Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend CBOE Membership Rules Relating to Membership Sale Process, 8324-8326 [E6-2201]

Download as PDF 8324 Federal Register / Vol. 71, No. 32 / Thursday, February 16, 2006 / Notices dsatterwhite on PROD1PC65 with NOTICES options.33 The Commission believes that the proposed position and exercise limits should serve to minimize potential manipulation concerns. The CBOE represents that it has adequate surveillance procedures for broad-based index options and that it intends to apply its existing surveillance procedures for index options to monitor trading in broad-based index options listed pursuant to CBOE Rule 24.2(f). In addition, because CBOE Rule 24.2(f) requires that each component of an index be an ‘‘NMS stock,’’ as defined in Rule 600 of Regulation NMS under the Act,34 each index component must be listed on a registered national securities exchange or Nasdaq. Accordingly, the CBOE will have access to information concerning trading activity in the component securities of an underlying index through the Intermarket Surveillance Group (‘‘ISG’’).35 CBOE Rule 24.2(f) also provides that non-U.S. index components that are not subject to a comprehensive surveillance sharing agreement between the CBOE and the primary market(s) trading the index components may comprise no more than 20% of the weight of the index.36 The Commission believes that these requirements will help to ensure that the CBOE has the ability to monitor trading in broad-based index options listed pursuant to CBOE Rule 24.2(f) and in the component securities of the underlying indexes. The Commission believes that the requirements in CBOE Rule 24.2(f) regarding, among other things, the minimum market capitalization, trading volume, and relative weightings of an underlying index’s component stocks are designed to ensure that the markets for the index’s component stocks are adequately capitalized and sufficiently liquid, and that no one stock dominates the index. In addition, CBOE Rule 24.2(f) requires that the underlying index be ‘‘broad-based,’’ as defined in 33 See CBOE Rule 24.4(a). Under CBOE Rule 24.5, the exercise limits for index option contracts are equivalent to the position limits prescribed for option contracts with the nearest expiration date in CBOE Rule 24.4 or 24.4A. 34 17 CFR 242.600. 35 The ISG was formed on July 14, 1983, to, among other things, coordinate more effectively surveillance and investigative information sharing arrangements in the stock and options markets. All of the registered national securities exchanges and the National Association of Securities Dealers, Inc., are members of the ISG. In addition, futures exchanges and non-U.S. exchanges and associations are affiliate members of the ISG. 36 However, such non-U.S. index components, as ‘‘NMS stocks,’’ would be registered under Section 12 of the Act, 15 U.S.C. 78l, and listed and traded on a national securities exchange or Nasdaq, where there is last sale reporting. VerDate Aug<31>2005 15:56 Feb 15, 2006 Jkt 208001 CBOE Rule 24.1(i)(1).37 The Commission believes that these requirements minimize the potential for manipulating the underlying index. The Commission believes that the requirement in CBOE Rule 24.2(f) that the current index value be widely disseminated at least once every 15 seconds by OPRA, CTA/CQ, NIDS, or by one or more major market data vendors during the time an index option trades on the CBOE should provide transparency with respect to current index values and contribute to the transparency of the market for broadbased index options. In addition, the Commission believes, as it has noted in other contexts, that the requirement in CBOE Rule 24.2(f) that an index option be settled based on the opening prices of the index’s component securities, rather than on closing prices, could help to reduce the potential impact of expiring index options on the market for the index’s component securities.38 The Exchange has requested accelerated approval of the proposed rule change. The Commission finds good cause for approving the proposed rule change, as amended, prior to the 30th day after the date of publication of the notice of filing in the Federal Register. The proposal implements listing and maintenance standards and position and exercise limits for broadbased index options substantially the same as those recently approved for the International Securities Exchange, which were subject to the full public comment period, with no comments received.39 The Commission does not believe that the Exchange’s proposal raises any novel regulatory issues. Therefore, the Commission finds good cause, consistent with Section 19(b)(2) of the Act,40 to approve the proposed rule change, as amended, on an accelerated basis. V. Conclusion It is therefore ordered, pursuant to Section 19(b)(2) of the Act,41 that the proposed rule change (SR–CBOE–2005– 37 See supra note 6. e.g., Securities Exchange Act Release No. 30944 (July 21, 1992), 57 FR 33376 (July 28, 1992) (order approving a CBOE proposal to establish opening price settlement for S&P 500 Index options). 39 See Securities Exchange Act Release No. 52578 (October 7, 2005), 70 FR 60590 (October 18, 2005). See also Securities Exchange Act Release No. 52781 (November 16, 2005), 70 FR 70898 (November 23, 2005) (order approving on an accelerated basis generic broad-based index option listing standards for the American Stock Exchange). 40 15 U.S.C. 78s(b)(2). 41 Id. 38 See, PO 00000 Frm 00054 Fmt 4703 Sfmt 4703 59), as amended, is hereby approved on an accelerated basis. For the Commission, by the Division of Market Regulation, pursuant to delegated authority.42 J. Lynn Taylor, Assistant Secretary. [FR Doc. E6–2197 Filed 2–15–06; 8:45 am] BILLING CODE 8010–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–53260; File No. SR–CBOE– 2006–04] Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend CBOE Membership Rules Relating to Membership Sale Process February 9, 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 9, 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)(iii) of the Act 3 and Rule 19b–4(f)(6) thereunder,4 which renders it effective upon filing with the Commission.5 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 CBOE proposes to revise Exchange membership rules related to the membership sale process. The text of the proposed rule change is available on CBOE’s Web site, http://www.cboe.com, at CBOE’s principal office, and at the Commission’s Public Reference Room. 42 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)(iii). 4 17 CFR 240.19b–4(f)(6). 5 The CBOE provided the Commission with written notice of its intent to file the proposed rule change on December 7, 2005. CBOE asked the Commission to waive the 30-day operative delay. See Section 19(b)(3)(A) of the Act, and Rule 19b– 4(f)(6)(iii) thereunder. 15 U.S.C. 78s(b)(1), 17 CFR 240.19b–4(f)(6)(iii). 1 15 E:\FR\FM\16FEN1.SGM 16FEN1 Federal Register / Vol. 71, No. 32 / Thursday, February 16, 2006 / 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, 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 parts of such statements. dsatterwhite on PROD1PC65 with NOTICES A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The Exchange is revising CBOE Rules 3.13(b) and 3.14(a) to implement new provisions that would take effect in the event of a ‘‘crossed’’ membership market. Specifically, the proposed rule change would provide that (i) when a bid is submitted that exceeds the best offer posted on the Exchange, a seat sale transaction will occur at the best offer posted on the Exchange, and (ii) when an offer is submitted that is less than the best bid posted on the Exchange, a seat sale transaction will occur at the best bid posted on the Exchange. For example, if the seat market is a $500,000 bid and a $525,000 offer, and subsequently a properly submitted bid is received by the CBOE Membership Department for $530,000, a seat sale transaction will occur at the posted offer of $525,000. Likewise, if the seat market is a $500,000 bid and a $525,000 offer, and thereafter a properly submitted offer is received by the CBOE Membership Department for $495,000, a seat sale transaction will occur at the posted bid of $500,000. The Exchange expects this rule would be used rarely since the Exchange provides prompt updates of all properly submitted bids and offers on the Exchange Bulletin Board, the Exchange ‘‘seat market’’ telephone hotline, and the Exchange’s Web site. However, it is possible for a bid or offer to be submitted that ‘‘crosses’’ the current membership market. Current CBOE Rules 3.13 and 3.14 only explicitly address what occurs in the event that the bid and offer are matched with the same price. The Exchange believes that this rule filing will improve those rules by explicitly addressing what shall occur when a bid is submitted that exceeds the best offer or an offer is submitted that is less than the best bid. VerDate Aug<31>2005 15:56 Feb 15, 2006 Jkt 208001 The proposed rule change also makes clear that bids and offers must be submitted in writing during seat market hours.6 The purpose of this proposed rule change is to ensure that all bids and offers are received by the Membership Department and processed in an orderly manner. The Exchange will issue an information circular to the Exchange’s membership to inform them of the hours that will constitute seat market hours. The Exchange notes that the proposed rule change was reviewed and endorsed by the Exchange’s Membership Committee, which is comprised of a cross-section of Exchange members and representatives of member organizations. 2. Statutory Basis The Exchange states that the proposed rule change is designed to improve the operation of the CBOE seat market thereby benefiting both the Exchange and its members. Therefore, the Exchange believes that the proposed rule change is consistent with the requirements of Section 6(b) of the Act,7 in general, and furthers the objectives of Section 6(b)(5),8 in particular, in that it is designed to promote just and equitable principles of trade, to prevent fraudulent and manipulative acts and, in general, to protect investors and the public interest. B. Self-Regulatory Organization’s Statement on Burden on Competition The Exchange does not believe that the proposed rule change will 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 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 rule 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 if consistent with the protection of investors and the public interest, provided that the 6 Seat market hours, as specified on the forms for submitting a bid or offer for membership purchase, are currently 7 a.m. to 4 p.m. Central time. 7 15 U.S.C. 78f(b). 8 15 U.S.C. 78f(b)(5). PO 00000 Frm 00055 Fmt 4703 Sfmt 4703 8325 Exchange has given the Commission written notice of its intent to file 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,9 the proposed rule change has become effective pursuant to Section 19(b)(3)(A) of the Act 10 and Rule 19b–4(f)(6) thereunder.11 A proposed rule change filed under Rule 19b–4(f)(6) under the Act 12 normally may not become operative prior to 30 days after the date of filing. However, Rule 19b–4(f)(6)(iii) 13 permits the Commission to designate a shorter time if such action is consistent with the protection of investors and the public interest. The CBOE has requested that the Commission waive the 30-day operative delay, which would make the rule change operative immediately. The Commission believes that such waiver is consistent with the protection of investors and the public interest, for it will allow the CBOE to clarify CBOE Rules 3.13 and 3.14 to address what shall occur with respect to trading in CBOE memberships in the event of a ‘‘crossed’’ membership market. In addition, the proposed rule change clarifies that bids and offers for CBOE memberships must be submitted in writing during CBOE’s seat market hours. For these reasons, the Commission designates that the proposal become operative immediately.14 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.15 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: 9 As required under Rule 19b–4(f)(6)(iii) under the Act, the Exchange provided the Commission with written notice of its intent to file the proposed rule change at least five business days prior to the date of filing of the proposal. 10 15 U.S.C. 78s(b)(3)(A). 11 17 CFR 240.19b–4(f)(6). 12 17 CFR 240.19b–4(f)(6). 13 17 CFR 240.19b–4(f)(6)(iii). 14 For purposes only of waiving the 30-day preoperative period, the Commission has considered the proposed rule’s impact on efficiency, competition, and capital formation. 15 U.S.C. 78c(f). 15 See 15 U.S.C. 78s(b)(3)(C). E:\FR\FM\16FEN1.SGM 16FEN1 8326 Federal Register / Vol. 71, No. 32 / Thursday, February 16, 2006 / Notices Electronic Comments • Use the Commission’s Internet comment form (http://www.sec.gov/ rules/sro.shtml); or • Send an e-mail to rulecomments@sec.gov. Please include File Number SR–CBOE–2006–04 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. SECURITIES AND EXCHANGE COMMISSION [Release No. 34–53269; File No. SR–NASD– 2006–018] Self-Regulatory Organizations; National Association of Securities Dealers, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change and Amendment No. 1 Thereto To Modify the Routing Sequence for Directed Cross Orders February 10, 2006. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’) 1 and Rule 19b–4 thereunder,2 All submissions should refer to File notice is hereby given that on February Number SR–CBOE–2006–04. This file 2, 2006, the National Association of number should be included on the subject line if e-mail is used. To help the Securities Dealers, Inc. (’’NASD’’), through its subsidiary, The Nasdaq Commission process and review your Stock Market, Inc. (‘‘Nasdaq’’), comments more efficiently, please use submitted to the Securities and only one method. The Commission will Exchange Commission (‘‘Commission’’) post all comments on the Commission’s the proposed rule change as described Internet Web site (http://www.sec.gov/ in Items I and II below, which Items rules/sro.shtml). Copies of the have been prepared by Nasdaq. Nasdaq submission, all subsequent filed the proposed rule change pursuant amendments, all written statements to Section 19(b)(3)(A) of the Act3 which with respect to the proposed rule renders it effective upon filing with the change that are filed with the Commission. On February 9, 2006, Commission, and all written Nasdaq filed Amendment No. 1 to the communications relating to the proposed rule change.4 The Commission proposed rule change between the is publishing this notice to solicit Commission and any person, other than comments on the proposed rule change, as amended, from interested persons. those that may be withheld from the public in accordance with the I. Self-Regulatory Organization’s provisions of 5 U.S.C. 552, will be Statement of the Terms of Substance of available for inspection and copying in the Proposed Rule Change the Commission’s Public Reference The proposed rule change is intended Room. Copies of the filing also will be to explicitly add INET to the routing available for inspection and copying at sequence for Directed Cross Orders in the principal office of the CBOE. All exchange-listed securities directed to comments received will be posted the NYSE and to allow subscribers to without change; the Commission does determine whether they wish to route to not edit personal identifying market centers in addition to Brut, information from submissions. You Nasdaq, and INET prior to the NYSE should submit only information that when the NYSE is the final destination you wish to make available publicly. All of the order.5 The text of the proposed submissions should refer to File rule change is below. Proposed new Number SR–CBOE–2006–04 and should language is in italics; deletions are in be submitted on or before March 9, [brackets].6 2006. * * * * * dsatterwhite on PROD1PC65 with NOTICES For the Commission, by the Division of Market Regulation, pursuant to delegated authority.16 J. Lynn Taylor, Assistant Secretary. [FR Doc. E6–2201 Filed 2–15–06; 8:45 am] BILLING CODE 8010–01–P 16 17 CFR 200.30–3(a)(12). VerDate Aug<31>2005 15:56 Feb 15, 2006 Jkt 208001 1 15 U.S.C. 78s(b)(1). CFR 240.19b–4. 3 15 U.S.C. 78s(b)(3)(A). 4 Amendment No. 1 made clarifying changes to the rule text and Section I of this notice. 5 See Amendment No. 1. 6 Changes are marked to the rule text that appears in the electronic NASD Manual found at www.nasd.com. Prior to the date when The NASDAQ Stock Market LLC (‘‘NASDAQ LLC’’) commences operations, NASDAQ LLC will file a conforming change to the rules of NASDAQ LLC approved in Securities Exchange Act Release No. 53128 (January 13, 2006). 2 17 PO 00000 Frm 00056 Fmt 4703 Sfmt 4703 4903. Order Entry Parameters (a) To Brut Orders—No Change (b) Brut Cross Orders— (1) No Change (A)–(C) No Change (D) A Brut Cross Order may also be designated as a Directed Cross Order. A Directed Cross Order is an order that is entered into the System during market hours and is executable against marketable contra-side orders in the System. The order also is eligible for routing to other market centers. After being processed in the Brut System and exhausting available liquidity in the Brut System, the order is automatically routed by Brut to the specific market center selected by the entering party for potential execution. Any portion of the Directed Cross Order that remains unfilled after being routed to the selected market center will be returned to the entering party. For Directed Cross Orders in exchange-listed securities directed to the New York Stock Exchange if, after being processed in the Brut System and exhausting available liquidity in the Brut System, such orders will be automatically routed to the Nasdaq Market Center and INET for potential execution and thereafter, if instructed by the entering party, to other market centers that provide automated electronic executions before being sent to the New York Stock Exchange. Directed Cross Orders in exchangelisted securities directed to the New York Stock Exchange shall remain at the New York Stock E[e]xchange7 until executed or cancelled by the entering party. (1)(E)–(F) No Change (c)–(f) No Change * * * * * II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, Nasdaq 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. Nasdaq has prepared summaries, set forth in Sections A, B, and C below, of the most significant aspects of such statements. 7 See E:\FR\FM\16FEN1.SGM Amendment No. 1. 16FEN1

Agencies

[Federal Register Volume 71, Number 32 (Thursday, February 16, 2006)]
[Notices]
[Pages 8324-8326]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E6-2201]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-53260; File No. SR-CBOE-2006-04]


Self-Regulatory Organizations; Chicago Board Options Exchange, 
Incorporated; Notice of Filing and Immediate Effectiveness of Proposed 
Rule Change To Amend CBOE Membership Rules Relating to Membership Sale 
Process

February 9, 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 9, 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)(iii) of the Act \3\ and 
Rule 19b-4(f)(6) thereunder,\4\ which renders it effective upon filing 
with the Commission.\5\ 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)(iii).
    \4\ 17 CFR 240.19b-4(f)(6).
    \5\ The CBOE provided the Commission with written notice of its 
intent to file the proposed rule change on December 7, 2005. CBOE 
asked the Commission to waive the 30-day operative delay. See 
Section 19(b)(3)(A) of the Act, and Rule 19b-4(f)(6)(iii) 
thereunder. 15 U.S.C. 78s(b)(1), 17 CFR 240.19b-4(f)(6)(iii).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    CBOE proposes to revise Exchange membership rules related to the 
membership sale process. The text of the proposed rule change is 
available on CBOE's Web site, http://www.cboe.com, at CBOE's principal 
office, and at the Commission's Public Reference Room.

[[Page 8325]]

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 parts 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 is revising CBOE Rules 3.13(b) and 3.14(a) to 
implement new provisions that would take effect in the event of a 
``crossed'' membership market. Specifically, the proposed rule change 
would provide that (i) when a bid is submitted that exceeds the best 
offer posted on the Exchange, a seat sale transaction will occur at the 
best offer posted on the Exchange, and (ii) when an offer is submitted 
that is less than the best bid posted on the Exchange, a seat sale 
transaction will occur at the best bid posted on the Exchange. For 
example, if the seat market is a $500,000 bid and a $525,000 offer, and 
subsequently a properly submitted bid is received by the CBOE 
Membership Department for $530,000, a seat sale transaction will occur 
at the posted offer of $525,000. Likewise, if the seat market is a 
$500,000 bid and a $525,000 offer, and thereafter a properly submitted 
offer is received by the CBOE Membership Department for $495,000, a 
seat sale transaction will occur at the posted bid of $500,000. The 
Exchange expects this rule would be used rarely since the Exchange 
provides prompt updates of all properly submitted bids and offers on 
the Exchange Bulletin Board, the Exchange ``seat market'' telephone 
hotline, and the Exchange's Web site. However, it is possible for a bid 
or offer to be submitted that ``crosses'' the current membership 
market. Current CBOE Rules 3.13 and 3.14 only explicitly address what 
occurs in the event that the bid and offer are matched with the same 
price. The Exchange believes that this rule filing will improve those 
rules by explicitly addressing what shall occur when a bid is submitted 
that exceeds the best offer or an offer is submitted that is less than 
the best bid.
    The proposed rule change also makes clear that bids and offers must 
be submitted in writing during seat market hours.\6\ The purpose of 
this proposed rule change is to ensure that all bids and offers are 
received by the Membership Department and processed in an orderly 
manner. The Exchange will issue an information circular to the 
Exchange's membership to inform them of the hours that will constitute 
seat market hours.
---------------------------------------------------------------------------

    \6\ Seat market hours, as specified on the forms for submitting 
a bid or offer for membership purchase, are currently 7 a.m. to 4 
p.m. Central time.
---------------------------------------------------------------------------

    The Exchange notes that the proposed rule change was reviewed and 
endorsed by the Exchange's Membership Committee, which is comprised of 
a cross-section of Exchange members and representatives of member 
organizations.
2. Statutory Basis
    The Exchange states that the proposed rule change is designed to 
improve the operation of the CBOE seat market thereby benefiting both 
the Exchange and its members. Therefore, the Exchange believes that the 
proposed rule change is consistent with the requirements of Section 
6(b) of the Act,\7\ in general, and furthers the objectives of Section 
6(b)(5),\8\ in particular, in that it is designed to promote just and 
equitable principles of trade, to prevent fraudulent and manipulative 
acts and, in general, to protect investors and the public interest.
---------------------------------------------------------------------------

    \7\ 15 U.S.C. 78f(b).
    \8\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
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

    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 rule 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 if consistent with the protection of investors 
and the public interest, provided that the Exchange has given the 
Commission written notice of its intent to file 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,\9\ the proposed rule change has become effective pursuant 
to Section 19(b)(3)(A) of the Act \10\ and Rule 19b-4(f)(6) 
thereunder.\11\
---------------------------------------------------------------------------

    \9\ As required under Rule 19b-4(f)(6)(iii) under the Act, the 
Exchange provided the Commission with written notice of its intent 
to file the proposed rule change at least five business days prior 
to the date of filing of the proposal.
    \10\ 15 U.S.C. 78s(b)(3)(A).
    \11\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------

    A proposed rule change filed under Rule 19b-4(f)(6) under the Act 
\12\ normally may not become operative prior to 30 days after the date 
of filing. However, Rule 19b-4(f)(6)(iii) \13\ permits the Commission 
to designate a shorter time if such action is consistent with the 
protection of investors and the public interest. The CBOE has requested 
that the Commission waive the 30-day operative delay, which would make 
the rule change operative immediately. The Commission believes that 
such waiver is consistent with the protection of investors and the 
public interest, for it will allow the CBOE to clarify CBOE Rules 3.13 
and 3.14 to address what shall occur with respect to trading in CBOE 
memberships in the event of a ``crossed'' membership market. In 
addition, the proposed rule change clarifies that bids and offers for 
CBOE memberships must be submitted in writing during CBOE's seat market 
hours. For these reasons, the Commission designates that the proposal 
become operative immediately.\14\
---------------------------------------------------------------------------

    \12\ 17 CFR 240.19b-4(f)(6).
    \13\ 17 CFR 240.19b-4(f)(6)(iii).
    \14\ For purposes only of waiving the 30-day pre-operative 
period, the Commission has considered the proposed rule's impact on 
efficiency, competition, and capital formation. 15 U.S.C. 78c(f).
---------------------------------------------------------------------------

    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.\15\
---------------------------------------------------------------------------

    \15\ See 15 U.S.C. 78s(b)(3)(C).
---------------------------------------------------------------------------

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:

[[Page 8326]]

Electronic Comments

     Use the Commission's Internet comment form (http://
www.sec.gov/rules/sro.shtml); or
     Send an e-mail to rule-comments@sec.gov. Please include 
File Number SR-CBOE-2006-04 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-2006-04. 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 (http://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 the 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-2006-04 and should be submitted on or before March 9, 2006.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\16\
---------------------------------------------------------------------------

    \16\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

J. Lynn Taylor,
Assistant Secretary.
 [FR Doc. E6-2201 Filed 2-15-06; 8:45 am]
BILLING CODE 8010-01-P