[Federal Register: August 3, 2007 (Volume 72, Number 149)]
[Notices]
[Page 43303-43305]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr03au07-106]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-56154; File No. SR-CBOE-2007-85]
Self-Regulatory Organizations; Chicago Board Options Exchange,
Incorporated; Notice of Filing and Immediate Effectiveness of Proposed
Rule Change Relating to CBOE's Delisting Policy
July 27, 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 23, 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 proposal as a ``non-
controversial'' proposed rule change pursuant to
[[Page 43304]]
section 19(b)(3)(A)(iii) of the Act \3\ and Rule 19b-4(f)(6)
thereunder.\4\ 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 amend its delisting policy. 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.
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
On January 23, 2007, the Commission approved CBOE's rule filing
(SR-CBOE-2006-92) to permit thirteen option classes to trade in penny
increments in connection with the Penny Pilot Program.\5\ In its rule
filing, CBOE discussed the various quote mitigation strategies that it
had already implemented and intended to implement. One of the quote
mitigation strategies was to adopt a delisting policy. CBOE's delisting
policy currently provides that CBOE will delist any equity option class
with national average daily volume (``ADV'') of less than 20 contracts.
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\5\ See Securities Exchange Act Release No. 55154 (January 23,
2007), 72 FR 4743 (February 1, 2007).
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Because CBOE's rule filing relating to the Penny Pilot Program was
only approved on a six-month pilot basis, including apparently the
delisting policy, CBOE requests that its delisting policy be approved
on a permanent basis.\6\
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\6\ CBOE believes it is unclear from the approval order whether
the delisting policy was intended to be approved only on a six-month
pilot basis, as opposed to the changes to the minimum increments for
the thirteen option classes participating in the Penny Pilot
Program.
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CBOE also proposes to amend its delisting policy to provide that
CBOE may make exceptions to its delisting policy in appropriate
circumstances. For example, if an option class that otherwise would
qualify to be delisted (due to having a national ADV of less than 20
contracts) experiences a significant increase in trading volume, CBOE
could choose not to delist the option class. To qualify, the option
class would need to have a national ADV of 20 or more contracts in the
month immediately preceding its scheduled delisting, or in the twenty
trading days prior to its scheduled delisting.
2. Statutory Basis
The Exchange 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.\7\ Specifically, the Exchange believes the
proposed rule change is consistent with the section 6(b)(5) Act \8\
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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\7\ 15 U.S.C. 78f(b).
\8\ 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
The proposed rule change has become effective pursuant to section
19(b)(3)(A) of the Act \9\ and Rule 19b-4(f)(6) thereunder,\10\ because
the foregoing proposed rule does not: (i) Significantly affect the
protection of investors or the public interest; (ii) impose any
significant burden on competition; and (iii) 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.
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\9\ 15 U.S.C. 78s(b)(3)(A).
\10\ 17 CFR 240.19b-4(f)(6).
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A proposed rule change filed under Rule 19b-4(f)(6) normally may
not become operative prior to 30-days after the date of filing.\11\
However, Rule 19b-4(f)(6)(iii) permits the Commission to designate a
shorter time if such action is consistent with the protection of
investors and the public interest.\12\ The Exchange has requested that
the Commission waive the 30-day operative delay. The Commission
believes that waiving the 30-day operative delay to allow the
Exchange's delisting policy as it currently exists to continue on a
permanent basis is consistent with the protection of investors and the
public interest because such waiver will ensure continuity of the
Exchange's policy and will allow the Exchange's quote mitigation
strategy to remain in effect without interruption. However, with regard
to CBOE's proposal to amend its policy, the Commission does not believe
that waiver of the operative delay is warranted. Therefore, the
Commission designates the proposal seeking to make the delisting policy
effective on a permanent basis to be operative upon filing with the
Commission.\13 \The proposed amendments to the policy will become
operative after the 30-day operative delay.
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\11\ 17 CFR 240.19b-4(f)(6)(iii). In addition, Rule 19b-
4(f)(6)(iii) requires the self-regulatory organization to give the
Commission 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 of filing of the
proposed rule change, or such shorter time as designated by the
Commission. CBOE has satisfied the five-day pre-filing requirement.
\12\ 17 CFR 240.19b-4(f)(6)(iii).
\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. 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 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.\14 \
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\14\ See 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:
[[Page 43305]]
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-2007-85 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-2007-85. 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 the 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-2007-85 and should be
submitted on or before August 24, 2007.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\15\
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\15\ 17 CFR 200.30-3(a)(12).
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Nancy M. Morris,
Secretary.
[FR Doc. E7-15066 Filed 8-2-07; 8:45 am]
BILLING CODE 8010-01-P