
[Federal Register: February 11, 2009 (Volume 74, Number 27)]
[Notices]
[Page 6927-6928]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr11fe09-96]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-59359; File No. SR-CBOE-2008-123]


Self-Regulatory Organizations; Chicago Board Options Exchange,
Incorporated; Order Approving Proposed Rule Change To Adopt a Trade,
Flash and Cancel Order Type for CBSX

February 4, 2009.
    On December 3, 2008, Chicago Board Options Exchange, Incorporated
(``CBOE'') filed with the Securities and Exchange Commission
(``Commission''), pursuant to Section 19(b)(1) of the Securities
Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder,\2\ a
proposed rule change to adopt a Trade, Flash and Cancel order type for
the CBOE Stock Exchange (``CBSX''). The proposed rule change was
published for comment in the Federal Register on January 2, 2009.\3\
The Commission received no comments regarding the proposal.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 59147 (December 22,
2008), 74 FR 150.
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    The Commission has carefully reviewed the proposed rule change and
finds that the proposed rule change is consistent with the requirements
of the Act and the rules and regulations thereunder applicable to a
national securities exchange \4\ and, in particular, Section 6(b)(5) of
the Act,\5\ which requires that an exchange have rules designed to
promote just and equitable principles of trade, remove impediments to
and perfect the mechanism of a free and open market and a national
market system, and to protect investors and the public interest. The
Commission also believes that the proposed rule change furthers the
objectives of Section 11A of the Act,\6\ as it helps to assure the
economically efficient execution of securities transactions, fair
competition among

[[Page 6928]]

brokers and dealers and among exchange markets, and the practicability
of brokers executing investors' orders in the best market.
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    \4\ In approving this proposed rule change, the Commission has
considered the proposed rule's impact on efficiency, competition,
and capital formation. See 15 U.S.C. 78c(f).
    \5\ 15 U.S.C. 78f(b)(5).
    \6\ 15 U.S.C. 78k-1.
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    If CBSX is at quoting at the national best bid or offer (``NBBO'')
when a Trade, Flash and Cancel order is submitted to CBSX, CBSX will
execute the incoming order automatically against the published
quotation. However, if CBSX is not quoting at the NBBO, the Trade,
Flash and Cancel designation initiates a process whereby the order
would be electronically exposed to CBSX traders for a period of up to
three seconds, rather than routed away to other markets, in accordance
with Exchange Rule 52.6(a). CBSX traders will not know the identity or
the account type of the party that submitted the Trade, Flash and
Cancel order.\7\ CBSX traders can respond with orders that match or
better the NBBO to trade with the Trade, Flash and Cancel order. If no
CBSX trader matches or improves on the NBBO by the end of the exposure
period, the CBSX system will cancel the Trade, Flash and Cancel order.
In no event will an execution result that is inferior to the NBBO.\8\
Use of the Trade, Flash and Cancel order is strictly voluntary. The
Commission believes that the Trade, Flash and Cancel order type is a
potentially useful means for order senders to control where their
orders are routed and to seek price improvement. Therefore, the
Commission believes that the proposal is consistent with the Act.
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    \7\ See e-mail from Angelo Evangelou, Assistant General Counsel,
CBOE, to Michael Gaw, Assistant Director, and Andrew Madar, Special
Counsel, Division of Trading and Markets, Commission, dated February
3, 2009.
    \8\ The Exchange stated that, ``If a flash responder attempts to
trade against the order by matching the flash price (the NBBO price
at the time the order was received by the CBSX System), the order
will be executed unless the system determines at the point of
execution that the flash price is worse than a revised NBBO in which
case the order will be cancelled.'' See e-mail from Angelo
Evangelou, Assistant General Counsel, CBOE, to Michael Gaw,
Assistant Director, and Andrew Madar, Special Counsel, Division of
Trading and Markets, Commission, dated December 19, 2008.
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    It is therefore ordered, pursuant to Section 19(b)(2) of the Act,
that the proposed rule change (SR-CBOE-2008-123) be, and it hereby is,
approved.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\9\
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    \9\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
 [FR Doc. E9-2774 Filed 2-10-09; 8:45 am]

BILLING CODE 8011-01-P
