by the Exchange on a class-by-class
basis. The amount shall be either (i) one minimum trading increment
(i.e., $0.10, $0.05 or $0.01, as applicable) or (ii) a $0.01
increment.\3\
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\3\ Additionally, the Exchange is proposing to make two non-
substantive changes to Rule 6.45B(b) in order to conform the text of
that rule to Rule 6.45A(b). Specifically, the Exchange is replacing
the phrase ``the trading crowd'' with the phrase ``open outcry'' in
Rule 6.45B(b) and inserting the phrase ``at a net debit or credit
price'' in Rule 6.45B(b)(ii).
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Currently the rules provide that one leg of a complex order must
better the corresponding bid (offer) in the public customer limit order
book by at least one minimum trading increment.\4\ The Exchange
believes that changing the rule to permit the minimum amount to be
$0.01 would provide additional flexibility to better facilitate the
orderly execution of complex orders, and would provide additional
opportunities and incentives for members to provide price improvement
to complex orders.\5\
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\4\ The rules also provide that a complex order may be executed
at the same derived net price as other individual series legs
represented in the trading crowd, which for purposes of the complex
order priority provision includes broker-dealer orders resting in
the electronic book and electronic quotes of Market-Makers.
\5\ Currently, for example, if a complex order spread market is
quoted on a net debit/credit basis at $0.90 to $1.10 and there are
orders represented in the public customer limit order book in the
individual series at each of the respective prices, the complex
order may only be executed with another member at a net price of
$0.95 to $1.05. Under the proposed revisions, a complex order may be
executed at a net price of $0.91 to $1.09, permitting price
improvement at net prices ranging from $0.91-$0.94 and $1.06-$1.09.
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2. Statutory Basis
The Exchange believes the proposed rule change is consistent with
section 6(b) of the Act,\6\ in general, and furthers the objectives of
section 6(b)(5) of the Act,\7\ in particular, in that it is designed to
prevent fraudulent and manipulative acts and practices, promote just
and equitable principles of trade, remove impediments to and perfect
the mechanisms of a free and open market and a national market system,
and, in general, protect investors and the public interest.
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\6\ 15 U.S.C. 78f(b).
\7\ 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 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
No written comments were either solicited or received with respect
to the proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Within 35 days of the date of publication of this notice in the
Federal Register or within such longer period (i) as the Commission may
designate up to 90 days of such date if it finds such longer period to
be appropriate and publishes its reasons for so finding or (ii) as to
which CBOE consents, the Commission will:
(A) By order approve such proposed rule change, or
(B) Institute proceedings to determine whether the proposed rule
change should be disapproved.
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-2008-03 on the subject line.
Paper Comments
Send paper comments in triplicate to Nancy M. Morris,
Secretary, Securities and Exchange Commission,
[[Page 9610]]
100 F Street, NE., Washington, DC 20549-1090.
All submissions should refer to File Number SR-CBOE-2008-03. 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 the filing also will be available for
inspection and copying at the principal office of 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-2008-03 and should be
submitted on or before March 13, 2008.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\8\
Florence E. Harmon,
Deputy Secretary.
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\8\ 17 CFR 200.30-3(a)(12).
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[FR Doc. E8-3197 Filed 2-20-08; 8:45 am]
BILLING CODE 8011-01-P