
[Federal Register: August 5, 2008 (Volume 73, Number 151)]
[Notices]               
[Page 45505-45506]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr05au08-96]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-58243; File No. SR-CBOE-2008-73]

 
Self-Regulatory Organizations; Chicago Board Options Exchange, 
Incorporated; Notice of Filing and Immediate Effectiveness of Proposed 
Rule Change Relating to Permanent Approval of the Customer Portfolio 
Margin Pilot Program

July 29, 2008.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act'' or ``Exchange Act'') \1\ and Rule 19b-4 thereunder,\2\ notice 
is hereby given that on July 8, 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 
substantially prepared by CBOE. CBOE has filed the proposal as a ``non-
controversial'' proposed rule change pursuant to Section 19(b)(3)(A) of 
the Act \3\ and Rule 19b-4(f)(6) thereunder,\4\ which renders the 
proposed rule change effective upon filing with the Commission. 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).
    \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 make permanent the customer portfolio margin 
program codified in Exchange Rules 9.15(c)--Delivery of Current Options 
Disclosure Documents, 12.4--Portfolio Margin, 13.5--Customer Portfolio 
Margin Accounts, and 15.8A--Risk Analysis of Portfolio Margin Accounts. 
CBOE is not proposing any textual changes to its Constitution or Rules. 
The text of the proposed rule change is available on the Exchange's 
website (http://www.cboe.org/legal), at the Exchange's Office of the 
Secretary 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, 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 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange's customer portfolio margining program, as previously 
approved by the Commission, allows broker-dealers, for eligible 
securities, to compute customer margin requirements based on a 
portfolio margining methodology.\5\ The portfolio margining program is 
operating under a pilot program that is scheduled to expire on July 31, 
2008.\6\
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    \5\ See Exchange Act Release No. 54919 (December 12, 2006), 71 
FR 75781 (December 18, 2006) (approving amendments to the program on 
a pilot basis to expire on July 31, 2007).
    \6\ See Exchange Act Release No. 56109 (July 19, 2007), 72 FR 
41365 (July 27, 2007) (extending the pilot program through July 31, 
2008).
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    Amendments to the rules effective April 2, 2007, made equities, 
equity options, narrow-based index options, unlisted derivatives and 
security futures eligible for portfolio margining.\7\ The Exchange 
believes it has had sufficient time to assess the operation of the 
pilot program and has not encountered any problems or difficulties 
relating to the pilot program since its inception. For this reason, the 
Exchange proposes that the Commission approve the pilot program on a 
permanent basis.\8\
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    \7\ See Exchange Act Release No. 54919, supra note 1.
    \8\ The Exchange understands that FINRA filed a similar proposed 
rule change that, if approved, would continue to provide a uniform 
approach with respect to portfolio margining. See (SR-FINRA-2008-
041).
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2. Statutory Basis
    Because the portfolio margin pilot program has promoted greater 
reasonableness, accuracy and efficiency with respect to margin 
requirements and better aligns margin requirements with actual risk, 
the Exchange believes that this proposed rule change is consistent with 
Section 6(b) of the Exchange Act,\9\ in general, and furthers the 
objectives of Section 6(b)(5) of the Act \10\ in particular, in that it 
is designed to perfect the mechanism of a free and open market, and 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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[[Page 45506]]

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 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 forgoing proposed rule change 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 after the date of the filing, 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) thereunder.\12\
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    \11\ 15 U.S.C. 78s(b)(3)(A).
    \12\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) 
requires a self-regulatory organization to provide the Commission 
with 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 of filing of the 
proposed rule change, or such shorter time as designated by the 
Commission. The Exchange has fulfilled this requirement.
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    A proposed rule change filed under Rule 19b-4(f)(6) normally may 
not become operative prior to 30 days after the date of filing. 
However, Rule 19b-4(f)(6)(iii) permits the Commission to designate a 
shorter time if such action is consistent with the protection of 
investors and the public interest. The Exchange requests that the 
Commission waive the 30-day operative delay, which would make the 
change operative upon filing. 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 customer 
portfolio margining program to continue uninterrupted as it would 
otherwise expire on July 31, 2008.\13\ Accordingly, the Commission 
designates the proposed rule change effective upon filing with the 
Commission.
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    \13\ For purposes only of waiving the operative delay for this 
proposal, the Commission has considered the proposed rule's impact 
on efficiency, competition and capital formation. See 15 U.S.C. 
78c(f).
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    At any time within 60 days of the filing of the 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 Number SR-CBOE-2008-73 on the subject line.

Paper Comments

     Send paper comments in triplicate to Secretary, Securities 
and Exchange Commission, 100 F Street, NE., Washington, DC 20549-1090.

All submissions should refer to File Number SR-CBOE-2008-73. 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 available publicly. All 
submissions should refer to File Number SR-CBOE-2008-73 and should be 
submitted on or before August 26, 2008.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\14\
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    \14\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Acting Secretary.
[FR Doc. E8-17841 Filed 8-4-08; 8:45 am]

BILLING CODE 8010-01-P
