[Federal Register: January 2, 2009 (Volume 74, Number 1)]
[Notices]
[Page 150-152]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr02ja09-60]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-59147; File No. SR-CBOE-2008-123]
Self-Regulatory Organizations; Chicago Board Options Exchange,
Incorporated; Notice of Filing of a Proposed Rule Change To Adopt a
Trade, Flash and Cancel Order Type for CBSX
December 22, 2008.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
[[Page 151]]
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on December 3, 2008, Chicago Board Options Exchange, Incorporated
(``CBOE'' or the ``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 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 filing proposes to adopt a Trade, Flash and Cancel order type
for the CBOE Stock Exchange (``CBSX''). The text of the proposed rule
change is available on the Exchange's Web site (http://www.cboe.org/
legal), 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 self-regulatory organization
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
Statutory Basis for, the Proposed Rule Change
1. Purpose
The purpose of this proposed rule change is to revise CBSX Rule
51.8 to adopt a Trade, Flash and Cancel order type. This is a market or
marketable limit order to buy or sell that is to be executed in whole
or in part on CBSX immediately and automatically after it is received
by the CBSX System without delay for any purpose except that it will be
electronically exposed pursuant to Rule 52.6 prior to cancellation.
Rule 52.6 provides that market or limit orders shall not be executed at
a price that would cause a trade-through of a Protected Quotation as
defined in Rule 611 of Regulation NMS; instead, these orders are
``flashed'' to CBSX Traders \3\ for potential execution at a price that
would not cause a trade-through.\4\ This new order type would allow
users to send orders to CBSX for execution even when CBSX is not the
NBBO without requiring CBSX to seek an NBBO fill for these orders at
away trading centers when price improvement on CBSX is not achieved.
Thus, users can seek fills on CBSX while maintaining control over
routing.
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\3\ ``CBSX Trader'' is defined in CBOE Rule 50.1. See e-mail
from Angelo Evangelou, Assistant General Counsel, CBOE, to Andrew
Madar, Attorney-Advisor, Commission, dated December 12, 2008.
\4\ If a flash responder attempts to trade against the order by
matching the flash price (the NBBO price at the time the order was
received by the CBSX System), the order will be executed unless the
system determines at the point of execution that the flash price is
worse than a revised NBBO in which case the order will be cancelled.
See e-mail from Angelo Evangelou, Assistant General Counsel, CBOE,
to Michael J. Gaw, Assistant Director, and Andrew Madar, Attorney-
Advisor, Commission, dated December 19, 2008.
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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) of the Act \6\ in particular in that, by offering users
an enhanced price improvement feature and greater control over order
routing, it is designed to promote just and equitable principles of
trade, and serve to remove impediments to and perfect the mechanism of
a free and open market and a national market system.
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\5\ 15 U.S.C. 78f(b).
\6\ 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 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-2008-123 on the subject line.
Paper Comments
Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, Station Place, 100 F Street, NE., Washington,
DC 20549-1090.
All submissions should refer to File Number SR-CBOE-2008-123. 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 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-2008-123 and
[[Page 152]]
should be submitted on or before January 23, 2009.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\7\
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\7\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Acting Secretary.
[FR Doc. E8-31149 Filed 12-31-08; 8:45 am]
BILLING CODE 8011-01-P