Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing of Proposed Rule Change Relating to the Elimination of Position and Exercise Limits on NDX Options, 50433-50435 [05-16963]
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Federal Register / Vol. 70, No. 165 / Friday, August 26, 2005 / Notices
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.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Within 35 days of the date of
publication of this notice in the Federal
Register or within such longer period (i)
as the Commission may designate up to
90 days of such date if it finds such
longer period to be appropriate and
publishes its reasons for so finding, or
(ii) as to which the Amex consents, the
Commission will:
(A) By order approve such proposed
rule change; or
(B) Institute proceedings to determine
whether the proposed rule change
should be disapproved.
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 (https://www.sec.gov/
rules/sro.shtml); or
• Send an e-mail to rulecomments@sec.gov. Please include File
Number SR–Amex–2005–063 on the
subject line.
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, 100 F Street, NE., Washington,
DC 20549. Copies of such filing also will
be available for inspection and copying
at the principal office of the Amex. 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 publicly available. All
submissions should refer to File
Number SR–Amex–2005–063 and
should be submitted on or before
September 16, 2005.
For the Commission, by the Division of
Market Regulation, pursuant to delegated
authority.14
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. E5–4658 Filed 8–25–05; 8:45 am]
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–52313; File No. SR–CBOE–
2005–41]
Self-Regulatory Organizations;
Chicago Board Options Exchange,
Incorporated; Notice of Filing of
Proposed Rule Change Relating to the
Elimination of Position and Exercise
Limits on NDX Options
August 22, 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 May 23,
Paper Comments
2005, the Chicago Board Options
• Send paper comments in triplicate
Exchange, Incorporated (‘‘CBOE’’ or
to Jonathan G. Katz, Secretary,
‘‘Exchange’’) filed with the Securities
Securities and Exchange Commission,
and Exchange Commission
Station Place, 100 F Street, NE.,
(‘‘Commission’’) the proposed rule
Washington, DC 20549–9303. All
change as described in Items I, II, and
submissions should refer to File
III below, which Items have been
Number SR–Amex–2005–063. This file
prepared by the CBOE. The Commission
number should be included on the
is publishing this notice to solicit
subject line if e-mail is used. To help the
comments on the proposed rule change
Commission process and review your
from interested persons.
comments more efficiently, please use
only one method. The Commission will I. Self-Regulatory Organization’s
post all comments on the Commission’s Statement of the Terms of Substance of
the Proposed Rule Change
Internet Web site (https://www.sec.gov/
rules/sro.shtml). Copies of the
The Exchange proposes to amend its
submission, all subsequent
rules to eliminate position and exercise
amendments, all written statements
limits for options on the Nasdaq 100
with respect to the proposed rule
Index (‘‘NDX’’). The text of the proposed
change that are filed with the
rule change is available on the CBOE’s
Commission, and all written
Web site (https://www.cboe.com), at the
communications relating to the
proposed rule change between the
14 17 CFR 200.30–3(a)(12).
1 15 U.S.C. 78s(b)(1).
Commission and any person, other than
2 17 CFR 240.19b–4.
those that may be withheld from the
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16:18 Aug 25, 2005
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50433
CBOE’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
CBOE included statements concerning
the purpose of and basis for the
proposed rule change and discussed any
comments it had 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, the Proposed Rule
Change
1. Purpose
The CBOE proposes to eliminate
position and exercise limits for options
on the NDX, a broad-based securities
index. In November 2001, the
Commission granted permanent
approval to a CBOE pilot program that
eliminated position and exercise limits
for options on the S&P 500 Index
(‘‘SPX’’), the S&P 100 Index (‘‘OEX’’),
and the Dow Jones Industrial Average
(‘‘DJX’’).3 The Exchange believes that
the circumstances and considerations
relied upon in approving the
elimination of position and exercise
limits for options on those broad-based
indexes equally apply to this proposal
relating to NDX position and exercise
limits.
In the Permanent Approval Order
relating to SPX, OEX, and DJX options,
the Commission cited several reasons
for allowing the Exchange to eliminate
position and exercise limits for these
options. First, the Commission
expressed its belief that the enormous
capitalization of each index and the
deep liquid markets for the securities
underlying each index significantly
reduced concerns of market
manipulation or disruptions in the
underlying markets.4 The Commission
previously had also noted the active
trading volume for options on the
3 See Securities Exchange Act Release No. 44994
(October 26, 2001), 66 FR 55722 (November 2, 2001)
(order granting permanent approval to the
elimination of position and exercise limits on the
SPX, OEX, and DJX) (‘‘Permanent Approval
Order’’). See also Securities Exchange Act Release
No. 40969 (January 22, 1999), 64 FR 4911 (February
1, 1999) (order approving the original pilot
program) (‘‘Pilot Approval Order’’).
4 See Permanent Approval Order, supra note 3.
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50434
Federal Register / Vol. 70, No. 165 / Friday, August 26, 2005 / Notices
respective indexes.5 The CBOE believes
that NDX shares these factors in
common with the SPX, OEX, and DJX.
As of the date of this rule filing, the
approximate market capitalizations of
the SPX, OEX, and DJX were $10.97
trillion, $5.94 trillion, and $3.7 trillion,
respectively. The average daily trading
volumes (‘‘ADTVs’’) for all underlying
components of the indexes were 1,250,
560, and 250 million shares,
respectively, and the ADTV for options
on the indexes were 253,981 contracts,
72,809 contracts, and 30,938 contracts,
respectively.6 The CBOE believes that
the NDX has very comparable
characteristics. The market
capitalization for the NDX is $1.84
trillion dollars, the ADTV for the
underlying securities is 420 million
shares, and the options ADTV is 44,008
contracts.
Secondly, with respect to SPX, OEX,
and DJX options, the Commission noted
that the financial requirements imposed
by both the Exchange and the
Commission help to address concerns
that a CBOE member or its customer(s)
may try to maintain an inordinately
large unhedged position in the indexes.7
These identical financial requirements
also apply to NDX options. Under CBOE
rules, the Exchange has the authority to
impose additional margin upon
accounts maintaining underhedged
positions, and is further able to monitor
accounts to determine when such action
is warranted. As noted in the
Exchange’s rules, the clearing firm
carrying such an account would be
subject to capital charges under Rule
15c3–1 under the Act 8 to the extent of
any resulting margin deficiency.9
Finally, the Exchange believes that
with regard to SPX, OEX, and DJX
options, the Commission relied
substantially on the Exchange’s ability
to provide surveillance and reporting
safeguards to detect and deter trading
abuses arising from the elimination of
position and exercise limits in options
on these indexes. The Exchange
represents that it monitors trading in
NDX options in much the same manner
as trading in SPX, OEX, and DJX options
and that the current CBOE surveillance
procedures are more than adequate to
5 See
Pilot Approval Order, supra note 3.
6 ADTVs are calculated over the previous three
months of trading.
7 See Permanent Approval Order, supra note 3.
8 17 CFR 240.15c3–1.
9 See Interpretation and Policy .04 to CBOE Rule
24.4. Clarified as per telephone conversation
between Ira Brandriss, Special Counsel, and
Theodore Venuti, Attorney, Division of Market
Regulation, Commission, and James M. Flynn,
Attorney II, Legal Division, CBOE, on August 12,
2005 (‘‘Telephone Conversation of August 12,
2005’’).
VerDate jul<14>2003
16:18 Aug 25, 2005
Jkt 205001
continue monitoring NDX options.
Additionally, the Exchange proposes to
impose a reporting requirement on
CBOE members (other than CBOE
market-makers) and member
organizations that trade NDX options.
This reporting requirement, which is
currently imposed on members and
member organizations that trade SPX
and OEX options, would require each
member or member organization that
maintains in excess of 100,000 NDX
contracts on the same side of the
market, for its own account or for the
account of a customer, to report
information as to whether the positions
are hedged and provide documentation
as to how such contracts are hedged, in
a manner and form required by the
Exchange’s Department of Market
Regulation.10 The Exchange also may
specify other reporting requirements, as
well as the limit at which the reporting
requirement may be triggered.11
In the interest of consistency, the
Exchange also proposes to amend
Exchange rules relating to the trading of
FLEX broad-based index options to
reflect that there shall be no exercise or
position limits on NDX options and to
adopt the 100,000 contract reporting
requirement for NDX FLEX options.12
Thus, the provisions in CBOE Rule
24A.7(b) applicable specifically to SPX
and OEX FLEX options shall also apply
to NDX FLEX options.13
The Exchange believes that
eliminating position and exercise limits
for NDX options and FLEX options is
consistent with CBOE Rules relating to
similar broad-based indexes and also
allows CBOE members and their
customers greater hedging and
investment opportunities.
2. Statutory Basis
By placing position and exercise
limits for NDX options on an equal basis
with other similar broad-based index
options, the Exchange believes that this
proposed rule change is consistent with
Section 6(b) of the Act,14 in general, and
furthers the objectives of Section
6(b)(5),15 in particular, in that it should
promote just and equitable principles of
trade, serve to remove impediments to
and perfect the mechanism of a free and
10 See
Interpretation and Policy .03 to CBOE Rule
24.4.
11 Id.
12 See CBOE Rules 24A.7 and 24A.8. The text of
Rule 24A.8 is not amended by this proposed rule
change.
13 This would include the authority of the
Exchange to impose additional margin on accounts
maintaining underhedged positions in these
options. Telephone Conversation of August 12,
2005, supra note.
14 15 U.S.C. 78f(b).
15 15 U.S.C. 78f(b)(5).
PO 00000
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open market and a national market
system, and to protect investors and the
public interest.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The CBOE believes that the proposed
rule change would not impose any
burden on competition that is 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.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Within 35 days of the date of
publication of this notice in the Federal
Register or within such longer period (i)
as the Commission may designate up to
90 days of such date if it finds such
longer period to be appropriate and
publishes its reasons for so finding, or
(ii) as to which the CBOE consents, the
Commission will:
(A) By order approve such proposed
rule change; or
(B) Institute proceedings to determine
whether the proposed rule change
should be disapproved.
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 (https://www.sec.gov/
rules/sro.shtml); or
• Send an e-mail to rulecomments@sec.gov. Please include File
Number SR–CBOE–2005–41 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–2005–41. 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
E:\FR\FM\26AUN1.SGM
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Federal Register / Vol. 70, No. 165 / Friday, August 26, 2005 / Notices
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
Section, 100 F Street, NE., Washington,
DC 20549. 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 publicly available. All
submissions should refer to File
Number SR–CBOE–2005–41 and should
be submitted on or before September 16,
2005.
For the Commission, by the Division of
Market Regulation, pursuant to delegated
authority.16
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 05–16963 Filed 8–25–05; 8:45 am]
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–52209A; File No. SR–
NASD–2004–165]
Self-Regulatory Organizations;
National Association of Securities
Dealers, Inc.; Order Approving
Proposed Rule Change and
Amendment Nos. 1 and 2 Thereto
Relating to NASD Rule 2790; Corrected
August 22, 2005.
Correction
In Part III.D. of Release 34–52209,
issued August 4, 2005,1 the Commission
is replacing the following sentence:
‘‘The NASD suggests that the proposed rule
change become effective 45 days after
approval by the Commission and the
Commission believes that this is reasonable.’’
with:
‘‘The NASD will announce the effective date
of the proposed rule change in a Notice to
16 17
CFR 200.30–3(a)(12).
Members (‘‘NtM’’) to be published no later
than 60 days following Commission
approval. The effective date will be not more
than 30 days following publication of the
NtM announcing Commission approval and
the Commission believes this is reasonable.’’
For the Commission, by the Division of
Market Regulation, pursuant to delegated
authority.2
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 05–16956 Filed 8–25–05; 8:45 am]
BILLING CODE 8010–01–P
DEPARTMENT OF STATE
[Public Notice 5175 ]
30-Day Notice of Proposed Information
Collection: DS Form 4502, Fulbright
Teacher Exchange Program
Application Package, OMB Control No.
1405–0114
Notice of request for public
comments and submission to OMB of
proposed collection of information.
Jkt 205001
FOR FURTHER INFORMATION CONTACT:
Public comments, or requests for
additional information, regarding the
collection listed in this notice should be
directed to Jennifer Gibson, Branch
Chief, or Ruta Chagnon, Program Officer
(ECA/A/S/X); Department of State, SA–
44, Room 349, 301 Fourth Street, SW.,
Washington, DC 20547, who may be
reached at 202–619–4555/6.
SUPPLEMENTARY INFORMATION:
SUMMARY: The Department of State has
submitted the following information
collection request to the Office of
Management and Budget (OMB) for
approval in accordance with the
Paperwork Reduction Act of 1995.
• Title of Information Collection:
Fulbright Teacher Exchange Program
Application Package.
• OMB Control Number: 1405–0114.
• Type of Request: Extension of a
currently approved collection.
• Originating Office: Office of Global
Educational Programs (ECA/A/S).
• Form Numbers: DS–4502.
• Respondents: Educators desiring to
participate in the Fulbright Teacher
Exchange Program.
• Estimated Number of Respondents:
950.
• Estimated Number of Responses:
950.
• Average Hours Per Response: 3.
• Total Estimated Burden: 2850.
• Frequency: On occasion.
• Obligation to Respond: Required to
obtain or retain a benefit.
DATES: The Department will accept
comments from the public up to 30 days
from August 26, 2005.
ADDRESSES: Direct comments and
questions to Katherine Astrich, the
Department of State Desk Officer in the
Office of Information and Regulatory
Affairs at the Office of Management and
Budget (OMB), who may be reached at
202–395–4718. You may submit
comments by any of the following
methods:
Dated: July 17, 2005.
Cathy Chikes,
Executive Director, Office of Global
Educational Programs, Department of State.
[FR Doc. 05–17023 Filed 8–25–05; 8:45 am]
Securities Exchange Act Release No. 52209
(August 4, 2005), 70 FR 46557 (August 10, 2005).
16:18 Aug 25, 2005
• E-mail:
Katherine_T._Astrich@omb.eop.gov.
You must include the DS form number,
information collection title, and OMB
control number in the subject line of
your message.
• Mail (paper, disk, or CD–ROM
submissions): Office of Information and
Regulatory Affairs, Office of
Management and Budget, 725 17th
Street, NW., Washington, DC 20503.
• Fax: 202–395–6974.
ACTION:
1 See
VerDate jul<14>2003
50435
PO 00000
We are
soliciting public comments to permit
the agency to:
• Evaluate whether the proposed
information collection is necessary for
the proper performance our functions.
• Evaluate the accuracy of our
estimate of the burden of the proposed
collection, including the validity of the
methodology and assumptions used.
• Enhance the quality, utility, and
clarity of the information to be
collected.
• Minimize the reporting burden on
those who are to respond, including the
use of automated collection techniques
or other forms of technology.
Abstract of proposed collection:
Under the Mutual Educational and
Cultural Exchange (Fulbright-Hays) Act
of 1961, as amended, the Fulbright
Teacher Exchange Program offers sixweek, semester, and academic-year
exchanges and seminar opportunities to
U.S. educators. The data collected is
used to determine whether prospective
candidates are qualified for
participation in the program.
Methodology: Applicants submit
either a paper or electronic application
to ECA. The receiving office inputs the
data into a database for retention and
program use as appropriate.
BILLING CODE 4710–05–P
2 17
CFR 200.30–3(a)(12).
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]]>Agencies
[Federal Register Volume 70, Number 165 (Friday, August 26, 2005)]
[Notices]
[Pages 50433-50435]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 05-16963]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-52313; File No. SR-CBOE-2005-41]
Self-Regulatory Organizations; Chicago Board Options Exchange,
Incorporated; Notice of Filing of Proposed Rule Change Relating to the
Elimination of Position and Exercise Limits on NDX Options
August 22, 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 May 23, 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 CBOE.
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.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to amend its rules to eliminate position and
exercise limits for options on the Nasdaq 100 Index (``NDX''). The text
of the proposed rule change is available on the CBOE's Web site (http:/
/www.cboe.com), at the CBOE'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 CBOE included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it had 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, the Proposed Rule Change
1. Purpose
The CBOE proposes to eliminate position and exercise limits for
options on the NDX, a broad-based securities index. In November 2001,
the Commission granted permanent approval to a CBOE pilot program that
eliminated position and exercise limits for options on the S&P 500
Index (``SPX''), the S&P 100 Index (``OEX''), and the Dow Jones
Industrial Average (``DJX'').\3\ The Exchange believes that the
circumstances and considerations relied upon in approving the
elimination of position and exercise limits for options on those broad-
based indexes equally apply to this proposal relating to NDX position
and exercise limits.
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\3\ See Securities Exchange Act Release No. 44994 (October 26,
2001), 66 FR 55722 (November 2, 2001) (order granting permanent
approval to the elimination of position and exercise limits on the
SPX, OEX, and DJX) (``Permanent Approval Order''). See also
Securities Exchange Act Release No. 40969 (January 22, 1999), 64 FR
4911 (February 1, 1999) (order approving the original pilot program)
(``Pilot Approval Order'').
---------------------------------------------------------------------------
In the Permanent Approval Order relating to SPX, OEX, and DJX
options, the Commission cited several reasons for allowing the Exchange
to eliminate position and exercise limits for these options. First, the
Commission expressed its belief that the enormous capitalization of
each index and the deep liquid markets for the securities underlying
each index significantly reduced concerns of market manipulation or
disruptions in the underlying markets.\4\ The Commission previously had
also noted the active trading volume for options on the
[[Page 50434]]
respective indexes.\5\ The CBOE believes that NDX shares these factors
in common with the SPX, OEX, and DJX. As of the date of this rule
filing, the approximate market capitalizations of the SPX, OEX, and DJX
were $10.97 trillion, $5.94 trillion, and $3.7 trillion, respectively.
The average daily trading volumes (``ADTVs'') for all underlying
components of the indexes were 1,250, 560, and 250 million shares,
respectively, and the ADTV for options on the indexes were 253,981
contracts, 72,809 contracts, and 30,938 contracts, respectively.\6\ The
CBOE believes that the NDX has very comparable characteristics. The
market capitalization for the NDX is $1.84 trillion dollars, the ADTV
for the underlying securities is 420 million shares, and the options
ADTV is 44,008 contracts.
---------------------------------------------------------------------------
\4\ See Permanent Approval Order, supra note 3.
\5\ See Pilot Approval Order, supra note 3.
\6\ ADTVs are calculated over the previous three months of
trading.
---------------------------------------------------------------------------
Secondly, with respect to SPX, OEX, and DJX options, the Commission
noted that the financial requirements imposed by both the Exchange and
the Commission help to address concerns that a CBOE member or its
customer(s) may try to maintain an inordinately large unhedged position
in the indexes.\7\ These identical financial requirements also apply to
NDX options. Under CBOE rules, the Exchange has the authority to impose
additional margin upon accounts maintaining underhedged positions, and
is further able to monitor accounts to determine when such action is
warranted. As noted in the Exchange's rules, the clearing firm carrying
such an account would be subject to capital charges under Rule 15c3-1
under the Act \8\ to the extent of any resulting margin deficiency.\9\
---------------------------------------------------------------------------
\7\ See Permanent Approval Order, supra note 3.
\8\ 17 CFR 240.15c3-1.
\9\ See Interpretation and Policy .04 to CBOE Rule 24.4.
Clarified as per telephone conversation between Ira Brandriss,
Special Counsel, and Theodore Venuti, Attorney, Division of Market
Regulation, Commission, and James M. Flynn, Attorney II, Legal
Division, CBOE, on August 12, 2005 (``Telephone Conversation of
August 12, 2005'').
---------------------------------------------------------------------------
Finally, the Exchange believes that with regard to SPX, OEX, and
DJX options, the Commission relied substantially on the Exchange's
ability to provide surveillance and reporting safeguards to detect and
deter trading abuses arising from the elimination of position and
exercise limits in options on these indexes. The Exchange represents
that it monitors trading in NDX options in much the same manner as
trading in SPX, OEX, and DJX options and that the current CBOE
surveillance procedures are more than adequate to continue monitoring
NDX options. Additionally, the Exchange proposes to impose a reporting
requirement on CBOE members (other than CBOE market-makers) and member
organizations that trade NDX options. This reporting requirement, which
is currently imposed on members and member organizations that trade SPX
and OEX options, would require each member or member organization that
maintains in excess of 100,000 NDX contracts on the same side of the
market, for its own account or for the account of a customer, to report
information as to whether the positions are hedged and provide
documentation as to how such contracts are hedged, in a manner and form
required by the Exchange's Department of Market Regulation.\10\ The
Exchange also may specify other reporting requirements, as well as the
limit at which the reporting requirement may be triggered.\11\
---------------------------------------------------------------------------
\10\ See Interpretation and Policy .03 to CBOE Rule 24.4.
\11\ Id.
---------------------------------------------------------------------------
In the interest of consistency, the Exchange also proposes to amend
Exchange rules relating to the trading of FLEX broad-based index
options to reflect that there shall be no exercise or position limits
on NDX options and to adopt the 100,000 contract reporting requirement
for NDX FLEX options.\12\ Thus, the provisions in CBOE Rule 24A.7(b)
applicable specifically to SPX and OEX FLEX options shall also apply to
NDX FLEX options.\13\
---------------------------------------------------------------------------
\12\ See CBOE Rules 24A.7 and 24A.8. The text of Rule 24A.8 is
not amended by this proposed rule change.
\13\ This would include the authority of the Exchange to impose
additional margin on accounts maintaining underhedged positions in
these options. Telephone Conversation of August 12, 2005, supra
note.
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The Exchange believes that eliminating position and exercise limits
for NDX options and FLEX options is consistent with CBOE Rules relating
to similar broad-based indexes and also allows CBOE members and their
customers greater hedging and investment opportunities.
2. Statutory Basis
By placing position and exercise limits for NDX options on an equal
basis with other similar broad-based index options, the Exchange
believes that this proposed rule change is consistent with Section 6(b)
of the Act,\14\ in general, and furthers the objectives of Section
6(b)(5),\15\ in particular, in that it should promote just and
equitable principles of trade, serve to 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.
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\14\ 15 U.S.C. 78f(b).
\15\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition
The CBOE believes that the proposed rule change would not impose
any burden on competition that is 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.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Within 35 days of the date of publication of this notice in the
Federal Register or within such longer period (i) as the Commission may
designate up to 90 days of such date if it finds such longer period to
be appropriate and publishes its reasons for so finding, or (ii) as to
which the CBOE consents, the Commission will:
(A) By order approve such proposed rule change; or
(B) Institute proceedings to determine whether the proposed rule
change should be disapproved.
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 (https://
www.sec.gov/rules/sro.shtml); or
Send an e-mail to rule-comments@sec.gov. Please include
File Number SR-CBOE-2005-41 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-2005-41. 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
[[Page 50435]]
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 Section, 100 F Street, NE., Washington, DC 20549. 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 publicly available. All submissions should refer to
File Number SR-CBOE-2005-41 and should be submitted on or before
September 16, 2005.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\16\
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\16\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 05-16963 Filed 8-25-05; 8:45 am]
BILLING CODE 8010-01-P
