[Federal Register: April 21, 2005 (Volume 70, Number 76)]
[Notices]
[Page 20780-20781]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr21ap05-86]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-51540; File No. SR-CBOE-2005-21]
Self-Regulatory Organizations; Chicago Board Options Exchange,
Inc.; Notice of Filing of Proposed Rule Change Relating to the
Calculation of the National Best Bid or Offer When Another Exchange Is
Disconnected From the Intermarket Options Linkage
April 13, 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 March 17, 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, II,
and III below, which items have been prepared by the 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
CBOE proposes to amend its rules regarding calculation of the
National Best Bid/Offer (``NBBO'') when another participant in the Plan
for the Purpose of Creating and Operating an Intermarket Option Linkage
(``Linkage Plan'') is disconnected from the Linkage.\3\ The text of the
proposed rule change is available on the Exchange's Web site (http://www.cboe.com
), the principal office of the Exchange, and at the
Commission's Public Reference Room.
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\3\ The term ``Linkage'' means the systems and data
communications network that link electronically the options
exchanges to one another for the purpose of sending and receiving
Linkage Orders, related confirmations, order statuses and
Administrative Messages. See Section 2(14) of the Linkage Plan.
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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 the purpose of, and basis for, the proposed rule change and
discussed any comments it had 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
Exchange Rule 6.13(e) provides circumstances where two Floor
Officials may determine that the quotes from one or more particular
markets, in one or more classes of options, are not reliable.
Currently, two circumstances are listed: (1) When another participant
in the Linkage Plan (``Participant'') \4\ declares its quotes non-firm,
and (2) when another Participant has communicated to the CBOE that the
Participant is experiencing systems or other problems there are
affecting the reliability of its disseminated quotes. The Exchange now
seeks to add one more circumstance to the list: when another
Participant in the Intermarket Options Linkage has ``disconnected''
from the Linkage and is not accepting Linkage orders. CBOE believes
this addition is necessary because there are times when, because
[[Page 20781]]
of system malfunctions, a Participant is disconnected from the Linkage
but has not declared a non-firm condition and has not informed other
markets that it may have quote problems. Under those situations, access
to such market is limited, and the Exchange believes it is appropriate
to exclude such market's quotes in CBOE's NBBO calculation.
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\4\ See Section 2(24) of the Linkage Plan.
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2. Statutory Basis
The Exchange believes the proposed rule change is consistent with
section 6(b) of the Act \5\ in general and furthers the objectives of
section 6(b)(5) \6\ in particular in that it should promote just and
equitable principles of trade, 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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\5\ 15 U.S.C. 78(b).
\6\ 15 U.S.C. 78(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition
The CBOE believes that the proposed rule change does not 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
Written comments were neither solicited nor received.
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-2005-21 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-2005-21. 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 such
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 publicly available. All submissions should refer to File Number
SR-CBOE-2005-21 and should be submitted on or before May 21, 2005.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\7\
Margaret H. McFarland,
Deputy Secretary.
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\7\ 17 CFR 200.30-3(a)(12).
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[FR Doc. E5-1878 Filed 4-20-05; 8:45 am]
BILLING CODE 8010-01-P