
[Federal Register: October 27, 2008 (Volume 73, Number 208)]
[Notices]               
[Page 63749-63750]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr27oc08-101]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-58828; File No. SR-CBOE-2008-107]

 
Self-Regulatory Organizations; Chicago Board Options Exchange, 
Incorporated; Notice of Filing and Immediate Effectiveness of Proposed 
Rule Change To Amend CBOE Rules Relating to the Minimum Size 
Requirement for Quotations

October 21, 2008.
    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 October 14, 2008, the Chicago Board Options Exchange, 
Incorporated (the ``Exchange'' or ``CBOE'') filed with the Securities 
and Exchange Commission (the ``Commission'') the proposed rule change 
as described in Items I, II and III 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

    The Exchange proposes to amend its rules pertaining to the minimum 
size requirement for quotations. The text of the proposed rule change 
is available on the Exchange's Web site (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, 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 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 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    CBOE proposes to amend its rules pertaining to the minimum size 
requirement for quotations. Currently, the initial size of a Market-
Maker's, DPM's or LMM's electronic quotation must be for at least 10 
contracts, unless the underlying primary market is disseminating a 100-
share quote. In that case, the quote size can be as low as one 
contract.\5\ In open outcry, the minimum quotation size is ten 
contracts for non-broker-dealer orders and one contract for broker-
dealer orders. (See, e.g., CBOE Rules 8.7, 8.14, and 8.15A.)
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    \5\ Pursuant to Rule 6.2B, if the underlying primary market 
disseminates less than a 1000-share quote immediately prior to the 
time an opening quote is submitted, the opening quote may be for as 
low as one contract.
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    CBOE proposes to amend its rules to allow the Exchange to set a 
minimum quotation size requirement for electronic and open outcry 
quotes on a class by class basis, provided the minimum set by the 
Exchange is at least one contract.\6\ CBOE would not impose a minimum 
quotation size requirement greater than 10 contracts. With respect to 
trading in open outcry, the minimum quotation size requirement could be 
different for non-broker-dealer orders and broker-dealer orders as is 
currently the case.
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    \6\ The minimum quotation size determined by CBOE might vary 
depending on the quotation size disseminated by the underlying 
primary market, as is currently permitted.
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    Although CBOE at this time does not anticipate lowering the minimum 
quotation size requirement from its current level of 10 contracts to 
one

[[Page 63750]]

contract, it believes it should have the flexibility to change the 
minimum size requirement on a class by class basis depending on market 
conditions and the trading and liquidity in a particular option class 
and its underlying security. CBOE notes that the minimum quotation size 
requirement for market-makers on NYSEArca and the Nasdaq Options Market 
is only one contract. (See NYSEArca Rule 6.37B and Nasdaq Options 
Market Rule Section 6(a).) As a result, CBOE believes the proposed rule 
change is based on and similar to the rules of other options exchanges.
    CBOE also proposes to make a technical change to Rule 6.2B, 
Interpretation .03 to delete the reference to RMM, which CBOE 
previously deleted from its rules.
2. Statutory Basis
    The proposed rule change would permit the Exchange to set a minimum 
quotation size requirement on a class by class basis, provided the 
minimum size is at least one contract. CBOE believes that this 
flexibility will enable the Exchange to take into consideration market 
conditions and the trading and liquidity in a particular option class 
and its underlying security. As a result, the Exchange believes the 
proposed rule change is consistent with the Securities Exchange Act of 
1934 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.\7\ Specifically, the Exchange believes the 
proposed rule change is consistent with the Section 6(b)(5) Act \8\ 
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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    \7\ 15 U.S.C. 78f(b).
    \8\ 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 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 self-regulatory organization 
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 \9\ and Rule 19b-4(f)(6) 
thereunder.\10\ 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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    \9\ 15 U.S.C. 78s(b)(3)(A).
    \10\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) 
under the Act requires that a self-regulatory organization submit to 
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 of filing 
of the proposed rule change, or such shorter time as designated by 
the Commission. The Exchange has satisfied this notice requirement.
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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-2008-107 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-2008-107. 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 the filing also will be available for 
inspection and copying at the principal office of the Exchange. 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-2008-107 and should be 
submitted on or before November 17, 2008.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\11\
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    \11\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Acting Secretary.
 [FR Doc. E8-25537 Filed 10-24-08; 8:45 am]

BILLING CODE 8011-01-P
