Self-Regulatory Organizations; Chicago Board Options Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Amending Obvious Error Rules, 40084-40086 [E5-3666]

Download as PDF 40084 Federal Register / Vol. 70, No. 132 / Tuesday, July 12, 2005 / Notices Electronic Comments • Use the Commission’s Internet comment form (http://www.sec.gov/ rules/sro.shtml); or • Send an e-mail to rulecomments@sec.gov. Please include File Number SR–Amex–2005–070 on the subject line. Paper Comments • Send paper comments in triplicate to Jonathan G. Katz, Secretary, Securities and Exchange Commission, 100 F Street, NE., Washington, DC 20549–9303. All submissions should refer to File Number SR–Amex–2005–070. 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. Copies of such filing also will be available for inspection and copying at Amex’s Office of the Secretary. 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–Amex–2005–070 and should be submitted on or before August 2, 2005. For the Commission, by the Division of Market Regulation, pursuant to delegated authority.17 J. Lynn Taylor, Assistant Secretary. [FR Doc. E5–3684 Filed 7–11–05; 8:45 am] BILLING CODE 8010–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–51969; File No. SR–CBOE– 2005–44] Self-Regulatory Organizations; Chicago Board Options Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Amending Obvious Error Rules July 5, 2005. 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 June 14, 2005, the Chicago Board Options Exchange, Inc. (‘‘CBOE’’ or ‘‘Exchange’’) 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 CBOE. The Exchange filed the proposed rule change as a ‘‘non-controversial’’ rule change under Rule 19b–4(f)(6) under the Act,3 which renders the proposal effective upon filing with the Commission. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The CBOE proposes to revise its obvious error rules for equity and index options. Below is the text of the proposed rule change. Proposed deletions are in [brackets]. * * * * * Chicago Board Options Exchange, Incorporated * * * * * Rule 6.25 Nullification and Adjustment of Equity Option Transactions This Rule governs the nullification and adjustment of transactions involving equity options. Rule 24.16 governs the nullification and adjustment of transactions involving index options and options on ETFs and HOLDRs. Paragraphs (a)(1), and (2) of this Rule have no applicability to trades executed in open outcry. (a) Trades Subject to Review A member or person associated with a member may have a trade adjusted or nullified if, in addition to satisfying the procedural requirements of paragraph 1 15 17 17 U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 3 17 CFR 240.19b–4(f)(6). CFR 200.30–3(a)(12). VerDate jul<14>2003 16:15 Jul 11, 2005 Jkt 205001 PO 00000 Frm 00098 Fmt 4703 Sfmt 4703 (b) below, one of the following conditions is satisfied: (1) No change (2) No Bid Series: Electronic transactions in series quoted no bid [at a nickel (i.e., $0.05 offer)] will be nullified provided at least one strike price below (for calls) or above (for puts) in the same options class was quoted no bid [at a nickel] at the time of execution. (3)–(5) No change (b)–(e) No change * * * * * Rule 24.16 Nullification and Adjustment of Index Option Transactions This Rule only governs the nullification and adjustment of transactions involving index options and options on ETFs or HLDRs. Rule 6.25 governs the nullification and adjustment of transactions involving equity options. Paragraphs (a)(1), (2), (6) and (7) of this Rule have no applicability to trades executed in open outcry. (a) Trades Subject to Review A member or person associated with a member may have a trade adjusted or nullified if, in addition to satisfying the procedural requirements of paragraph (b) below, one of the following conditions is satisfied: (1)–(6) No change (7) No Bid Series: Electronic transactions in series quoted no bid [at a nickel (i.e., $0.05 offer)] will be nullified provided at least one strike price below (for calls) or above (for puts) in the same options class was quoted no bid [at a nickel] at the time of execution. (b)–(e) No change * * * * * 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 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. The 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, Proposed Rule Change 1. Purpose The CBOE proposes to revise its obvious error rules with respect to E:\FR\FM\12JYN1.SGM 12JYN1 Federal Register / Vol. 70, No. 132 / Tuesday, July 12, 2005 / Notices equities and indexes (CBOE Rules 6.25 and 24.16, respectively) (‘‘Obvious Error Rules’’) to adjust the terms that relate to the nullification of no bid series as set forth in CBOE Rules 6.25(a)(2) and 24.16(a)(7) (together ‘‘No Bid Provisions’’). Under the current No Bid Provisions, electronic transactions in option series quoted no bid at a nickel (i.e., $0.05 offer) are nullified provided at least one strike price below (for calls) or above (for puts) in the same options class is quoted no bid at a nickel at the time of execution. A ‘‘no bid’’ option refers to an option where the bid price is $0.00.4 Series of options quoted no bid are usually deep out-of-the-money series that are perceived as having little if any chance of expiring in-the-money.5 For this reason, relatively few transactions occur in these series, and those that do are usually the result of a momentary pricing error. In some cases, the pricing error is substantial enough such that other provisions in the Obvious Error Rules become applicable. The Exchange asserts that in many cases though, the No Bid Provisions are the only provisions that would apply to the pricing error. The proposed rule change would remove the condition set forth in the No Bid Provisions that provides that the option series must be offered at a nickel and instead only require that the option series be quoted no bid. The Exchange states that the reason for this change is that options that are priced at no bid, regardless of the offer, are usually deep out-of-the-money series that are perceived as having little if any chance of expiring in-the-money. This is especially the case when the series below (for calls) or above (for puts) in the same option class similarly is quoted no bid. In this regard, the offer price is irrelevant. Therefore, transactions that are no bid at a dime, for example, are just as likely to be the result of an obvious error as are transactions that are no bid at a nickel when the series below (for calls) or above (for puts) in the same option class similarly is quoted no bid. The Exchange also notes that the text of the No Bid Provisions, as proposed, is substantively identical to Rule 1092(c)(ii)(E) of the Philadelphia Stock Exchange (‘‘Phlx’’) Rulebook, which applies to options on stocks, exchangetraded fund shares, and foreign currencies. 4 When the bid price is $0.00, the offer price is typically $0.05. In this instance, the option typically is referred to as ‘‘no bid at a nickel.’’ 5 For example, on July 11th with the underlying stock trading at $21, the JULY 40 calls likely will be quoted no-bid at a nickel. VerDate jul<14>2003 16:15 Jul 11, 2005 Jkt 205001 2. Statutory Basis The CBOE believes that the filing provides for the nullification of certain trades that result from an inaccurate pricing anomaly. For this reason, and because the same provision has already been approved for the Phlx,6 the Exchange believes that its proposal is consistent with Section 6(b) of the Act 7 in general, and furthers the objectives of Section 6(b)(5) of the Act 8 in particular, in that it is designed to promote just and equitable principles of trade, remove impediments to and perfect the mechanism of a free and open market and national market system and, in general, to protect investors and the public interest. B. Self-Regulatory Organization’s Statement on Burden on Competition The CBOE does not believe that the proposed rule change will impose any inappropriate 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 CBOE neither solicited nor received written comments on the proposed rule change. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Because the proposed rule change: (i) Does not significantly affect the protection of investors or the public interest; (ii) does not impose any significant burden on competition; and (iii) by its terms, does not become operative for 30 days after the date of filing (or such shorter time as the Commission may designate if consistent with the protection of investors and the public interest), the proposed rule change has become effective pursuant to Section 19(b)(3)(A) of the Act 9 and subparagraph (f)(6) of Rule 19b-4 thereunder.10 As required under Rule 19b-4(f)(6)(iii),11 the Exchange provided 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 the filing of the proposed rule change. 6 See Securities Exchange Act Release No. 49785 (May 28, 2004), 69 FR 32090 (June 8, 2004) (Order approving adoption of Phlx Rule 1092(c)(ii)(E)). 7 15 U.S.C. 78f(b). 8 15 U.S.C. 78f(b)(5). 9 15 U.S.C. 78s(b)(3)(A). 10 17 CFR 240.19b-4(f)(6). 11 17 CFR 240.19b-4(f)(6)(iii). PO 00000 Frm 00099 Fmt 4703 Sfmt 4703 40085 A proposed rule change filed under 19b-4(f)(6) normally may not become operative prior to 30 days after the date of filing.12 However, Rule 19b4(f)(6)(iii) 13 permits the Commission to designate a shorter time if such action is consistent with the protection of investors and the public interest. In addition, the Exchange has requested that the Commission waive the 30-day operative delay and render the proposed rule change to become operative immediately. The Commission believes that waiving the 30-day operative delay is consistent with the protection of investors and the public interest. Waiver of the 30-day operative delay would enable the Exchange to implement the proposal as quickly as possible. In addition, the Commission notes that the proposed No Bid Provisions are substantially identical to Phlx Rule 1092(c)(ii)(E). The Commission does not believe that the proposed rule change raises new regulatory issues. For the reasons stated above, the Commission designates the proposal to become operative immediately.14 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 the 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 rulecomments@sec.gov. Please include File Number SR-CBOE-2005-44 on the subject line. Paper Comments • Send paper comments in triplicate to Jonathan G. Katz, Secretary, Securities and Exchange Commission, 100 F Street, NE., Washington, DC 20549–9309. 12 Id. 13 Id. 14 For purposes of waiving the operative date of this proposal only, the Commission has considered the impact of the proposed rule on efficiency, competition, and capital formation. 15 U.S.C. 78c(f). E:\FR\FM\12JYN1.SGM 12JYN1 40086 Federal Register / Vol. 70, No. 132 / Tuesday, July 12, 2005 / Notices All submissions should refer to File Number SR–CBOE–2005–44. 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 Section. 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–2005–44 and should be submitted on or before August 2, 2005. For the Commission, by the Division of Market Regulation, pursuant to delegated authority.15 Jill M. Peterson, Assistant Secretary. [FR Doc. E5–3666 Filed 7–11–05; 8:45 am] BILLING CODE 8010–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–51967; File No. SR–CHX– 2004–25] Self-Regulatory Organizations; Chicago Stock Exchange, Inc.; Notice of Filing of Proposed Rule Change and Amendment Nos. 1 and 2 Thereto Relating to a Prohibition on Using a Layoff Service Unless the Service Provides Required Information to the Exchange July 1, 2005. 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 August 31, 2004, the Chicago Stock Exchange, 15 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 1 15 VerDate jul<14>2003 16:15 Jul 11, 2005 Jkt 205001 Inc. (‘‘CHX’’ 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 by the CHX. On June 7, 2005 and June 27, 2005, the Exchange filed Amendment Nos. 1 3 and 2 4 to the proposed rule change, respectively. The Commission is publishing this notice to solicit comments on the proposed rule change, as amended, from interested persons. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to amend CHX Article V, Rule 4 to prohibit Exchange participants, beginning August 1, 2005, from using any communications means to send orders to another market for execution (‘‘layoff service’’), unless that layoff service has established a process for providing the Exchange with specific information about the orders and the executions that participants receive. The text of the proposed rule change, as amended, is available on CHX’s Web site (http:// www.chx.com/marketreg/proposed rules.htm), at CHX’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 CHX included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received regarding the proposal. The text of these statements may be examined at the places specified in Item IV below. The CHX 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 Changes 1. Purpose The Exchange’s participants execute trades on the Exchange and on other 3 See Amendment No. 1 dated June 7, 2005. In Amendment No. 1, the Exchange modified the text of the proposed rule change in response to comments by the Commission staff. See infra notes 12–16 and accompanying text for a description of items included in Amendment No. 1. 4 See Amendment No. 2 dated June 27, 2005, replacing the original filing and Amendment No. 1 in their entirety. In Amendment No. 2, the Exchange eliminated the requirement to provide information about the contra party to the execution and made other technical changes to the proposal. PO 00000 Frm 00100 Fmt 4703 Sfmt 4703 markets. Most interaction with other markets occurs through electronic systems that are provided either by other markets themselves or by members of those markets. Although the Exchange currently receives execution information about its participants’ trading in other markets, the Exchange believes that it could conduct more efficient surveillance of its participants’ order-handling activities if it received additional types of information. This proposal, which would amend the Exchange’s rule relating to communications from the trading floor, is designed to provide the Exchange with the layoff service information that it needs to enhance its surveillance programs. Specifically, the proposal would prohibit Exchange participants, beginning August 1, 2005, from using a layoff service to send orders to another market for execution, unless that service (or the participant using the service) has established a process for providing the Exchange with the following specific information: (1) The symbol of the security to be traded; (2) the clearing organization; (3) an order identifier that uniquely identifies the order; (4) the participant recording the order details; (5) the number of shares; (6) the side of the market on which the order is placed; (7) a designation of the order type (e.g., market, limit, stop, stop limit); (8) whether the order is for the account of a customer or for the account of the participant sending the order; (9) whether the order is short or short exempt; (10) any limit price and/or stop price; (11) the date and time of order transmission; (12) the market to which the order was transmitted; (13) the time in force; (14) a designation of the order as held or not held; (15) any special conditions or instructions associated with the order (including any customer do-not-display instructions or all-ornone conditions); (16) any modifications to the details set out in (1) through (15), for all or part of an order or any cancellation of all or part of the order; (17) the date and time of the transmission of any modifications to the order or any cancellation of the order; (18) the date and time of any order expiration; (19) the identification of the party canceling or modifying the order; (20) the transaction price; (21) the number of shares executed; (22) the date and time of execution; (23) settlement instructions; (24) a system-generated time(s) of recording the required information; and (25) any other information that the Exchange may require from time to time.5 For purposes 5 See Proposed CHX Article V, Rule 4, Interpretation and Policy .01. E:\FR\FM\12JYN1.SGM 12JYN1

Agencies

[Federal Register Volume 70, Number 132 (Tuesday, July 12, 2005)]
[Notices]
[Pages 40084-40086]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E5-3666]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-51969; File No. SR-CBOE-2005-44]


Self-Regulatory Organizations; Chicago Board Options Exchange, 
Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule 
Change Amending Obvious Error Rules

July 5, 2005.
    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 June 14, 2005, the Chicago Board Options Exchange, Inc. (``CBOE'' or 
``Exchange'') 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 CBOE. The Exchange 
filed the proposed rule change as a ``non-controversial'' rule change 
under Rule 19b-4(f)(6) under the Act,\3\ which renders the proposal 
effective upon filing with the Commission. 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.
    \3\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------

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

    The CBOE proposes to revise its obvious error rules for equity and 
index options. Below is the text of the proposed rule change. Proposed 
deletions are in [brackets].
* * * * *

Chicago Board Options Exchange, Incorporated

* * * * *

Rule 6.25 Nullification and Adjustment of Equity Option Transactions

    This Rule governs the nullification and adjustment of transactions 
involving equity options. Rule 24.16 governs the nullification and 
adjustment of transactions involving index options and options on ETFs 
and HOLDRs. Paragraphs (a)(1), and (2) of this Rule have no 
applicability to trades executed in open outcry.
    (a) Trades Subject to Review
    A member or person associated with a member may have a trade 
adjusted or nullified if, in addition to satisfying the procedural 
requirements of paragraph (b) below, one of the following conditions is 
satisfied:
    (1) No change
    (2) No Bid Series: Electronic transactions in series quoted no bid 
[at a nickel (i.e., $0.05 offer)] will be nullified provided at least 
one strike price below (for calls) or above (for puts) in the same 
options class was quoted no bid [at a nickel] at the time of execution.
    (3)-(5) No change
    (b)-(e) No change
* * * * *

Rule 24.16 Nullification and Adjustment of Index Option Transactions

    This Rule only governs the nullification and adjustment of 
transactions involving index options and options on ETFs or HLDRs. Rule 
6.25 governs the nullification and adjustment of transactions involving 
equity options. Paragraphs (a)(1), (2), (6) and (7) of this Rule have 
no applicability to trades executed in open outcry.
    (a) Trades Subject to Review
    A member or person associated with a member may have a trade 
adjusted or nullified if, in addition to satisfying the procedural 
requirements of paragraph (b) below, one of the following conditions is 
satisfied:
    (1)-(6) No change
    (7) No Bid Series: Electronic transactions in series quoted no bid 
[at a nickel (i.e., $0.05 offer)] will be nullified provided at least 
one strike price below (for calls) or above (for puts) in the same 
options class was quoted no bid [at a nickel] at the time of execution.
    (b)-(e) No change
* * * * *

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 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. The 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, Proposed Rule Change

1. Purpose
    The CBOE proposes to revise its obvious error rules with respect to

[[Page 40085]]

equities and indexes (CBOE Rules 6.25 and 24.16, respectively) 
(``Obvious Error Rules'') to adjust the terms that relate to the 
nullification of no bid series as set forth in CBOE Rules 6.25(a)(2) 
and 24.16(a)(7) (together ``No Bid Provisions'').
    Under the current No Bid Provisions, electronic transactions in 
option series quoted no bid at a nickel (i.e., $0.05 offer) are 
nullified provided at least one strike price below (for calls) or above 
(for puts) in the same options class is quoted no bid at a nickel at 
the time of execution. A ``no bid'' option refers to an option where 
the bid price is $0.00.\4\ Series of options quoted no bid are usually 
deep out-of-the-money series that are perceived as having little if any 
chance of expiring in-the-money.\5\ For this reason, relatively few 
transactions occur in these series, and those that do are usually the 
result of a momentary pricing error. In some cases, the pricing error 
is substantial enough such that other provisions in the Obvious Error 
Rules become applicable. The Exchange asserts that in many cases 
though, the No Bid Provisions are the only provisions that would apply 
to the pricing error.
---------------------------------------------------------------------------

    \4\ When the bid price is $0.00, the offer price is typically 
$0.05. In this instance, the option typically is referred to as ``no 
bid at a nickel.''
    \5\ For example, on July 11th with the underlying stock trading 
at $21, the JULY 40 calls likely will be quoted no-bid at a nickel.
---------------------------------------------------------------------------

    The proposed rule change would remove the condition set forth in 
the No Bid Provisions that provides that the option series must be 
offered at a nickel and instead only require that the option series be 
quoted no bid. The Exchange states that the reason for this change is 
that options that are priced at no bid, regardless of the offer, are 
usually deep out-of-the-money series that are perceived as having 
little if any chance of expiring in-the-money. This is especially the 
case when the series below (for calls) or above (for puts) in the same 
option class similarly is quoted no bid. In this regard, the offer 
price is irrelevant. Therefore, transactions that are no bid at a dime, 
for example, are just as likely to be the result of an obvious error as 
are transactions that are no bid at a nickel when the series below (for 
calls) or above (for puts) in the same option class similarly is quoted 
no bid. The Exchange also notes that the text of the No Bid Provisions, 
as proposed, is substantively identical to Rule 1092(c)(ii)(E) of the 
Philadelphia Stock Exchange (``Phlx'') Rulebook, which applies to 
options on stocks, exchange-traded fund shares, and foreign currencies.
2. Statutory Basis
    The CBOE believes that the filing provides for the nullification of 
certain trades that result from an inaccurate pricing anomaly. For this 
reason, and because the same provision has already been approved for 
the Phlx,\6\ the Exchange believes that its proposal is consistent with 
Section 6(b) of the Act \7\ in general, and furthers the objectives of 
Section 6(b)(5) of the Act \8\ in particular, in that it is designed to 
promote just and equitable principles of trade, remove impediments to 
and perfect the mechanism of a free and open market and national market 
system and, in general, to protect investors and the public interest.
---------------------------------------------------------------------------

    \6\ See Securities Exchange Act Release No. 49785 (May 28, 
2004), 69 FR 32090 (June 8, 2004) (Order approving adoption of Phlx 
Rule 1092(c)(ii)(E)).
    \7\ 15 U.S.C. 78f(b).
    \8\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

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

    The CBOE does not believe that the proposed rule change will impose 
any inappropriate 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 CBOE neither solicited nor received written comments on the 
proposed rule change.

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

    Because the proposed rule change: (i) Does not significantly affect 
the protection of investors or the public interest; (ii) does not 
impose any significant burden on competition; and (iii) by its terms, 
does not become operative for 30 days after the date of filing (or such 
shorter time as the Commission may designate if consistent with the 
protection of investors and the public interest), the proposed rule 
change has become effective pursuant to Section 19(b)(3)(A) of the Act 
\9\ and subparagraph (f)(6) of Rule 19b-4 thereunder.\10\ As required 
under Rule 19b-4(f)(6)(iii),\11\ the Exchange provided 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 the filing of the 
proposed rule change.
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    \9\ 15 U.S.C. 78s(b)(3)(A).
    \10\ 17 CFR 240.19b-4(f)(6).
    \11\ 17 CFR 240.19b-4(f)(6)(iii).
---------------------------------------------------------------------------

    A proposed rule change filed under 19b-4(f)(6) normally may not 
become operative prior to 30 days after the date of filing.\12\ 
However, Rule 19b-4(f)(6)(iii) \13\ permits the Commission to designate 
a shorter time if such action is consistent with the protection of 
investors and the public interest. In addition, the Exchange has 
requested that the Commission waive the 30-day operative delay and 
render the proposed rule change to become operative immediately. The 
Commission believes that waiving the 30-day operative delay is 
consistent with the protection of investors and the public interest. 
Waiver of the 30-day operative delay would enable the Exchange to 
implement the proposal as quickly as possible. In addition, the 
Commission notes that the proposed No Bid Provisions are substantially 
identical to Phlx Rule 1092(c)(ii)(E). The Commission does not believe 
that the proposed rule change raises new regulatory issues. For the 
reasons stated above, the Commission designates the proposal to become 
operative immediately.\14\
---------------------------------------------------------------------------

    \12\ Id.
    \13\ Id.
    \14\ For purposes of waiving the operative date of this proposal 
only, the Commission has considered the impact of the proposed rule 
on efficiency, competition, and capital formation. 15 U.S.C. 78c(f).
---------------------------------------------------------------------------

    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 the 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-2005-44 on the subject line.

Paper Comments

     Send paper comments in triplicate to Jonathan G. Katz, 
Secretary, Securities and Exchange Commission, 100 F Street, NE., 
Washington, DC 20549-9309.

[[Page 40086]]

    All submissions should refer to File Number SR-CBOE-2005-44. 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 Section. 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-2005-44 and should be submitted on or before August 
2, 2005.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\15\
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    \15\ 17 CFR 200.30-3(a)(12).
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Jill M. Peterson,
Assistant Secretary.
[FR Doc. E5-3666 Filed 7-11-05; 8:45 am]
BILLING CODE 8010-01-P