

[Federal Register: February 9, 2007 (Volume 72, Number 27)]
[Notices]               
[Page 6305-6306]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr09fe07-94]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-55219; File No. SR-CBOE-2007-10]

 
Self-Regulatory Organizations; Chicago Board Options Exchange, 
Incorporated; Notice of Filing and Immediate Effectiveness of Proposed 
Rule Change to Extend the Duration of CBOE Rule 6.45A(b) Pertaining to 
Orders Represented in Open Outcry

February 1, 2007.
    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 January 29, 2007, 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 substantially 
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

    The CBOE proposes to extend the duration of CBOE Rule 6.45A(b) (the 
``Rule''), relating to the allocation of orders represented in open 
outcry in equity option classes designated by the Exchange to be traded 
on the CBOE Hybrid Trading System (``Hybrid'') through April 30, 2007. 
No other changes are being made to the Rule. The text of the proposed 
rule change is available at CBOE, the Commission's Public Reference 
Room, and (http://www.cboe.org/Legal).


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.

A. Self-Regulatory Organization's Statement of the Purpose of, and the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    In March 2005, the Commission approved revisions to CBOE Rule 6.45A 
related to the introduction of Remote Market-Makers.\6\ Among other 
things, the Rule, pertaining to the allocation of orders represented in 
open outcry in equity options classes traded on Hybrid, was amended to 
clarify that only in-crowd market participants would be eligible to 
participate in open outcry trade allocations. In addition, the Rule was 
amended to limit the duration of the Rule until September 14, 2005. The 
duration of the Rule was thereafter extended through January 31, 
2007.\7\ As the duration period expires on January 31, 2007, the 
Exchange proposes to extend the effectiveness of the Rule through April 
30, 2007.\8\
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    \6\ See Securities Exchange Act Release No. 51366 (March 14, 
2005), 70 FR 13217 (March 18, 2005) (SR-CBOE-2004-75).
    \7\ See Securities Exchange Act Release Nos. 52423 (September 
14, 2005), 70 FR 55194 (September 20, 2005) (extending the duration 
of the Rule through December 14, 2005) and 52957 (December 15, 
2005), 70 FR 76085 (December 22, 2005) (extending the Rule through 
March 14, 2006), 53524 (March 21, 2006), 71 FR 15235 (March 27, 
2006) (extending the duration of the Rule through July 14, 2006), 
54164 (July 17, 2006), 71 FR 42143 (July 25, 2006) (extending the 
duration of the Rule through October 31, 2006) and 54680 (November 
1, 2006), 71 FR 65554 (November 8, 2006) (extending the duration of 
the Rule through January 31, 2007).
    \8\ In order to effect proprietary transactions on the floor of 
the Exchange, in addition to complying with the requirements of the 
Rule, members are also required to comply with the requirements of 
Section 11(a)(1) of the Act, 15 U.S.C. 78k(a)(1), or qualify for an 
exemption. Section 11(a)(1) restricts securities transactions of a 
member of any national securities exchange effected on that exchange 
for (i) the member's own account, (ii) the account of a person 
associated with the member, or (iii) an account over which the 
member or a person associated with the member exercises discretion, 
unless a specific exemption is available. The Exchange has issued 
regulatory circulars to members informing them of the applicability 
of these Section 11(a)(1) requirements each time the duration of the 
Rule was extended. See CBOE Regulatory Circulars RG05-103 (November 
2, 2005), RG06-001 (January 3, 2006), RG06-34 (April 7, 2006), RG06-
79 (July 31, 2006) and RG06-115 (November 8, 2006). The Exchange 
represents that it expects to issue a similar regulatory circular to 
members reminding them of the applicability of the Section 11(a)(1) 
requirements with respect to the proposed rule change.
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2. Statutory Basis
    Extension of the duration of the rule will allow the Exchange to 
continue to operate under the existing allocation parameters for orders 
represented in open outcry in Hybrid on an uninterrupted basis. 
Accordingly, 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.\9\ Specifically, the Exchange believes the 
proposed rule change is consistent with the Section 6(b)(5) \10\ 
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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    \9\ 15 U.S.C. 78f(b).
    \10\ 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.

[[Page 6306]]

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 under the existing allocation 
parameters for orders represented in open outcry in Hybrid on an 
uninterrupted basis. 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 Rule 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 the 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 Number SR-CBOE-2007-10 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-2007-10. 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 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-2007-10 and should be submitted on or before March 
2, 2007.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\16\
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    \16\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
 [FR Doc. E7-2139 Filed 2-8-07; 8:45 am]

BILLING CODE 8010-01-P
