Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Order Approving a Proposed Rule Change and Amendment No. 1 Thereto To Amend the Exchange's Trade-Through and Locked Markets Rules, 55192-55193 [05-18623]
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55192
Federal Register / Vol. 70, No. 181 / Tuesday, September 20, 2005 / Notices
all Participants disseminate dynamic
quotes with size, the Participants
believe that it is appropriate to calculate
the FCQS based on the size of the
disseminated quotation of the
Participant receiving the P/A Order.
Accordingly, the Participant Exchanges
submitted Amendment No. 16 to the
Linkage Plan, and the Exchange
proposes to amend the definition of
FCQS to Chapter XII, Section 1(g) of
BOX Rules. As such, upon
implementation of the proposed rule
change and Amendment No. 16, a
Participant will provide incoming P/A
Orders with executions up to the full
size of a Participant’s disseminated
quotation.
The proposed rule change will
eliminate a 15-second period
Participants must wait before sending a
second P/A Order. Specifically, Chapter
XII, Section 2(c) of BOX’s Rules governs
the manner in which P/A Orders larger
than the FCQS are handled. It provides
that an initial P/A Order may be sent to
a Participant for execution at the FCQS;
if the same Participant continues to
disseminate the same price 15 seconds
after the execution of the initial P/A
Order, the market maker can send a
second P/A Order, subject to certain
restrictions. The Exchange proposes to
eliminate the 15-second wait period
because the Participants now employ
dynamic quotes with size, obviating the
need for a manual quote refresh period
for P/A Orders.
any burden on competition that is not
necessary or appropriate in furtherance
of the purposes of the Act.
2. Statutory Basis
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
prevent fraudulent and manipulative
acts and practices, to promote just and
equitable principles of trade, to foster
cooperation and coordination with
persons engaged in regulating, clearing,
settling, processing information with
respect to, and facilitating transactions
in securities, 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.
Specifically, the Exchange believes the
proposed rule change will help promote
the Linkage Plan by providing greater
automatic execution of Linkage orders.
• 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–BSE–2005–39 on the
subject line.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposed rule change would impose
7 15
8 15
U.S.C. 78f(b).
U.S.C. 78f(b)(5).
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14:53 Sep 19, 2005
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C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
Written comments were neither
solicited nor received.
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 BSE 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.
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 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
publicly available. All submissions
should refer to File Number SR–BSE–
2005–39 and should be submitted on or
before October 11, 2005.
For the Commission, by the Division of
Market Regulation, pursuant to delegated
authority.9
Jonathan G. Katz,
Secretary.
[FR Doc. 05–18669 Filed 9–19–05; 8:45 am]
BILLING CODE 8010–01–P
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
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–BSE–2005–39. 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
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SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–52419; File No. SR–CBOE–
2005–51]
Self-Regulatory Organizations;
Chicago Board Options Exchange,
Incorporated; Order Approving a
Proposed Rule Change and
Amendment No. 1 Thereto To Amend
the Exchange’s Trade-Through and
Locked Markets Rules
September 13, 2005.
On June 30, 2005, the Chicago Board
Options Exchange, Incorporated
(‘‘CBOE’’), filed with the Securities and
Exchange Commission (‘‘Commission’’)
a proposed rule change pursuant to
Section 19(b)(1) of the Securities
Exchange Act of 1934 (‘‘Act’’) 1 and Rule
19b–4 thereunder,2 to implement
Amendment No. 15 to the Plan for the
Purpose of Creating and Operating an
Intermarket Option Linkage 3 by
9 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 On July 28, 2000, the Commission approved a
national market system plan for the purpose of
creating and operating an intermarket option
linkage proposed by the American Stock Exchange
LLC, the CBOE, and the International Securities
Exchange, Inc. See Securities Exchange Act Release
No. 43086 (July 28, 2000), 65 FR 48023 (August 4,
2000) (‘‘Linkage Plan’’). Subsequently, upon
separate requests by the Philadelphia Stock
Exchange, Inc., the Pacific Exchange, Inc., and the
Boston Stock Exchange, Inc., the Commission
issued orders to permit these exchanges to
participate in the Linkage Plan. See Securities
1 15
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Federal Register / Vol. 70, No. 181 / Tuesday, September 20, 2005 / Notices
amending CBOE Rules 6.80 and 6.84 to
add a ‘‘trade and ship’’ exception to the
definition of ‘‘Trade-Through’’ and add
a ‘‘book and ship’’ exception to the
provision relating to locked markets,
respectively. On July 26, 2005, the
CBOE filed Amendment No. 1 to the
proposed rule change.4 The proposed
rule change, as amended, was published
for comment in the Federal Register on
August 5, 2005.5 The Commission
received no comments on the proposal.
This order approves the proposed rule
change, as amended.
Under the proposed rule change, an
order could be traded at a price that is
one minimum quoting increment
inferior to the national best bid or offer
(‘‘NBBO’’) if a Linkage Order 6 is sent
contemporaneously to the market(s)
disseminating the NBBO to satisfy all
interest at the NBBO price. The
proposed rule change also would
provide that an order may be booked
that would otherwise lock another
market if a Linkage Order is sent
contemporaneously to such other
market to satisfy all interest at the lock
price and only the remaining portion of
the order is booked. The CBOE proposes
that, under trade and ship, any
execution received from the market
disseminating the NBBO must (pursuant
to agency obligations) be reassigned to
the customer order that is underlying
the Linkage Order that was sent to trade
with the market disseminating the
NBBO.
After careful consideration, the
Commission finds that the proposed
rule change is consistent with the
requirements of section 6 of the Act 7
and the rules and regulations
thereunder applicable to a national
securities exchange.8 In particular, the
Commission finds that the proposed
rule change is consistent with section
6(b)(5) of the Act,9 which requires,
among other things, that the rules of an
exchange be designed to promote just
and equitable principles of trade, to
remove impediments to and perfect the
mechanism of a free and open market
Exchange Act Release Nos. 43573 (November 16,
2000), 65 FR 70851 (November 28, 2000); 43574
(November 16, 2000), 65 FR 70850 (November 28,
2000); and 49198 (February 5, 2004), 69 FR 7029
(February 12, 2004).
4 In Amendment No. 1, the CBOE revised the rule
text to use terms consistent with CBOE’s current
rules and made certain clarifying changes to the
purpose section.
5 See Securities Exchange Act Release No. 52173
(July 29, 2005), 70 FR 45452.
6 See CBOE Rule 6.80(12).
7 15 U.S.C. 78f.
8 In approving this proposal, the Commission has
considered the proposed rule’s impact on
efficiency, competition, and capital formation. See
15 U.S.C. 78c(f).
9 15 U.S.C. 78f(b)(5).
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and a national market system, and, in
general, to protect investors and the
public interest. The Commission
believes that the proposed rule change
should help to implement the Linkage
Plan by facilitating the ability of CBOE’s
members to execute their customer
orders in a timely manner and
potentially could decrease the incidence
of Trade-Throughs and locked markets.
It is therefore ordered, pursuant to
Section 19(b)(2) of the Act,10 that the
proposed rule change (SR–CBOE–2005–
51) as amended, is approved.
For the Commission, by the Division of
Market Regulation, pursuant to delegated
authority.11
Jonathan G. Katz,
Secretary.
[FR Doc. 05–18623 Filed 9–19–05; 8:45 am]
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–52424; File No. SR–CBOE–
2005–68]
Self-Regulatory Organizations;
Chicago Board Options Exchange,
Incorporated; Notice of Filing of
Proposed Rule Change Relating to the
Definition of Firm Customer Quote Size
in the Linkage Plan
55193
Intermarket Option Linkage (‘‘Linkage
Plan’’).4 The Exchange is proposing: (i)
To amend the definition of ‘‘Firm
Customer Quote Size’’ (‘‘FCQS’’)5 to
provide automatic executions for
Linkage Principal Acting as Agent
Orders (‘‘P/A Orders’’)6 up to the full
size of the Exchange’s disseminated
quotation; and (ii) to eliminate a 15second waiting period between the
sending of P/A Orders.
The text of the proposed rule change
is available on CBOE’s Web site
(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 received on the proposed
rule change. The text of these statements
may be examined at the places specified
in Item IV below. The Exchange has
prepared summaries, set forth in
sections A, B, and C below, of the most
significant aspects of such statements.
September 14, 2005.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
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
29, 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. Purpose
The purpose of the proposed rule
change is to modernize the definition of
FCQS in CBOE rules related to the
operation of the Linkage rules. At the
time the Linkage commenced, options
quote sizes were not disseminated
through the Options Price Reporting
Authority and most participants in the
Linkage Plan employed automatic
execution systems that guaranteed
automatic fills on orders under a certain
contract size (which was generally a
static number). As such, the FCQS was
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to amend its
rules governing the operation of the
intermarket option linkage (‘‘Linkage’’)
to conform with a proposed
amendment 3 to the Plan for the Purpose
of Creating and Operating an
10 15
U.S.C. 78s(b)(2).
CFR 200.30–3(a)(12).
1 15 U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 See Securities Exchange Act Release No. 52401
(September 9, 2005) (File No. 4–429) (‘‘Amendment
No. 16’’).
11 17
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4 On July 28, 2000, the Commission approved a
national market system plan for the purpose of
creating and operating an intermarket option market
linkage proposed by the American Stock Exchange,
LLC, CBOE, and International Securities Exchange,
Inc. See Securities Exchange Act Release No. 43086
(July 28, 2000), 65 FR 48023 (August 4, 2000).
Subsequently, upon separate requests by the
Philadelphia Stock Exchange, Inc., Pacific
Exchange, Inc. and Boston Stock Exchange, Inc. the
Commission issued orders to permit these
exchanges to participate in the Linkage Plan. See
Securities Exchange Act Release Nos. 43573
(November 16, 2000), 65 FR 70850 (November 28,
2000), 43574 (November 16, 2000), 65 FR 70851
(November 28, 2000) and 49198 (February 5, 2004),
69 FR 7029 (February 12, 2004).
5 See Exchange Rule 6.80(9).
6 See Section 2(16)(a) of the Linkage Plan and
Exchange Rule 6.80(12)(i).
E:\FR\FM\20SEN1.SGM
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]]>Agencies
[Federal Register Volume 70, Number 181 (Tuesday, September 20, 2005)]
[Notices]
[Pages 55192-55193]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 05-18623]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-52419; File No. SR-CBOE-2005-51]
Self-Regulatory Organizations; Chicago Board Options Exchange,
Incorporated; Order Approving a Proposed Rule Change and Amendment No.
1 Thereto To Amend the Exchange's Trade-Through and Locked Markets
Rules
September 13, 2005.
On June 30, 2005, the Chicago Board Options Exchange, Incorporated
(``CBOE''), filed with the Securities and Exchange Commission
(``Commission'') a proposed rule change pursuant to Section 19(b)(1) of
the Securities Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4
thereunder,\2\ to implement Amendment No. 15 to the Plan for the
Purpose of Creating and Operating an Intermarket Option Linkage \3\ by
[[Page 55193]]
amending CBOE Rules 6.80 and 6.84 to add a ``trade and ship'' exception
to the definition of ``Trade-Through'' and add a ``book and ship''
exception to the provision relating to locked markets, respectively. On
July 26, 2005, the CBOE filed Amendment No. 1 to the proposed rule
change.\4\ The proposed rule change, as amended, was published for
comment in the Federal Register on August 5, 2005.\5\ The Commission
received no comments on the proposal. This order approves the proposed
rule change, as amended.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ On July 28, 2000, the Commission approved a national market
system plan for the purpose of creating and operating an intermarket
option linkage proposed by the American Stock Exchange LLC, the
CBOE, and the International Securities Exchange, Inc. See Securities
Exchange Act Release No. 43086 (July 28, 2000), 65 FR 48023 (August
4, 2000) (``Linkage Plan''). Subsequently, upon separate requests by
the Philadelphia Stock Exchange, Inc., the Pacific Exchange, Inc.,
and the Boston Stock Exchange, Inc., the Commission issued orders to
permit these exchanges to participate in the Linkage Plan. See
Securities Exchange Act Release Nos. 43573 (November 16, 2000), 65
FR 70851 (November 28, 2000); 43574 (November 16, 2000), 65 FR 70850
(November 28, 2000); and 49198 (February 5, 2004), 69 FR 7029
(February 12, 2004).
\4\ In Amendment No. 1, the CBOE revised the rule text to use
terms consistent with CBOE's current rules and made certain
clarifying changes to the purpose section.
\5\ See Securities Exchange Act Release No. 52173 (July 29,
2005), 70 FR 45452.
---------------------------------------------------------------------------
Under the proposed rule change, an order could be traded at a price
that is one minimum quoting increment inferior to the national best bid
or offer (``NBBO'') if a Linkage Order \6\ is sent contemporaneously to
the market(s) disseminating the NBBO to satisfy all interest at the
NBBO price. The proposed rule change also would provide that an order
may be booked that would otherwise lock another market if a Linkage
Order is sent contemporaneously to such other market to satisfy all
interest at the lock price and only the remaining portion of the order
is booked. The CBOE proposes that, under trade and ship, any execution
received from the market disseminating the NBBO must (pursuant to
agency obligations) be reassigned to the customer order that is
underlying the Linkage Order that was sent to trade with the market
disseminating the NBBO.
---------------------------------------------------------------------------
\6\ See CBOE Rule 6.80(12).
---------------------------------------------------------------------------
After careful consideration, the Commission finds that the proposed
rule change is consistent with the requirements of section 6 of the Act
\7\ and the rules and regulations thereunder applicable to a national
securities exchange.\8\ In particular, the Commission finds that the
proposed rule change is consistent with section 6(b)(5) of the Act,\9\
which requires, among other things, that the rules of an exchange be
designed to promote just and equitable principles of trade, 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 the proposed rule change
should help to implement the Linkage Plan by facilitating the ability
of CBOE's members to execute their customer orders in a timely manner
and potentially could decrease the incidence of Trade-Throughs and
locked markets.
---------------------------------------------------------------------------
\7\ 15 U.S.C. 78f.
\8\ In approving this proposal, the Commission has considered
the proposed rule's impact on efficiency, competition, and capital
formation. See 15 U.S.C. 78c(f).
\9\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\10\ that the proposed rule change (SR-CBOE-2005-51) as amended, is
approved.
---------------------------------------------------------------------------
\10\ 15 U.S.C. 78s(b)(2).
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\11\
---------------------------------------------------------------------------
\11\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Jonathan G. Katz,
Secretary.
[FR Doc. 05-18623 Filed 9-19-05; 8:45 am]
BILLING CODE 8010-01-P
