[Federal Register: January 6, 2006 (Volume 71, Number 4)]
[Notices]
[Page 955-957]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr06ja06-70]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-53040; File No. SR-CBOE-2005-116]
Self-Regulatory Organizations; Chicago Board Options Exchange,
Incorporated; Notice of Filing and Immediate Effectiveness of Proposed
Rule Change To Extend a Pilot Program Relating to Electronic DPMs and
Affiliated Market-Makers
December 28, 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 December 23, 2005, 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 prepared by the Exchange.
The Exchange filed the proposal as a ``non-controversial'' proposed
rule change pursuant to 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
CBOE proposes to extend the pilot allowing Electronic DPMs (``e-
DPMS'') to have up to one affiliated Market-Maker trade in classes
assigned to the e-DPM. 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 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 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.
[[Page 956]]
A. Self-Regulatory Organization's Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to amend CBOE Rule 8.93(vii) to extend the
pilot program allowing an e-DPM the option to have up to one separate
affiliated Market-Maker physically present in the trading crowds where
it operates as an e-DPM (such Market-Makers would be required to trade
on a separate membership). The pilot would be extended from January 12,
2006 until September 14, 2006.
In July of 2004, the SEC approved File No. SR-CBOE-2004-24, which
established the e-DPM program, including the pilot program.\5\ The
pilot allows e-DPM firms to maintain a physical presence in the trading
crowd through an affiliated Market-Maker, who would also be able to
electronically stream a quote. The pilot, however, limits the number of
separate affiliates per trading crowd to one.
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\5\ See Securities Exchange Act Release No. 50003 (July 12,
2004), 69 FR 43028 (July 19, 2004).
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CBOE will be sending the Commission, under separate cover, data
relating to: (1) The size of the orders that e-DPM's and affiliated
Market-Makers both trade with electronically; (2) the price and size of
the e-DPM's and the affiliated Market-Maker's respective quotes; (3)
the price and size of quotes of other participants in the classes where
an e-DPM and an affiliate are quoting; and (4) a breakdown of how
orders are allocated to the e-DPM, the affiliated Market-Maker, and any
other participants.
The date chosen to extend the pilot program corresponds with the
ending date of a matching pilot program for Remote Market-Makers (RMMs)
found in CBOE Rule 8.4(c)(i). Thus, the date chosen would allow the
Commission to evaluate both pilot programs simultaneously.
2. Statutory Basis
CBOE 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.\6\ Specifically, the Exchange believes the proposed
rule change is consistent with the Section 6(b)(5) \7\ requirements
that the rules of an exchange be designed to promote just and equitable
principles of trade, and to 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
The Exchange neither solicited nor received comments on the
proposal.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
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, provided that the Exchange has given
the Commission written notice of its intent to file 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, the proposed rule change has become effective pursuant to
Section 19(b)(3)(A) of the Act \8\ and Rule 19b-4(f)(6) thereunder.\9\
At any time within 60 days of the filing of such 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.
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\8\ 15 U.S.C. 78s(b)(3)(A).
\9\ 17 CFR 240.19b-4(f)(6).
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Under Rule 19b-4(f)(6)(iii) of the Act,\10\ the proposal does not
become operative for 30 days after the date of its filing, or such
shorter time as the Commission may designate if consistent with the
protection of investors and the public interest. The Exchange has
requested that the Commission accelerate the 30-day operative date and
waive the five day pre-filing requirement. The Commission, consistent
with the protection of investors and the public interest, has
determined to accelerate the 30-day operative date and waive the five
day pre-filing requirement, so that the e-DPM pilot program may
continue without interruption.\11\
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\10\ 17 CFR 240.19b-4(f)(6)(iii).
\11\ For purposes only of accelerating the 30-day operative
period for this proposal, 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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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-2005-116 on the subject line.
Paper Comments
Send paper comments in triplicate to Jonathan G. Katz,
Secretary, Securities and Exchange Commission, 100 F Street, NE.,
Washington, DC 20549-9303.
All submissions should refer to File Number SR-CBOE-2005-116. 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 Section, 100 F Street,
NE., Washington, DC 20549. Copies of such 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-2005-116 and
[[Page 957]]
should be submitted on or before January 27, 2006.
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\12\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\12\
Jonathan G. Katz,
Secretary.
[FR Doc. E6-19 Filed 1-5-06; 8:45 am]
BILLING CODE 8010-01-P