Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Order Approving a Proposed Rule Change and Notice of Filing and Order Granting Accelerated Approval to Amendment No. 2 Thereto To List and Trade Short Term Option Series, 41451-41453 [E5-3812]

Download as PDF Federal Register / Vol. 70, No. 137 / Tuesday, July 19, 2005 / Notices Send or deliver comments to—Curtis Rumbaugh, CFC Operations Manager, Office of CFC Operations, U.S. Office of Personnel Management, 1900 E Street, NW., Room 5450, Washington, DC 20415. ADDRESSES: U.S. Office of Personnel Management. Linda M. Springer, Director. [FR Doc. 05–14112 Filed 7–18–05; 8:45 am] BILLING CODE 6325–46–P OFFICE OF PERSONNEL MANAGEMENT Proposed Collection; Comment Request for Review of a Currently Approved Information Collection: RI 38–107 Office of Personnel Management. ACTION: Notice. AGENCY: SUMMARY: In accordance with the Paperwork Reduction Act of 1995 (Pub. L. 104–13, May 22, 1995), this notice announces that the Office of Personnel Management (OPM) intends to submit to the Office of Management and Budget (OMB) a request for review of a currently approved information collection. RI 38–107, Verification of Who is Getting Payments, is used to verify that the entitled person is indeed receiving the monies payable. Failure to collect this information would cause OPM to pay monies absent the assurance of the correct payee. Comments are particularly invited on: Whether this collection of information is necessary for the proper performance of functions of the Office of Personnel Management, and whether it will have practical utility; whether our estimate of the public burden of this collection of information is accurate, and based on valid assumptions and methodology; and ways in which we can minimize the burden of the collection of information on those who are to respond, through the use of appropriate technological techniques or other forms of information technology. Approximately 25,400 forms are completed annually. Each form takes approximately 10 minutes to complete. The annual estimated burden is 4,234 hours. For copies of this proposal, contact Mary Beth Smith-Toomey on (202) 606– 8358, FAX (202) 418–3251 or via e-mail to mbtoomey@opm.gov. Please include a mailing address with your request. DATES: Comments on this proposal should be received within 60 calendar days from the date of this publication. VerDate jul<14>2003 18:27 Jul 18, 2005 Jkt 205001 Send or deliver comments to—Pamela S. Israel, Chief, Operations Support Group, Retirement Services Programs, U.S. Office of Personnel Management. 1900 E Street, NW., Room 3349, Washington, DC 20415. For Information Regarding Administrative Coordination Contact: Cyrus S. Benson, Team Leader, Publications Team, RIS Support Services/Support Group, (202) 606– 0623. ADDRESSES: U.S. Office of Personnel Management. Linda M. Springer, Director. [FR Doc. 05–14113 Filed 7–18–05; 8:45 am] BILLING CODE 6325–38–P Submission for OMB Review; Comment Request for Review of a Revised Information Collection: RI 20– 80 Office of Personnel Management. ACTION: Notice. AGENCY: Frm 00083 Fmt 4703 Sfmt 4703 U.S. Office of Personnel Management. Linda M. Springer, Director. [FR Doc. 05–14114 Filed 7–18–05; 8:45 am] BILLING CODE 6325–38–P SECURITIES AND EXCHANGE COMMISSION Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Order Approving a Proposed Rule Change and Notice of Filing and Order Granting Accelerated Approval to Amendment No. 2 Thereto To List and Trade Short Term Option Series July 12, 2005. In accordance with the Paperwork Reduction Act of 1995 (Pub. L. 104–13, May 22, 1995), this notice announces that the Office of Personnel Management (OPM) has submitted to the Office of Management and Budget (OMB) a request for review of a revised information collection. RI 20–80, Alternative Annuity Election, is used for individuals who are eligible to elect whether to receive a reduced annuity and a lump-sum payment equal to their retirement contributions (alternative form of annuity) or an unreduced annuity and no lump sum. Approximately 200 annuitants and survivors request reconsideration annually. We estimate it takes approximately 20 minutes to apply. The annual burden is 67 hours. For copies of this proposal, contact Mary Beth Smith-Toomey on (202) 606– 8358, FAX (202) 418–3251 or via e-mail to mbtoomey@opm.gov. Please include a mailing address with your request. DATES: Comments on this proposal should be received within 30 calendar days from the date of this publication. ADDRESSES: Send or deliver comments to—Pamela Israel, Chief, Operations Support Group, Retirement Services Program, U.S. Office of Personnel Management, 1900 E Street, NW., Room 3349, Washington, DC 20415; and Brenda Aguilar, OPM Desk Officer, Office of Information and Regulatory Affairs, Office of Management and PO 00000 Budget, New Executive Office Building, NW., Room 10235, Washington, DC 20503. For Information Regarding Administrative Coordination Contact: Cyrus S. Benson, Team Leader, Publications Team, Administrative Services Branch, (202) 606–0623. [Release No. 34–52011; File No. SR–CBOE– 2004–63] OFFICE OF PERSONNEL MANAGEMENT SUMMARY: 41451 I. Introduction On October 12, 2004, the Chicago Board Options Exchange, Incorporated (‘‘CBOE’’ or ‘‘Exchange’’) 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 initiate a one-year pilot program that would allow the Exchange to list and trade option series that expire one week after being opened (‘‘Short Term Option Series’’). The Exchange filed Amendment No. 1 with the Commission on January 21, 2005.3 The amended proposal was published for comment in the Federal Register on February 16, 2005.4 The Commission received one comment letter regarding the proposal.5 The Exchange filed Amendment No. 2 with the Commission on April 26, 2005.6 This notice and order requests 1 15 U.S.C. 78s(b)(1). CFR 240.19b–4. 3 Amendment No. 1 replaced the original filing in its entirety. 4 See Securities Exchange Act Release No. 51172 (February 9, 2005), 70 FR 7979. 5 See letter from Michael J. Ryan, Executive Vice President and General Counsel, American Stock Exchange, to Jonathan G. Katz, Secretary, Commission, dated March 10, 2005 (‘‘Amex Letter’’). 6 Amendment No. 2 replaced the original filing and Amendment No. 1 in their entirety. Amendment No. 2 proposes that Short Term Option 2 17 E:\FR\FM\19JYN1.SGM Continued 19JYN1 41452 Federal Register / Vol. 70, No. 137 / Tuesday, July 19, 2005 / Notices comment on Amendment No. 2 and approves the proposal, as amended, on an accelerated basis. II. Description of Proposed Rule CBOE proposes to amend its rules to establish a pilot program to list and trade Short Term Option Series, which would expire one week after the date on which a series is opened. Under the proposal, the Exchange could select up to five approved option classes 7 on which Short Term Option Series could be opened. A series could be opened on any Friday that is a business day and would expire at the close of business on the next Friday that is a business day. If a Friday were not a business day, the series could be opened (or would expire) on the first business day immediately prior to that Friday. Under the pilot program, the Exchange also could list and trade Short Term Option Series on any option class that is selected by another exchange that employs a similar pilot program. Limiting the number of such option classes would ensure that the addition of new series through the pilot program would have only a negligible impact on the Exchange’s and the Options Price Reporting Authority’s (‘‘OPRA’’) quoting capacity. Also, limiting the term of the pilot program to a period of one year would allow the Exchange and the Commission to determine whether the Short Term Option Series program should be extended, expanded, and/or made permanent. As originally proposed, all Short Term Option Series would be P.M.settled. However, in Amendment No. 2, CBOE revised the proposal so that a Short Term Option Series would be settled in the same manner as the monthly expiration series in the same class. If the monthly option contract for a particular class were A.M.-settled, as most index options are,8 the Short Term Option Series for that class also would be A.M.-settled; if the monthly option contract for a particular class were P.M.settled, as most non-index options are, the Short Term Option Series for that Series listed on currently approved option classes would settle in the same manner (i.e., with respect to A.M. or P.M. settlement and cash or physical settlement) as do the monthly expiration series in the same option class. 7 A Short Term Option Series could be opened in any option class that satisfied the applicable listing criteria under CBOE rules (i.e., stock options, options on exchange-traded funds as defined under Interpretation and Policy .06 to CBOE Rule 5.3, or options on indexes). 8 The Exchange notes, however, that certain monthly expiration index options—specifically, American- and European-style options on the S&P 100 Index (OEX and XEO, respectively)—are P.M.settled. Therefore, the Short Term Option Series in these index options would also be P.M.-settled. VerDate jul<14>2003 17:15 Jul 18, 2005 Jkt 205001 class also would be P.M.-settled. Similarly, Short Term Option Series for a particular class would be physically settled or cash-settled in the same manner as the monthly option contract in that class. The Exchange usually would open five Short Term Option Series for each expiration date in that class. The strike price of each Short Term Option Series would be fixed at a price per share, with at least two strike prices above and two strike prices below the value of the underlying stock or calculated index value at about the time that the Short Term Option Series is opened. CBOE would not open a Short Term Option Series in the same week that the corresponding monthly option series is expiring, because the monthly option series in its last week before expiration is functionally equivalent to the Short Term Option Series. The interval between strike prices on Short Term Option Series would be the same as with the corresponding monthly option series. CBOE would aggregate a Short Term Option Series with its corresponding monthly option series for purposes of the Exchange’s rules on position limits. The Exchange represented that it has the system capacity to adequately handle the new option series contemplated by this proposal. The Exchange provided to the Commission information in a confidential submission to support that representation. CBOE proposed that the pilot program extend one year from the date of this approval. III. Discussion After careful review, the Commission finds that the proposal, as amended, is consistent with the requirements of the Act and the rules and regulations thereunder applicable to a national securities exchange.9 In particular, the Commission believes that the proposal is consistent with the requirements of Section 6(b)(5) of the Act,10 which requires, among other things, that the rules of a national securities exchange be designed to remove impediments to and perfect the mechanism of a free and open market and a national market system and, in general, to protect investors and the public interest. The Commission believes that listing and trading Short Term Option Series, under the terms described in CBOE’s proposal, will further the public interest by offering investors new means of 9 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). 10 15 U.S.C. 78f(b)(5). PO 00000 Frm 00084 Fmt 4703 Sfmt 4703 managing their risk exposures and carrying out their investment objectives. The Commission also believes that the pilot program strikes a reasonable balance between the Exchange’s desire to offer a wider array of investment opportunities and the need to avoid unnecessary proliferation of option series that could compromise options quotation capacity. The Commission expects CBOE to monitor the trading and quotation volume associated with the additional option series created under the pilot program and the effect of these additional series on the capacity of the Exchange’s, OPRA’s, and vendors’ systems. The Commission received one comment letter on the proposed rule change.11 The commenter questioned the appropriateness of P.M. settlement for Short Term Option Series on indexes, given the Commission’s historical concern that P.M.-settled index options have the potential to increase volatility in the underlying equity market. The Commission shares the commenter’s concern. In Amendment No. 2, CBOE revised its proposal so that all Short Term Option Series will be settled in the same manner as the corresponding monthly expiration series in the same class. Consequently, the majority of Short Term Option Series on indexes will be A.M.-settled, as are the majority of regular index options. The Commission believes that this amendment adequately addresses any concerns regarding settlement time. Pursuant to Section 19(b)(2) of the Act,12 the Commission finds good cause for approving the amended proposal prior to the thirtieth day after the publication of Amendment No. 2 in the Federal Register. Amendment No. 2 proposes that Short Term Option Series listed on currently approved option classes will settle in the same manner (i.e., with respect to A.M. or P.M. settlement and cash or physical settlement) as do their corresponding monthly expiration series in the same option class. The Commission finds good cause to accelerate approval of the amended proposal because CBOE’s approach to settlement times for the new Short Term Option Series is consistent with prior Commission guidance regarding options settlement times generally. IV. Solicitation of Comments Concerning Amendment No. 2 Interested persons are invited to submit written data, views, and 11 See 12 15 E:\FR\FM\19JYN1.SGM Amex Letter, supra note 5. U.S.C. 78s(b)(2). 19JYN1 Federal Register / Vol. 70, No. 137 / Tuesday, July 19, 2005 / Notices 41453 arguments concerning Amendment No. 2, including whether it is consistent with the Act. Comments may be submitted by any of the following methods: CBOE–2004–63), as amended, is approved, and that Amendment No. 2 thereto is approved on an accelerated basis, as a pilot program, through July 12, 2006. Chicago Board Options Exchange, Incorporated Rules * * * * * Electronic Comments • Use the Commission’s Internet comment form (https://www.sec.gov/ rules/sro.shtml); or • Send an e-mail to rulecomments@sec.gov. Please include File Number SR–CBOE–2004–63 on the subject line. For the Commission, by the Division of Market Regulation, pursuant to delegated authority.14 Jill M. Peterson Assistant Secretary [FR Doc. E5–3812 Filed 7–18–05; 8:45 am] Paper Comments • Send paper comments in triplicate to Jonathan G. Katz, Secretary, Securities and Exchange Commission, Station Place, 100 F Street, NE., Washington, DC 20549–9303. All submissions should refer to File Number SR–CBOE–2004–63. 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 (https://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 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–2004–63 and should be submitted on or before August 9, 2005. SECURITIES AND EXCHANGE COMMISSION (a)–(c) No Change. * * * Interpretations and Policies: .01 Rule 7.11 governs the liability of the Exchange for claims arising out of errors or omissions of an Order Book Official or his/her assistants or clerks or a PAR Official or his/her assistants or clerks. .02–.04 No Change. * * * * * V. Conclusion For the foregoing reasons, the Commission finds that the proposed rule change, as amended, is consistent with the requirements of the Act and the rules and regulations thereunder. It is therefore ordered, pursuant to Section 19(b)(2) of the Act,13 that the proposed rule change (File No. SR– 13 Id. VerDate jul<14>2003 18:27 Jul 18, 2005 Jkt 205001 BILLING CODE 8010–01–P [Release No. 34–52017; File No. SR–CBOE– 2005–46] Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing of a Proposed Rule Change and Amendment No. 1 Thereto Relating to the Establishment of PAR Officials July 12, 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 10, 2005, the Chicago Board Options Exchange, Incorporated (‘‘CBOE’’ 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 Exchange. On July 1, 2005, CBOE submitted Amendment No. 1 to the proposed rule change.3 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 its rules relating to Designated Primary Market Makers (‘‘DPMs’’). The text of the proposed rule change, as amended, is below. Proposed new language is in italics; deletions are in brackets. * * * * * CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 3 Amendment No. 1 replaced the original rule filing in its entirety. In Amendment No. 1, CBOE added amendments to certain Exchange Rules relating to the operation of the Plan for the Purpose of Creating and Operating an Intermarket Option Linkage (‘‘Linkage Plan’’) to accommodate the implementation of the proposed PAR Official Rules and other proposed rule changes described herein. PO 00000 14 17 1 15 Frm 00085 Fmt 4703 Sfmt 4703 Rule 6.7. Rule 6.8. Exchange Liability RAES Operations No Change. * * * Interpretations and Policies: .01 No Change. .02 (a) No Change. (b) In respect of those classes of options that have been specifically designated by the appropriate Floor Procedure Committee as coming within the scope of this sentence (‘‘automatic step-up classes’’), under circumstances where the Exchange’s best bid or offer is inferior to the current best bid or offer in another market by no more than the ‘‘step-up amount’’ as defined below, such orders will be automatically executed on RAES at the current best bid or offer in the other market. (i) In respect of automatic step-up classes of options under circumstances where the Exchange’s best bid or offer is inferior to the current best bid or offer in another market by more than the step-up amount, or (ii) In respect of series of option classes designated by the appropriate Floor Procedure Committee or its Chairman under circumstances where the NBBO for one of the series is crossed (e.g., 6.10 bid, 6 asked) or locked (e.g., 6 bid, 6 asked), or (iii) In respect of specified automatic step-up classes or series of options or specified markets under circumstances where the Chairman of the appropriate Floor Procedure Committee or his designee has determined that automatic step-up should not apply because quotes in such options or markets are deemed not to be reliable, or (iv) In respect of classes of equity options other than automatic step-up classes where the Exchange’s best bid or offer is inferior to the current best bid or offer in another market by any amount, such orders will be rerouted for non-automated handling to [the DPM or OBO] a PAR workstation in the trading crowd for that class of options, or to any other location in the event of system problems or contrary routing instructions from the firm that E:\FR\FM\19JYN1.SGM 19JYN1

Agencies

[Federal Register Volume 70, Number 137 (Tuesday, July 19, 2005)]
[Notices]
[Pages 41451-41453]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E5-3812]


=======================================================================
-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-52011; File No. SR-CBOE-2004-63]


Self-Regulatory Organizations; Chicago Board Options Exchange, 
Incorporated; Order Approving a Proposed Rule Change and Notice of 
Filing and Order Granting Accelerated Approval to Amendment No. 2 
Thereto To List and Trade Short Term Option Series

July 12, 2005.

I. Introduction

    On October 12, 2004, the Chicago Board Options Exchange, 
Incorporated (``CBOE'' or ``Exchange'') 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 initiate a one-year pilot 
program that would allow the Exchange to list and trade option series 
that expire one week after being opened (``Short Term Option Series''). 
The Exchange filed Amendment No. 1 with the Commission on January 21, 
2005.\3\ The amended proposal was published for comment in the Federal 
Register on February 16, 2005.\4\ The Commission received one comment 
letter regarding the proposal.\5\ The Exchange filed Amendment No. 2 
with the Commission on April 26, 2005.\6\ This notice and order 
requests

[[Page 41452]]

comment on Amendment No. 2 and approves the proposal, as amended, on an 
accelerated basis.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ Amendment No. 1 replaced the original filing in its 
entirety.
    \4\ See Securities Exchange Act Release No. 51172 (February 9, 
2005), 70 FR 7979.
    \5\ See letter from Michael J. Ryan, Executive Vice President 
and General Counsel, American Stock Exchange, to Jonathan G. Katz, 
Secretary, Commission, dated March 10, 2005 (``Amex Letter'').
    \6\ Amendment No. 2 replaced the original filing and Amendment 
No. 1 in their entirety. Amendment No. 2 proposes that Short Term 
Option Series listed on currently approved option classes would 
settle in the same manner (i.e., with respect to A.M. or P.M. 
settlement and cash or physical settlement) as do the monthly 
expiration series in the same option class.
---------------------------------------------------------------------------

II. Description of Proposed Rule

    CBOE proposes to amend its rules to establish a pilot program to 
list and trade Short Term Option Series, which would expire one week 
after the date on which a series is opened. Under the proposal, the 
Exchange could select up to five approved option classes \7\ on which 
Short Term Option Series could be opened. A series could be opened on 
any Friday that is a business day and would expire at the close of 
business on the next Friday that is a business day. If a Friday were 
not a business day, the series could be opened (or would expire) on the 
first business day immediately prior to that Friday.
---------------------------------------------------------------------------

    \7\ A Short Term Option Series could be opened in any option 
class that satisfied the applicable listing criteria under CBOE 
rules (i.e., stock options, options on exchange-traded funds as 
defined under Interpretation and Policy .06 to CBOE Rule 5.3, or 
options on indexes).
---------------------------------------------------------------------------

    Under the pilot program, the Exchange also could list and trade 
Short Term Option Series on any option class that is selected by 
another exchange that employs a similar pilot program. Limiting the 
number of such option classes would ensure that the addition of new 
series through the pilot program would have only a negligible impact on 
the Exchange's and the Options Price Reporting Authority's (``OPRA'') 
quoting capacity. Also, limiting the term of the pilot program to a 
period of one year would allow the Exchange and the Commission to 
determine whether the Short Term Option Series program should be 
extended, expanded, and/or made permanent.
    As originally proposed, all Short Term Option Series would be P.M.-
settled. However, in Amendment No. 2, CBOE revised the proposal so that 
a Short Term Option Series would be settled in the same manner as the 
monthly expiration series in the same class. If the monthly option 
contract for a particular class were A.M.-settled, as most index 
options are,\8\ the Short Term Option Series for that class also would 
be A.M.-settled; if the monthly option contract for a particular class 
were P.M.-settled, as most non-index options are, the Short Term Option 
Series for that class also would be P.M.-settled. Similarly, Short Term 
Option Series for a particular class would be physically settled or 
cash-settled in the same manner as the monthly option contract in that 
class. The Exchange usually would open five Short Term Option Series 
for each expiration date in that class. The strike price of each Short 
Term Option Series would be fixed at a price per share, with at least 
two strike prices above and two strike prices below the value of the 
underlying stock or calculated index value at about the time that the 
Short Term Option Series is opened. CBOE would not open a Short Term 
Option Series in the same week that the corresponding monthly option 
series is expiring, because the monthly option series in its last week 
before expiration is functionally equivalent to the Short Term Option 
Series. The interval between strike prices on Short Term Option Series 
would be the same as with the corresponding monthly option series. CBOE 
would aggregate a Short Term Option Series with its corresponding 
monthly option series for purposes of the Exchange's rules on position 
limits.
---------------------------------------------------------------------------

    \8\ The Exchange notes, however, that certain monthly expiration 
index options--specifically, American- and European-style options on 
the S&P 100 Index (OEX and XEO, respectively)--are P.M.-settled. 
Therefore, the Short Term Option Series in these index options would 
also be P.M.-settled.
---------------------------------------------------------------------------

    The Exchange represented that it has the system capacity to 
adequately handle the new option series contemplated by this proposal. 
The Exchange provided to the Commission information in a confidential 
submission to support that representation.
    CBOE proposed that the pilot program extend one year from the date 
of this approval.

III. Discussion

    After careful review, the Commission finds that the proposal, as 
amended, is consistent with the requirements of the Act and the rules 
and regulations thereunder applicable to a national securities 
exchange.\9\ In particular, the Commission believes that the proposal 
is consistent with the requirements of Section 6(b)(5) of the Act,\10\ 
which requires, among other things, that the rules of a national 
securities exchange be designed to remove impediments to and perfect 
the mechanism of a free and open market and a national market system 
and, in general, to protect investors and the public interest.
---------------------------------------------------------------------------

    \9\ 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).
    \10\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    The Commission believes that listing and trading Short Term Option 
Series, under the terms described in CBOE's proposal, will further the 
public interest by offering investors new means of managing their risk 
exposures and carrying out their investment objectives. The Commission 
also believes that the pilot program strikes a reasonable balance 
between the Exchange's desire to offer a wider array of investment 
opportunities and the need to avoid unnecessary proliferation of option 
series that could compromise options quotation capacity. The Commission 
expects CBOE to monitor the trading and quotation volume associated 
with the additional option series created under the pilot program and 
the effect of these additional series on the capacity of the 
Exchange's, OPRA's, and vendors' systems.
    The Commission received one comment letter on the proposed rule 
change.\11\ The commenter questioned the appropriateness of P.M. 
settlement for Short Term Option Series on indexes, given the 
Commission's historical concern that P.M.-settled index options have 
the potential to increase volatility in the underlying equity market.
---------------------------------------------------------------------------

    \11\ See Amex Letter, supra note 5.
---------------------------------------------------------------------------

    The Commission shares the commenter's concern. In Amendment No. 2, 
CBOE revised its proposal so that all Short Term Option Series will be 
settled in the same manner as the corresponding monthly expiration 
series in the same class. Consequently, the majority of Short Term 
Option Series on indexes will be A.M.-settled, as are the majority of 
regular index options. The Commission believes that this amendment 
adequately addresses any concerns regarding settlement time.
    Pursuant to Section 19(b)(2) of the Act,\12\ the Commission finds 
good cause for approving the amended proposal prior to the thirtieth 
day after the publication of Amendment No. 2 in the Federal Register. 
Amendment No. 2 proposes that Short Term Option Series listed on 
currently approved option classes will settle in the same manner (i.e., 
with respect to A.M. or P.M. settlement and cash or physical 
settlement) as do their corresponding monthly expiration series in the 
same option class. The Commission finds good cause to accelerate 
approval of the amended proposal because CBOE's approach to settlement 
times for the new Short Term Option Series is consistent with prior 
Commission guidance regarding options settlement times generally.
---------------------------------------------------------------------------

    \12\ 15 U.S.C. 78s(b)(2).
---------------------------------------------------------------------------

IV. Solicitation of Comments Concerning Amendment No. 2

    Interested persons are invited to submit written data, views, and

[[Page 41453]]

arguments concerning Amendment No. 2, including whether it is 
consistent with the Act. Comments may be submitted by any of the 
following methods:

Electronic Comments

     Use the Commission's Internet comment form (https://
www.sec.gov/rules/sro.shtml); or
     Send an e-mail to rule-comments@sec.gov. Please include 
File Number SR-CBOE-2004-63 on the subject line.

Paper Comments

     Send paper comments in triplicate to Jonathan G. Katz, 
Secretary, Securities and Exchange Commission, Station Place, 100 F 
Street, NE., Washington, DC 20549-9303.
    All submissions should refer to File Number SR-CBOE-2004-63. 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 (https://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 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-2004-63 and should be submitted on or before August 
9, 2005.

V. Conclusion

    For the foregoing reasons, the Commission finds that the proposed 
rule change, as amended, is consistent with the requirements of the Act 
and the rules and regulations thereunder.
    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\13\ that the proposed rule change (File No. SR-CBOE-2004-63), as 
amended, is approved, and that Amendment No. 2 thereto is approved on 
an accelerated basis, as a pilot program, through July 12, 2006.
---------------------------------------------------------------------------

    \13\ Id.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\14\
---------------------------------------------------------------------------

    \14\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Jill M. Peterson
Assistant Secretary
[FR Doc. E5-3812 Filed 7-18-05; 8:45 am]
BILLING CODE 8010-01-P
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