

[Federal Register: January 10, 2008 (Volume 73, Number 7)]
[Notices]               
[Page 1900-1901]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr10ja08-69]                         

=======================================================================
-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-57089; File No. SR-CBOE-2007-143]

 
Self-Regulatory Organizations; Chicago Board Options Exchange, 
Incorporated; Notice of Filing of Proposed Rule Change Pertaining to 
the Imposition of Fines for Minor Rule Violations

January 3, 2008.
    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 27, 2007, the Chicago Board Options Exchange, Incorporated 
(``CBOE'' or ``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 
substantially by the CBOE. The Commission is publishing this notice to 
solicit comments on the proposed rule change from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend CBOE Rule 17.50, ``Imposition of 
Fines for Minor Rule Violations,'' to revise the provisions of CBOE 
Rule 17.50(g)(8) ``Violations of Exercise and Exercise Advice Rules for 
Noncash-Settled Equity Options.'' The text of the proposed rule change 
is available on the Exchange's Web site (http://www.cboe.org/Legal), 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 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 these 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 aspects of such 
statements.

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

1. Purpose

    The Exchange proposes to increase and strengthen the sanctions 
imposed by its Minor Rule Violation Plan (``MRVP'') on any member who 
fails to submit to the Exchange in a timely manner pursuant to CBOE 
Rule 11.1 (or a Regulatory Circular issued pursuant to CBOE Rule 11.1) 
``Advice Cancel'' or exercise instruction relating to the exercise or 
nonexercise of a noncash-settled equity option. The Exchange believes 
that increasing the fine levels specified with respect to both 
individual members and member organizations, and lengthening the 
surveillance period from a 12-month period to a rolling 24-month period 
will serve as an effective deterrent to such violative conduct.
    In addition, the Exchange, as a member of the Intermarket 
Surveillance Group, as well as certain other self-regulatory 
organizations (``SROs'') executed and filed on October 29, 2007 with 
the Commission, a final version of an Agreement pursuant to section 
17(d) of the Act (the ``17d-2 Agreement'').\3\ As set forth in the 17d-
2 Agreement, the SROs have agreed that their respective rules 
concerning the filing of Expiring Exercise Declarations, also referred 
to as Contrary Exercise Advices, of options contracts, are common 
rules. As a result, the proposal to amend the CBOE's MRVP will further 
result in consistency in sanctions among the SROs that are signatories 
to the 17d-2 Agreement concerning Contrary Exercise Advice 
violations.\4\ In addition, the proposed rule change replaces the term 
``infraction'' with the term ``violation'' to provide greater 
consistency among the signatories to the 17d-2 Agreement concerning 
Contrary Exercise Advice violations.
---------------------------------------------------------------------------

    \3\ See letter to Richard Holley, Senior Special Counsel, 
Division of Trading and Markets, Commission, from Nyieri Nazarian, 
Assistant General Counsel, American Stock Exchange LLC (``Amex''), 
dated October 29, 2007.
    \4\ See Amex Rule 590.
---------------------------------------------------------------------------

2. Statutory Basis
    The Exchange believes that 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 it 
is designed to promote just and equitable principles of trade, 
facilitate transactions in securities, remove impediments to and 
perfect the mechanism of a free and open market and a national market 
system, and, in general, to protect investors and the public interest. 
Specifically, the Exchange believes that the proposed rule change will 
strengthen its ability to carry out its oversight responsibilities as 
an SRO and reinforce its surveillance and enforcement functions. 
Additionally, the Exchange believes that the proposed rule change will 
promote consistency in minor rule violations and respective SRO 
reporting obligations as set forth pursuant to Rule 19d-1(c)(2) under 
the Act,\7\ which governs minor rule violation plans.
---------------------------------------------------------------------------

    \5\ 15 U.S.C. 78f(b).
    \6\ 15 U.S.C. 78f(b)(5).
    \7\ 17 CFR 240.19d-1(c)(2).
---------------------------------------------------------------------------

B. Self-Regulatory Organization's Statement on Burden on Competition

    CBOE does not believe that the proposed rule change will impose any

[[Page 1901]]

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

    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 the Exchange 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-2007-143 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-2007-143. 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 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-2007-143 and should be 
submitted on or before January 31, 2008.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\8\
---------------------------------------------------------------------------

    \8\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Florence E. Harmon,
Deputy Secretary.
 [FR Doc. E8-188 Filed 1-9-08; 8:45 am]

BILLING CODE 8011-01-P
