Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Order Approving Proposed Rule Change To Prohibit the Practice of Unbundling Orders To Maximize Rebates of Fees, 2605 [E6-397]

Download as PDF Federal Register / Vol. 71, No. 10 / Tuesday, January 17, 2006 / Notices SECURITIES AND EXCHANGE COMMISSION [Release No. 34–53088; File No. SR–CBOE– 2005–92] Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Order Approving Proposed Rule Change To Prohibit the Practice of Unbundling Orders To Maximize Rebates of Fees January 10, 2006. I. Introduction On November 7, 2005, 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 prohibit the practice of unbundling orders to maximize rebates of fees. The proposed rule change was published for notice and comment in the Federal Register on December 8, 2005.3 The Commission received no comments on the proposal. This order approves the proposed rule change. II. Description of the Proposal CBOE proposed to adopt a new rule to expressly prohibit its members from dividing single orders into multiple orders for the sole purpose of maximizing market data rebates. III. Discussion and Commission Findings The Commission has reviewed carefully the proposed rule change and finds that it is consistent with the requirements of the Act and the rules and regulations thereunder applicable to a national securities exchange,4 particularly section 6(b)(5) of the Act which, among other things, requires that the rules of a national securities exchange be designed to promote just and equitable principles of trade, to foster cooperation and coordination with persons engaged in regulating securities transactions, to remove impediments to perfect the mechanism of a free and open market and a national market system and, in general, to protect investors and the public interest.5 The Commission believes that the proposed 1 15 U.S.C. 78s(b)(l). CFR 240. 19b–4. 3 See Securities Exchange Act Release No. 52872 (December 1, 2005), 70 FR 73043. 4 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). 5 15 U.S.C. 78f(b)(5). sroberts on PROD1PC69 with NOTICES 2 17 VerDate Aug<31>2005 15:57 Jan 13, 2006 Jkt 208001 rule change should help eliminate the distortive practice of trade shredding, and, therefore, promote just and equitable principles of trade. IV. Conclusion It is therefore ordered, pursuant to section 19(b)(2) of the Act,6 that the proposed rule change (File No. SR– CBOE–2005–92), be and hereby is, approved. For the Commission, by the Division of Market Regulation, pursuant to delegated authority.7 Nancy M. Morris, Secretary. [FR Doc. E6–397 Filed 1–13–06; 8:45 am] BILLING CODE 8010–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–53072; File No. SR–CBOE– 2006–02] Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend CBOE Rule 8.4 Relating to Remote Market-Maker Appointments January 6, 2006. 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 January 5, 2006, the Chicago Board Options Exchange, Incorporated (‘‘Exchange’’ or ‘‘CBOE’’) filed with the Securities and Exchange Commission (‘‘Commission’’) the proposed rule change as described in Items I and II below, which Items have been prepared by the Exchange. The Exchange filed the proposal pursuant to section 19(b)(3)(A) of the Act 3 and Rule 19b–4(f)(6) 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 persons. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The CBOE proposes to amend CBOE Rule 8.4 relating to Remote MarketMaker appointments. Below is the text of the proposed rule change. Proposed 6 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 15 U.S.C. 78s(b)(3)(A). 4 17 CFR 240.19b–4(f)(6). 7 17 PO 00000 Frm 00094 Fmt 4703 Sfmt 4703 2605 new language is italicized; proposed deletions are in [brackets]. * * * * * Rule 8.4—Remote Market-Makers Rule 8.4. (a) No Change. (b) No change. (c) No change. (d) Appointment of RMMs: An RMM will have a Virtual Trading Crowd (‘‘VTC’’) Appointment, which confers the right to quote electronically (and not in open outcry) an appropriate number of products selected from ‘‘tiers’’ that have been structured according to trading volume statistics. Of the products included in the Hybrid 2.0 Platform, Tier A will consist of the 20% most actively-traded products over the preceding three calendar months, excluding ‘‘A+’’ tier products, Tier B will consist of the next 20% most actively-traded products, etc., through Tier E, which will consist of the 20% least actively-traded products. Tier ‘‘A+’’ will consist of options on Standard & Poor’s Depositary Receipts, options on the Nasdaq-100 Index Tracking Stock, options on Diamonds, [and] reduced value options on the Standard & Poor’s 500 Stock Index, and options based on The Dow Jones Industrial Average. * * * * * 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 Exchange 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. A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The purpose of this rule change is to amend CBOE Rule 8.4 relating to Remote Market-Maker (‘‘RMM’’) appointments. CBOE Rule 8.4 provides that RMMs will have a Virtual Trading Crowd (‘‘VTC’’) Appointment, which confers the right to quote electronically in a certain number of products selected from various ‘‘tiers’’. There are five tiers that are structured according to trading volume statistics and an ‘‘A+’’ Tier E:\FR\FM\17JAN1.SGM 17JAN1

Agencies

[Federal Register Volume 71, Number 10 (Tuesday, January 17, 2006)]
[Notices]
[Page 2605]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E6-397]



[[Page 2605]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-53088; File No. SR-CBOE-2005-92]


Self-Regulatory Organizations; Chicago Board Options Exchange, 
Incorporated; Order Approving Proposed Rule Change To Prohibit the 
Practice of Unbundling Orders To Maximize Rebates of Fees

 January 10, 2006.

I. Introduction

    On November 7, 2005, 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 prohibit the practice of 
unbundling orders to maximize rebates of fees. The proposed rule change 
was published for notice and comment in the Federal Register on 
December 8, 2005.\3\ The Commission received no comments on the 
proposal. This order approves the proposed rule change.
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    \1\ 15 U.S.C. 78s(b)(l).
    \2\ 17 CFR 240. 19b-4.
    \3\ See Securities Exchange Act Release No. 52872 (December 1, 
2005), 70 FR 73043.
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II. Description of the Proposal

    CBOE proposed to adopt a new rule to expressly prohibit its members 
from dividing single orders into multiple orders for the sole purpose 
of maximizing market data rebates.

III. Discussion and Commission Findings

    The Commission has reviewed carefully the proposed rule change and 
finds that it is consistent with the requirements of the Act and the 
rules and regulations thereunder applicable to a national securities 
exchange,\4\ particularly section 6(b)(5) of the Act which, among other 
things, requires that the rules of a national securities exchange be 
designed to promote just and equitable principles of trade, to foster 
cooperation and coordination with persons engaged in regulating 
securities transactions, to remove impediments to perfect the mechanism 
of a free and open market and a national market system and, in general, 
to protect investors and the public interest.\5\ The Commission 
believes that the proposed rule change should help eliminate the 
distortive practice of trade shredding, and, therefore, promote just 
and equitable principles of trade.
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    \4\ 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).
    \5\ 15 U.S.C. 78f(b)(5).
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IV. Conclusion

    It is therefore ordered, pursuant to section 19(b)(2) of the 
Act,\6\ that the proposed rule change (File No. SR-CBOE-2005-92), be 
and hereby is, approved.
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    \6\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\7\
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    \7\ 17 CFR 200.30-3(a)(12).
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Nancy M. Morris,
Secretary.
 [FR Doc. E6-397 Filed 1-13-06; 8:45 am]
BILLING CODE 8010-01-P