
[Federal Register Volume 76, Number 226 (Wednesday, November 23, 2011)]
[Notices]
[Pages 72469-72470]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-30180]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-65781; File No. SR-CBOE-2011-101]


Self-Regulatory Organizations; Chicago Board Options Exchange, 
Incorporated; Notice of Filing and Immediate Effectiveness of a 
Proposed Rule Change To Clarify That CBSX Will Process Only Round-Lot 
Orders of HOLDRS

November 17, 2011.
    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 November 15, 2011, the Chicago Board Options Exchange, Incorporated 
(``Exchange'' or ``CBOE'') filed with the Securities and Exchange 
Commission (``Commission'') the proposed rule change as described in 
Items I and II below, which Items have been prepared by the Exchange. 
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.
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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 Rule 52.8 to clarify that CBOE Stock 
Exchange (``CBSX''), CBOE's stock trading facility, will only process 
round-lot orders \3\ of HOLDRS Trust Issued Receipts (``HOLDRS'') that 
trade on CBSX. The text of the proposed rule change is available on the 
Exchange's Web site (http://www.cboe.com/AboutCBOE/CBOELegalRegulatoryHome.aspx), at the Exchange's Office of the 
Secretary, and at the Commission.
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    \3\ A ``round-lot'' order is an order for a quantity that is a 
multiple of 100 (e.g. 100, 400, 1200). An ``odd-lot'' order is an 
order for a quantity that is less than 100. A ``mixed-lot'' order is 
an order for a quantity that is greater than 100 but not a multiple 
of 100 (e.g. 135, 372, 1126).
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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 self-regulatory organization 
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
    Rule 52.8 states that odd-lot orders (including the odd-lot potion 
of a mixed-lot order) are processed in the same manner as are round-lot 
orders, except (i) If an incoming odd-lot order trades against a quote 
in the CBSX Book, the new quantity remaining in the quote will be 
rounded down to the nearest lower round-lot amount (zero or multiple of 
100) for display purposes, with the remaining odd-lot amount being 
cancelled, or (ii) if an incoming order trades against a limit order 
resting on the CBSX Book and an odd-lot amount remains from the limit 
order resting on the CBSX Book, that odd-lot amount will remain in the 
system eligible for execution but will not be displayed.
    HOLDRS are Trust Issued Receipts that trade on CBSX and represent 
an investor's beneficial ownership of a specified group of stocks in 
various industries, sectors or groups.\4\ Currently, CBSX processes 
odd-lot and mixed-lot orders of HOLDRS in accordance with Rule 52.8, as 
described above. However, the prospectuses describing the terms of 
HOLDRS provide that investors may only acquire, hold, transfer, and 
surrender a round-lot of HOLDRS.\5\ The purpose of the proposed rule 
change is to amend Rule 52.8 to state that CBSX will only process 
round-lot orders of HOLDRS that trade on CBSX in accordance with the 
trading terms of HOLDRS. CBSX will no longer accept odd-lot or mixed-
lot orders of HOLDRS it receives.
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    \4\ The following is a list of current outstanding HOLDRS: 
Biotech (BBH), Broadband (BDH), B2B Internet (BHH), Europe 2001 
(EKH), Internet (HHH), Internet Architecture (IAH), Internet 
Infrastructure (IIH), Market 2000+ (MKH), Oil Services (OIH), 
Pharmaceutical (PPH), Regional Bank (RKH), Retail (RTH), 
Semiconductor (SMH), Software (SWH), Telecom (TTH), Utilities (UTH), 
and Wireless (WMH).
    \5\ The prospectuses also provide, however, that bid and ask 
prices are quoted per single HOLDR.
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2. Statutory Basis
    The Exchange believes the proposed rule change is consistent with 
Section 6(b) of the Act \6\ in general and furthers the objectives of 
Section 6(b)(5) \7\ in particular in that it is designed to prevent 
fraudulent and manipulative acts and practices and to promote just and 
equitable principles of trade, and in general to protect investors and 
the public interest. Specifically, the Exchange believes that the 
proposed rule change serves to foster investor protection by ensuring 
that investors not only are aware of this restriction on transactions 
in HOLDRS but also comply with this restriction going forward, as CBSX 
will no longer accept transactions that do not.
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    \6\ 15 U.S.C. 78f(b).
    \7\ 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

    No written comments were solicited or received with respect to the 
proposed rule change.

[[Page 72470]]

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    The foregoing rule change has become effective pursuant to Section 
19(b)(3)(A) of the Act \8\ and Rule 19b-4(f)(6) thereunder \9\ because 
the proposal does not: (i) Significantly affect the protection of 
investors or the public interest; (ii) impose any significant burden on 
competition; and (iii) by its terms, 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.\10\
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    \8\ 15 U.S.C. 78s(b)(3)(A).
    \9\ 17 CFR 240.19b-4(f)(6).
    \10\ In addition, Rule 19b-4(f)(6)(iii) requires the Exchange to 
give the Commission written notice of the Exchange's 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 
requirement.
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    The Exchange has requested that the Commission waive the 30-day 
operative delay period. The Commission believes that such action is 
consistent with the protection of investors and the public interest, 
because it will enable the Exchange immediately to align its trading 
rules with respect to HOLDRS with provisions of the HOLDRS 
prospectuses. Therefore, the Commission designates the proposed rule 
change to be operative upon filing.\11\
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    \11\ 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 summarily may temporarily suspend 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.\12\
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    \12\ 15 U.S.C. 78s(b)(3)(C).
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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 email to rule-comments@sec.gov. Please include 
File Number SR-CBOE-2011-101 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-CBOE-2011-101. This file 
number should be included on the subject line if email 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 Web site viewing and 
printing 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 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-2011-101 and should be 
submitted on or before December 14, 2011.
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    \13\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\13\
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2011-30180 Filed 11-22-11; 8:45 am]
BILLING CODE 8011-01-P


