Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing of Proposed Rule Change Relating to the Exposure Period for Crossing Orders in the Hybrid Trading System, 9184-9186 [E6-2439]
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9184
Federal Register / Vol. 71, No. 35 / Wednesday, February 22, 2006 / Notices
exchange.8 In particular, the
Commission believes that the proposal
is consistent with section 6(b)(5) of the
Act,9 which requires that the rules of an
exchange be designed to prevent
fraudulent and manipulative acts and
Electronic Comments
practices, to promote just and equitable
principals of trade, to remove
• Use the Commission’s Internet
impediments to and perfect the
comment form at (https://www.sec.gov/
mechanism of a free and open market
rules/sro.shtml); or
and a national market system, and in
• Send an e-mail to rulegeneral, to protect investors and the
comments@sec.gov. Please include File
public interest.
Number SR–CBOE–2006–16 on the
The Commission believes the
subject line.
Program, by providing CBOE MarketMakers with the ability to adjust their
Paper Comments
quotation sizes to correspond to the
liquidity in the underlying primary
• Send paper comments in triplicate
market, provides a reasonable method
to Nancy M. Morris, Secretary,
for Market-Makers to manage their risks
Securities and Exchange Commission,
when the primary market disseminates
100 F Street, NE., Washington, DC
a 1-up market. The Commission notes
20549–1090.
that the Program has been operating on
All submissions should refer to File
a pilot basis for almost 18 months and
Number SR–CBOE–2006–16. This file
that, after evaluating quotation data
number should be included on the
relating to the Program, the CBOE
subject line if e-mail is used. To help the believes that the Program is functioning
Commission process and review your
as intended. The Commission also notes
comments more efficiently, please use
that, even though Market-Makers will
only one method. The Commission will have the ability to quote 1-up when the
post all comments on the Commission’s underlying primary market disseminates
a 1-up market, Market-Makers should
Internet Web site (https://www.sec.gov/
have an incentive to display competitive
rules/sro.shtml). Copies of the
quotations with significant size because
submission, all subsequent
the CBOE’s matching algorithm for
amendments, all written statements
allocating incoming orders in CBOE’s
with respect to the proposed rule
Hybrid Trading System is based in part
change that are filed with the
of the size of the Market-Maker’s
Commission, and all written
quotation at the best price.
communications relating to the
The Commission finds good cause,
proposed rule change between the
10
Commission and any person, other than pursuant to section 19(b)(2) of the Act,
for approving the proposed rule change
those that may be withheld from the
prior to the thirtieth day after
public in accordance with the
publication in the Federal Register. The
provisions of 5 U.S.C. 552, will be
Program is scheduled to expire on
available for inspection and copying in
February 17, 2006, and as such, to allow
the Commission’s Public Reference
the Program to continue to operate
Section. Copies of such filing also will
without interruption, the Commission
be available for inspection and copying
believes it is appropriate to accelerate
at the principal office of the CBOE. All
approval. The Commission notes that no
comments received will be posted
comments were received in connection
without change; the Commission does
with the approval of the Program on a
not edit personal identifying
pilot basis or the approval of the
information from submissions. You
extension of the pilot period for the
should submit only information that
you wish to make available publicly. All Program. Accordingly, the Commission
finds that good cause exists, pursuant to
submissions should refer to File
11
Number SR–CBOE–2006–16 and should section 6(b)(5) of the Act, to approve
the proposal on an accelerated basis.
be submitted on or before March 15,
2006.
V. Conclusion
It is therefore ordered, pursuant to
IV. Commission’s Findings and Order
section 19(b)(2) of the Act,12 that the
Granting Accelerated Approval of
Proposed Rule Change
cprice-sewell on PROD1PC66 with NOTICES
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:
The Commission finds that the
proposed rule change is consistent with
the requirements of the Act and the
rules and regulations thereunder
applicable to a national securities
VerDate Aug<31>2005
14:35 Feb 21, 2006
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8 In approving this proposal, the Commission has
considered its impact on efficiency, competition,
and capial formation. See 15 U.C.C. 78c(f).
9 15 U.S.C. 78f(b)(5).
10 15 U.S.C. 78s(b)(2).
11 15 U.S.C. 78f(b)(5).
12 15 U.S.C. 78s(b)(2).
PO 00000
Frm 00104
Fmt 4703
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proposed rule change (SR–CBOE–2006–
16), is hereby approved on an
accelerated basis.
For the Commission, by the Division of
Market Regulation, pursuant to delegated
authority.13
Nancy M. Morris,
Secretary.
[FR Doc. E6–2437 Filed 2–21–06; 8:45 am]
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–53278; File No. SR–CBOE–
2006–09]
Self-Regulatory Organizations;
Chicago Board Options Exchange,
Incorporated; Notice of Filing of
Proposed Rule Change Relating to the
Exposure Period for Crossing Orders
in the Hybrid Trading System
February 13, 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
30, 2006, 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.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
CBOE proposes to decrease the
exposure period for crossing orders in
its Hybrid Trading System (‘‘Hybrid’’)
from 10 seconds to 3 seconds. The text
of the proposed rule change is provided
below (additions are italicized;
deletions are [bracketed]).
Chicago Board Options Exchange,
Incorporated Rules
*
*
*
*
*
Rule 6.45A.—Priority and Allocation of
Equity Option Trades on the CBOE
Hybrid System
(a)–(e) No change.
* * * Interpretations and Policies:
.01 Principal Transactions: Order
entry firms may not execute as principal
against orders they represent as agent
unless: (i) Agency orders are first
13 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
E:\FR\FM\22FEN1.SGM
22FEN1
Federal Register / Vol. 71, No. 35 / Wednesday, February 22, 2006 / Notices
exposed on the Hybrid System for at
least [ten (10)]three (3) seconds, (ii) the
order entry firm has been bidding or
offering for at least [ten (10)]three (3)
seconds prior to receiving an agency
order that is executable against such bid
or offer, or (iii) the order entry firm
proceeds in accordance with the
crossing rules contained in Rule 6.74.
.02 Solicitation Orders. Order entry
firms must expose orders they represent
as agent for at least [ten (10)]three (3)
seconds before such orders may be
executed electronically via the
electronic execution mechanism of the
Hybrid System, in whole or in part,
against orders solicited from members
and non-member broker-dealers to
transact with such orders.
*
*
*
*
*
Rule 6.45B—Priority and Allocation of
Trades in Index Options and Options on
ETFs on the CBOE Hybrid System
(a)–(d) No change.
* * * Interpretations and Policies:
.01 Principal Transactions: Order
entry firms may not execute as principal
against orders they represent as agent
unless: (i) Agency orders are first
exposed on the Hybrid System for at
least [ten (10)]three (3) seconds, (ii) the
order entry firm has been bidding or
offering for at least [ten (10)]three (3)
seconds prior to receiving an agency
order that is executable against such bid
or offer, or (iii) the order entry firm
proceeds in accordance with the
crossing rules contained in Rule 6.74.
.02 Solicitation Orders. Order entry
firms must expose orders they represent
as agent for at least [ten (10)]three(3)
seconds before such orders may be
executed electronically via the
electronic execution mechanism of the
Hybrid System, in whole or in part,
against orders solicited from members
and non-member broker-dealers to
transact with such orders.
*
*
*
*
*
cprice-sewell on PROD1PC66 with 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
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 CBOE has
prepared summaries, set forth in
sections A, B, and C below, of the most
significant aspects of such statements.
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A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
CBOE rules provide that an order
entry firm may not execute an order it
represents as agent with a facilitation or
solicited order (referred to herein as
‘‘crossing orders’’) using Hybrid unless
it first complies with the 10-second
exposure requirement. Specifically,
order entry firms may not execute a
facilitation cross unless (i) the agency
order is first exposed on Hybrid for at
least 10 seconds, (ii) the order entry firm
has been bidding or offering for at least
10 seconds prior to receiving the agency
order that is executable against such bid
or offer, or (iii) the order entry firm
proceeds in accordance with the floorbased open outcry crossing rules
contained in CBOE Rule 6.74,
‘‘Crossing’’ Orders. Similarly, order
entry firms may not execute a
solicitation cross unless the agency
order is first exposed on Hybrid for at
least 10 seconds. During this 10 second
exposure period for crossing orders,
other members may enter orders to trade
against the exposed order.
The Exchange proposes to shorten the
duration of the exposure period
contained in the rules governing such
transactions, as set forth in
Interpretations and Policies .01 and .02
to CBOE Rules 6.45A, Priority and
Allocation of Equity Option Trades on
the CBOE Hybrid System, and 6.45B,
Priority and Allocation of Trades in
Index Options and Options on ETFs on
the CBOE Hybrid System, from 10
seconds to 3 seconds. This shortened
exposure period is fully consistent with
the electronic nature of Hybrid. Market
participants on the CBOE have
implemented systems that monitor any
updates to the CBOE market including
any changes resulting from orders being
entered into Hybrid and can
automatically respond based on pre-set
parameters. Thus, an exposure period of
3 seconds will permit exposure of
orders on the CBOE in a manner
consistent with the Exchange’s
electronic market.
By reducing the exposure time from
10 seconds to 3 seconds, the CBOE
believes that members will be able to
provide liquidity to their customers’
orders on a timelier basis, thus
providing investors with more speedy
executions. Timely and accurate
executions are consistent with the
principles under which Hybrid was
developed.
PO 00000
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9185
2. Statutory Basis
The Exchange believes the proposed
rule change is consistent with section
6(b) of the Act 3 in general and furthers
the objectives of section 6(b)(5) of the
Act 4 in particular in that it is designed
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. In particular, the
proposed rule change will provide
investors with more timely execution of
their options orders, while ensuring that
there is an adequate exposure of all
crossing orders in the CBOE
marketplace.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
CBOE does not believe that the
proposed rule change will impose any
burden on competition that is not
necessary or appropriate in furtherance
of the purposes of the Act.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
No written comments were solicited
or received with respect to the proposed
rule change.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
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 CBOE 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.
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:
3 15
4 15
E:\FR\FM\22FEN1.SGM
U.S.C. 78f(b).
U.S.C. 78f(b)(5).
22FEN1
9186
Federal Register / Vol. 71, No. 35 / Wednesday, February 22, 2006 / Notices
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–2006–09 on the
subject line.
Paper Comments
cprice-sewell on PROD1PC66 with NOTICES
• 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. 34–53287; File No. SR–Phlx–
2006–10]
Self-Regulatory Organizations;
Philadelphia Stock Exchange, Inc.;
Notice of Filing and Immediate
Effectiveness of Proposed Rule
Change Imposing Licensing Fees in
Connection with the Firm-Related
Equity Option and Index Option Fee
Cap
February 14, 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–2006–09. This file
2, 2006, the Philadelphia Stock
number should be included on the
subject line if e-mail is used. To help the Exchange, Inc. (‘‘Phlx’’ or ‘‘Exchange’’)
filed with the Securities and Exchange
Commission process and review your
Commission (‘‘Commission’’) the
comments more efficiently, please use
proposed rule change as described in
only one method. The Commission will
Items I, II and III below, which Items
post all comments on the Commission’s have been prepared by the Phlx. The
Internet Web site (https://www.sec.gov/
Phlx has designated this proposal as one
rules/sro.shtml). Copies of the
establishing or changing a due, fee, or
submission, all subsequent
other charge imposed by a selfamendments, all written statements
regulatory organization pursuant to
with respect to the proposed rule
section 19(b)(3)(A)(ii) of the Act 3 and
change that are filed with the
Rule 19b–4(f)(2) thereunder,4 which
Commission, and all written
renders the proposal effective upon
communications relating to the
filing with the Commission. The
proposed rule change between the
Commission is publishing this notice to
Commission and any person, other than solicit comments on the proposed rule
those that may be withheld from the
change from interested persons.
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 Phlx proposes to amend its
Room. Copies of such filing also will be
schedule of fees to adopt a license fee
available for inspection and copying at
of $.10 for options traded on the
the principal office of the CBOE. All
following products: 5 (1) State Street
comments received will be posted
Global Advisors’, a division of State
without change; the Commission does
Street Bank and Trust Company
not edit personal identifying
(‘‘SSGA’’), streetTracks based on the
information from submissions. You
Dow Jones & Co., Inc. (‘‘Dow Jones’’)
should submit only information that
Global Titans 50 IndexSM, traded under
you wish to make available publicly. All the symbol DGT; (2) SSGA’s
submissions should refer to File
streetTracks based on the Dow Jones
Number SR–CBOE–2006–09 and should Wilshire 5000 IndexSM, traded under
be submitted on or before March 15,
the symbol TMW; (3) BGI’s iShares Dow
2006.
Jones Select Dividend IndexSM, traded
under the symbol DVY; (4) iShares Dow
For the Commission, by the Division of
Jones U.S. Total Market IndexSM, traded
Market Regulation, pursuant to delegated
5
under the symbol IYY; (5) iShares Dow
authority.
Jones U.S. Basic Materials IndexSM,
Nancy M. Morris,
traded under the symbol IWM; (6)
Secretary.
iShares Dow Jones U.S. Consumer
[FR Doc. E6–2439 Filed 2–21–06; 8:45 am]
Services Sector IndexSM, traded under
BILLING CODE 8010–01–P
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 15 U.S.C. 78s(b)(3)(A)(ii).
4 17 CFR 240.19b–4(f)(2).
5 This fee will be charged only to Exchange
Members.
2 17
5 17
CFR 200.30–3(a)(12).
VerDate Aug<31>2005
14:35 Feb 21, 2006
Jkt 208001
PO 00000
Frm 00106
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Sfmt 4703
the symbol IYC; (7) iShares Dow Jones
U.S. Financial Sector IndexSM, traded
under the symbol IYF; (8) iShares Dow
Jones U.S. Financial Services Sector
IndexSM, traded under the symbol IYG;
(9) iShares Dow Jones U.S. Healthcare
Sector IndexSM, traded under the
symbol IYH; (10) iShares Dow Jones
U.S. Industrial Sector IndexSM, traded
under the symbol IYJ; (11) iShares Dow
Jones U.S. Consumer Goods Sector
IndexSM, traded under the symbol IYK;
(12) iShares Dow Jones U.S. Real Estate
Sector IndexSM, traded under the
symbol IYR; (13) iShares Dow Jones U.S.
Technology Sector IndexSM, traded
under the symbol IYW; (14) iShares
Dow Jones U.S. Telecommunications
Sector IndexSM, traded under the
symbol IYZ; (15) iShares Dow Jones U.S.
Utilities Sector IndexSM, traded under
the symbol IDU; and (16) First Trust’s
ETF based on the Dow Jones Select
Microcap IndexSM, traded under the
symbol FDM, (collectively ‘‘Dow Jones
products’’) 6 to be assessed per contract
side for equity option ‘‘firm’’
transactions (comprised of equity option
firm/proprietary comparison
transactions, equity option firm/
proprietary transactions and equity
option firm/proprietary facilitation
transactions). This license fee will be
imposed only after the Exchange’s
$60,000 ‘‘firm-related’’ equity option
and index option comparison and
transaction charge cap, described more
fully below, is reached.
Currently, the Exchange imposes a
cap of $60,000 per member
organization 7 on all ‘‘firm-related’’
6 ‘‘Dow Jones’’ and ‘‘SSGA’s streetTracks based on
the Dow Jones Global Titans 50 IndexSM’’, ‘‘SSGA’s
streetTracks based on the Dow Jones Wilshire 5000
IndexSM’’, ‘‘BGI’s iShares Dow Jones Select
Dividend IndexSM’’, ‘‘iShares Dow Jones U.S. Total
Market IndexSM’’, ‘‘iShares Dow Jones U.S. Basic
Materials IndexSM’’, ‘‘iShares Dow Jones U.S.
Consumer Services Sector IndexSM’’, ‘‘iShares Dow
Jones U.S. Financial Sector IndexSM’’, ‘‘iShares Dow
Jones U.S. Financial Services Sector IndexSM’’,
‘‘iShares Dow Jones U.S. Healthcare Sector
IndexSM’’, ‘‘iShares Dow Jones U.S. Industrial
Sector IndexSM’’, ‘‘iShares Dow Jones U.S.
Consumer Goods Sector IndexSM’’, ‘‘iShares Dow
Jones U.S. Real Estate Sector IndexSM’’, ‘‘iShares
Dow Jones U.S. Technology Sector IndexSM’’,
‘‘iShares Dow Jones U.S. Telecommunications
Sector IndexSM’’, ‘‘iShares Dow Jones U.S. Utilities
Sector IndexSM’’, and ‘‘First Trust’s ETF based on
the Dow Jones Select Microcap IndexSM’’, are
service marks of Dow Jones & Company, Inc. and
have been licensed for use for certain purposes by
the Philadelphia Stock Exchange, Inc. The Dow
Jones products are not sponsored, endorsed, sold or
promoted by Dow Jones, and Dow Jones makes no
representation regarding the advisability of
investing in such product(s).
7 The firm/proprietary comparison or transaction
charge applies to member organizations for orders
for the proprietary account of any member or nonmember broker-dealer that derives more than 35%
of its annual, gross revenues from commissions and
principal transactions with customers. Member
E:\FR\FM\22FEN1.SGM
22FEN1
]]>Agencies
[Federal Register Volume 71, Number 35 (Wednesday, February 22, 2006)]
[Notices]
[Pages 9184-9186]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E6-2439]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-53278; File No. SR-CBOE-2006-09]
Self-Regulatory Organizations; Chicago Board Options Exchange,
Incorporated; Notice of Filing of Proposed Rule Change Relating to the
Exposure Period for Crossing Orders in the Hybrid Trading System
February 13, 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 30, 2006, 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\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
CBOE proposes to decrease the exposure period for crossing orders
in its Hybrid Trading System (``Hybrid'') from 10 seconds to 3 seconds.
The text of the proposed rule change is provided below (additions are
italicized; deletions are [bracketed]).
Chicago Board Options Exchange, Incorporated Rules
* * * * *
Rule 6.45A.--Priority and Allocation of Equity Option Trades on the
CBOE Hybrid System
(a)-(e) No change.
* * * Interpretations and Policies:
.01 Principal Transactions: Order entry firms may not execute as
principal against orders they represent as agent unless: (i) Agency
orders are first
[[Page 9185]]
exposed on the Hybrid System for at least [ten (10)]three (3) seconds,
(ii) the order entry firm has been bidding or offering for at least
[ten (10)]three (3) seconds prior to receiving an agency order that is
executable against such bid or offer, or (iii) the order entry firm
proceeds in accordance with the crossing rules contained in Rule 6.74.
.02 Solicitation Orders. Order entry firms must expose orders they
represent as agent for at least [ten (10)]three (3) seconds before such
orders may be executed electronically via the electronic execution
mechanism of the Hybrid System, in whole or in part, against orders
solicited from members and non-member broker-dealers to transact with
such orders.
* * * * *
Rule 6.45B--Priority and Allocation of Trades in Index Options and
Options on ETFs on the CBOE Hybrid System
(a)-(d) No change.
* * * Interpretations and Policies:
.01 Principal Transactions: Order entry firms may not execute as
principal against orders they represent as agent unless: (i) Agency
orders are first exposed on the Hybrid System for at least [ten
(10)]three (3) seconds, (ii) the order entry firm has been bidding or
offering for at least [ten (10)]three (3) seconds prior to receiving an
agency order that is executable against such bid or offer, or (iii) the
order entry firm proceeds in accordance with the crossing rules
contained in Rule 6.74.
.02 Solicitation Orders. Order entry firms must expose orders they
represent as agent for at least [ten (10)]three(3) seconds before such
orders may be executed electronically via the electronic execution
mechanism of the Hybrid System, in whole or in part, against orders
solicited from members and non-member broker-dealers to transact with
such orders.
* * * * *
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 CBOE has prepared summaries, set forth in sections
A, B, and C below, of the most significant aspects of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
CBOE rules provide that an order entry firm may not execute an
order it represents as agent with a facilitation or solicited order
(referred to herein as ``crossing orders'') using Hybrid unless it
first complies with the 10-second exposure requirement. Specifically,
order entry firms may not execute a facilitation cross unless (i) the
agency order is first exposed on Hybrid for at least 10 seconds, (ii)
the order entry firm has been bidding or offering for at least 10
seconds prior to receiving the agency order that is executable against
such bid or offer, or (iii) the order entry firm proceeds in accordance
with the floor-based open outcry crossing rules contained in CBOE Rule
6.74, ``Crossing'' Orders. Similarly, order entry firms may not execute
a solicitation cross unless the agency order is first exposed on Hybrid
for at least 10 seconds. During this 10 second exposure period for
crossing orders, other members may enter orders to trade against the
exposed order.
The Exchange proposes to shorten the duration of the exposure
period contained in the rules governing such transactions, as set forth
in Interpretations and Policies .01 and .02 to CBOE Rules 6.45A,
Priority and Allocation of Equity Option Trades on the CBOE Hybrid
System, and 6.45B, Priority and Allocation of Trades in Index Options
and Options on ETFs on the CBOE Hybrid System, from 10 seconds to 3
seconds. This shortened exposure period is fully consistent with the
electronic nature of Hybrid. Market participants on the CBOE have
implemented systems that monitor any updates to the CBOE market
including any changes resulting from orders being entered into Hybrid
and can automatically respond based on pre-set parameters. Thus, an
exposure period of 3 seconds will permit exposure of orders on the CBOE
in a manner consistent with the Exchange's electronic market.
By reducing the exposure time from 10 seconds to 3 seconds, the
CBOE believes that members will be able to provide liquidity to their
customers' orders on a timelier basis, thus providing investors with
more speedy executions. Timely and accurate executions are consistent
with the principles under which Hybrid was developed.
2. Statutory Basis
The Exchange believes the proposed rule change is consistent with
section 6(b) of the Act \3\ in general and furthers the objectives of
section 6(b)(5) of the Act \4\ in particular in that it is designed 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.
In particular, the proposed rule change will provide investors with
more timely execution of their options orders, while ensuring that
there is an adequate exposure of all crossing orders in the CBOE
marketplace.
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\3\ 15 U.S.C. 78f(b).
\4\ 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 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
No written comments were solicited or received with respect to the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
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 CBOE 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.
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 9186]]
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-2006-09 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-2006-09. This file
number should be included on the subject line if e-mail is used. To
help the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's Internet Web site (https://www.sec.gov/rules/
sro.shtml). Copies of the submission, all subsequent amendments, all
written statements with respect to the proposed rule change that are
filed with the Commission, and all written communications relating to
the proposed rule change between the Commission and any person, other
than those that may be withheld from the public in accordance with the
provisions of 5 U.S.C. 552, will be available for inspection and
copying in the Commission's Public Reference Room. Copies of such
filing also will be available for inspection and copying at the
principal office of the 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-2006-09 and should be submitted on or before March
15, 2006.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\5\
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\5\ 17 CFR 200.30-3(a)(12).
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Nancy M. Morris,
Secretary.
[FR Doc. E6-2439 Filed 2-21-06; 8:45 am]
BILLING CODE 8010-01-P
