

[Federal Register: November 28, 2006 (Volume 71, Number 228)]
[Notices]               
[Page 68853-68855]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr28no06-95]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-54780; File No. SR-CBOE-2006-87]

 
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 CBOE's Retail 
Automatic Execution System

November 17, 2006.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given 
that on November 3, 2006, the Chicago Board Options Exchange, 
Incorporated (``CBOE'' or ``Exchange'') filed with the Securities and 
Exchange Commission (the ``Commission'') the proposed rule change as 
described in Items I and II below, which Items have been prepared by 
the CBOE. 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\ which renders it effective upon 
filing with the Commission.\5\ 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).
    \5\ The Exchange has asked the Commission to waive the 30-day 
operative delay required by Rule 19b-4(f)(6)(iii), 17 CFR 240.19b-
4(f)(6)(iii). See discussion infra Section III.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    CBOE proposes to extend a pilot program relating to the operation 
of CBOE's Retail Automatic Execution

[[Page 68854]]

System (``RAES''). The text of the proposed rule change is available on 
the CBOE's Internet Web site (http://www.cboe.com), at the CBOE's 

principal office, and at the Commission's Public Reference Room.

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 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 the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The purpose of this filing is to extend a pilot program until 
November 30, 2007 to allow broker-dealer orders that are eligible for 
execution on RAES pursuant to CBOE Rule 6.8, Interpretation and Policy 
.01 to automatically execute against customer limit orders on CBOE's 
book in classes designated by the appropriate Procedure Committee. The 
pilot was originally approved on May 13, 2004, with an expiration date 
of November 30, 2004.\6\ The pilot was extended for one year to 
November 30, 2005 pursuant to SR-CBOE-2004-78 \7\ and again extended an 
additional year to November 30, 2006 pursuant to SR-CBOE-2005-96.\8\
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    \6\ Securities Exchange Act Release No. 49699 (May 13, 2004), 69 
FR 28958 (May 19, 2004) (approving SR-CBOE-2003-42).
    \7\ Securities Exchange Act Release No. 50779 (December 1, 
2004), 69 FR 71087 (December 8, 2004).
    \8\ Securities Exchange Act Release No. 52855 (November 30, 
2005), 70 FR 73317 (December 9, 2005).
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    The Exchange's RAES system was created to allow for the automatic 
execution of retail customer options orders against CBOE market makers 
at their disseminated prices. In 1999, the Exchange expanded the RAES 
system to allow incoming RAES orders to execute against customer limit 
orders on the CBOE book when such booked orders constitute CBOE's best 
bid/offer.\9\ The Exchange has allowed broker-dealer orders to be 
executed on RAES in classes designated by the appropriate Procedure 
Committee.\10\ The pilot program allows these broker-dealer orders to 
automatically execute against the book.
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    \9\ Securities Exchange Act Release No. 41995 (October 8, 1999), 
64 FR 56547 (October 20, 1999) (approving SR-CBOE-1999-29).
    \10\ See SR-CBOE-2002-22, 35, and 56.
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2. Statutory Basis
    The Exchange believes the proposed rule change is consistent with 
Section 6(b) of the Act, in general and furthers the objectives of 
Section 6(b)(5) of the Act 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.

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

    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

    Because the foregoing proposed rule change does not (1) 
significantly affect the protection of investors or the public 
interest; (2) impose any significant burden on competition; and (3) 
become operative for thirty 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, it has become 
effective pursuant to Section 19(b)(3)(A) of the Act \11\ and Rule 19b-
4(f)(6) \12\ thereunder.\13\
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    \11\ 15 U.S.C. 78s(b)(3)(A).
    \12\ 17 CFR 240.19b-4(f)(6).
    \13\ Pursuant to Rule 19b-4(f)(6)(iii), the Exchange has given 
the Commission written 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 on which 
the Exchange filed the proposed rule change. See 17 CFR 240.19b-
4(f)(6)(iii).
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    A proposed rule change filed under Commission Rule 19b-4(f)(6) \14\ 
normally does not become operative prior to thirty days after the date 
of filing. The CBOE requests that the Commission waive the 30-day 
operative delay, as specified in Rule 19b-4(f)(6)(iii), and designate 
the proposed rule change to become operative immediately to allow the 
Exchange to continue to operate the pilot program which affords 
automatic execution to a greater number of market participants on an 
uninterrupted basis. The Commission hereby grants the request. The 
Commission believes that waiving the 30-day operative delay is 
consistent with the protection of investors and the public interest 
because such waiver will allow the CBOE to continue to operate under 
the pilot program without interruption. For these reasons, the 
Commission designates the proposed rule change as effective and 
operative upon filing.\15\
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    \14\ 17 CFR 240.19b-4(f)(6).
    \15\ For the purposes only of waiving the operative date of 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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    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.

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 No. SR-CBOE-2006-87 on the subject line.

Paper Comments

     Send paper comments in triplicate to Nancy M. Morris, 
Secretary, Securities and Exchange Commission, Station Place, 100 F 
Street, NE., Washington, DC 20549-1090.
    All submissions should refer to File Number SR-CBOE-2006-87. 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

[[Page 68855]]

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 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-2006-87 and should be 
submitted on or before December 19, 2006.
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    \16\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\16\
Nancy M. Morris,
Secretary.
[FR Doc. E6-20054 Filed 11-27-06; 8:45 am]

BILLING CODE 8011-01-P
