Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to an Extension of the Pilot Programs Applicable to Fee Caps for Dividend Spread and Merger Spread Transactions Until March 1, 2006, 53402-53403 [E5-4885]
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Federal Register / Vol. 70, No. 173 / Thursday, September 8, 2005 / Notices
imbalances to be published as soon as
practicable after 8 a.m. (CT), and
thereafter at approximately 8:20 a.m.
(CT), on the Settlement Date.11
The proposed rule change also
provides a limited exception that would
permit cancellations and changes to
booked orders falling under this
provision that are made to correct a
legitimate error. The member submitting
the change or cancellation would be
required to prepare and maintain a
memorandum setting forth the
circumstances that resulted in the
change or cancellation and would be
required to file a copy of the
memorandum with the Exchange no
later than the next business day in a
form and manner prescribed by the
Exchange. In addition, two Floor
Officials would have the ability to
suspend the new rule in the event of
unusual market conditions.12
The Exchange also proposes (i) to
move the cut-off time for the submission
of all other index option orders for
participation in the modified ROS
opening on Settlement Date mornings
from 8:28 a.m. (CT) to 8:25 a.m. (CT); (ii)
to change the time standards reflected in
the rule from CST to CT, since Chicago
is in the Central Time zone; and (iii) to
revise the rule language in current
CBOE Rule 6.2A.03(viii) to reflect that
the Exchange has recently implemented
a systems change to ROS that
automatically generates cancellation
orders for Exchange market-maker, away
market-maker, specialist, and brokerdealer orders which remain on the
electronic book following the modified
ROS opening procedure.
III. Discussion
After careful review, the Commission
finds that the proposed rule change is
consistent with the requirements of the
Act and the rules and regulations
applicable to a national securities
exchange.13 In particular, the
Commission believes that the proposed
rule change is consistent with the
requirements on Section 6(b)(5) of the
Act 14 that the rules of a national
11 The Exchange represents that it would publish
the imbalance on its Web site. See Notice.
12 For example, the CBOE states that if a
significant market event occurs between 8:00 a.m.
(CT) and 8:25 a.m. (CT), Floor Officials may
determine to suspend the rule provision in the
interest of maintaining a fair and orderly market so
that limit orders placed in the book to unwind
hedged volatility index futures positions are not
unfairly disadvantaged as a result of a significant
market move that would result in limit orders going
unexecuted.
13 In approving this proposed rule change, the
Commission has considered the proposed rule’s
impact on efficiency, competition, and capital
formation. 15 U.S.C. 78c(f).
14 15 U.S.C. 78f(b)(5).
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15:25 Sep 07, 2005
Jkt 205001
securities exchange, in part, promote
just and equitable principles of trade,
remove impediments to and perfect the
mechanism of a free and open market
and a national market system and, in
general, to protect investors and the
public interest.
The Exchange believes that the
proposed rule change will improve the
modified ROS opening procedure by
exposing for a longer period of time
order imbalances in index options
resulting from the unwinding of hedged
volatility index future positions. The
Exchange further believes that the
market participants to whom the
proposed rule change applies would not
be materially affected by the 8 a.m. (CT)
cut-off time, because the last day of
trading in volatility index futures in the
applicable expiring month occurs on the
day before Settlement Date, and holders
of open volatility index futures are
generally aware before 8 a.m. (CT) of the
related index options series that they
need to place on the book in order to
adequately unwind their hedges. The
Commission believes that the proposed
rule change may serve the intended
benefit without imposing an undue
burden on these participants. The
Commission notes that it has approved
a similar rule in another context.15
The proposed rule change would also
modify the deadline for submitting all
other index options orders for
participation in the modified ROS
opening procedure, and any changes to
or cancellations of any orders, from 8:28
a.m. (CT) to 8:25 a.m. (CT). The
Exchange believes that this rule change
would give Lead Market-Makers on the
CBOE additional time to review order
imbalances on the book in order to
setting the Autoquote values that are
used in the modified ROS opening
procedures. The Commission believes
this proposed adjustment is reasonable
to achieve the intended benefit.
The Commission further believes that
the other associated aspects of the
proposed rule change are appropriate to
clarify the application of the rule and to
provide for its reasonable
implementation.
IV. Conclusion
It is therefore ordered, pursuant to
Section 19(b)(2) of the Act,16 that the
proposed rule change (SR–CBOE–2004–
86), as amended by Amendment No. 1,
is approved.
15 See NYSE Rule 123C(6). See, e.g., Securities
Exchange Act Release No. 25804 (June 15, 1988), 53
FR 23474 (June 22, 1988) (order approving File Nos.
SR–NYSE–87–11 and 88–04).
16 15 U.S.C. 78s(b)(2).
PO 00000
Frm 00072
Fmt 4703
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For the Commission, by the Division of
Market Regulation, pursuant to delegated
authority.17
Jonathan G. Katz,
Secretary.
[FR Doc. E5–4875 Filed 9–7–05; 8:45 am]
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–52374; File No. SR–CBOE–
2005–66]
Self-Regulatory Organizations;
Chicago Board Options Exchange,
Incorporated; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change Relating to an Extension
of the Pilot Programs Applicable to Fee
Caps for Dividend Spread and Merger
Spread Transactions Until March 1,
2006
September 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
24, 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 CBOE. The Exchange
designated the proposed rule change as
establishing or changing a due, fee, or
other charge imposed by the Exchange
under Section 19(b)(3)(A)(ii) of the Act 3
and Rule 19b–4(f)(2) thereunder,4 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 parties.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to amend its
Fees Schedule to extend until March 1,
2006 the pilot programs applicable to
fee caps on dividend spread and merger
spread transactions. The text of the
proposed rule change is available on the
Exchange’s Web site (https://
www.cboe.com), at the Office of the
Secretary, CBOE, and at the
Commission.
17 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 15 U.S.C. 78s(b)(3)(A)(ii)
4 17 CFR 240.19b–4(f)(2).
1 15
E:\FR\FM\08SEN1.SGM
08SEN1
Federal Register / Vol. 70, No. 173 / Thursday, September 8, 2005 / Notices
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission,
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. 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 Exchange currently caps marketmaker, firm, and broker-dealer
transaction fees associated with
‘‘dividend spread’’ transactions 5 at
$2,000 for all dividend spread
transactions executed on the same
trading day in the same options class. A
similar fee cap is currently in place for
market-maker, firm, and broker-dealer
transaction fees associated with ‘‘merger
spread’’ transactions 6 executed on the
same trading day in the same options
class.7 Both fee caps are in effect as pilot
programs that are due to expire on
September 1, 2005.8
The Exchange proposes to extend
both pilot programs until March 1, 2006.
No other changes are proposed. The
Exchange believes that extension of
these fee cap programs should attract
additional liquidity and permit the
Exchange to remain competitive.
2. Statutory Basis
The Exchange believes that the
proposed rule change is consistent with
Section 6(b) of the Act,9 in general, and
furthers the objectives of Section 6(b)(4)
5A
‘‘dividend spread’’ is defined as any trade
done to achieve a dividend arbitrage between any
two deep-in-the-money options.
6 A ‘‘merger spread’’ transaction is defined as a
transaction executed pursuant to a strategy
involving the simultaneous purchase and sale of
options of the same class and expiration date, but
with different strike prices, followed by the exercise
of the resulting long options position, each
executed prior to the date on which shareholders
of record are required to elect their respective form
of consideration, i.e., cash or stock.
7 Telephone conversation between Jaime Galvan,
Assistant Secretary, CBOE, and Steve Kuan, Special
Counsel, Division of Market Regulation,
Commission, on August 30, 2005.
8 See Securities Exchange Act Release Nos. 51468
(April 1, 2005), 70 FR 17742 (April 7, 2005) (SR–
CBOE–2005–18), and 51828 (June 13, 2005), 70 FR
35475 (June 20, 2005) (SR–CBOE–2005–42).
9 15 U.S.C. 78f(b).
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15:25 Sep 07, 2005
Jkt 205001
of the Act 10 in particular, in that it is
designed to provide for the equitable
allocation of reasonable dues, fees, and
other charges among CBOE members
and other persons using its facilities.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
CBOE does not believe that the
proposed rule change will impose any
burden on competition that is not
necessary or appropriate in furtherance
of 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
The foregoing rule change has become
effective pursuant to Section 19(b)(3)(A)
of the Act 11 and paragraph (f)(2) of Rule
19b–4 thereunder 12 because it is
establishing or changing a due, fee, or
other charge applicable only to the
Exchange’s members. 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 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 (https://www.sec.gov/
rules/sro.shtml); or
∑ Send an e-mail to rulecomments@sec.gov. Please include File
Number SR–CBOE–2005–66 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.
U.S.C. 78f(b)(4).
U.S.C. 78s(b)(3)(A).
12 17 CFR 240.19b–4(f)(2).
All submissions should refer to File
Number SR–CBOE–2005–66. 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–2005–66 and should
be submitted on or before September 29,
2005.
For the Commission, by the Division of
Market Regulation, pursuant to delegated
authority.13
Jonathan G. Katz,
Secretary.
[FR Doc. E5–4885 Filed 9–7–05; 8:45 am]
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–52364; File No. SR–ISE–
2005–41]
Self-Regulatory Organizations;
International Securities Exchange, Inc.;
Notice of Filing and Immediate
Effectiveness of a Proposed Rule
Change Relating to the Price
Improvement Mechanism
August 31, 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
22, 2005, the International Securities
Exchange, Inc. (‘‘ISE’’ or ‘‘Exchange’’)
filed with the Securities and Exchange
10 15
13 17
11 15
1 15
PO 00000
Frm 00073
Fmt 4703
Sfmt 4703
53403
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
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]]>Agencies
[Federal Register Volume 70, Number 173 (Thursday, September 8, 2005)]
[Notices]
[Pages 53402-53403]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E5-4885]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-52374; File No. SR-CBOE-2005-66]
Self-Regulatory Organizations; Chicago Board Options Exchange,
Incorporated; Notice of Filing and Immediate Effectiveness of Proposed
Rule Change Relating to an Extension of the Pilot Programs Applicable
to Fee Caps for Dividend Spread and Merger Spread Transactions Until
March 1, 2006
September 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 24, 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 CBOE. The
Exchange designated the proposed rule change as establishing or
changing a due, fee, or other charge imposed by the Exchange under
Section 19(b)(3)(A)(ii) of the Act \3\ and Rule 19b-4(f)(2)
thereunder,\4\ 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 parties.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ 15 U.S.C. 78s(b)(3)(A)(ii)
\4\ 17 CFR 240.19b-4(f)(2).
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to amend its Fees Schedule to extend until
March 1, 2006 the pilot programs applicable to fee caps on dividend
spread and merger spread transactions. The text of the proposed rule
change is available on the Exchange's Web site (https://www.cboe.com),
at the Office of the Secretary, CBOE, and at the Commission.
[[Page 53403]]
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, 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. 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 Exchange currently caps market-maker, firm, and broker-dealer
transaction fees associated with ``dividend spread'' transactions \5\
at $2,000 for all dividend spread transactions executed on the same
trading day in the same options class. A similar fee cap is currently
in place for market-maker, firm, and broker-dealer transaction fees
associated with ``merger spread'' transactions \6\ executed on the same
trading day in the same options class.\7\ Both fee caps are in effect
as pilot programs that are due to expire on September 1, 2005.\8\
---------------------------------------------------------------------------
\5\ A ``dividend spread'' is defined as any trade done to
achieve a dividend arbitrage between any two deep-in-the-money
options.
\6\ A ``merger spread'' transaction is defined as a transaction
executed pursuant to a strategy involving the simultaneous purchase
and sale of options of the same class and expiration date, but with
different strike prices, followed by the exercise of the resulting
long options position, each executed prior to the date on which
shareholders of record are required to elect their respective form
of consideration, i.e., cash or stock.
\7\ Telephone conversation between Jaime Galvan, Assistant
Secretary, CBOE, and Steve Kuan, Special Counsel, Division of Market
Regulation, Commission, on August 30, 2005.
\8\ See Securities Exchange Act Release Nos. 51468 (April 1,
2005), 70 FR 17742 (April 7, 2005) (SR-CBOE-2005-18), and 51828
(June 13, 2005), 70 FR 35475 (June 20, 2005) (SR-CBOE-2005-42).
---------------------------------------------------------------------------
The Exchange proposes to extend both pilot programs until March 1,
2006. No other changes are proposed. The Exchange believes that
extension of these fee cap programs should attract additional liquidity
and permit the Exchange to remain competitive.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with Section 6(b) of the Act,\9\ in general, and furthers the
objectives of Section 6(b)(4) of the Act \10\ in particular, in that it
is designed to provide for the equitable allocation of reasonable dues,
fees, and other charges among CBOE members and other persons using its
facilities.
---------------------------------------------------------------------------
\9\ 15 U.S.C. 78f(b).
\10\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------
B. Self-Regulatory Organization's Statement on Burden on Competition
CBOE does not believe that the proposed rule change will impose any
burden on competition that is not necessary or appropriate in
furtherance of 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
The foregoing rule change has become effective pursuant to Section
19(b)(3)(A) of the Act \11\ and paragraph (f)(2) of Rule 19b-4
thereunder \12\ because it is establishing or changing a due, fee, or
other charge applicable only to the Exchange's members. 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 furtherance
of the purposes of the Act.
---------------------------------------------------------------------------
\11\ 15 U.S.C. 78s(b)(3)(A).
\12\ 17 CFR 240.19b-4(f)(2).
---------------------------------------------------------------------------
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-2005-66 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-CBOE-2005-66. 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-2005-66 and should be submitted on or before
September 29, 2005.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\13\
---------------------------------------------------------------------------
\13\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Jonathan G. Katz,
Secretary.
[FR Doc. E5-4885 Filed 9-7-05; 8:45 am]
BILLING CODE 8010-01-P
