Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Extend the Duration of the SizeQuote Mechanism Pilot, 8012-8014 [E6-2111]
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Federal Register / Vol. 71, No. 31 / Wednesday, February 15, 2006 / Notices
cprice-sewell on PROD1PC66 with NOTICES
general, to protect investors and the
public interest.
The Commission notes that the
Exchange believes that the need to
continue trading options for some
period of time after the close of trading
in the underlying securities markets is
no longer necessary because
improvements in the processing and
reporting of transactions have obviated
the need to respond to late reports of
closing prices over the consolidated
tape in order to bring options quotes in
line with the closing price of the
underlying security. Because the two
minute delay between the close of
normal trading in equity options and the
corresponding underlying equity
markets is no longer necessary, the
Commission believes that eliminating
the delay is in the public interest and
appropriate for the protection of
investors and the maintenance of fair
and orderly markets. Therefore, the
Commission finds that it is consistent
with the Act for the Exchange to amend
and clarify its rules governing the hours
of trading of options on individual
stocks on BOX from 4:02 p.m. (e.s.t.) to
4 p.m. (e.s.t.).
The Commission finds good cause for
approving this proposed rule change, as
amended, before the thirtieth day after
publication of notice thereof in the
Federal Register. The Commission notes
that all of the options exchanges have
filed substantially similar proposals and
seek to implement these industry-wide
changes simultaneously on February 13,
2006.13 For example, on December 20,
2005, the Commission published for
comment in the Federal Register a
similar proposed rule change submitted
by the Chicago Board Options Exchange,
Incorporated (‘‘CBOE’’).14 The
Commission received no comments on
the CBOE’s proposed rule change. The
Commission believes that the BSE’s
proposed rule change, as amended,
raises no new issues or novel regulatory
questions. Accordingly, the Commission
finds good cause, pursuant to Section
19(b)(2) of the Act,15 for approving the
proposed rule change, as amended,
prior to the thirtieth day after
publication in the Federal Register. In
addition, because the existence of
dissimilar closing times among the
options exchanges could lead to
confusion for options investors and
broker-dealers, the Commission finds
good cause to accelerate approval of the
13 See
note 16, infra.
Securities Exchange Act Release No. 52949
(December 13, 2005), 70 FR 75513 (December 20,
2005) (SR–CBOE–2005–104). See also Securities
Exchange Act Release No. 53055 (January 5, 2006),
71 FR 2279 (January 13, 2006) (SR–ISE–2005–58).
15 15 U.S.C. 78s(b)(2).
14 See
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13:17 Feb 14, 2006
Jkt 208001
proposed rule change, as amended, to
enable the six options exchanges to
simultaneously amend their hours of
trading on an industry-wide basis in a
uniform manner.16
V. Conclusion
It is therefore ordered, pursuant to
Section 19(b)(2) of the Act,17 that the
proposed rule change and Amendment
No. 1 thereto (SR–BSE–2006–02) be, and
hereby are, approved on an accelerated
basis.
For the Commission, by the Division of
Market Regulation, pursuant to delegated
authority.18
J. Lynn Taylor,
Assistant Secretary.
[FR Doc. E6–2113 Filed 2–14–06; 8:45 am]
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–53252; File No. SR-CBOE–
2006–05]
Self-Regulatory Organizations;
Chicago Board Options Exchange,
Incorporated; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change To Extend the Duration of
the SizeQuote Mechanism Pilot
February 8, 2006.
Pursuant to section 19(b)(1) of the
Securities Exchange Act of 1934 (the
‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on January
30, 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 as a
‘‘non-controversial’’ proposed rule
change pursuant to section 19(b)(3)(A)
of the Act 3 and Rule 19b–4(f)(6)
thereunder,4 which renders it effective
upon filing with the Commission. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
16 The Commission notes that it is simultaneously
approving similar proposals from the other options
exchanges. See Securities Exchange Act Release
Nos. 53244 (SR–Amex–2006–003); 53246 (SR–
CBOE–2005–104); 53248 (SR–ISE–2005–58); 53249
(SR–PCX–2005–138); and 53247 (SR–Phlx–2006–
01) (February 7, 2006).
17 15 U.S.C. 78s(b)(2).
18 17 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).
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I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to extend the
pilot in CBOE Rule 6.74(f) pertaining to
the SizeQuote Mechanism, which is a
process by which a Floor Broker may
execute and facilitate large-sized orders
in open outcry. The Exchange is
proposing to extend the pilot program,
which would otherwise expire on
February 15, 2006, through February 15,
2007. No other changes are being made
to the pilot program through this rule
filing.5 The text of the proposed rule
change is available on the Exchange’s
Web site (https://www.cboe.com), at the
Exchange’s Office of the Secretary and
at the Commission.
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 those
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 parts of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule
Change
1. Purpose
CBOE Rule 6.74(f), which relates to
the open outcry ‘‘SizeQuote’’
Mechanism, was approved on a pilot
basis in February 2005; was recently
expanded, in January 2006, to include
solicited orders; and will expire on
February 15, 2006.6 This pilot program
5 A separate rule change proposal has been filed
and is currently pending with the Commission that
would make amendments to the SizeQuote
Mechanism. See SR–CBOE–2005–115 (proposal to
modify the pilot program in various respects,
including to permit a Floor Broker to execute the
entire SizeQuote Order at a price at least one
trading increment better than the best price
communicated by the in-crowd market participants
(‘‘ICMPs’’) in their responses to the SizeQuote
request).
6 See Securities Exchange Act Release Nos. 51205
(February 15, 2005), 70 FR 8647 (February 22, 2005)
(approving SR–CBOE–2004–72 on a pilot basis
through February 15, 2006) and 53135 (January 17,
2006), 71 FR 3908 (January 24, 2006) (approving
SR-CBOE–2005–83, which modified the pilot
program to enable a Floor Broker to execute a
SizeQuote Order with either a Floor Broker’s
facilitation order, one or more solicited orders, or
a combination of the Floor Broker’s facilitation
order and such solicited order(s)).
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Federal Register / Vol. 71, No. 31 / Wednesday, February 15, 2006 / Notices
cprice-sewell on PROD1PC66 with NOTICES
provides a process by which a Floor
Broker, using his or her exercise of due
diligence to execute orders at the best
price(s), may execute and facilitate
large-sized orders in open outcry. Under
the pilot program, the ICMPs have
priority to trade a SizeQuote Order at
the best price communicated by the
ICMPs in their response to a Floor
Broker’s SizeQuote request and at one
increment better, while a Floor Broker
can execute the entire SizeQuote Order
with a facilitation order, one or more
solicited orders, or a combination of
solicited and facilitation orders at a
price two trading increments better than
the best price provided by the ICMPs in
their response to the SizeQuote request.
For purposes of the pilot program, the
minimum qualifying order size is 250
contracts 7 and Floor Brokers must stand
ready to facilitate the entire size of the
order for which they request
SizeQuotes.
The instant proposed rule change
seeks to extend the existing pilot
program, which would otherwise expire
on February 15, 2006, through February
15, 2007. The Exchange notes that, as
part of the original pilot program
approval order,8 the Exchange
represented that it would provide the
Commission a report at the end of the
initial pilot period summarizing the
effectiveness of the SizeQuote program.
In that regard, though the SizeQuote
Mechanism has been made available
during the pilot period in all equity
option classes traded on the Exchange
for orders of 250 contracts or more,
Floor Brokers have not generally availed
themselves of the SizeQuote Mechanism
to facilitate large-sized orders.9
However, the Exchange continues to
believe that the SizeQuote Mechanism
enhances ICMPs’ ability and incentive
to quote competitively and participate
in open outcry trades while at the same
time creates a process that gives greater
certainty to Floor Brokers in the
execution of large orders in that ICMPs
only have one opportunity to respond
with a quote response (which further
enhances an ICMP’s incentive to quote
7 The appropriate Exchange committee
determines the classes in which SizeQuote operates
and may vary the minimum qualifying order size,
provided that such number may not be less than
250 contracts.
8 See note 6, supra.
9 The Exchange believes the SizeQuote
Mechanism has not been actively utilized due to
some of the limitations and risks inherent in the
original design of the pilot program. Thus, apart
from the instant proposal to extend the pilot period,
CBOE recently expanded the pilot program to
include solicited orders. Originally the pilot
program only applied to facilitation orders. See note
6, supra, and accompanying text. CBOE has also
proposed to modify the pilot program in various
other respects. See note 5, supra.
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13:17 Feb 14, 2006
Jkt 208001
competitively). The Exchange is
therefore seeking to extend the existing
pilot program, including the
amendment made thereto pursuant to
SR–CBOE–2005–83,10 for another year,
through February 15, 2007, in order to
continue its evaluation of the utility of
the SizeQuote Mechanism.
2. Statutory Basis
The Exchange believes the proposed
rule change is consistent with section
6(b) of the Act 11 in general and furthers
the objectives of section 6(b)(5) of the
Act 12 in particular in that it is designed
to 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 protect investors and the
public interest.
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 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
The Exchange neither solicited nor
received comments on the proposal.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Because the foregoing proposed rule
change, as amended, does not:
(i) Significantly affect the protection
of investors or the public interest;
(ii) Impose any significant burden on
competition; and
(iii) Become operative for 30 days
from the date on which it was filed, or
such shorter time as the Commission
may designate, it has become effective
pursuant to section 19(b)(3)(A) of the
Act 13 and Rule 19b–4(f)(6)
thereunder.14 At any time within 60
days after the filing of the proposed rule
change, the Commission may summarily
10 See
note 6, supra.
U.S.C. 78f(b).
12 15 U.S.C. 78f(b)(5).
13 15 U.S.C. 78s(b)(3)(A).
14 17 CFR 240.19b–4(f)(6).
Pursuant to Rule 19b–4(f)(6)(iii) under the Act,
the Exchange is required to give the Commission
written notice of its intent to file the proposed rule
change, along with a brief description and text of
the proposed rule change, at least five business days
prior to the date of filing of the proposed rule
change, or such shorter time as designated by the
Commission. The Commission notes that the
Exchange provided notice of the filing at least five
business days prior to the date of filing.
11 15
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8013
abrogate the rule change if it appears to
the Commission 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.
A proposed rule change filed under
section 19b–4(f)(6) normally may not
become operative prior to 30 days after
the date of its filing.15 Rule 19b–
4(f)(6)(iii) permits the Commission to
designate a shorter time if such action
is consistent with the protection of
investors and the public interest.16
CBOE has requested that the
Commission waive the 30-day operative
delay. The Commission believes that
waiving the 30-day operative delay is
consistent with the protection of
investors and the public interest so that
the pilot program may continue until
February 15, 2007 without
interruption.17
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–2006–05 on the
subject line.
Paper Comments
• Send paper comments in triplicate
to Nancy M. Morris, Secretary,
Securities and Exchange Commission,
100 F Street, NE., Washington, DC
20549–1090.
All submissions should refer to File
Number SR–CBOE–2006–05. 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
15 17
CFR 240.19b–4(f)(6)(iii).
16 Id.
17 For purposes only of waiving the 30-day
operative delay, the Commission has considered the
proposed rule’s impact on efficiency, competition,
and capital formation. See 15 U.S.C. 78c(f).
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8014
Federal Register / Vol. 71, No. 31 / Wednesday, February 15, 2006 / Notices
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 available publicly. All
submissions should refer to File
Number SR–CBOE–2006–05 and should
be submitted on or before March 8,
2006.
For the Commission, by the Division of
Market Regulation, pursuant to delegated
authority.18
J. Lynn Taylor,
Assistant Secretary.
[FR Doc. E6–2111 Filed 2–14–06; 8:45 am]
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–53246; File No. SR–CBOE–
2005–104]
Self-Regulatory Organizations;
Chicago Board Options Exchange,
Incorporated; Order Approving
Proposed Rule Change and Notice of
Filing and Order Granting Accelerated
Approval to Amendment No. 1 Thereto
To Amend Its Rules Governing the
Hours of Trading in Equity Options and
Narrow-Based Index Options
cprice-sewell on PROD1PC66 with NOTICES
February 7, 2006.
I. Introduction
On December 6, 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
amend its rules governing the hours of
trading in equity options and narrowbased index options. The proposed rule
change was published for comment in
the Federal Register on December 20,
2005. The Commission received no
comments on the proposed rule change.
On January 31, 2006, the Exchange filed
CFR 200.30–3(a)(12).
1 15 U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
13:17 Feb 14, 2006
II. Description
The CBOE proposes to amend its rules
governing the hours of trading in equity
options and narrow-based index
options. Specifically, the CBOE
proposes to amend its rules to change
the close of the normal trading hours in
equity options and in narrow-based
index options from 3:02 p.m. (Chicago
time) to 3 p.m. (Chicago time). After the
change, the time of the close of trading
in these CBOE options will correspond
to the normal time set for the close of
trading on the primary exchanges listing
the stocks underlying the CBOE options.
The primary exchanges generally close
at 3 p.m. (Chicago time).
The Exchange represents that
improvements in the processing and
reporting of transactions have largely
eliminated significant delays in the
reporting of closing prices; and
therefore, a two minute session is no
longer needed to trade options after the
underlying securities close trading.
Additionally, the Exchange believes that
pricing aberrations can occur if an
option is traded when the underlying
stock is no longer trading, since there is
a close relationship in the price of the
underlying stock and the overlying
option. As a result, the CBOE believes
that it is difficult for the market to price
options accurately when the underlying
security is not trading. Furthermore, as
noted above, the Exchange also
proposes to change the closing time for
narrow-based indexes (under CBOE
Rule 24.6) because these indexes are
subject to the same pricing problems as
options on individual stocks. According
to the CBOE, a significant news
announcement on one component of a
narrow-based index could have a
significant effect on that index.
However, the Exchange is not at this
time proposing to change the closing
time of 3:15 p.m. (Chicago time) for
broad-based index options because it
does not believe that a significant news
announcement by the issuer of one
component stock of a broad-based index
is likely to have a significant effect on
the price of that broad-based index.
Accordingly, under the proposed rule
change, as amended, the CBOE proposes
3 In Amendment No. 1, the Exchange requested
that the implementation date for the new closing
time be changed from February 1, 2006, as was
originally proposed, to February 13, 2006.
18 17
VerDate Aug<31>2005
Amendment No. 1 to the proposed rule
change.3 This order approves the
proposed rule change, grants accelerated
approval to Amendment No. 1 to the
proposed rule change, and solicits
comments from interested persons on
Amendment No. 1.
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to amend its rules, including CBOE
Rules 6.1, 6.2, 12.3, 24.6, and 24.16, in
which references are made to a 3:02
p.m. closing time for equity options and
narrow-based index options. The CBOE
proposes that the proposed rule change,
as amended, be implemented on
February 13, 2006.4
III. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning Amendment No.
1, including whether Amendment No. 1
is consistent with the Act. Comments
may be submitted by any of the
following methods:
Electronic Comments
• Use the Commission’s Internet
comment form at (https://www.sec.gov/
rules/sro.shtml); or
• Send an e-mail to rulecomments@sec.gov. Please include File
Number SR–CBOE–2005–104 on the
subject line.
Paper Comments
• Send paper comments in triplicate
to Nancy M. Morris, Secretary,
Securities and Exchange Commission,
100 F Street, NE., Washington, DC
20549–1090.
All submissions should refer to File
Number SR-CBOE–2005–104. 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
Section. 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 available publicly. All
submissions should refer to File
Number SR–CBOE–2005–104 and
4 Id.
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]]>Agencies
[Federal Register Volume 71, Number 31 (Wednesday, February 15, 2006)]
[Notices]
[Pages 8012-8014]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E6-2111]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-53252; File No. SR-CBOE-2006-05]
Self-Regulatory Organizations; Chicago Board Options Exchange,
Incorporated; Notice of Filing and Immediate Effectiveness of Proposed
Rule Change To Extend the Duration of the SizeQuote Mechanism Pilot
February 8, 2006.
Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given
that on January 30, 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 as a ``non-
controversial'' proposed rule change pursuant to section 19(b)(3)(A) of
the Act \3\ and Rule 19b-4(f)(6) thereunder,\4\ which renders it
effective upon filing with the Commission. 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.
\3\ 15 U.S.C. 78s(b)(3)(A).
\4\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to extend the pilot in CBOE Rule 6.74(f)
pertaining to the SizeQuote Mechanism, which is a process by which a
Floor Broker may execute and facilitate large-sized orders in open
outcry. The Exchange is proposing to extend the pilot program, which
would otherwise expire on February 15, 2006, through February 15, 2007.
No other changes are being made to the pilot program through this rule
filing.\5\ The text of the proposed rule change is available on the
Exchange's Web site (https://www.cboe.com), at the Exchange's Office of
the Secretary and at the Commission.
---------------------------------------------------------------------------
\5\ A separate rule change proposal has been filed and is
currently pending with the Commission that would make amendments to
the SizeQuote Mechanism. See SR-CBOE-2005-115 (proposal to modify
the pilot program in various respects, including to permit a Floor
Broker to execute the entire SizeQuote Order at a price at least one
trading increment better than the best price communicated by the in-
crowd market participants (``ICMPs'') in their responses to the
SizeQuote request).
---------------------------------------------------------------------------
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 those 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 parts of such
statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule Change
1. Purpose
CBOE Rule 6.74(f), which relates to the open outcry ``SizeQuote''
Mechanism, was approved on a pilot basis in February 2005; was recently
expanded, in January 2006, to include solicited orders; and will expire
on February 15, 2006.\6\ This pilot program
[[Page 8013]]
provides a process by which a Floor Broker, using his or her exercise
of due diligence to execute orders at the best price(s), may execute
and facilitate large-sized orders in open outcry. Under the pilot
program, the ICMPs have priority to trade a SizeQuote Order at the best
price communicated by the ICMPs in their response to a Floor Broker's
SizeQuote request and at one increment better, while a Floor Broker can
execute the entire SizeQuote Order with a facilitation order, one or
more solicited orders, or a combination of solicited and facilitation
orders at a price two trading increments better than the best price
provided by the ICMPs in their response to the SizeQuote request. For
purposes of the pilot program, the minimum qualifying order size is 250
contracts \7\ and Floor Brokers must stand ready to facilitate the
entire size of the order for which they request SizeQuotes.
---------------------------------------------------------------------------
\6\ See Securities Exchange Act Release Nos. 51205 (February 15,
2005), 70 FR 8647 (February 22, 2005) (approving SR-CBOE-2004-72 on
a pilot basis through February 15, 2006) and 53135 (January 17,
2006), 71 FR 3908 (January 24, 2006) (approving SR-CBOE-2005-83,
which modified the pilot program to enable a Floor Broker to execute
a SizeQuote Order with either a Floor Broker's facilitation order,
one or more solicited orders, or a combination of the Floor Broker's
facilitation order and such solicited order(s)).
\7\ The appropriate Exchange committee determines the classes in
which SizeQuote operates and may vary the minimum qualifying order
size, provided that such number may not be less than 250 contracts.
---------------------------------------------------------------------------
The instant proposed rule change seeks to extend the existing pilot
program, which would otherwise expire on February 15, 2006, through
February 15, 2007. The Exchange notes that, as part of the original
pilot program approval order,\8\ the Exchange represented that it would
provide the Commission a report at the end of the initial pilot period
summarizing the effectiveness of the SizeQuote program. In that regard,
though the SizeQuote Mechanism has been made available during the pilot
period in all equity option classes traded on the Exchange for orders
of 250 contracts or more, Floor Brokers have not generally availed
themselves of the SizeQuote Mechanism to facilitate large-sized
orders.\9\ However, the Exchange continues to believe that the
SizeQuote Mechanism enhances ICMPs' ability and incentive to quote
competitively and participate in open outcry trades while at the same
time creates a process that gives greater certainty to Floor Brokers in
the execution of large orders in that ICMPs only have one opportunity
to respond with a quote response (which further enhances an ICMP's
incentive to quote competitively). The Exchange is therefore seeking to
extend the existing pilot program, including the amendment made thereto
pursuant to SR-CBOE-2005-83,\10\ for another year, through February 15,
2007, in order to continue its evaluation of the utility of the
SizeQuote Mechanism.
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\8\ See note 6, supra.
\9\ The Exchange believes the SizeQuote Mechanism has not been
actively utilized due to some of the limitations and risks inherent
in the original design of the pilot program. Thus, apart from the
instant proposal to extend the pilot period, CBOE recently expanded
the pilot program to include solicited orders. Originally the pilot
program only applied to facilitation orders. See note 6, supra, and
accompanying text. CBOE has also proposed to modify the pilot
program in various other respects. See note 5, supra.
\10\ See note 6, supra.
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2. Statutory Basis
The Exchange believes the proposed rule change is consistent with
section 6(b) of the Act \11\ in general and furthers the objectives of
section 6(b)(5) of the Act \12\ in particular in that it is designed to
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 protect investors and the public
interest.
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\11\ 15 U.S.C. 78f(b).
\12\ 15 U.S.C. 78f(b)(5).
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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 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
The Exchange neither solicited nor received comments on the
proposal.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Because the foregoing proposed rule change, as amended, does not:
(i) Significantly affect the protection of investors or the public
interest;
(ii) Impose any significant burden on competition; and
(iii) Become operative for 30 days from the date on which it was
filed, or such shorter time as the Commission may designate, it has
become effective pursuant to section 19(b)(3)(A) of the Act \13\ and
Rule 19b-4(f)(6) thereunder.\14\ At any time within 60 days after the
filing of the proposed rule change, the Commission may summarily
abrogate the rule change if it appears to the Commission 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.
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\13\ 15 U.S.C. 78s(b)(3)(A).
\14\ 17 CFR 240.19b-4(f)(6).
Pursuant to Rule 19b-4(f)(6)(iii) under the Act, the Exchange is
required to give the Commission written notice of its intent to file
the proposed rule change, along with a brief description and text of
the proposed rule change, at least five business days prior to the
date of filing of the proposed rule change, or such shorter time as
designated by the Commission. The Commission notes that the Exchange
provided notice of the filing at least five business days prior to
the date of filing.
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A proposed rule change filed under section 19b-4(f)(6) normally may
not become operative prior to 30 days after the date of its filing.\15\
Rule 19b-4(f)(6)(iii) permits the Commission to designate a shorter
time if such action is consistent with the protection of investors and
the public interest.\16\ CBOE has requested that the Commission waive
the 30-day operative delay. The Commission believes that waiving the
30-day operative delay is consistent with the protection of investors
and the public interest so that the pilot program may continue until
February 15, 2007 without interruption.\17\
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\15\ 17 CFR 240.19b-4(f)(6)(iii).
\16\ Id.
\17\ For purposes only of waiving the 30-day operative delay,
the Commission has considered the proposed rule's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
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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-2006-05 on the subject line.
Paper Comments
Send paper comments in triplicate to Nancy M. Morris,
Secretary, Securities and Exchange Commission, 100 F Street, NE.,
Washington, DC 20549-1090.
All submissions should refer to File Number SR-CBOE-2006-05. 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
[[Page 8014]]
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 available publicly. All submissions should refer to
File Number SR-CBOE-2006-05 and should be submitted on or before March
8, 2006.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\18\
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\18\ 17 CFR 200.30-3(a)(12).
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J. Lynn Taylor,
Assistant Secretary.
[FR Doc. E6-2111 Filed 2-14-06; 8:45 am]
BILLING CODE 8010-01-P
